Rabu, 22 Januari 2020

7 Steps for Planning Your Financial Life

I am a strong believer of managing one’s own money and finances. The simple reason is that it’s your money at stake, and your financial future that’s being planned. Nobody cares more about your money than you do. So if you are not motivated to improve your financial situation, nobody else is going to do so either…not even the best financial planner around.

I manage my own finances and see no reason why anyone else can’t do that on his or her own. This is not to say that using the services of a financial planner is not worth it. In fact, if you can find a good, ethical, trustworthy financial planner, supplementing your financial skills with his knowledge can work wonders for your financial life. Also, being your own financial planner works only if you have the time and energy to put into the job.

Senin, 20 Januari 2020

Investment Versus Speculation: Results to Be Expected by The Intelligent Investor

This chapter will outline the viewpoints that will be set forth in the remainder of the book. In particular we wish to develop at the outset our concept of appropriate portfolio policy for the individual, nonprofessional investor.

Investment versus Speculation

What do we mean by “investor”? Throughout this book the term will be used in contradistinction to “speculator.” As far back as 1934, in our textbook Security Analysis,1 we attempted a precise formulation of the difference between the two, as follows: “An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”

Types of Assets in Asset Allocation (The Art of Asset Allocation)

The process of asset allocation involves choosing a portfolio by selecting combinations of investments to meet your specific needs and goals as an investor. This is done by dividing the portfolio among different asset classes. The five main asset classes that make up a typical portfolio include:

1. Stocks: Stocks represent equity or ownership in a business or company. If you own stock in a company, you own a piece of that company. Stocks have historically produced the highest returns. However, they also carry the most risk, with a tendency towards greater price swings – highs and lows – that makes them more volatile than either bonds or other debt instruments.

Minggu, 19 Januari 2020

20 Rules for Successful Investing (Investing For Dummies)

1# Saving is a prerequisite to investing. Unless you have wealthy, benevolent relatives, living within your means and saving money are prerequisites to investing and building wealth.

2# Know the three best wealth-building investments. People of all economic means make their money grow in ownership assets - stocks, real estate, and small business - where you share in the success and profitability of the asset.

3# Be realistic about expected returns. Over the long term, 9 to 10 percent per year is about right for ownership investments (such as stocks and real estate). If you run a small business, you can earn higher returns and even become a multimillionaire, but years of hard work and insight are required.

Sabtu, 18 Januari 2020

Financial Market Returns From 1802 (Stocks For The Long Run)

This chapter analyzes the returns on stocks and bonds over long periods of time in both the United States and other countries. This two-century history is divided into three subperiods. In the first subperiod, from 1802 through 1871, the U.S. made a transition from an agrarian to an industrialized economy, much like the "emerging markets" of Latin America and Asia today.5 In the second subperiod, from 1871 through 1925, the U.S. was transformed into the foremost political and economic power in the world.6 The third subperiod, from 1926 to the present, contains the 1929-32 stock collapse, the Great Depression, and postwar expansion. The data from this period have been analyzed extensively by academics and professional money managers, and have served as a benchmark for historical returns.7 Figure 1-1 tells the story. It depicts the total return indexes for stocks, long- and short-term bonds, gold, and commodities from 1802 through 1997. Total returns means that all returns, such as interest and dividends and capital gains, are automatically reinvested in the asset and allowed to accumulate over time.