Over the long run, almost all actively managed funds compare poorly. You will almost certainly beat all the actively managed funds. Well, not so likely. The authors note the very low fees charged by Vanguard. Note: I notice that the Vanguard Index Fund has an even lower expense ratio than the authors cite. I checked recently, and the expense ratio was only. David and Tom spend a lot of time emphasizing how well index funds do over the long run.
They encourage active investors to always compare their results to an index fund. In other words, index funds should be the standard of comparison. I especially appreciate the authors clearly explaining how fees eat up investment returns.
The Gardners illustrate so well the advantage of index funds, that I intend to continue in that investment path. Of course, other readers are likely more ambitious than me. If you are planning to actively manage your portfolio, the authors have lots of tips.
For example, the appendix also contains some guidelines for hiring a discount broker. Feb 10, EG Gilbert rated it it was amazing. A good company may seem expensive, but it should continue to perform well over time so tiny price fluctuations now will become irrelevant in hindsight.
Be patient. Watch quarterly reporting and look for underlying reasons for variances from expectations. Is this temporary or structural? Better to just buy an index fund. Five Basic Investing Lessons: 1. Manage your own money if you have the time and instinct 3. Make sure you understand the incentives of the people giving you advice 5. Fight the urge to concentrate on short-term gains; think long-term Jun 28, Robert Hernandez rated it it was amazing.
This is a great book for someone who has no idea how to start investing. Its very fun to see how the motley fool podcast information resonates in this book not as an ad, but rather by its content and is extended to breakdown what it takes to be able to pick stocks out for the long run.
It does show the power of many investing vehicles, including mutual fund, stock, index funds, shorting, and options, and their pros and cons. It puts greater emphasis to picking your own stock as an individual, b This is a great book for someone who has no idea how to start investing.
It puts greater emphasis to picking your own stock as an individual, but recognizes the value to either to hire someone that does above market indexes, or just plainly do the index funds. It also demonstrates in more detail how Tom and David invest, the two CEO, which is nice to see how they compare and contrast.
All in all, a great book updated to relate the times. Jan 01, Amin Mo rated it it was amazing. Still, the book deserves five stars for presenting something new to me when it come to evaluating a company, which is to evaluate it by looking at culture, operation team, strategies and not statistics and figure in the report alone. And even for statistics, it presents new metrics to compare with when considering investing in a company, and covers figures in the report and explaining them.
There are also many more things that were addressed in the book that I heard before and always wanted to learn. I rate book upon the knowledge manifested, and this one did it subtly. Excellent Whether you are a beginner or a long-time investor, this book is a good one. For beginners, it is full of investing principles and is written in an easy-to-understand, conversational style. It gives you tips on how to spot small, fast-growing companies that could be around for the long-term; and it provides warning signs to heed.
May 05, Andrew Imrie rated it liked it. A bit disappointed really. But since then the Motley Fool have gone a bit weird - regularly blitzing people with advertisements for their subscription services - and then the second half of this book, which seems to go against their earlier advice by say A bit disappointed really. But since then the Motley Fool have gone a bit weird - regularly blitzing people with advertisements for their subscription services - and then the second half of this book, which seems to go against their earlier advice by saying that, yes, you can beat the market after all.
For the average person, I'm not convinced. Nov 24, Dick rated it really liked it. It exceeded my expectation. May 22, Desmond rated it it was amazing. This book is amazing. I have read this book twice. Sep 25, Mala Ashok rated it liked it. This is a good book for investors who are starting out in their investment journey.
Since i'm not in that demographic I did not find it too useful. Also, if you are looking for specific stock picks you are going to be disappointed. The tools are there. Apply them and you can build a good investment portfolio.
Oct 12, Mike Steele rated it it was amazing. This is the one book that anyone who wants to start investing should read first. Written for investors of all levels, from novices who know nothing, to the advanced who want to improve. The first edition of this book back in the 's set me on the course for a successful financial life, and this new edition brings everything up to date. Dec 24, Michael rated it really liked it Shelves: financial. Full of great information.
A very informative read. Well written and easy to understand. I won this book in a GoodReads Giveaway. Feb 29, Prateek rated it really liked it. Dec 13, Love Allman rated it liked it. I received this book in the giveaways and it arrived lightning fast. Thank you.
I have not read this book because I am not an investor. I am giving it as a gift. Thank you very much!! Dec 14, Susan Csoke rated it it was amazing. This revised and updated third edition is loaded with all the information that is needed to be a successful investor. Thank you Goodreads for this free book!!!!! Jan 05, Bennett L rated it it was amazing Shelves: informational-nonfiction. Great for getting started in investing, but should have some background experience.
A little slow at parts, but explains topics very well. Feb 09, Free Book rated it it was amazing Shelves: business-investing. Jun 04, Deucalion rated it it was amazing Shelves: investing. Essential read that shaped the core of my investing process. The general idea is that as you get older, stocks gradually become a less desirable place to keep your money. If you're young, you have decades ahead of you to ride out any ups and downs in the market, but this isn't the case if you're retired and reliant on your investment income.
Here's a quick rule of thumb that can help you establish a ballpark asset allocation. Take your age and subtract it from This is the approximate percentage of your investable money that should be in stocks this includes mutual funds and ETFs that are stock based.
The remainder should be in fixed-income investments like bonds or high-yield CDs. You can then adjust this ratio up or down depending on your particular risk tolerance. For example, let's say that you are 40 years old. If you're more of a risk taker or are planning to work past a typical retirement age, you may want to shift this ratio in favor of stocks.
On the other hand, if you don't like big fluctuations in your portfolio, you might want to modify it in the other direction. All of the advice about investing in stocks for beginners doesn't do you much good if you don't have any way to actually buy stocks. To do this, you'll need a specialized type of account called a brokerage account. And opening a brokerage account is typically a quick and painless process that takes only minutes. You can easily fund your brokerage account via EFT transfer, by mailing a check, or by wiring money.
Opening a brokerage account is generally easy, but you should consider a few things before choosing a particular broker:. First, determine the type of brokerage account you need. For most people who are just trying to learn stock market investing, this means choosing between a standard brokerage account and an individual retirement account IRA.
Both account types will allow you to buy stocks, mutual funds, and ETFs. The main considerations here are why you're investing in stocks and how easily you want to be able to access your money. If you want easy access to your money, are just investing for a rainy day, or want to invest more than the annual IRA limit, you'll probably want a standard brokerage account.
On the other hand, if your goal is to build up a retirement nest egg, an IRA is a great way to go. These accounts come in two varieties -- traditional and Roth IRAs are very tax-advantaged places to buy stocks, but the downside is that it can be difficult to withdraw your money until you get older. The majority of online stock brokers have eliminated trading commissions, so most but not all are on a level playing field as far as costs are concerned.
However, there are several other big differences. For example, some brokers offer customers a variety of educational tools, access to investment research, and other features that are especially useful for newer investors. Others offer the ability to trade on foreign stock exchanges. And some have physical branch networks, which can be nice if you want face-to-face investment guidance. There's also the user-friendliness and functionality of the broker's trading platform.
I've used quite a few of them and can tell you firsthand that some are far more "clunky" than others. Many will let you try a demo version before committing any money, and if that's the case, I highly recommend it. Now that we've answered the question of how you buy stock, if you're looking for some great beginner-friendly investment ideas, here are five great stocks to help get you started.
Of course, in just a few paragraphs we can't go over everything you should consider when selecting and analyzing stocks, but here are the important concepts to master before you get started:. It's a good idea to learn the concept of diversification , meaning that you should have a variety of different types of companies in your portfolio. However, I'd caution against too much diversification. Stick with businesses you understand -- and if it turns out that you're good at or comfortable with evaluating a particular type of stock, there's nothing wrong with one industry making up a relatively large segment of your portfolio.
Buying flashy high-growth stocks may seem like a great way to build wealth and it certainly can be , but I'd caution you to hold off on these until you're a little more experienced. It's wiser to create a "base" to your portfolio with rock-solid, established businesses. If you want to invest in individual stocks, you should familiarize yourself with some of the basic ways to evaluate them.
Our guide to value investing is a great place to start. There we help you find stocks trading for attractive valuations. And if you want to add some exciting long-term-growth prospects to your portfolio, our guide to growth investing is a great place to begin. Here's one of the biggest secrets of investing, courtesy of the Oracle of Omaha himself, Warren Buffett. You do not need to do extraordinary things to get extraordinary results.
Note: Warren Buffett is not only the most successful long-term investor of all time, but also one of the best sources of wisdom for your investment strategy. The most surefire way to make money in the stock market is to buy shares of great businesses at reasonable prices and hold on to the shares for as long as the businesses remain great or until you need the money.
If you do this, you'll experience some volatility along the way, but over time you'll produce excellent investment returns. Investing Best Accounts. Stock Market Basics. Stock Market. Industries to Invest In. Getting Started. Planning for Retirement.
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This also assumes you're talking about gold jewelry of at least 10 karat. Pure gold is 24 karat. Extremely expensive jewelry may hold its value, but more because it is a collector's item than because of its gold content. These are the best option for owning physical gold. However, there are markups to consider.
The money it takes to turn raw gold into a coin is often passed on to the end customer. Also, most coin dealers will add a markup to their prices to compensate them for acting as middlemen. Mint , so you know you are dealing with a reputable dealer. Then you have to store the gold you've purchased. That could mean renting a safe deposit box from the local bank, where you could end up paying an ongoing cost for storage.
Selling, meanwhile, can be difficult since you have to bring your gold to a dealer, who may offer you a price that's below the current spot price. Another way to get direct exposure to gold without physically owning it, gold certificates are notes issued by a company that owns gold. These notes are usually for unallocated gold, meaning there's no specific gold associated with the certificate, but the company says it has enough to back all outstanding certificates. You can buy allocated gold certificates, but the costs are higher.
The big problem here is that the certificates are really only as good as the company backing them, sort of like banks before FDIC insurance was created. That said, if you're going to simply buy a paper representation of gold, you might want to consider exchange-traded funds instead. This fund directly purchases gold on behalf of its shareholders. Another way to own gold indirectly, futures contracts are a highly leveraged and risky choice that is inappropriate for beginners. Even experienced investors should think twice here.
Essentially, a futures contract is an agreement between a buyer and a seller to exchange a specified amount of gold at a specified future date and price. As gold prices move up and down, the value of the contract fluctuates, with the accounts of the seller and buyer adjusted accordingly. Futures contracts are generally traded on exchanges, so you'd need to talk to your broker to see if it supports them. The biggest problem: Futures contracts are usually bought with only a small fraction of the total contract cost.
This creates leverage, which increases an investor's potential gains -- and losses. And since contracts have specific end dates, you can't simply hold on to a losing position and hope it rebounds. Futures contracts are a complex and time-consuming investment that can materially amplify gains and losses. Although they are an option, they are high-risk and not recommended for beginners. One major issue with a direct investment in gold is that there's no growth potential.
An ounce of gold today will be the same ounce of gold years from now. This is why some investors turn to mining stocks. Their prices tend to follow the prices of the commodities on which they focus; however, because miners are running businesses that can expand over time, investors can benefit from increasing production.
This can provide upside that owning physical gold never will. However, running a business also comes with the accompanying risks. Mines don't always produce as much gold as expected, workers sometimes go on strike, and disasters like a mine collapse or deadly gas leak can halt production and even cost lives. All in all, gold miners can perform better or worse than gold -- depending on what's going on at that particular miner.
That's a function of the way gold is found in nature, as well as diversification decisions on the part of the mining company's management. If you're looking for a diversified investment in precious and semiprecious metals, then a miner that produces more than just gold could be seen as a net positive.
However, if what you really want is pure gold exposure, every ounce of a different metal that a miner pulls from the ground simply dilutes your gold exposure. Potential investors should pay close attention to a company's mining costs, existing mine portfolio, and expansion opportunities at both existing and new assets when deciding on which gold mining stocks to buy. Both also have exposure to other metals, but the latter focuses on smaller miners; their expense ratios are 0.
All are important pieces of information that are easy to overlook when you assume that a simple ETF name will translate into a simple investment approach. Investors who prefer the idea of owning mining stocks over direct gold exposure can effectively own a portfolio of miners by investing in a mutual fund. However, as the Vanguard fund's name implies, you are likely to find a fund's portfolio contains exposure to miners that deal with precious, semiprecious, and base metals other than gold.
That's not materially different from owning mining stocks directly, but you should keep this factor in mind, because not all fund names make this clear. For example, the Fidelity Select Gold Portfolio also invests in companies that mine silver and other precious metals.
Fees for actively managed funds, meanwhile, can be materially higher than those of index-based products. Note that expense ratios can vary greatly between funds. Also, when you buy shares of an actively managed mutual fund, you are trusting that the fund managers can invest profitably on your behalf. That doesn't always work out as planned. For most investors, buying stock in a streaming and royalty company is probably the best all-around option for investing in gold.
These companies provide miners with cash up front for the right to buy gold and other metals from specific mines at reduced rates in the future. They are like specialty finance companies that get paid in gold, allowing them to avoid many of the headaches and risks associated with running a mine. That said, none of the major streaming companies has a pure gold portfolio, with silver the most common added exposure.
Franco-Nevada, the largest streaming and royalty company, also has exposure to oil and gas drilling. So you'll need to do a little homework to fully understand what commodity exposures you'll get from your investment. And while streaming companies avoid many of the risks of running a mine, they don't completely sidestep them: If a mine isn't producing any gold, there's nothing for a streaming company to buy.
The built-in wide margins that result from the streaming approach provide an important buffer for these businesses. That has allowed the profitability of streamers to hold up better than miners' when gold prices are falling. This is the key factor that gives streaming companies an edge as an investment. They provide exposure to gold, they offer growth potential via the investment in new mines, and their wide margins through the cycle provide some downside protection when gold prices fall.
That combination is hard to beat. There's no perfect way to own gold: Each option comes with trade-offs. That said, probably the best strategy for most people is to buy stock in streaming and royalty companies. However, what to invest in is just one piece of the puzzle: There are other factors that you need to consider.
The real benefit, for new and experienced investors alike, comes from the diversification that gold can offer. Once you've built your gold position, make sure to periodically balance your portfolio so that your relative exposure to it remains the same. It's best to buy small amounts over time.
There's no one-size-fits-all answer to this question. The important thing is that you start as soon as possible, and make it a habit. This may not sound like much, but it sure can add up over time. You may be surprised at the long-term impact you can make by investing a seemingly small amount of money while you're young. There are hundreds of things you can invest in, ranging from stocks and bonds to artwork and collectible coins. For our purposes, we're going to focus on investments you can choose in your brokerage account, or in your retirement plan at work.
These generally include:. Since stocks are highly volatile but have the most return potential, they are more appropriate for younger investors. In contrast, bonds are designed for predictability, making them better for older investors with lower risk tolerance. Cash investments are typically not a good idea unless you have lots of near-term liquidity needs.
Determining the appropriate asset allocation for your investment strategy is a critical step to take. There are two main methods of investing. Active investment refers to picking individual stocks and bonds or buying mutual funds that are actively managed by professionals. In other words, an active investor's goal is to beat the market. On the other hand, passive investing means simply trying to match the market's performance, generally through funds that track indexes.
The question you need to answer is how much time you want to spend on investing. If you have the time and desire to research individual stocks, active investment could be the way to go. If not, there's nothing wrong with passive investing. In fact, billionaire investor Warren Buffett believes that passive investing is the best way to go for many people. If you choose to invest in individual stocks, the first thing you should understand is the difference between investing and speculating.
Investing is a long-term activity, designed to achieve sustained returns that can compound over time. Speculating is akin to gambling -- trying to chase a quick payday. With that in mind, there are certain types of stocks that make excellent long-term investments, especially for beginners.
There are many things to look for in your first stock investments , but just to name a few: You'll want to learn basic ways to value stocks, identify durable competitive advantages , and understand how a business makes money. Of course, our writers at The Motley Fool regularly suggest some good beginner stocks, like these examples. Once you've learned the basics, and you've come up with your game plan, the next step is to open a brokerage account and put your plan into action.
Be sure to shop around, as different brokerages charge different fees and offer different features.
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