Category: Investments

Allaria: 3 questions about investing you need to answer – Alton Telegraph

Investing in the stock market can seem simple for some and complex for others and getting to a “good” investing outcome can be done in many ways. I would argue that your mindset and expectations about investing and the way you approach investing has much to do with your perceived outcome.

Therefore, there are three questions about investing that all investors need to answer before you buy any stocks or bonds.

1. Is my goal to “beat the market?”

While I am certainly oversimplifying things here, most investors can be divided into two categories; those that are seeking returns equal to the market and those seeking returns that are better than the market. It is crucially important for you to decide and choose which camp you are in.

If you decide your goal is to simply seek returns equal to the market, your investment path should theoretically be straightforward. Low-cost index funds or ETFs can do a respectable job of delivering market-like returns.

(However, Vanguard found that even that isn’t so simple. Their Advisor Alpha study says that investors without advisors perform about 3% worse per year when evaluating long-term periods. Poor investor behavior accounts for nearly half of the underperformance.)

If your goal is to outperform “the market,” then you have two options to get that done. First, you can invest in “the market” using index funds but attempt to only be invested during good times and not tough times. This is called market timing. Most people claim this cannot be done, but many of those same people will try to do it anyway (i.e. moving their investments to cash prior to a major election).

The other way to beat the market is to not invest in the entire market, but only parts of the market (i.e. overweighting certain sectors, buying individual stocks, etc.).

The key here is to understand is that beating the market is incredibly hard to do, especially on a consistent basis. In fact, according to S&P Dow Jones Indices, 88.99% of large cap US mutual funds have underperformed the S&P 500 index over 10 years (as of April of 2020), and these are run by professional money managers who invest millions and billions of dollars for their investors.

2. What is my definition of “the market?”

This sounds simple, but individual investors answer this question incredibly inconsistently. Some say “the market” is the Dow Jones Industrial Average. Some say it is the S&P 500. Others say it is the Russell 3000. So, which is it and why does this matter?

If your goal is to beat the market, then it is important that you identify what you’re actually up against. Likewise, if your goal is to get market-like returns, it’s important to know what that actually means.

When we talk about “the market” in our firm, we are talking about the entire global equity market, which includes U.S. stocks, international stocks, emerging markets, small cap, large cap, etc. But, if you simply want to track the S&P 500, you are only talking about U.S. Large cap stocks. Right there is a key difference.

When you evaluate your own portfolio, be sure you are comparing apples to apples. This will help prevent a gap between your expectations and your outcomes.

3. How much time do I need to effectively measure the performance of my strategy?

No matter what investment strategy you choose, you need to understand a proper timeframe for evaluating your outcomes. All investments are designed for certain periods of time. Some investments are better for short-term time periods while others are better for the long-term.

If you invest in a strategy that is designed for the long-term, but you are evaluating your outcomes after 1, 3, or even 5 years, you’re missing the boat. I once heard a phrase that says it best: “Measuring the success or failure of a diversified portfolio after 1, 2, or even 5 years, is a bit like pulling up daisies to see how the roots are doing.” It makes no sense.

We all know not to expect flowers to bloom overnight, so why would you expect stocks to return 6%, 7%, or 8% every year. The average returns we usually punch into our retirement calculators are just that: averages. Those averages include data from long time periods of 10, 20, or even 30 years.

So, can you rely on the average returns of your stock portfolio after just five years? Not quite. Doing so would be like relying on a vaccine that has worked on literally four out of five people. Would that make you feel comfortable enough to take it? Probably not. You would want much more data and testing. In the finance world, more data equals more time.

Bottom Line

Is your goal to beat the market? If so, what is your definition of the market and how much time do your investments require before you have enough data to do a meaningful evaluation.

Answering these questions will not guarantee investing success, but doing so can help you avoid major disappointments and help prevent against poor decisions.

Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment strategy. In addition, this article shall not constitute the provision of personalized investment, tax or legal advice, and investors shall not assume this article serves as a substitute for personalized individual advice. Information contained in this article may have been derived from third-party sources that CAWM believes to be reliable; however CAWM does not control such information and does not guarantee the accuracy or timeliness of such information and disclaims all liability for damages resulting from such sources.


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I’m 65, have $500,000 in cash, no ‘impressive’ work resume and am terrified of investing — can I retire? – MarketWatch


I’ll turn 65 in December, and I’d LOVE to retire. First, the good news:
– I’m single and have no dependents (not even a pet). 
– I own a home with no mortgage in a place I love that has low living expenses.
– I have zero debt.
– I have $475,000 in savings (almost all in cash at this point). I should have $500,000 by the end of the contract I’m currently working. 
– I have a very modest lifestyle and am very frugal.
– I am in good health.

Now the bad news: 
– Other than anticipated Social Security (approximately $1,300/month if I wait until full retirement age, $1,200/month if I retire at 65), I have no pension or other income streams. 
– I don’t have an impressive work resume that could lead to lucrative employment in retirement.
– I do not have a long-term care insurance policy.
– I have been a hapless investor for most of my life, and am terrified of investing in the markets in the current climate.

Will I ever be able to retire? Is there some way I can make $500,000 in savings last, especially given the abysmally low interest rate environment? Both my parents passed in their early 80’s, so that’s the best guess I have on my longevity. 

I would be very interested in hearing your feedback. Thank you for your time.



See: There are six types of retirees — which are you?

Dear MD, 

I’d like to start by congratulating you on the good news. Owning a home with no mortgage is a huge accomplishment, as is having no debt and nearly half a million dollars in savings. And of course, it’s nice to hear you’re in good health!

There are a few parts of your letter I’d like to address. The first is regarding how much you have saved for retirement. While $500,000 is a lot of money — and as I said, a great achievement  —  it may not be enough for your retirement needs. You should first try to get a handle on what you expect to spend in retirement, as well as your anticipated cash flows, to see how much that leaves you with every month, said James Guarino, managing director of advisory firm Baker Newman Noyes. It will also help you determine how much money you may need to earn to live comfortably in retirement, or what kind of lifestyle you can expect to have. 

Here’s one way to go about this recommendation: think about short-term and long-term needs, said Marguerita Cheng, chief executive officer of Blue Ocean Global Wealth. Consider the essential expenses you’ll have, such as utilities, groceries, any sort of health care, and then the variable expenses, like a museum membership or any dinners at a restaurant with family or friends. Then see if your Social Security benefits at full retirement age matches that figure. “Because the reader is blessed with good health, it may make sense to delay until Full Retirement Age because Social Security provides inflation-adjusted guaranteed lifetime income,” she said. 

Some advisers I heard from said you may even want to consider delaying Social Security until age 70, at which time you’d get your full benefit and then some. Your monthly benefit could be 32% higher, or more, if you waited until your 70th birthday, columnist Mark Hulbert explained. This way, you may also not become reliant on Social Security right now.

Don’t miss: Should I still use the 60/40 rule investing rule for retirement?  

Investing can be scary, especially in the current environment we’re in. So much is unknown, and the markets naturally react to all of the chaos we are seeing in the world, what with the pandemic, looming city shutdowns, a heated election season and so on. But investing can be one of the many keys to a successful retirement, and you could benefit from being a part of it. “Since he says he’s in good health, he could be around another 30 years and a plan keeping $500,000 in cash during that period is a wild bet,” said James Sexton, founder of Western Reserve Capital Management. The goal of investing money for people in your specific situation isn’t to become “rich,” but to “accumulate the greatest level of assets so that they have more choices in retirement, and are not forced into an unpleasant situation,” he said.

Being a conservative investor can be challenging, Guarino said, and you may have to allocate a portion of your assets to more aggressive investments to get some extra income and protection against inflation (of which you would have practically none in most typical savings accounts). 

There are also strategies, like the “bucket” strategy, that would put your money into different categories: short-term, for liquidity purposes, and long-term, for longevity, Cheng said. The former would focus on keeping your principal assets stable, while the latter would encourage the growth of that money. Longevity is a blessing, but it can also be a risk, as you need your money to last you your lifetime — one reason why you should also look into long-term care plans, which can give you a sense of calm should a health emergency arise one day. 

Of course, if you are terrified of investing, as you say — and I’m sure many people would agree with you that they are too these days — you should consider working with a financial adviser, if only periodically, to set you up with the proper investment portfolio and to occasionally do a check up. They could also suggest alternatives, such as an investment that would generate sustainable income (like a non-commissioned annuity, said David Haas, owner of Cereus Financial Advisors). To make the most of your assets, you could choose to work longer, live on less and take on some incremental risk, said Matt Bacon, a financial adviser at Carmichael Hill. 

Also see: I’m a 57-year-old nurse with no retirement savings and I want to retire within seven years. What can I do?

I’ll leave you with one more note. You mentioned that you don’t have an impressive work resume, but I believe if you have worked at all there’s something to say about it. If you do plan to work in retirement, if only part-time, think carefully about the type of job you’d like and how your current skills and past experiences can benefit you in that position. If you don’t have the proper education or experience for the role, are there any free or cheap online classes you can take to add to your resume? 

I recently responded to a woman who was 66, retired and now in need of a job to make ends meet. I’d like to reiterate what I told her: it’s never too late. There are numerous opportunities out there that can help you supplement your retirement income, such as being a part of the gig economy (drivers, babysitters, dog walkers, freelance writers) or consulting in your field. If you’re crafty, you can make things to sell on platforms like Etsy. And if you’re looking for a more traditional role, you can set up job alerts on sites like Monster and Glassdoor, and take note of similar responsibilities and skills that companies ask for in job listings to include in your resume or cover letter. 

Good luck, and happy early birthday!


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Credit stress hurts new money going into China’s massive infrastructure project, says Moody’s – CNBC

SINGAPORE — Investments in China’s massive infrastructure project in 2020 could fall “well short” of last year’s level as the coronavirus pandemic caused financial strains in participating countries, according to Moody’s Investors Service.

The Belt and Road Initiative is an ambitious Chinese policy that started out focusing on building infrastructure networks connecting China to central Asia, Europe and Africa. It has since morphed into what some experts say is China’s way of trying to influence technology and governance around the world.

Moody’s estimates that the initiative now covers 139 countries.

Workers take down a Belt and Road Forum panel outside the venue of the forum in Beijing on April 27, 2019.

Greg Baker | AFP | Getty Images

In the first half of 2020, the value of Chinese-led new contracts and investments in BRI countries totaled $23.5 billion, the credit ratings agency said in a Monday report. That suggests that full-year volumes will fall short of last year’s $104.7 billion, it added.

Such a decline is attributed to greater economic and financial pressure faced by participating countries, many of which are small economies with diminished abilities to take on new debt financing, said Michael Taylor, managing director and chief credit officer for Asia-Pacific at Moody’s.

So certainly, this year, we’ve seen a rise in credit stress that we don’t expect to go away in 2021.

Michael Taylor

chief credit officer for Asia-Pacific, Moody’s

“Quite a number of those are relatively small and they tend to have quite concentrated economies, whether it’s in commodities or tourism; some of them are also quite dependent on remittances — and each of those have been quite badly hit by coronavirus,” Taylor told CNBC’s “Squawk Box Asia” on Tuesday.

“So certainly, this year, we’ve seen a rise in credit stress that we don’t expect to go away in 2021,” he added.

The Moody’s report said some BRI participating countries have sought financing support from the International Monetary Fund or debt relief from G-20 lenders, including China. Those countries include Pakistan, Zambia, Tanzania and Angola, the agency noted.

Credit strains and project delays facing those countries could also cause financial losses at Chinese entities with large BRI exposures, according to the report. Moody’s named China Development Bank and Export-Import Bank of China as having “significant exposure” to projects under the initiative.

But overall damage, if any, will likely be manageable for the banks and other Chinese companies involved, said the agency.

‘Increasingly green’

The pandemic’s impact on the Belt and Road Initiative is likely to persist for years. Moody’s estimated that fresh Chinese-led investment flows into participating countries may not return to levels seen in 2014-2019 in the next two years.

Still, Beijing wouldn’t “reverse course” on its BRI strategy “given the considerable financial outlay and political capital that the country has invested in the initiative,” the agency said.

There remains a “huge infrastructure financing need” across Asia, a gap which the China-led initiative can help to plug, Taylor told CNBC.

He added that more participating countries are likely to emphasize environmental sustainability in a post-pandemic world, so an increasing number of BRI projects will be focused on that.

The BRI is already becoming “increasingly green,” Moody’s said in its report. Renewable energy accounted for around 58% of new contract values in the first half of 2020 — climbing from 18.5% in 2014, the agency said.

“This trend will likely continue as BRI countries start to place a greater emphasis on low-carbon and climate-resilient infrastructure,” read the report.


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5 Investment Strategies to Maximize Your 401(k) – Motley Fool

A 401(k) makes investing for retirement easy with pre-tax contributions withdrawn directly from your paycheck. However, once you’ve made your contribution, you need to choose the right investments to maximize returns while limiting risk. Most 401(k) plans usually provide a small selection of funds in which to invest, and you’ll want to pick an appropriate mix of assets for your age and risk tolerance. 

This guide will help you develop a strategy to invest in your 401(k) to make the most of this tax-advantaged retirement account. 

An egg marked "401K" in gold lettering sits inside a golden trophy, with gold coins scattered around the base.

Image source: Getty Images.

1. Contribute enough to max out your match

Employers often match contributions you make to your own 401(k) plan. For example, your employer might match 50% of your contributions up to a maximum of 4% of your salary.

This is free money, but you can claim it only if you invest at least enough to max out your company’s matching funds. This is the only investment option that gives you a guaranteed 100% return on invested funds immediately with no risk, so it’s smart to always max out your match before investing in any other retirement accounts. 

2. Set your contributions as a percentage of your salary

There are two general ways 401(k) plans allow people to manage their contributions — either as a specific dollar amount per paycheck or as a percentage of their salaries. If you have the option to enter your contribution based on a percentage of your salary, it’s a good idea to go that route.

If you choose to contribute a percentage of your salary, your contributions will increase automatically as your salary rises over time with yearly adjustments and raises. This can help to scale up your retirement savings goals over the course of your career with minimal intervention on your part. 

3. Understand the risks

Once your contributions and employer matching funds are deposited, they’ll need to be invested so your money can grow over time.

Usually 401(k)s allow you to choose investments from a small number of preselected funds, such as index funds, which track major market indexes, or target-date funds, which select a mix of investments appropriate for your age.

Investing in index funds or target-date funds presents less risk than investing in shares of individual companies, but there is always some risk inherent in investing. To minimize the danger of losses, you should build a diversified portfolio of different investments. 

You should also generally avoid investing too much — if any — of your 401(k) funds in your own employer’s stock, if that is an option available to you. Otherwise, if your company experiences financial trouble, you could lose both your job and your nest egg at the same time. 

4. Invest based on the time until you’ll need the money

Remember that a 401(k) is a retirement account, so you should plan not to withdraw money until you are at least 59 1/2. If you’re fairly young now, that means you have a long investing horizon ahead of you. If you’re nearing retirement age, however, your investing horizon is much shorter; you will need to start withdrawing that money soon to fund your retirement. 

Keep this timeline in mind when determining your risk tolerance. If you’re investing in your 401(k) throughout your career, your willingness to take risks should change over time. When you’re younger, more of your 401(k) funds should be invested in the stock market to maximize potential returns. You have time to wait out any downturns. However, as you age, you have less flexibility around market volatility and should shift your funds toward safer investments.

Lower-risk investments such as cash, CDs, money market funds, and bonds present far less risk of loss but also lower rates of return. If you overinvest your 401(k) funds in safe investments like these, you risk missing out on the wealth-building returns of the stock market.

To make sure you aren’t taking on too much — or too little — risk with your 401(k), consider this simple formula: Subtract your age from 110 and invest the resulting percentage of your 401(k) money in the market. A 20-year-old would have 90% of their money in stocks while an 80-year-old would have just 30% of their assets in the market.

Many 401(k)s offer target date funds. If you invest in one, your portfolio will be rebalanced for you. If you select other investments, you’ll need to manually make changes as you age and as your appropriate level of risk exposure shifts. 

5. Revisit your plan and consider adjustments at least once a year

One of the best things about using a 401(k) to invest for retirement is that you can put your investments on autopilot. However, this doesn’t mean you should simply set up your 401(k) contributions once and forget it forever. You need to make sure you’re on track with your retirement goals, that your portfolio remains balanced, and that your investments are performing as expected. 

To stay on top of your retirement investing, make a repeating appointment on your calendar to check in on your 401(k) at least once a year. 

You should also consider making changes as you reach key milestones in your life and career. If you get a big raise, consider upping the percentage of your salary that goes toward your 401(k). If you pay off your student loans, consider shifting the money you’d been spending there to instead build wealth on your behalf. When you hit key milestone birthdays (such as age 50, when you can start making catch-up contributions!) or your kids become able to care for themselves, those are also great times to revisit your plan and make adjustments.

Get started now

Your 401(k) can serve as the cornerstone of a strong retirement strategy. To make that strategy a reality, the most important thing you can do is get started on your investment path as soon as you can. The sooner you start, the more time will be your ally, and the better your chances will be of enjoying a financially comfortable retirement.


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5 Investing Tricks to Double Your Money – msnNOW

chart: 5 Investing Tricks to Double Your Money

© Provided by The Motley Fool 5 Investing Tricks to Double Your Money

We all want to get the most out of our money, whether our end goal is a home down payment, retirement, or increased freedom and security. Your investments are, undoubtedly, critical building blocks for increasing your net worth and reducing any financial stress. This article will provide five under-utilized steps you can take today to help ensure your money will grow to its highest potential. 

1. Set dividends to reinvest

Every brokerage house will allow you to set dividend payments to either “cash” or “reinvest.” If you have this setting in “cash” mode, every time your investment pays a dividend, you’ll receive it as ready, spendable cash in your settlement account. This is a sensible choice if you rely on your investment account for passive income and see long-term gains as a secondary priority. 

However, if you’re investing in a retirement account for the purpose of covering retirement costs in 30 or 40 years, you’ll be far better off setting dividend payments to “reinvest.” When each of your investments pays a dividend, the payment will be automatically reinvested back into the same stock, bond, or fund from which it came. If the market value of the investment has fallen, your dividend will purchase more shares upon reinvestment. This causes a powerful compounding effect that requires no ongoing intervention on the part of the account owner. 

Man watching line graph increasing to the right.

© Getty Images Man watching line graph increasing to the right.

2. Get your employer match

Most employers offer a company match for contributing to a 401(k) or 403(b) plan, and this is one of the easiest opportunities to immediately double your money. If an employer offers a 4% match (match range is typically 3% to 6%), this means that for every dollar up to 4% of your compensation that you contribute to your employer’s plan, your company will contribute an equivalent amount. This works out to a 100% return — precisely the definition of doubling your money. 

Some employers also offer other incentives, like an Employee Stock Ownership Plan (“ESOP”), that allow you to take advantage of discounted stock purchases or additional matching opportunities. This is why it’s absolutely necessary to read your company’s 401(k) plan document and really know the details — often, there is free money to be had by simply following the rules of the plan. 

3. Use a discount broker

Gallery: 10 Investing Strategies to Become a Millionaire Retiree (The Motley Fool)

Whether you’re trading stocks, bonds, exchange-traded funds (“ETFs”), or mutual funds, you should not be paying expensive trading fees for the privilege. Commissions have fallen to zero or near-zero — there is simply no reason to pay a fee to buy shares of stock in 2020. Fidelity, Vanguard, and Schwab, among other brokers, offer zero-cost trading in most instruments, and do not require in-person assistance. 

The fact is, costs matter — a lot. A 1% annual fee on your investments, also known as a “wrap fee,” will eventually eat up quite a significant share of your after-tax return. High commissions, often ranging from hundreds to even thousands of dollars per trade, are, in my estimation, an archaic and predatory fee method used to take advantage of investors. Use a discount broker and you’ll be well on your way to doubling your money by simply avoiding high fees.

4. Leave your investments alone

The literature on market timing is clear: The more you try to trade in and out of the market in search of short-term gains, the more you’re putting your long-term goals in peril. If you hear someone say that it “feels like the market is a bit overvalued,” this statement is nothing more than a veiled attempt to time the market. The best option, at least for those investing for the long term, is to set your investments according to a written asset allocation. Then, don’t change them unless it’s to contribute more money or periodically rebalance. Repeated contributions at regular intervals over long periods of time will cause your money to multiply at a rapid pace — regardless of where the market happens to be trading today. 

5. Change your mindset

When it comes to personal finance, it’s useful to look at your own income statement as if you’re running a business. On the income side, are you in a career that brings in enough revenue, and if not, are there any certifications or professional designations that might advance your salary? On the expense side, do you feel you’re getting proper value out of your expenditures, or are there places to cut spending? Simply looking at your finances from this standpoint can sometimes help free up excess money that can be used for continuous investment. The more money you have invested, as early on in your life as possible, will lead to it doubling sooner.

Take stock and act

Doubling your money in the stock market comes down to getting a few simple steps right. Assuming you are careful to control your costs, ensure the settings on your accounts are accurate, and operate with a business mindset, you’ll be on the right track to achieving investment success. 

The Motley Fool has a disclosure policy.


10 stocks we like better than Walmart

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Ask us: On investment – The Hindu

Q. I am 35 and married with a 3-year-old kid. I work in the private sector. I would like to retire at 60 with a corpus of ₹3 crore. My present accumulated funds come to ₹38 lakh (including FD, PPF and LIC). I prefer to own an apartment in 5-6 years. Kindly guide me. My current CTC is ₹18.5 lakh.

A. If you can save about ₹40,000 per month over the next 20 years, and allow your present corpus to grow, you should be able to reach your goal of ₹3 crore assuming a return of 7%. You may have to dip into this corpus to pay for buying your apartment. In such a scenario, you will have to increase your savings in later years a bit. Take stock then, after seeing how much corpus depletes when you withdraw to buy your house.

We have assumed 7% return. But adding equities will help increase your chance of superior returns. You can consider investing in equity index funds to keep the portfolio maintenance and cost low and allow it to grow in line with equity market. The debt part can be diversified into options like the RBI Floating Rate Bond (7 years) and can be earmarked for buying a house. The remaining debt can also be considered through NPS if you need tax deduction. Continue your other investments and consider adding some quality corporate bond funds if you are familiar with mutual funds.

Q. I am a 76-year-old retired banker. My investment of ₹40 lakh is with a cooperative bank where I get 8.25% interest. I want to know if there is a threat to co-operative banks, in general. If so, where can I invest to get a regular monthly income?

C.K. Prem Kumar

A. While one cannot generalise, it is true that the risk of co-operative banks going bad is higher than that for regular public and private banks. History suggests the process of any takeover in case a bank goes bad is often delayed. Hence, the possibility of moratoriums being imposed (as for Lakshmi Vilas Bank) cannot be ruled out. Consider exhausting Post office Senior Citizens’ Scheme and PM Vaya Vandana Yojana. Park the balance in RBI Floating Rate Bonds and public sector bank, or large private sector bank, FDs. Lock into shorter periods with banks and renew when rates go up.

Q. I am 23 and have just started earning. I am confused as to where exactly I must begin investing.

Mansi Gangurde

A.This is a good age to start investing seriously. Exhaust the traditional options of EPF fo tax purpose and look at investing for the long term in mutual funds (MFs). If you are new to MFs, it is best to start learning about them so that you are not mis-sold products. You can otherwise keep it to equity index funds and avoid active funds entirely. But make sure you have a minimum 7-year view for this and expect the corpus to fall at times.

With debt, consider a combination of short-term deposits and long-term options such as the RBI Floating Rate Bond. You can also consider quality corporate bond funds once you get familiar with MFs. As your income grows, you can consider NPS for additional tax deduction and to save for retirement. Ensure you have good medical cover outside of the one given by your employer. If you have dependents, take a simple term insurance so that your family is compensated well for your income loss.

Q. I am a 21-year-old college student. I make a small sum via freelancing. Please suggest whether I ought to go for equity or MFs.

A. Start investing a small sum in equity index funds if you can give this money at least 5-7 years’ time. Please note whether it is stocks or equity MFs, this is the minimum time frame you need to have. Else, stick to bank FDs. If you are familiar with stock markets and are willing to put in effort to constantly learn, track and review investments, start investing a small sum that you can afford to lose. Unless you have good knowledge of technical analysis, do not attempt it. Instead read about businesses and their financials and try to pick stocks for the long term.

(The author is co-founder,


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Investing for beginners: Basic strategies to know – msnNOW

As an investor, you are unique. And as you start building your portfolio, there are many strategies you can draw upon to help you achieve your personal financial objectives. Which you choose will depend on your needs and the goals you are trying to accomplish.

Related: Asset allocation for beginners


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Bain Capital Raises $800 Million for Second Impact Investing Fund – The Wall Street Journal

Bain Capital has raised $800 million in fresh capital to back businesses that the firm bets will benefit not only fund investors but also society at large.

Bain Capital Double Impact, the Boston firm’s impact investment unit, has raised its second fund as investment vehicles focused on generating environmental, social and governance benefits have faced their share of marketing headwinds.



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How’s your investment portfolio looking? Here are 5 must-follow rules. – USA TODAY

Christy Bieber
 |  The Motley Fool

Show Caption
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Top 5 investing mistakes that are easy to avoid

Even seasoned investors make mistakes at times. But when you start investing, you’re prone to letting your emotions take over.

Investing is one of the surest ways to build wealth – if you do it wisely. The good news is, it doesn’t have to be that hard to build a portfolio that should perform well for you over the long term.

In fact, if you follow five simple steps, you’ll likely be well on your way to earning generous returns that can help your money grow over time. Here’s what they are. 

1. Invest in what you know

Investors tend to get into trouble when they buy assets they don’t understand, as they have no way of evaluating them effectively to learn the potential risk and likely returns. But if you make sure you’re fully informed before you buy, you’ll be in a much better position to minimize your risk and maximize your potential gains.

Investing in what you know doesn’t mean only buying stocks in your own industry; it means taking the time to learn about companies you’re considering buying shares of; understanding the factors that determine share value; and finding out what drives growth. If you are willing to put in the work, you should be able to develop a solid investment thesis that helps ensure many of your investments are successful ones.

Warren Buffett’s Berkshire Hathaway: Company invests in Pfizer and other drugmakers, trims Apple stake

Of course, not everyone has the interest in taking the time to research stock picks. Fortunately, it can be a lot easier to learn how to invest in index funds.  While you won’t beat the market with them, you can still earn reasonable returns over time to build wealth. 

2. Watch your fees

Investment fees can kill your portfolio’s potential by eating into your effective return on investment. You need to know what fees you’re paying for any investments you’re considering and make sure they’re worth it.

Duke Energy, Costco, AbbVie: Here are 3 recession proof stocks to consider

The fact is, most brokerage firms know all you need in order to buy stocks and exchange-traded funds (ETFs) without paying commission fees. There are plenty of low-fee funds out there that perform better than their more expensive counterparts. The situations are few and far between when you should accept paying a high cost for investments.

3. Invest for the long term

Short-term investing can sometimes make you a quick profit, but it’s really hard to make that happen consistently. If you want to maximize the chances of your portfolio performing well, buy stocks or ETFs that you’d be happy to hold for a long time.

Taking this approach eliminates the problem of market timing; if the investment performs well over time, it won’t matter as much whether you bought in at rock bottom or not. You’ll also be less likely to suffer big losses because you’ll be able to hold your stocks through any downturns even if you happen to buy in shortly before a crash happens. 

4. Take advantage of favorable investment tax rules

One of the many reasons stocks help you build wealth is that the income you earn from them is taxed at favorable rates – provided you take advantage of the long-term capital gains rules.

See, if you hold a stock for more than a year, you’ll be taxed at the long-term capital gains rate, while if you hold it for less than a year, you’ll be taxed at the short-term capital gains rate. The short-term capital gains rate is your ordinary income tax rate, while the long-term rate is typically lower (for many investors, it’s as low as 0%).

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Holding onto your stocks for longer than a year can increase your effective rate of return because you’ll be sending less of your profits to the IRS. This is yet another reason why investing for the long term makes a lot of sense if you want to build a winning portfolio.

5. Diversify

Finally, you want to buy a mix of different assets rather than putting all of your eggs into one basket. If your portfolio is well diversified because you own different kinds of investments, it’s much more likely that some will do well even if others do poorly. Diversification is easy if you buy index funds, but you can also diversify by picking a good mix of individual stocks if you’re hoping to try to beat the market. 

The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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Investing in the stock markets? Here’s how your investments are taxed – Mint

By Raghunathan Parthasarathy

Thanks to technology upgradation and various zero brokerage platforms, access to the stock market has become convenient and simple. On this front, it is imperative to be acquainted with the tax obligations attached with the income earned from trading or investing in stocks and mutual funds.

Taxation of stocks and mutual funds : In addition to the profit or loss made on sale of stocks or mutual funds (referred as ‘sale income’), the said instruments can fetch dividends. The taxability of sale income and dividend work differently. Further, the taxability of sale income depends on the frequency/ quantum of sale made by the investor.

Taxability of dividend income : This is simple. Dividends are generally classified under “Income from other sources” and are taxed at the applicable income-tax rates. The Company paying dividends will deduct tax at source and this varies based on the type of investor.

Taxability of sale income :

(A) For active trading investors, sale income comes under the category of “income from business”. In cases where trading is undertaken without delivery, it is treated as “speculative business income”. Expenses like brokers’ commission, internet charges, demat account charges, etc., can be subtracted from gains earned. In such instances, the tax shall be paid on net profit and a tax audit will need to be carried out if the trading volume exceeds 5 crore in a given financial year.

In case of loss, it can be adjusted against other income sources (except salary). Excess loss can be carried forward and set off against business income in the subsequent year.

Loss of the year is allowed to be carried forward for eight years in case of normal business loss and is restricted to 4 years for speculative business loss and that too adjustment only with speculative business profits.

(B) For persons making investment and not actively trading, the sale income gets categorised as capital gains (CG). CG tax rate on sale of mutual funds/ stocks varies based on the period of holding the instrument before sale.

In case of loss on sale, it is allowed to be carried forward for 8 years and set-off in the year of gain.

Here is how mutual funds and equity shares are taxed

Taxation of mutual funds and equity shares

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Taxation of mutual funds and equity shares

*without indexation benefit over and above 1 lakh (Exemption from Long Term CG provided for listed equity shares/ equity-oriented MF was withdrawn with effect from 1 February 2018)

Share Buy-Back by listed companies: Where Indian listed companies carry out share buy-back, the proceeds received by the shareholder are exempt from income tax as share buy-back tax is paid by the listed company

Other aspect: Equity Exchange Traded Funds (ETFs) are taxed at par with equity oriented mutual funds. Taxation of derivatives is not covered.

(The author is the Associate Partner – Tax & Regulatory Services, BDO India. Views expressed by the author are his own.)

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