|
|
|
Five tips for Investing
One of the most common requests I receive is for investing help.
In this article, I try to present just a few basic investing tips
to remember when you plan for your future through investing.
1. Have a plan and know where you are going with your...
Investing on a Budget
Have you ever found yourself wanting to make investments for the future, but ended up telling yourself that you simply couldn't afford to make those investments?
If you think that just because you're on a limited income you can't afford to make...
Turning Bad Debts into Good Debts through Investing Fundamentals
If you've ever earned enough money to put some aside, like most people you've probably invested it with an eye toward security – since, perhaps, you can't imagine yourself ever getting rich. "Most people dream of becoming rich, but it isn't their...
Understanding Fixed Income Investing: Expectations
I’ve come to the conclusion that the Stock Market is an easier medium for investors to understand (i.e., to form behavioral expectations about) than the Fixed Income Market. As unlikely as this sounds, experience proves it, irrefutably. Few...
Useful Tips on Investing
Here are some useful tips on investing. When you make an investment, you are giving your money to a company or an enterprise, hoping that it will be successful and pay you back with even more money. Some investments make money, and some don't. You...
|
|
| |
|
|
|
|
|
|
Index investing - Going by the numbers
The Dow, the NASDAQ, the S&P 500 – these are stock indexes, company structures that keep track of the values of listed stocks and enable brokers and others to trade in them. Index investing involves holding a portfolio of stocks or a mutual fund spread across an index, so that the value of the stocks is relatively equivalent to the value of the index at any given time.
The three big funds aren’t the only indexes available for investing; there are thousands of others, including not only American-based indexes but indexes specific to other countries and international indexes. When looking at index investing, you should keep in mind the wide variety of possibilities for your invested cash.
The most significant advantage to index investing is that it’s easy to diversify your investments, reducing your risk for losing money. Index funds also have a lower expense ratio than other types of mutual funds, which ensures that you’ll be able to keep more of your money.
Although index investing seems to be hard to target to your areas of interest, it’s actually easier than you think. For instance, if your interest is in tech stocks, your index investing choice is a NASDAQ fund. If you believe that a market in another country, say India or South Korea, is getting ready to take off, then you invest in a fund from an index based in that country. You have more choice than you might think.
Choosing Your Index
Associated Websites
Investing Fund
You should educate yourself about the different indexes available before you choose a specific fund. If you’re interested in blue chip stocks, you should invest in a fund based on the Dow Jones Industrial Average; this index tracks thirty crucial companies heavy in blue chips. If you want a more diversified portfolio that is based on a realistic picture of the American stock market, you should look for a fund based on the S&P 500.
If you’ve been looking overseas at the advances made there, you should look for an index investing fund based in a promising foreign economy. South Korea is emerging as a world leader in health technology, for instance, as well as a prime area for outsourcing by American companies.
As in any mutual fund, you should look to the long term rather than the short. Index investing funds may be volatile in the short term, but historically they’ve always gone up. Some analysts are predicting a tripling of stock value by 2020, in fact; this may be overly optimistic, but long term gains will be offset if you overcompensate for losses and sell your holdings early. Experts generally recommend that you leave your mutual funds and index investing funds alone most of the time, making adjustments on an annual or semiannual basis.
About the Author
Jakob Jelling is the founder of http://www.cashbazar.com. Please visit his financial website to learn more about investing.
|
|
|
|
|
|