Are you managing your money? You should know first principles of investing.

Every investors should know first principles of investing.

Why is investing important?

• The average yearly return for the S&P 500 is between 9% - 10% over the last 100 years.
• Investing allows you to make money while you sleep. Let compound interest work for you and unlock the magic of slowly building wealth over time.
• Investing is the only protection against inflation. You may not feel an inflationary environment but true for decades.
• If you haven't inherited wealth, then the only way to attain financial freedom is through investing. If you aim to achieve financial freedom without relying on luck, then the only path to follow is to Earn -> Save -> Invest -> Compound. There is no other way.

 

 

Learning How to Start Investing or managing your own money:

Investing can be confusing, complex, or tedious for many of us. On top of that investing is not taught in schools or colleges. That's true, we live in a society where the belief is, that investing is for professional money managers or rich people. That's not true in today's world, We come far ahead and investing is open to ordinary people like you but if you are new to the investing world then you may have a question Where should I start? The simple answer to that is anyone who is starting, first $5000 they should put in the S&P500 mutual fund and let it compound for the rest of their life. Some of the known S&P500 mutual funds are Vanguard 500 Index Fund ETF(VOO), SPDR S&P 500 ETF Trust(SPY), and Fidelity 500 Index Fund(FXAIX). Before that, you need to open up your trading account with Fidelity, Schwab, or any other company.

 

If you don't have time and don't want to put too much effort but still want to be invested and compounding your wealth, our advice is to keep adding to the S&P500 mutual fund every month consistently until you can. You will still have a decent return and you will beat some of the professional money managers too.

If you are willing to invest the time and effort to learn about managing your own money, you can purchase the stocks of individual companies that you believe in, and generate considerable returns for your portfolio. However, this will require you to conduct extensive research and analysis and learn about companies and their financial jargon.

 

After your first $5000, for every new $10,000 that you put into investing, you should contribute $500 to the S&P500 mutual fund and the rest of the $9500 in the choice of your individual company's stock until your portfolio hits 1 million dollars. The greatest investor of our lifetime Warren Buffett still has some portion of his portfolio invested in the S&P500.

 

3 main reasons you should put money in the S&P500 mutual fund.

1) The average yearly return for the S&P 500 is between 9% - 10% over the last 100 years. That should be the benchmark for your portfolio return.

2) The S&P 500 consists of potentially the best 500 companies in the United States.

3) It will give your automatic diversification out of the box and still compound at a decent rate.

 

Once you start building the portfolio of individual company's stock, make sure you diversify. It's been nearly impossible to predict which asset classes will perform best in a given year. Diversification will give you some protection on the downside. You should invest for the long-term. Markets go up more than they decline over the long-term.

That’s why we focus our time horizon for long-term. To get the jump start your investing journey Please join Stockscurrent and become a member to see the recent stock we bought in our portfolio. We conduct research, share analysis, share our watchlist and make recommendations that will provide you the insight. You will have access to our real money portfolio too.