Finance: Is it true that regular index investing performs good result with low risk?

Is it true that regular index investing performs good result with low risk?

Written by Alexander Korablev

There are many mutual funds and ETF on repparttar

market. But only a few performs results as good as s&p 500 or better. Well known that s&p 500 performs good results in long terms. But how can we convert these good results into money? We can buy index fund shares.

Index Funds seek investment results that correspond with repparttar 148046 total return of repparttar 148047 some market index (for example s&p 500). Investing into index funds gives chance that repparttar 148048 result of this investment will be close to result of repparttar 148049 index.

As we see, we receive good result doing nothing. It's main advantages of investing into index funds.

This investment strategy works better for long term. It means that you have to invest your money into index funds for 5 years or longer. Most of people have no much money for big one time investment. But we can invest small amount of dollars every month.

We have tested performance for 5-years regular investment into three indexes (S&P500, S&P Mid Caps 400, S&P Small Caps 600). The result of testing shows that every month investing small amounts of dollar gives good results. Statistic shows that you will receive profit from 26% to 28.50% of initial investment into S&P 500 with 80% probability.

Stop Loss Orders And Where To Place Them

Written by John B Keown

It is difficult to stress repparttar

importance of placing and maintaining stop-loss orders protecting your investments. With repparttar 148014

Graham Investor method of investing, one might think there is such a margin of safety involved that stop-losses aren't needed. Nothing could be further from repparttar 148015

truth.

If you are buying a house, repparttar 148016 three most important pieces of advice anyone can give you are: "location, location, location!" With Investing they should be: "preservation, preservation, preservation!" Of capital, that is. This is best illustrated with percentages.

As an example, you may buy any number of stocks in a $10,000 portfolio. Without stops, if you lose 20% of repparttar 148017 value of your $10,000 (i.e. $2,000) you will need to make 25% on repparttar 148018 remainder to get back to where you started. Likewise, if you lose 50% and are left with $5,000 you now need to make 100% profit to get back to where you started. How many people make 25% in a year? Not many! How many people double their money in a year? Even fewer!

You might think you won't lose 50% of your investment, but it does happen, and a lot more regularly than any of us care to admit. So, always use stops.

Once you have established a buy point, you can work out where to place repparttar 148019 initial stop. There are several ways of doing this:

1) Place repparttar 148020 stop one tick below repparttar 148021 most recent resistance level or swing low.

2) Use a fixed percentage, e.g. 8%, 10%, 12%.

3) Use volatility as a guide. Take a 14 day moving average of repparttar 148022 High-Low range for repparttar 148023 stock (including gaps). Use a stop of 2.5 to 3 times this range.

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