Investing money in stocks
- Money in stocks, over the long term, tend to offer very good returns, but stocks tend to be very volatile, with lots of short-term jumps and falls in value. Hold on and be patient.
- Shoot for the average by buying index funds with low fees.
- Don’t bother with individual stocks: they require a ton of research and a lot of attention, and even then they come with a lot of risks.
- Have some portion of your investments in an index fund made up of international stocks and other international investments (euro and the Chinese yuan).
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Number of stocks in a portfolio
If you want optimum returns on your portfolio, you need to have a maximum of 3-4 stocks (with the ratio 40:30:30) but it will have a higher risk.
If you want good returns with little risk then you need to have 6-8 stocks.
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Why invest in index funds?
- Minimize your time spent researching individual stocks.
- You can invest with less risk.
- Index funds are available for a wide variety of investments. You can buy stock index funds and bond index funds.
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Short-Term (1-5 years) Investing Strategy
For short-term investing, keep your money in a bond fund like the Vanguard Total Bond Market Index Fund or a certificate of deposit (DC) at your local bank.
If you are willing to take on a bit more risk, put your money in a balanced index fund like the Vanguard Wellesley Income Fund, which...
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