Interesting article on psychology and equity threshold.
Wednesday, 26 November 2014
Tuesday, 25 November 2014
Friday, 21 November 2014
However, what happens in practice is more often tragic. Here are some of those stories.
Thursday, 20 November 2014
To check valuations of world markets, here are some useful resources:
If you want to be your own central banker, try this.
Rolesia is a free, fun and strategic economy web simulation for all who enjoy strategy simulations, and for all wishing to discover and understand the policy tools on offer to Governments and Central Banks around the world. The purpose of the software is to help the world-wide population understand the complexity of the world economy, and also to understand the power behind governments’ fiscal and the central banks’ economic monetary policies. Helping to improve the world population’s knowledge is a small contribution towards empowering the people of this planet and strengthening democracy. The simulation can be perceived as an economy game based on a virtual economy.
Wednesday, 19 November 2014
Can Money Buy You Happiness? It’s True to Some Extent. But Chances Are You’re not Getting the Most Bang for Your Buck.
Here is a list of very basic principles as prerequisite to investing. This is a concise list. Each line deserves a chapter, if not a book, on its own.
- Pay yourself first. Establish a habit to save regularly.
- Start early. Benefit from the magic of compounding interest.
- Keep costs low. Costs eat a huge portion of returns over time.
- Use value-averaging, or dollar-cost averaging. Invest regularly the same amounts at equal intervals. Because of markets' reversion to the mean this leads to dollar-cost-averaging of the asset price.
- Stick to index funds ("what you understand") as the core. Active funds are expensive and, in general, return less. Specialist funds or individual securities can be used as satellites. This is known as "core-satellite" strategy.
- Keep cash portion in liquid bonds for better returns.
- Stick to your asset allocation.
- Pay attention to the total return (income + growth). Income funds yield more but usually have lower total return. Tax effects of income - income is taxed immediately but tax on growth is delayed (taxed only if sold).
- Long-term price earnings (P/E) ratio is 14. Starting valuations matter.
- Asset allocation, the risk balance, is the main determinant of return. Bonds proportional to age (?).
The principles above come from various texts and personal experience. They should be refined over time.
A good article on valuations and starting point for investments by Shane Oliver.
These charts explain a lot: