If you determine your overall investing position based on goals and timeframe, you can lay out a strategy. For example, a young couple, without children, who have a high combined income, can be aggressive in their choices. They may opt to put 80 percent of their investment dollars into riskier, aggressive funds and the remaining 20 percent into more conservative fund investments. They have time on their side and are not averse to taking some financial risk.
Mutual fund advertisements tell you, usually in the finest of print "Past performance is no guarantee of future results." While that statement has always been true, now's a particularly good time to take heed. It's been an especially topsy-turvy time for fund managers and investors, which makes it that much harder to evaluate potential homes for your investment dollars. Which is not to say you should ignore a fund's recent performance if you want to add it to your portfolio. Just take it with a big ol' grain of sodium chloride.
By diversifying across sectors, caps and fund categories, you lower your overall level of risk. In a sense, a good investor is doing at some level what a fund manager does by choosing diverse investments so that, if one does poorly, the others will more than make up for it. It's been an especially topsy-turvy time for fund managers and investors, which makes it that much harder to evaluate potential homes for your investment dollars.
Foremost, don't overpay. Why pick a high-expense fund if there's a low-expense alternative that's just as good? And don't pay a sales charge, or load, to a broker if you've done the investment homework yourself. There are plenty of low-cost, no-load funds out there with above-average returns and managers with long-term track records. You just have to look closely enough to find them.
It's important to keep in mind that value investing is not concerned with how much the price of a stock has risen or fallen necessarily, but rather what is the "intrinsic" or inherent value of the stock, and is it currently trading below that price, i.e. at a discount to it's intrinsic value. The important point here is that when looking at stocks that are trading at or above their intrinsic value, the only hope for gaining value is based on future events, since the stock price already represents what the company is worth.
Index funds can and often will outpace many of the managed funds during a bull market. In 1998, for example, some 80 percent of the funds designed to beat the S&P 500 did not succeed, making index funds a good choice. In a bear market, however, a good fund manager can be advantageous since the index fund will obviously drop. Of course, as is typically the case, over time, equities, equity funds, and the indexes can rebound, and in the long term such funds should be good investments.
The Nasdaq Composite: The NASDAQ is a heavily followed index that has a strong technology-oriented representation and includes companies such as Microsoft. A fund mirroring the NASDAQ 500 index will include all domestic and non-U.S.-based common stocks listed on the NASDAQ stock market. The index is capitalization-weighted.
Mutual fund advertisements tell you, usually in the finest of print "Past performance is no guarantee of future results." While that statement has always been true, now's a particularly good time to take heed. It's been an especially topsy-turvy time for fund managers and investors, which makes it that much harder to evaluate potential homes for your investment dollars. Which is not to say you should ignore a fund's recent performance if you want to add it to your portfolio. Just take it with a big ol' grain of sodium chloride.
By diversifying across sectors, caps and fund categories, you lower your overall level of risk. In a sense, a good investor is doing at some level what a fund manager does by choosing diverse investments so that, if one does poorly, the others will more than make up for it. It's been an especially topsy-turvy time for fund managers and investors, which makes it that much harder to evaluate potential homes for your investment dollars.
Foremost, don't overpay. Why pick a high-expense fund if there's a low-expense alternative that's just as good? And don't pay a sales charge, or load, to a broker if you've done the investment homework yourself. There are plenty of low-cost, no-load funds out there with above-average returns and managers with long-term track records. You just have to look closely enough to find them.
It's important to keep in mind that value investing is not concerned with how much the price of a stock has risen or fallen necessarily, but rather what is the "intrinsic" or inherent value of the stock, and is it currently trading below that price, i.e. at a discount to it's intrinsic value. The important point here is that when looking at stocks that are trading at or above their intrinsic value, the only hope for gaining value is based on future events, since the stock price already represents what the company is worth.
Index funds can and often will outpace many of the managed funds during a bull market. In 1998, for example, some 80 percent of the funds designed to beat the S&P 500 did not succeed, making index funds a good choice. In a bear market, however, a good fund manager can be advantageous since the index fund will obviously drop. Of course, as is typically the case, over time, equities, equity funds, and the indexes can rebound, and in the long term such funds should be good investments.
The Nasdaq Composite: The NASDAQ is a heavily followed index that has a strong technology-oriented representation and includes companies such as Microsoft. A fund mirroring the NASDAQ 500 index will include all domestic and non-U.S.-based common stocks listed on the NASDAQ stock market. The index is capitalization-weighted.
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