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7 Myths About Real Estate Investing That Are Costing You Tens of Thousands of Dollars
Copyright 2005 Alex Nghiem
Did you know that real estate investing has created more millionaires that ALL other industries combined? The question, then, is why are more people not invested in real estate? Even with the increased awareness in real...
Halliburton Under Fire
The shareholders of Halliburton are trying to stop state-sponsored terrorism, using the same economic leverage that was effective against South African racism in the 1970's. Back then, shareholders used corporate resolutions to stop companies...
Optimize Portfolio Performance with Equity Styles
1) Equities can be grouped into six "equity styles"
2) Returns of each equity style can vary significantly with trends persisting for months and years.
3) By dynamically altering a portfolio's exposure to various equity styles, investors can...
Sanity Check - Buying a Business
In the business broker community there is a review process that helps a buyer determine if a business purchase makes sense or not. This check can be done by a Fortune 500 company where everything is figured down to the penny and takes 1000 hours...
VIX and the Psychology of Markets
VIX and the Psychology of Markets
We know that greed and fear rule the markets. But did you know
that when investors gets too greedy, markets usually fall, and
when investors are overcome with fear, markets usually rise. So
how can when we...
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Mutual Fund Versus Stocks
If you have money to invest, you might contemplate investing in
mutual fund. What is mutual fund? Mutual fund is simply a
collection of stocks that are bought using money pooled from
various individual investors. Historically, average mutual fund
returns 2% less annually than a stock market index.
While the return is less than stellar, there are several
advantages of investing in mutual fund. They provide
diversification, economies of scale and liquidity. So, the
question you want to ask yourself is whether you want to have a
smaller return for the advantages mentioned previously.
While two percent difference looks small, it is not pocket
change. Investors who set aside $ 1 a day, would have $ 562,000
of savings in fifty years if he invests in stock index fund
growing at 10.5% per annum. The same investors would collect
'only' $ 271,000 if he invests in average mutual fund that grow
at 8.5% per annum.
There are also disadvantages investing in mutual funds. There is
a problem on how to choose the 'right' mutual fund. If average
mutual fund returns 8.5% annually, the below-average fund will
give you less than that. Just like picking a stock, you would
find some stocks that outperform the average and other stocks
that do not perform well.
The next question would be if we investors can do better than
stock market index fund of 10.5%?
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A lot of people believe they
can. But, the path ahead is full of obstacles. First, you need
to get educated about stocks in general and how to calculate the
fair value of a common stock. Next, you need to open a brokerage
account to execute your buy and sell order. Finally, you need to
keep abreast of new developments. Business comes and goes.
Industry rises and falls. Examples of industry that used to
dominate are: typewriters, cassette players, sewing machine and
traditional camera. If you don't read often, you may predict
that certain stock has a high fair value even when the entire
industry is collapsing.
It all comes down to individual investors. Would they want to
learn more and get a few more percentage return each year? Or
would they let someone else manage their money? Me, I prefer to
learn how to manage my own investment. Sure, it is time
consuming. But giving a little bit of your time may give you the
potential to double your retirement money in fifty years. The
potential is rewarding and someday you might even manage someone
else's money.
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