How Conservative Are Investors?

This is a Sunday feature looking back at selected articles from the early days of this blog before readership had ramped up. Enjoy. Everything I read about asset allocation says that investors are very conservative and must put a significant fraction of their money into fixed income investments like bonds even though stocks have historically given much higher returns. All of these commentators may be right about their assessment of investor psychology. Of course, this says nothing about w

Age-Based Investment Strategy Can Hurt You

Adapted from Source: sxc.hu Photo: wax115 You have heard that you should invest more aggressively when you are young, and become gradually more conservative as you age. Fund companies help with the conventional wisdom by creating target retirement date, or “lifecycle” funds. These funds shift the asset allocation from almost all stocks for younger workers to mostly bonds for older employee portfolios with target retirement dates like 2015. Another investment rule of thumb for the same idea

6 Investing Rules Revisited Part 6: You Are Better Be A Owner Than A Renter

*** Hey! Where is part 5? It’s over at INO Blog… It’s about asset allocation according to your age. (link will be updated later on today)*** If I was to start over my financial life, I would do something differently: I would buy a property right after signing my first employment contract. During almost 4 years, I gave $30,000 in rent instead of building equity within my own property. When I was young, my parents basically lived on the profit made on each property sol

Five things to know about asset allocation (AME Info)

With literally thousands of stocks, bonds and mutual funds to choose from, picking the right investments can confuse even the most seasoned investor. However, starting to build a portfolio with stock picking might be the wrong approach.

The First Time Investor How to Start Safe Invest Smart and Sleep Well

The First Time Investor How to Start Safe Invest Smart and Sleep Well

From the end of the 1990’s bull run to today’s point-and-click electronic trading, investors face a radically transformed trading environment. The First Time Investor has been updated to teach beginning investors everything they must know in this new, high-speed investment arena. Along with the basics, it now features in-depth discussions on day trading, decimalization, the expansion of the global marketplace, and more–as well as a valuable new section on the top 10 things people must do to protect their 401(k)s.

User Ratings and Reviews

5 Stars Truly Excellent Book!
I was thrilled to finally get some serious and safe ” how to” information on investing. I thoroughly read and enjoyed Peter Lynch’s book ” One Up On Wall Street”, which is the true ABC guide to investing, but never felt confident enough to put my money in any sort of investment vehicle. This book helps the reader to diversify and thus reduce risk. Simple explanations and data to back up the authors’ claims makes this an excellent guide for the first time investor.

A strong 5 stars!

5 Stars Great Primer on Investing Basics and Risks Involved
Although I’m a veteran investor, I enjoyed reading this well-written updated third edition by two highly qualified authors. Everyone involved in investing in the stock market, mutual funds or separately managed accounts will glean useful information from this book. Composed of 22 chapters and three appendices, this 300-page paperback covers the key basics of investing.

This no-nonsense easy-to-read text explains the importance of determining your risk tolerance before you invest, understanding the difference between asset allocation and diversification so you don’t make foolish mistakes, knowing how to determine your retirement income goals and capabilities, and investing for your children’s education.

Many investors do not have a clear idea of the riskiness of the stock market. Perhaps after the the Nasdaq Composite Index fell from 5048 in March 2000 to 1100 in October 2002, investors learned the hard way that risk really matters. That is why one of the key discussion points that the authors hammer home is the comparison of investment risk vs. reward. The authors cover the risk-to-reward spectrum with numerical examples, the meaning of the efficient frontier, beta, and the standard deviation. One chapter provides a blueprint of how to build a diversified portfolio in five easy steps.

Additional chapters cover the basics of investing in active and passive mutual funds, their share classes, stocks, bonds, annuities,separate accounts and company stock options. Also provided is a 17-page glossary of investment terms.

If you have never invested in the stock market or have a minimal knowledge of how to play the game, then I highly recommend that your read this book before you place your hard-earned cash in the market so that the odds are in your favor. You need at least a basic knowledge prior to investing, otherwise your may lost a large portion of your capital without realizing what happened to you, and that would be a shame.

4 Stars Useful info and easy to read.
An easy read yet full of useful info. The authors explained some concepts I’d heard often but never fully understood. I’m excited about applying the concepts to my personal portfolio and my 401k.

Buy/More Info

The First Time Investor How to Start Safe Invest Smart and Sleep Well

The First Time Investor How to Start Safe Invest Smart and Sleep Well

From the end of the 1990’s bull run to today’s point-and-click electronic trading, investors face a radically transformed trading environment. The First Time Investor has been updated to teach beginning investors everything they must know in this new, high-speed investment arena. Along with the basics, it now features in-depth discussions on day trading, decimalization, the expansion of the global marketplace, and more–as well as a valuable new section on the top 10 things people must do to protect their 401(k)s.

User Ratings and Reviews

5 Stars Truly Excellent Book!
I was thrilled to finally get some serious and safe ” how to” information on investing. I thoroughly read and enjoyed Peter Lynch’s book ” One Up On Wall Street”, which is the true ABC guide to investing, but never felt confident enough to put my money in any sort of investment vehicle. This book helps the reader to diversify and thus reduce risk. Simple explanations and data to back up the authors’ claims makes this an excellent guide for the first time investor.

A strong 5 stars!

5 Stars Great Primer on Investing Basics and Risks Involved
Although I’m a veteran investor, I enjoyed reading this well-written updated third edition by two highly qualified authors. Everyone involved in investing in the stock market, mutual funds or separately managed accounts will glean useful information from this book. Composed of 22 chapters and three appendices, this 300-page paperback covers the key basics of investing.

This no-nonsense easy-to-read text explains the importance of determining your risk tolerance before you invest, understanding the difference between asset allocation and diversification so you don’t make foolish mistakes, knowing how to determine your retirement income goals and capabilities, and investing for your children’s education.

Many investors do not have a clear idea of the riskiness of the stock market. Perhaps after the the Nasdaq Composite Index fell from 5048 in March 2000 to 1100 in October 2002, investors learned the hard way that risk really matters. That is why one of the key discussion points that the authors hammer home is the comparison of investment risk vs. reward. The authors cover the risk-to-reward spectrum with numerical examples, the meaning of the efficient frontier, beta, and the standard deviation. One chapter provides a blueprint of how to build a diversified portfolio in five easy steps.

Additional chapters cover the basics of investing in active and passive mutual funds, their share classes, stocks, bonds, annuities,separate accounts and company stock options. Also provided is a 17-page glossary of investment terms.

If you have never invested in the stock market or have a minimal knowledge of how to play the game, then I highly recommend that your read this book before you place your hard-earned cash in the market so that the odds are in your favor. You need at least a basic knowledge prior to investing, otherwise your may lost a large portion of your capital without realizing what happened to you, and that would be a shame.

4 Stars Useful info and easy to read.
An easy read yet full of useful info. The authors explained some concepts I’d heard often but never fully understood. I’m excited about applying the concepts to my personal portfolio and my 401k.

Buy/More Info

Investing Basics: Asset Allocation using 10-5-3 Rule

This entry is a part of the series Investing Basics . To be updated as new articles are added, please Subscribe Asset Allocation Source: stck.xchng Image: arinas74 There are any number of rules for investing out there. Many of them have to do with asset allocation . One of those rules that can help you determine what asset allocation could work for you is the 10-5-3 rule. The rule comes from a book by James O’Donnell, called The Shortest Investment Book Ever: Wall St