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The best way to know how a portfolio is performing is to calculate the return on a regular basis. While this exercise may seem easy, the math can get tricky. Mistakes are common and sometimes they compound into very large errors. I find there are two common mistakes people make when computing return of investment calculation. Both errors are explained below.
Counting Deposit and Withdrawal as Investment Gains and Losses
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Your level of risk tolerance is the most fundamental thing in choosing the right investments for you. Before anything else, it must be understood that investing are like other things in the world: there should be positive and negative side to it. All investments follow 3 common principles. First, every investment takes with it a some of inherent risk. Second, risk and returns can not be separated such that the general principle of higher risk-higher return and lesser return, greater safety is widely accepted. Third, investing in anything for which one has no knowledge of is the kiss of death for the money invested. (more…)
A hedge fund is a professionally managed portfolio of investments that is typically open to a limited range of sophisticated or wealthy investors. As the name suggests, these funds hedge their risks by offsetting potential losses by hedging their investments using different approaches, the most popular one being short selling. Nowadays, the term hedge fund is applied to funds that do not actually ‘hedge’ their risks but rather increase it because they expect to generate a higher return. (more…)
Average investors need all the tax breaks they can get, especially when they invest for retirement. All investments are not taxed the same. Consider this your basic investment guide to understanding the tax breaks available to most investors.
Ordinary taxation offers investors no tax breaks. For example, you hold a CD jointly with your spouse or in your name only, and earned $4000 in interest last year. (more…)
Getting a reputable financial adviser can be hard; in reality, a lot of them are terrible, so you have to be very careful in selecting the most suitable one to work with.
Given that I used to be involved in portfolio management for a leading asset management firm, for a huge asset management company, I am going to give you an insider’s perspective on what you need to look for in access your the fee that you pay your financial adviser. (more…)
You can do just about anything online – often saving yourself time, money and headaches in the process. Investing online promises much the same attraction.
An increasing number of financial service providers are offering online investment services that have the potential to make investing simpler, give you more control over your investments and even save you money. Unsurprisingly, a lot of investors love the idea of being able to keep a closer eye on their investments. (more…)
The Sky Is Falling!
Everyone is wondering what to do. Everyone is fearful.
Actually that’s not true at all. The unschooled, untrained, unknowing Masses are indeed fearful. They are reading the newspaper headlines each day and getting more and more worried for their jobs, their businesses, their investments, (more…)
An investment portfolio is simply a collection of investment assets. Once the portfolio is established, it is updated or “rebalanced” by selling existing securities and using the proceeds to buy new securities, by investing additional funds to increase the overall size of the portfolio, or by selling securities to decrease the size of investment portfolio. (more…)