[ad_1]
Is it necessary to invest only in safe-haven assets, or is it like looking for a needle in a haystack?
The investment world is full of proverbs. Some are completely ridiculous, others have stood the test of time and can still benefit savers today. He summarizes the key Tim Bennett and Killik & Co. Here are some of them.
Most people are most concerned about the daily ups and downs of stocks when investing. But the real problem is that when times get tough, you don’t have enough cash to meet your obligations. This applies to both families and companies. That’s when you realize the true importance of this saying “Cash is king”. How can you protect yourself? “Make sure you as an investor are prepared for the unexpected and use declines and low stock prices to your advantage.” Tim Bennett said.
Vice versa “Cash is a waste” (English rhyme “Cash is trash”). This is perhaps even more important, especially from a long-term investment perspective. It is not a good idea to put your retirement money in a fixed deposit account or other money market investment. This capitalization approach will most likely not give you incomewhich can overcome inflation.
Timing the market is more important than timing the market
Market timing is hard. It’s basic investing lesson. Asset prices, especially short-term ones, move randomly, with no pattern or logic to their movements. Trying to get out of this bandwagon and move money out of stocks and into safe assets is more difficult than it might seem at first glance. When doing so, people often move assets into less profitable investments only after stock prices have plummeted. Even if you manage to correctly time a market downturn, an equally difficult task awaits you – correctly timing the returns of risky assets.
Do you try to follow investment advice when investing?
“All the people you see on TV are the survivors, the one percent who made it through the last recession. What you don’t see are all the other people who tried to beat the market and failed.” Bennett said. So what does he recommend? Stick to a long-term strategy, make sure you have the risk profile set correctly and understand the potential losses you could incur in a downturn, focus on the long-term outlook, and don’t change your course.
Don’t look for a needle in a haystack, buy the whole bunch
You don’t have to be an aggressive investor to win. Finding the best, most profitable investments every day is not only time-consuming, but also extremely difficult. economist They even say it is almost impossible. A good option for retail investors is to buy the entire market. In passive index investing, you buy the entire market not through a single index, but through one of the indices. It already contains all the key and most profitable companies from a given country, and in addition to immediate access to a given market, you also get automatic diversificationThis means that by buying one passive fund, you can invest in dozens (hundreds) of individual companies. This way, you implement another basic piece of advice – don’t put all your eggs in one basket.
Another advantage of passive investing is low fees. They only become noticeable over long time horizons. After retirement, you can get more money in your portfolio with passive investing than with actively managed investing because of the relatively low fees. This is simply because of more efficient management costs. At the same time, by replicating the index, you are not picking stocks that will underperform over the long term. Even the most famous active investors Warren Buffett Move his funds to index funds upon his death. That says it all.
[ad_2]
Source link
