“The individual investor should act consistently as an investor and not as a speculator”
Is something left in your purse besides lint at the end of your pay cycle and you want to invest, but don’t know how?
I invest our money for the absolute best returns relative to the risk. I want low cost of access and simple ongoing acquisition and management.
The absolute start point and actually the only investment tool you need to learn about is an ETF. ETF is an Electronic Traded Fund.
It’s basically a composite of a collection of shares. Say you decided to buy 1 share of every stock on the Dow Jones. That is a pretty diversified low risk portfolio, but it will cost you at least $10,000 with fees of around $30 bucks for every $1.05 share you buy. The trading fees alone make that a bad idea.
Enter an ETF that is a composite representation of the Dow that you can buy for as little as $100. All the dividends, growth and value appreciation with equivalent risk and all for a single trading fee.
ETFs make investing safe, simple and profitable.
There are only three things to do right away.
1. Open an electronic discount broking service that you can use to buy ETFs online.
2. Understand the different ETFs and find the funds that are performing the best longer term (hint: it’s almost always the ETF that is the purest representation of the underlying asset category it is trying to model).
3. Save regularly and acquire consistently.
By far the third point is the hardest to implement. Investors always get sucked into shiny light syndrome, but remember this last piece of advice.
Only a handful of individual stocks and managed funds will out pace an ETF. Since you can’t know which investments these are beforehand and the vast majority won’t outperform an ETF then the possibility of a bigger return does not beat the probability that you will pick an investment that won’t beat an ETF.
ETFs are perfect for the average investor that wants a very good return without a lot of risk, complexity and active oversight.
For many people it is likely the only investment vehicle you need to understand.