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Having A Goal In Investing
Having a goal is critical to your investing career. Goal gives
you directions. It will also set your mind to reach that goal.
So, before putting any money into stocks, the first question you
should ask is what do you want to achieve with stock...
Information About Investing Online
The Internet is a great tool for everyone, including investors due to the response speed, and the amount of information that is exchanged. Transactions are executed very quickly, with the click of a button or a few keystrokes. However, the Internet...
Making Money in Real Estate - Tax Lien Investing Tips and Risks
In my last article I gave a brief introduction to what tax liens
are and talked about how you can earn huge returns by invest
ing in tax lien certificates and tax deed sales. But it's
one thing to know that investing in tax liens can make...
The Microwave Approach to Investing
We live in a society obsessed with a microwave approach to life.
We want what we want and we want it NOW! No doubt, we're
impatient. So how do you and I cope with our desire for instant
gratification?
Sure enough, we want it right now....
What Makes A Business Worth Investing In?
You have always been interested in investing in a business,
however you always hold back because you are scared of making a
bad choice and losing your investment. However, there are some
ways to evaluate businesses to reduce the risk you are...
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Is it true that regular index investing performs good result with low risk?
There are many mutual funds and ETF on the market. But only a few performs results as good as s&p 500 or better. Well known that s&p 500 performs good results in long terms. But how can we convert these good results into money? We can buy index fund shares.
Index Funds seek investment results that correspond with the total return of the some market index (for example s&p 500). Investing into index funds gives chance that the result of this investment will be close to result of the index.
As we see, we receive good result doing nothing. It's main advantages of investing into index funds.
This investment strategy works better for long term. It means that you have to invest your money into index funds for 5 years or longer. Most of people have no much money for big one time investment. But we can invest small amount of dollars every month.
We have tested performance for 5-years regular investment into three indexes (S&P500, S&P Mid Caps 400, S&P Small
Caps 600). The result of testing shows that every month investing small amounts of dollar gives good results. Statistic shows that you will receive profit from 26% to 28.50% of initial investment into S&P 500 with 80% probability.
We must note that investing into indexes isn't risk-free investment. There are results with loosing in our testing. The poorest result is loosing about 33% of initial investment into S&P 500.
Diversification is the best way to reduce risk. Investing into 2-3 different indexes can reduce risk significantly. Best results are given by investing into indexes with different types of assets (bond index and share index) or different classes of assets (small caps, mid caps, big caps).
You can find full version of this article with full results of our tests here: http://fplab.com/node/116
About the Author
Alexander Korablev is head of FPLab Team.
http://Fplab.com is trainings and courses catalog for traders and investors.
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