Beginner's Guide to Investing
Investing is the first step in growing wealth. The art of making smart investment choices, understanding the intricacies of portfolio diversification, or having a fair understanding of the market is not as confusing as it sounds. Making prudent investments is something a new investor can easily do with a bit of education.
Yield is the expected return on an investment, or in the case of bonds – interest received from holding a security.
A yield curve shows yields by maturity. Typically, it depicts average yields on short, medium, or long-term maturity investments on a given day or week of trading. Therefore, it’s very important to take note of exactly which yield you’re looking at when making your investment decision.
Wealthy people have one secret that helps them stay ahead – they manage their assets well. Surprisingly, efficient management of wealth is actually more important than earning it. But it’s not as easy as it sounds. Managing wealth efficiently can be tricky, complicated, and sometimes volatile. Many people spend their whole lives figuring out how to do that effectively, that’s where a wealth manager comes in.
Index funds are a type of mutual fund that replicates the return of an index. An Index fund consists of stocks from a variety of companies whose stock prices reflect the value of an index. For example, fortune 500 companies, emerging markets or real estate. Indices are often used as broad indicators of how a select set of companies or a market or a sector is performing that the index is representing.
The value investing approach believes that the market is not always efficient. This means that a price quoted may not always be reflective of the fundamentals or intrinsic value of an asset. When an investor chooses to buy an asset that’s priced lower than its intrinsic value, this is called value investing. Simply put, the idea rests on selecting currently undervalued stocks that may increase in value in the future, ultimately yielding growth.
Leveraged investing is when you set out to gain a higher profit by investing borrowed money. Higher profits come in when your return on investment is higher than the interest paid to a lender. Although it can reap higher rewards, as we’ve learned, higher rewards often come with higher risk.