Carrie2006
Registered User
- Messages
- 16
If you are interested in growth but more importantly protecting your capital, the best funds to choose are those that perform well when markets are both up and down. There are funds out there that generate outperformance (not absolute or positive returns) in both bull and bear markets offering more downside protection for your money. Contray to what a lot of people think some fund mangers have qualifications such as MBAs, CFAs etc and have years and years of successful investment experience. That does often put them in a better position to select stocks that may outperform. If you do invest in a fund do so with a medium - to - long-term time horizon.
Regarding investing in individual stocks, of course we can all be lucky and find that killer company whose share price doubles over a year. However, these companies are the exception rather than the norm. So don't go into the stockmarket with the illusion that you will become an overnight millionaire. If you invested money in apple back in 2000 you would have made a killing, it would have been a very different story if you invested in Enron.
If you are going to invest in individual stocks then make sure you don't put all your eggs in one basket, spread your money across at least ten different stocks, preferably with some sector diversification (unless you are very confident on an individual sector). You could also consider investing in one or two mid or small cap stocks to add additional diversification to your portfolio (small caps have outperformed large caps over the last few years, they are predicting that 2007 will be the year of the large cap but they said that in 2005 and 2006 and small caps significantly outperformed in those years!). Before and during your investment in a company, watch out for things like the companies earnings announcements etc, key financial ratios such as Price/Earnings ratios, Price to Book ratio, dividend yields, free cash flow etc. For a more qualitative feel for the company, frequently go on the companies web site to hear of new product launches, Merger and Acquisition activity etc. All these factors influence the companies share price. Activity in competitor companies can also have an effect.
Happy investing! I hope it works out great for you guys.
Regarding investing in individual stocks, of course we can all be lucky and find that killer company whose share price doubles over a year. However, these companies are the exception rather than the norm. So don't go into the stockmarket with the illusion that you will become an overnight millionaire. If you invested money in apple back in 2000 you would have made a killing, it would have been a very different story if you invested in Enron.
If you are going to invest in individual stocks then make sure you don't put all your eggs in one basket, spread your money across at least ten different stocks, preferably with some sector diversification (unless you are very confident on an individual sector). You could also consider investing in one or two mid or small cap stocks to add additional diversification to your portfolio (small caps have outperformed large caps over the last few years, they are predicting that 2007 will be the year of the large cap but they said that in 2005 and 2006 and small caps significantly outperformed in those years!). Before and during your investment in a company, watch out for things like the companies earnings announcements etc, key financial ratios such as Price/Earnings ratios, Price to Book ratio, dividend yields, free cash flow etc. For a more qualitative feel for the company, frequently go on the companies web site to hear of new product launches, Merger and Acquisition activity etc. All these factors influence the companies share price. Activity in competitor companies can also have an effect.
Happy investing! I hope it works out great for you guys.