Top stories
Wall Street Investment Tips
USINFO | 2014-01-03 13:56
Invest Consistently
Investing consistently over time is one of the best ways to build wealth. Trying to time the market is very difficult, and even professional investors often have trouble getting it right. For most average investors, a better approach is to invest the same amount of money consistently month after month, no matter what the stock market is doing. This approach is known as dollar cost averaging, and it allows you to accumulate more shares when the market dips and fewer when it is at all time highs.
Control Your Costs
Costs are important when it comes to investing, since the less you spend the more you have left to invest. When shopping for a mutual fund, look for funds with both good performance and low expenses. An analysis of mutual fund costs done by the Motley Fool website found that some funds have expenses as low as 0.18 percent per year, while others charge well in excess of 1 to 1.5 percent annually.
If you choose to invest in individual stocks, look for an online broker with low charges and commissions. By shopping around you can find commissions as low as $7 per trade.
Use Index Funds
Index funds differ from managed mutual funds in that they do not attempt to time the market or choose the best stocks. Instead, index funds simply purchase all of the stocks in a given index such as the Standard and Poors 500 index or the total stock market index. This approach guarantees that the fund will nearly match the performance of the underlying index, eliminating the risk of under-performance. An analysis reported by "Money" magazine found that the majority of managed mutual funds fail to perform as well as the market, and that makes index funds a good choice for many investors.
Investing consistently over time is one of the best ways to build wealth. Trying to time the market is very difficult, and even professional investors often have trouble getting it right. For most average investors, a better approach is to invest the same amount of money consistently month after month, no matter what the stock market is doing. This approach is known as dollar cost averaging, and it allows you to accumulate more shares when the market dips and fewer when it is at all time highs.
Control Your Costs
Costs are important when it comes to investing, since the less you spend the more you have left to invest. When shopping for a mutual fund, look for funds with both good performance and low expenses. An analysis of mutual fund costs done by the Motley Fool website found that some funds have expenses as low as 0.18 percent per year, while others charge well in excess of 1 to 1.5 percent annually.
If you choose to invest in individual stocks, look for an online broker with low charges and commissions. By shopping around you can find commissions as low as $7 per trade.
Use Index Funds
Index funds differ from managed mutual funds in that they do not attempt to time the market or choose the best stocks. Instead, index funds simply purchase all of the stocks in a given index such as the Standard and Poors 500 index or the total stock market index. This approach guarantees that the fund will nearly match the performance of the underlying index, eliminating the risk of under-performance. An analysis reported by "Money" magazine found that the majority of managed mutual funds fail to perform as well as the market, and that makes index funds a good choice for many investors.
