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119

You grossly miscalculated because you forgot that money has to actually be in the account to earn. You earn nothing on the £50 you haven't deposited yet. And that is the first problem: compounding isn't working for you because compounding takes time, and only 600 quid is even in there for 4 years. You're getting fleeced Adjust for the above, and the ...


116

Welcome new user, I will take a crack at explaining this. It is a good question and it's a very common misapprehension. I think the shortest possible explanation is this: You see how you said "... a top company such as Apple ..." ... Forget 5 year. Here's a 25+ year chart of Apple: It barely tripled in 20+ years. What an absolute dog! Every day ...


64

Short answer: The YouTube channel has over 500k subscribers but most videos have well under 50k views, complete with click-baity thumbnails. Those numbers mean nobody actually cares. Internet personalities like these make their money by selling newsletters and "classes," which supplement the ad revenue from their YouTube channel. If she were ...


59

If mean-reversion does exist, am I correct to say that timing the market is likely to reap great rewards? Sure!!! Just one problem: you can't time the market. why do so many people think it's a bad idea to invest when the market is high Because "they" think that the market will crash Real Soon Now. and a good idea to invest when the market is low? ...


50

One problem with looking at investments this way is that only £50 of your money was in the market for the whole 5 years. That last investment of £50 was only in the market for a month, and £600 of it was in for less than a year. This makes it seem like your investment isn't growing very fast. To be able to see how it might grow I tend to use a ...


47

A great deal of analysis on this question relies on misunderstandings of the market or noticing trends that happened at the same time but were not caused by each other. Without knowing your view, I'll just give the basic idea. The amount of active management is self-correcting. The reason people have moved out of actively managed funds is that the funds ...


45

Hindsight is 20:20. companies like Google, Facebook, Netflix, Amazon, Apple have all increased anywhere from 3x-6x in value in the past 5 years. ...while at the same time, companies like General Electric, Walgreens or Kraft lost a considerable amount of their stock value. How could you have known 5 years ago which companies would be "good" and ...


44

One benefit of cash ETFs over a bank deposit is if you're interested in diversifying your currency holdings, they are a cheaper method than going to traditional currency exchanges. For instance, if you're in the US, and you want some of your cash holdings to be in EUR to hedge against the possibility of the dollar falling, you could exchange your dollars to ...


42

It really depends on what you mean by "hard to outperform the S&P 500". Consider a roulette wheel. In a certain sense, it's easy to make money at a roulette wheel. The strategy is very simple: if the wheel is about to come up red, then bet on red, and if it's about to come up black, then bet on black. You'll double your money! However, this ...


38

One is priced in US dollars and the other is priced in euro. The euro has appreciated against the US dollar over the past three years, hence the lower return in euro than in dollars.


36

Any scheme of borrowing money to "invest" is in fact a gamble and should be avoided. Stick to your own money for investments. Nobody can predict the market and neither can you. 4% interest rates for a government bond sounds like a banana republic given the amount of money central banks are pumping into the market to buy government bonds. Even worse,...


35

The common expression in retort would be "Time in the market beats timing the market." Meaning: On average, the stock market rises [because on average, the global economy is expanding as outputs continue to increase] - a common rule of thumb for North American markets would be 7% / year, after factoring inflation. This general rise beats out the average ...


35

You're comparing an index that is measured in USD versus an ETF that tracks that index but is paid in GBP. The difference is mostly the difference in exchange rate over time between USD and GBP.


35

The ETFs are designed to replicate the return. Don't get hung up on the price. Illustrative Example: Say you have two ETFs both designed to replicate the return of an index. Call these ETFs A and B. Whether you buy 1 share of ETF A for $100 or 2 shares of ETF B for $50, you have invested $100. Each ETF manager will take your money along with the ...


32

Leverage can be good to increase gains, but it amplifies movements of a stock. Also downward movements. Paired with the increased gains is also an increased risk, and that changes the investment vehicle. The goal of an index fund is to passively follow an index as closely as possible. Leverage could reduce tracking error on upward movement, but would ...


30

No. Owning a stock is not trading a stock. See https://en.wikipedia.org/wiki/Insider_trading. If you are in a position of the company where you know (positive or negative) information about the company which would materially impact the stock price, you only commit insider trading when you use that knowledge before it becomes public knowledge.


28

You can use firecalc (https://www.firecalc.com/) to show the historical probabilities that your stock investments will never run out of money when you take out money each year. For 15.000, a stock portfolio of 460.000 would be historically 99% safe for a 50 year timespan. In a best case scenario with that sum, your portfolio would have grown to 9,2 million. ...


28

First of all, insider trading is only illegal when you have material, non-public information that affects your trading decision. So if you do not have any pertinent information that could be considered the reason for your trade (i.e. you're making one-off trades and not part of a systematic trading program) then you'd be fine. As to whether it's a violation ...


25

You're not going to learn anything of significance by investing or trading with only $200 other than how to use the platform of your broker and you could easily do that by opening a FREE paper trading account with a broker. There are a slew of web sites that offer stock price forecasts. What makes you think that they are any good? If they could pick ...


24

Personal rule for borrowing money in order to 'invest' in any kind of generally available thing: Assume your investment will lose all of its value and you lose your job and need to live off your savings for 6 months to a year while still repaying the debt. (If you think losing its value is unrealistic, then assume the brokerage goes bankrupt and it takes 5 ...


21

You have some confusion regarding how ETFs work. N100 is traded on Indian stock exchanges so it will tick during opens hours in the Indian market. People are buying and selling it during the open market, so you should expect for prices to change. You are trading the ETF and not the underlying stocks in the index, which will tick during US market hours. But ...


21

Generally, it is recommended to use 4% initial withdrawal. That gives you a 99% chance to make it through 30 years, using up the capital in the process. So unless you plan to die in 30 years, that's too thin. The 4% rule gives you however a nearly as good chance to still have the capital or even more, so if you're fine with maybe 98.5%, it could work - ...


21

Yes, you pay capital gains tax on ETF holdings just like mutual find holdings, but you are not "double taxed". Say you buy a fund at the beginning of the year and sell it at the end of the year. Say also that the NAV (the value of all of its holdings, less expenses) of the fund goes up by $5 per unit over the year, and realizes and distributes $1 ...


20

Behind the scenes, mutual funds and ETFs are very similar. Both can vary widely in purpose and policies, which is why understanding the prospectus before investing is so important. Since both mutual funds and ETFs cover a wide range of choices, any discussion of management, assets, or expenses when discussing the differences between the two is inaccurate. ...


20

First, it's not always the case that ETFs have lower expenses than the equivalent mutual funds. For example, in the Vanguard family of funds the expense ratio for the ETF version is the same as it is for the Admiral share class in the mutual fund version. With that in mind, the main advantages of a mutual fund over an equivalent ETF are: You can buy or ...


20

X, A, B and C all trade independently and are subject to their own buy and sell pressures that affects their prices. But the price of the ETF tends to be consistent with the price of the underlying shares, for a couple of reasons. The fundamental value of X is just the aggregated value of the underlying shares. After all it's just (indirect) ownership of ...


19

The unit is arbitrary. It doesn't mean anything. I buy these special paint can liners. Some stores sell 4 for $4.00, others sell 5 for $5.00 and others sell 6 for $6.00. It's exactly the same thing as that. In any of the funds, your $1.00 buys, say, 0.0000316 shares of GE stock, as well as 499 other stocks in principle totaling up to $1.00 value. Just ...


17

I understand that they are different financial products, exchanged on different markets with different currencies. You're right, that's the difference. One is VOO, the other is VOO priced in euros on a different exchange. I do not understand why one of them has a 3 Years Annualised returns of 18.48% while the other has 13.18%. Without looking further I'...


17

I am mostly interested in long-term dividend-paying investments. Why only dividend stocks? The value of a stock goes down when they pay a dividend, so dividend stocks are (in my opinion) more appropriate for short-term income needs. Long-term you should be looking at total return (dividends + price growth). Plus, capital gains are taxed less if the stock ...


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