Financial Freedom, Investing

Have You Met Mr. Market?

Do you know the allegory of Mr. Market? This useful parable—created by Warren Buffett’s mentor—might change everything you think about the stock market, its daily prices, and the endless news cycle (and blogs?!) built upon it.

The Original Mr. Market

The imaginary investor named “Mr. Market” was created by Benjamin Graham in his 1949 book The Intelligent Investor. Graham, if you’re not familiar, was the guy who taught Warren Buffett about securities analysis and value investing. Not a bad track record.

Graham asks the readers of his book to imagine that they have a business partner: a man named Mr. Market. On some days, Mr. Market arrives at work full of enthusiasm. Business is good and Mr. Market is wildly happy. So happy, in fact, that he wants to buy the reader’s share of the business.

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But on other days, Mr. Market is incredibly depressed. The business has hit a bump in the road. Mr. Market will do anything to sell his own shares of the business to the reader.

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Of course, the reader is always free to decline Mr. Market’s offers. And the reader certainly should feel wary of Mr. Market. After all, he is irrational, emotional, and moody. It seems he does not have good business judgement. Graham describes him as having, “incurable emotional problems.”

How can Mr. Market’s feelings fluctuate so quickly? Rather than taking an even emotional approach to business highs and lows, Mr. Market reacts strongly to the slightest bit of news.

If anything, the reader could probably find a way to take advantage of Mr. Market’s over-reactions. The reader could buy from Mr. Market when he’s feeling overly pessimistic and sell to Mr. Market when he’s feeling unjustifiably euphoric. This is one of the basic principles behind value investing.

But Mr. Market is a metaphor

Of course, Mr. Market is an imaginary investor. Yet countless readers have felt that Mr. Market acts as a perfect metaphor for the market fluctuations in the real stock market.

The stock market will come to you with a different price every day. The market will hear good news from a business and countless investors will look to buy that business’s stock. Will you sell to them? But a negative headline will send the market tumbling. Investors will sell. Please, they plead, will you buy my shares?!

Don’t like today’s price? You’ll get a new one tomorrow.

Is this any way to make rational money decisions? By buying while manic and selling while depressive? Do these daily market fluctuations relate to the true intrinsic value of the businesses they represent?

“Never buy something from someone who is out of breath”

Burton Malkiel

There’s a reason why Benjamin Graham built Mr. Market to resemble an actual manic-depressive. It’s an unfortunate affliction. And sadly, those afflicted are often untethered from reality.

The stock market is nothing more than a collection of individuals. These individuals can fall prey to the same emotional overreactions as any other human. Mr. Market acts as a representation of those people.

“In the short run, the stock market is a voting machine. Yet, in the long run, it is a weighing machine.”

Benjamin Graham

Votes are opinions, and opinions can be wrong. That’s why the market’s daily price fluctuations should not affect your long-term investing decisions. But weight is based on fact, and facts don’t lie. Over the long run, the true weight (or value) of a company will make itself apparent.

Warren Buffett’s Thoughts

Warren Buffett is on the record speaking to Berkshire Hathaway shareholders saying that Mr. Market is his favorite part of Benjamin Graham’s book.

Why? Because:

If you cannot control your emotions, you cannot control your money.

Warren Buffett

Of course, Buffett is famous for skills beyond his emotional control. I mean, the guy is 90 years old and continues his daily habits of eating McDonalds and reading six hours of business briefings. That’s fame-worthy.

Warren Buffett

But Buffett’s point is that ignoring Mr. Market is 1) difficult but 2) vitally important. Your mental behavior is just as important as your investing choices.

For example: perhaps your business instincts suggested that Amazon was a great purchase in 1999—at about $100 per share. It was assuredly overvalued at that point based on intrinsic value, but your crystal ball saw a beautiful future.

But Buffett’s real question for you would be: did you sell Amazon when the Dot Com bubble burst (and the stock fell to less than $10 per share)? Did Mr. Market’s depression affect you? Or did your belief in the company’s long-term future allow to hold on until today—when the stock sits at over $3000 per share.

The Woefully Ignorant Sports Fan

I know about 25 different versions of this guy, so I bet you know at least one of them. I’m talking about the Woefully Ignorant Sports Fan, or WISF for short.

The WISF is a spitting image of Mr. Market.

When Lebron James has a couple bad games, the WISF confidently exclaims,

“The dude is a trash basketball player. He’s been overhyped since Day 1. I’m surprised he’s still in the starting lineup.”

Skip Bayless: ESPN's different rules for me and Stephen Smith
Stephen A. Smith and Skip Bayless: Two Gods of the WISF world

Wow! That’s a pretty outrageous claim. But when Lebron wins the NBA finals and takes home another First-Team All-NBA award, the WISF changes his tune.

“I’m telling you, that’s why he’s the Greatest of All Time. The GOAT. Love him or hate him, you can’t deny he’s the King.”

To the outside observer, this kind of flip-flop removes any shred of the WISF’s credibility. And yet the WISF flip-flops constantly, consistently, and without a hint of irony. It’s simply his nature.

Now think about the WISF alongside Mr. Market. What does the WISF actually tell us about Lebron? Very little! And what does Mr. Market tell us about the true value of the companies on the stock market? Again, very little!

We should not seek truth in the loud pronouncements of an emotional judge. This is another aphorism from The Intelligent Investor book.

But I Want More Money!

Just out of curiosity, I logged into my Fidelity account in late March 2020. The COVID market was at the bottom of its tumble, and my 401(k) and Roth IRA both showed scarring.

Ouch. Tens of thousands of dollars disappeared. Years of saving and investing…poof. This is how investors lose heart. Should I sell now and save myself further losses?

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No! Absolutely not! Selling at the bottom is what Mr. Market does. It’s emotional behavior. It’s not based on rationality, not on the intrinsic values of the underlying businesses.

My pessimism quickly subsided. In fact, I began to feel silver linings. Why?

I’m still in the buying phase of my investing career. I buy via my 401(k) account every two weeks. And I buy via my Roth IRA account every month. I’ve never sold a stock. The red ticks in the image below show my two-week purchasing schedule so far in 2020.

Buy when high, buy when low. That’s the Lazy Portfolio way!

If you’re investing for later in life, then your emotions should typically be the opposite of the market’s emotions. If the market is sad and prices are low and they want to sell…well, great! A low price for you increases your ability to profit later.

And Benjamin Graham agrees. He doesn’t think you should ignore Mr. Market altogether, but instead should do business with him only when it’s in your best interest (ooh yeah!).

“The intelligent investor shouldn’t ignore Mr. Market entirely. Instead, you should do business with him, but only to the extent that it serves your interest.”

Benjamin Graham

If you log into your investment accounts and see that your portfolio value is down, take a step back and consider what it really means. You haven’t lost any money. You don’t lock in any losses unless you sell.

The only two prices that ever matter are the price when you buy and the price when you sell.

Mr. Market in the News

If you pay close attention to the financial news, you’ll realize that it’s a mouthpiece for the emotional whims of Mr. Market. Does that include blogs, too? In some cases, absolutely. But I try to keep the Best Interest out of that fray.

For example, here are two headlines from September 29, 2020:

Just imagine if these two headlines existed in another space. “Bananas—A Healthy Snack That Prevents You From Ever Dying” vs. “Bananas—A Toxic Demon Food That Will Kill Your Family.”

The juxtaposition of these two headlines reminds me of Jason Zweig’s quote:

“The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap).”

Jason Zweig

More often than not, reality sits somewhere between unsustainable optimism and unjustified pessimism. As an investor, your most important job is to not be duped by this emotional rollercoaster.

Investing Based on Recent Performance

Out of all the questions you send me (and please keep sending them!), one of the most common is:

“Jesse – I’m deciding between investment A, investment B, and investment C. I did some research, and B has the best returns over the past three years. So I should pick B, right?”

Wonderful Readers

Great question! I’ve got a few different answers.

What is Mr. Market saying?

Let’s look at the FANG+ index. The index contains Twitter, Tesla, Apple, Facebook, Google, Netflix, Amazon, NVIDIA, and the Chinese companies Baidu and Alibaba. Wow! What an assortment of popular and well-known companies!

The recent price trend of FANG+ certainly represents that these companies are strong. The index has doubled over the past year.

Mr. Market is euphoric!

And what do we think when Mr. Market is euphoric?

How do you make money?

Another one of my favorite quotes from The Intelligent Investor is this:

“Obvious prospects for physical growth in a business do not translate into obvious profits for investors”

Benjamin Graham

You make money when a company’s stock price is undervalued compared to its prospects for physical growth. You buy low (because it’s undervalued), the company grows, the stock price increases, you sell, and boom—you’ve made a profit.

I think most people would agree that the FANG+ companies all share prospects for physical growth. But, are those companies undervalued? Alternatively, have their potentials for future growth already been accounted for in their prices?

It’s just like someone saying, “I want a Ferrari! It’s such a famous car. How could it not be a great purchase?”

The statement is incomplete. How much are you paying for the Ferrari? Is it undervalued, only selling for $10,000? Or is it overvalued, selling at $10 million? The product itself—whether a car or a company—must be judged against the price it is selling for.

Past Results Do Not Guarantee Future Performance

If investing were as simple as, “History always repeats itself,” then writing articles like this wouldn’t be worthwhile. Every investment company in the world includes a disclaimer: “Past results do not guarantee future performance.”

Before making a specific choice like “Investment B,” one should understanding the ideas of results-oriented thinking and random walks.

Farewell, Mr. Market

Mr. Market, like the real stock market, is an emotional reactionary. His daily pronouncements are often untethered from reality. Don’t let him affect you.

Instead, realize that only two of Mr. Market’s thoughts ever matter—when you buy from him and when you sell to him. Do business with him, but make sure it’s in your best interest (oh yeah!). Everything else is just noise.

If the thoughts of Benjamin Graham, Warren Buffett, and the Best Interest haven’t convinced you, just look at the financial news or consider the Woefully Ignorant Sports Fan. Rapidly changing opinions rarely reflect true reality.

Stay rational and happy investing!

If you enjoyed this article and want to read more, I’d suggest checking out my Archive or Subscribing to get future articles emailed to your inbox.

Source: bestinterest.blog

Financial Freedom, Investing

Worthy Bonds Review: Earn 5% Interest on Your Money

This page may include affiliate links. Please see the disclosure page for more information. Bonds are often an integral part of a diversified investment portfolio. In our Worthy Bonds review, we’ll introduce you to a unique type of bond investment open to all investors. If a 5% interest is attractive to you, you’ll want to learn about…

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Banking, Financial Freedom, Financial Planning, Investing, Personal Finance, Retirement

The 8 Best Vanguard Funds for Long-Term Investments

If you’re busy and want to invest your money in the long term, you will love the best vanguard funds. They are cheaper.

They are high quality funds, well diversified, and professionally managed.

Thus, vanguard funds are a favorite for long-term investments and for retirement.

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Vanguard mutual funds, like any mutual funds, are money invested by investors. They are pooled together in a single investment portfolio. The mutual fund is then managed by a professional manager who then use the money to buy a bunch of stocks, bonds or other assets.

With Vanguard index funds, they are passively managed. That is, they are managed by a computer with its only job is to track an index, such as the S&P 500.

Nonetheless, both mutual funds and index funds are cost-efficient and a huge time saver for a busy investor. And because of that, the best vanguard funds are superior investment vehicles for long term-investment. 

In this article,  we will discuss the 8 best vanguard funds that offer a high-quality, cost and time-efficient way to invest in the stock market.

Understanding the Advantages of the Best Vanguard Funds

Before jumping into the best vanguard funds, it’s important to go over the main reasons for investing in mutual or index funds rather than individual stocks, bonds, or other securities.

Diversification. You have probably heard of the popular saying “don’t put all your eggs in one basket.” Well, if so, it applies well to mutual and index funds. Diversification is when you have a mix of investment to help control the total risk of your investment portfolio.

Unless you have a lot of money, buying individual stocks yourself can be costly. But with a mutual or index fund, you’re able to buy dozens of stocks and invest in different types of stocks in a variety of industries, thus diversifying your portfolio.

Because you invest in multiple stocks across various industries, you are spreading your risk. If one stock plummets, the others can balance it out. Most Vanguard funds, if not all, are diversified.

Low minimum investment. Another benefit of Vanguard funds is that they require a reasonable investment minimum. Some Vanguard mutual funds require a minimum of $3000 to invest. They also offer a monthly investment plan, so you can start with as little as $20 per month.

Cost efficiency. The charges that you pay to buy or sell a fund can be significant. However Vanguard funds are known to cost way less than the average mutual fund.

Professional management. Even if you have a lot and you are an expert in investing, investing your money in a Vanguard mutual fund is a huge time saver. That means once you buy your fund and contribute to it monthly (however you chose), you can just forget about it.

A Vanguard professional manager takes care of it for you. Plus, vanguard fund managers are experienced, well educated. So you don’t have to worry about an inexperienced manager running your money.

These are the reasons why investing in the best vanguard funds is better than investing in individual stocks and/or bonds.

However, one of the drawbacks with vanguard funds, as with all mutual or index funds, is that you don’t have control over your investment portfolio. Leaving your money to someone who decides when and what to invest in can be difficult for you if you’re someone who likes to be in control.

So, if you like to be in control and things yourself, you may want to develop your own investment portfolio and not relying on these Vanguard funds.

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Are you a long-term investor?

Think about yourself and your goals before choosing these best Vanguard funds.

What are your investment goals? Do you plan on holding these funds in the long term?

A long term investor is someone who puts money into an investment product for a long period of time.

If you plan on investing money to achieve some goals in 2 years, such as buying a car or going on a vacation, you should not use these Vanguard Funds.

That is because stocks and bonds can rise and fall significantly over a short period of time. That makes it possible to lose some or all of your money. Moreover, if you need cash in a hurry, a Vanguard fund is definitely not the right investment for you.

So you’re better off using short-term investments for these kind of goals.

But if you want to build wealth for the long term or your goal is to retire in 20 or 40 years, these Vanguard funds are for you.

Likewise, what is your appetite for risk?

A long-term investor should be aware of the risks involved in investing in the stock market. They should know their own risk tolerance. Some investors are more cautious than others. Some can take risks and are able to sleep well at night.

These vanguard funds carry different level of risks. Some are more conservative than the others. 

Therefore, before you start buying Vanguard funds, figure out whether you are a long term investor. In other words, don’t keep money in funds unless you plan on holding them for at least 5 years.

The 8 Best Vanguard Funds to Buy Now for Long-Term Investments

Now that you have a pretty good idea of why a Vanguard fund is a good long-term investment, and you are aware of your risk tolerance, below is 8 of the top and best Vanguard funds to buy now for the long term. If you have questions beyond Vanguard funds, it may make sense to work with a financial planner or financial advisor near you.

Vanguard Total Stock Market Admiral (VTSAX)

  • Minimum initial investment:$3000
  • Expenses:0.04%

The biggest and perhaps one of the best Vanguard funds is the Vanguard Total Stock Market. The fund was created in 1992. It gives long term investors a broad exposure to the entire US equity market, including large, mid, and small cap growth stocks. Some of the largest stocks include Apple, Facebook, Johnson And Johnson, Alphabet, Berkshire Hathaway, etc…

This Vanguard fund has all of the attributes mentioned above, i.e., diversification and low costs. Note this fund invests exclusively in stock. So it’s the most aggressive Vanguard fund around.You need a minimum of $3000 to invest in this fund. The expenses are 0.04%, which is extremely low. Note this is also available as an ETF, with an expense ratio of 0.03%.

Vanguard 500 Index (VFIAX)

  • Minimum initial investment:$3,000
  • Expenses: 0.04%

If you want to have your money invested only in American assets, this Vanguard fund is the right one for you. The Vanguard 500 Index, as the name suggests tracks the S&P 500 index.

This index funds gives you exposure to 500 of the largest U.S. companies, spreading across different industries, making it one of the best Vanguard funds to have. Some of the largest companies you might already know include Microsoft, Apple, Visa, JP Morgan Chase, Facebook, etc. It has a minimum investment of $3,000 with an expense ratio of 0.04&, making it one of the best Vanguard funds to have. 

Vanguard Wellington Income Investor Share (VWINX)

  • Minimum initial investment:
  • Expenses:

If you’re aware of risks involved in investing in stocks and you have a low tolerance for risk, the Vanguard wellington Income is for you. This fund allocates about one third to stocks and two thirds to bonds, making it very conservative.

Another good thing about this Vanguard fund is that it invests in stocks that have a strong track record of providing dividend income to its investors. So, if you are one of those long term investors who has a low appetite for risks and who likes to receive a steady dividend payment without a lot of volatility in the share price, you should consider this fund.

Vanguard Star (VGSTX)

  • Minimum initial investment: $1,000
  • Expenses: 0.31%

The great thing about this Vanguard fund is that the minimum investment is relatively low ($1000), making it a good choice among new investors. Plus, it’s well balanced.

It is invested 60% in stocks and 40% in bonds. For those investors looking for a broad diversification in both domestic and international stocks and bonds, this fund should not be overlooked.

Vanguard Dividend Growth (VDIGX)

  • Minimum initial investment:$3000
  • Expenses:0.22%

Vanguard Dividend Growth, as the name suggests, focuses on companies that pay dividends and have the ability to grow their dividends over time.

If you’re an investor with a long term focus and likes to receive a steady dividend income, you may want to consider this fund. The minimum investment is $3000 with an expense ratio of 0.22%.

Vanguard Health Care (VGHCX)

  • Minimum initial investment: $3,000
  • Expenses: 0.34%

As the name suggests, Vanguard Health Care only invests in the Health Care Section. That’s the only downside. Apart from that, it gives investors a great exposure to various domestic and international companies within the health care sector, such as pharmaceutical firms, research firms, and medical supply and equipment companies.

If you’re considering this Vanguard fund, you should also have another and more diversified fund to reduce your risk.

Vanguard International Growth (VWIGX)

  • Minimum initial investment: $3000
  • Expenses: 0.43%

If you’re looking to build a complete investment portfolio and want to have more exposure to foreign stocks, the Vanguard International Growth is the one of the best Vanguard Funds to accomplish that goal. The fund focuses on non-U.S. stocks in developed and emerging markets with a high growth potential.

However, one thing to consider is the high volatility of this fund. Because it also invests in developed countries, the share price can rise and fall significantly. So you should consider this fund if you want more exposure to foreign stocks. But you also want to have another fund as well to balance it out. The minimum initial investment is $3,000 with an expense ratio of 0.43%.

Vanguard Total Bond Market Index (VTBLX)

  • Minimum initial investment: $3000
  • Expenses: 0.05%

Bond funds may be appropriate and advantageous for long term investors who want a bond fund that invests US and Corporate bonds. If that’s your goal then the Vanguard Total Bond Market Index is the right one for you.

Just as any Vanguard funds, it’s cost efficient, safe and high quality. It has a minimum initial investment of $3,000 and an expense ration of 0.05%. Also note that this fund is also available as an ETF.

The Bottom Line

If you’re looking to invest in mutual or index funds, those are the best Vanguard funds to buy now and hold for the long term. They are high quality, low-cost, and are safe. 

Related:

  • How to Save 100k?
  • 5 Mistakes People Make When Hiring a Financial Advisor
  • IRA vs. 401k: What Are the Key Differences?
  • Can I Retire at 60 with 500k? Is It Enough?

Speak with the Right Financial Advisor

  • If you have questions beyond knowing which of the best Vanguard funds to invest, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc).
  • Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
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The post The 8 Best Vanguard Funds for Long-Term Investments appeared first on GrowthRapidly.

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Financial Freedom, Investing

Traditional And Roth IRA Contribution Limits Announced

The contribution limits for the Roth IRA and Traditional IRA were just announced. Here’s what IRS limits are for the upcoming year.

The post Traditional And Roth IRA Contribution Limits Announced appeared first on Bible Money Matters and was written by Peter Anderson. Copyright © Bible Money Matters – please visit biblemoneymatters.com for more great content.

Source: biblemoneymatters.com

Financial Freedom

How to Start Investing in the Stock Market

Although investing in the stock market can feel intimidating at first, it could be the key to achieving your financial goals. Short of hitting the lottery or building a thriving business that you can sell, buying securities that increase in value over time is usually the easiest path to wealth. 

After all, the average savings account pays out a paltry 0.05% APY according to the Federal Reserve Bank of St. Louis, yet the average stock market return is around 10% per year before accounting for inflation. 

Unless you want your money to languish in a savings account where it’s worth less with each passing year, learning to invest should be at the top of your to-do list.

6 Steps to Start Investing in the Stock Market

But, how do you start down a path that is notoriously complicated and has the potential to leave you with less money than you started? Here are a few top steps you should take to get started.

1. List Your Goals

Ask yourself what you hope to accomplish by investing in the stock market. A few examples of investment goals might include: 

  • Making a quick profit by investing in the short-term, and reselling stocks at a higher price,
  • Creating a source of passive income you can use later on,
  • Growing investment earnings so it can cover your retirement, or
  • Saving money for a specific goal.

As you list out your goals, make sure you have the extra money to invest on a regular basis, while also having cash set aside for emergencies. If you have a lot of credit card debt or other high-interest debt, you might even consider paying it off before you begin investing. After all, the average credit card interest rate is currently over 16% —  and you might not get an investment return anywhere close to that.

2. Start With Retirement Savings Accounts

There are advantages that come with investing in a retirement account. Accounts, like a workplace 401(k), a SEP IRA, or a Solo 401(k) are tax-advantaged, giving you the chance to reduce your taxable income (and thus, pay less in taxes) when you contribute. 

With a 401(k) plan from your job, for example, you can contribute up to $19,500 in 2020 and again in 2021. If you’re age 50 or older, you can also contribute another $6,500 each year which is called, a “catch-up contribution”. The amount you contribute is taken off of your taxable income, so your tax liability is lower.

You might also qualify for an “employer match” on contributions to your employer-sponsored retirement account. Check with your company’s human resource department to learn if your employer offers this benefit. 

Other retirement accounts to consider include a traditional or Roth IRA. You can deduct your full traditional IRA contribution from your taxable income, if you don’t have a retirement plan at work. Another option is funding a Roth IRA which lets you contribute using after-tax dollars instead. This means you won’t get a tax deduction for contributing, but Roth IRA funds grow tax-free and you can take distributions at retirement age without paying any taxes. 

In 2021, contribution limits for IRAs stay the same as 2020. You can contribute up to $6,000 to an IRA, or $7,000 if you’re age 50 and older. 

3. Open a Brokerage Account

In addition to investing for retirement, you can also open a taxable brokerage account. You won’t get any upfront tax advantages for opening a brokerage account, but you get the chance to buy and sell stocks and other securities, or buy and hold them for the long-term.

There are excellent brokerage account options for beginners or experienced investors, many of which let you invest in some capacity without any fees. Some of the top firms to consider include: 

  • Betterment: Best for Beginners
  • Robinhood: Best for No Minimum Balance Requirement
  • M1 Finance: Best for Free Trades

4. Compare Costs and Fees

You might not have a lot of options if you’re investing in your workplace retirement plan at first. If you have the option to select a brokerage firm, you’ll need to compare the fees and costs involved in investing. Fees and costs to watch out for include:

  • Investment management fees. These fees can be nonexistent or as high as 1% of your account balance (or more).
  • Expense ratios. Specific funds, like index funds or mutual funds, might carry this fee.
  • Transaction fees. You might pay transaction fees when buying or selling a stock or another security.
  • Front-end loads. This fee can be charged on some investments upfront.
  • Annual account fees. A charge that’s tacked on just for using your brokerage account.

These are just some of the main fees to watch out for, but there are plenty of others. If you want to figure out how much you’re paying in fees on your investment accounts, the free retirement fee analyzer tool from Personal Capital is a good place to start.

5. Start Off With Simple Investments

You’ve probably heard plenty about the “hot stocks” of the last few years, and how investors who got in early have gotten rich by being in the right place, at the right time. Unfortunately, most “regular” investors don’t hear about hot stocks until it’s too late.

As a beginning investor, it’s usually best to keep your stock market strategy simple by investing in what you understand. Some beginning investments to consider include exchange-traded funds (ETFs), which are made up of various investments that track an index or focus on a specific industry sector. You could even stick to index funds, which are another type of investment that tracks an index and are mostly “hands-off” for the investor.

Target-date funds are another type of simple investment to consider. These funds include a selection of stocks and bonds that adjust for less risk over time. If you purchase a target-date fund that’s meant to last until 2050, for example, your risk would be high at first but slowly taper down as you approached 2050 or whatever “target date” you choose for retirement.

6. Research Before Jumping on Complex Strategies

If you’re curious about more complex investing options, you’ll need to learn more about how and when to invest. Some resources to turn to include investing books, like:

  • The Little Book of Common Sense Investing by John C. Bogle
  • Investing All-In-One for Dummies by Eric Tyson

You could also check out top investing forums like Seeking Alpha or the Bogleheads forum, taking the time to read through questions and answers from investors at the top of their game.

Blog posts that can help you get started with some investing basics include: 

  • How to Invest Essentials for Beginners & Intermediates
  • How the Stock Market Works
  • How to Buy Stock Online

The Bottom Line

Investing in the stock market can be nerve-racking, but starting with common-sense investments in place (e.g. employer-sponsored retirement account) and uncomplicated investments (like index funds), lets you ease into the process slowly.

Over time and with more experience, you’ll have a better sense of when — and when not to — shy away from the risks of the stock market.  

The post How to Start Investing in the Stock Market appeared first on Good Financial Cents®.

Source: goodfinancialcents.com