Where to Invest money

**bUU** · 03-05-2013, 01:44 AM

I don't know how investing differs between the United States and India, but here in the United States, I believe the efficient-market hypothesis tells the story. You can learn about it from many sources, but the best is probably John C. Bogle, the founder of Vanguard, and his research showed (basically) that "owning a diversified portfolio of stocks and holding it for the long term is a winner�s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser�s game. Common sense tells us�and history confirms�that the simplest and most efficient investment strategy is to buy and hold all of the nation�s publicly held businesses at very low cost. The classic index fund that owns this market portfolio is the only investment that guarantees you with your fair share of stock market returns."

So that directs us to broad-based index funds - "total market" index funds, diversified between US equities, international except US equities, and bonds.

Again, I don't know how investing from India affects this logic.

**swapnil** · 03-05-2013, 11:42 PM

Actually, the logic you said works perfectly for any type of stock market whether in India or any part of the world, but as I said, seeing the current market scenario, I think it is not beneficial for me to invest amount in stocks or bonds, because market is dipping continuously so for me I think Mutual Funds is the best option according to me, but again as I am new I want some guidance as to what to do in such a circumstances would you still go for purchasing stocks seeing the current market scenario or not, or would you go for safe investment????

**bUU** · 03-06-2013, 01:14 AM

Originally posted by swapnil View Post

... seeing the current market scenario, I think it is not beneficial for me to invest amount in stocks or bonds, because market is dipping continuously so for me I think Mutual Funds is the best option according to me

I think you misunderstand what a mutual fund is. The vast majority of them are dominated by collective holdings in stocks and bonds. And the ones that the experts I respect the most recommend most highly are total market index funds, which effectively are collective holdings in (veritably) all the stock offerings in a market, or (veritably) all bond offerings in the market. And they will dip and spike periodically, just like stocks and bonds. There are other asset classes, of course, such as commodities and real estate, but those investments dip and spike as well. The reality is that the days of investing in a 8% CD, and having guaranteed earnings every month from your investment, are over. The very best guaranteed, fixed income investments are paying somewhere around 1%, meaning that your investing is losing ground against inflation as it sits invested. Unfortunately, some risk is now required to do better.

**swapnil** · 03-06-2013, 09:44 PM

Originally posted by bUU View Post

I think you misunderstand what a mutual fund is. The vast majority of them are dominated by collective holdings in stocks and bonds. And the ones that the experts I respect the most recommend most highly are total market index funds, which effectively are collective holdings in (veritably) all the stock offerings in a market, or (veritably) all bond offerings in the market. And they will dip and spike periodically, just like stocks and bonds. There are other asset classes, of course, such as commodities and real estate, but those investments dip and spike as well. The reality is that the days of investing in a 8% CD, and having guaranteed earnings every month from your investment, are over. The very best guaranteed, fixed income investments are paying somewhere around 1%, meaning that your investing is losing ground against inflation as it sits invested. Unfortunately, some risk is now required to do better.

Ofcourse they do, and I am well known to this fact that they lock up our contributed funds in the stock markets itself, but here the catch is they distribute their MF points among the investors, and you may get benefit of safe investment by investing in mutual fund, because the guys in the mutual fund are fairly experienced and know the current market well, and also know techniques to get good returns from the market in such a scenario as well, so I thought of investing in mutual funds rather then directly going for investing in stocks because I am planning to invest the money in the market for the first time, and I am completely new as far as practical knowledge is concerned.

**bUU** · 03-07-2013, 01:38 AM

Originally posted by swapnil View Post

the guys in the mutual fund are fairly experienced and know the current market well, and also know techniques to get good returns from the market in such a scenario as well

This is a myth.

http://money.usnews.com/money/personal-finance/mutual-funds/articles/2012/10/12/study-active-funds-consistently-fail-to-beat-benchmarks

"Think your mutual fund manager has what it takes to beat the market? If so, some new data from Standard & Poor's may make you think twice. ... over the past year, the S&P Composite 1500 beat 89.84 percent of all actively managed domestic stock funds. Over the past three and five years, those numbers were 73.24 percent and 67.72 percent, respectively."

Think about that ... Those "fairly experienced guys" you are talking about failed almost 90% of the time, last year. Every few years they manage to eek out a win in one asset category or another, but never consistently, and you never know in advance when they're going to get lucky, and given how infrequently and inconsistently they win, you're better off avoiding actively-managed funds.

They do know what they're doing - they're making money off of your investing, by charging expense rates that are up to 2000% higher than comparable index funds. You're well-advised to be concerned more about making money for yourself than for the manager of the funds you purchase. And the way to do that is by passive investing - investing in total market index funds.

**swapnil** · 03-07-2013, 08:41 PM

Originally posted by bUU View Post

This is a myth.

http://money.usnews.com/money/personal-finance/mutual-funds/articles/2012/10/12/study-active-funds-consistently-fail-to-beat-benchmarks

"Think your mutual fund manager has what it takes to beat the market? If so, some new data from Standard & Poor's may make you think twice. ... over the past year, the S&P Composite 1500 beat 89.84 percent of all actively managed domestic stock funds. Over the past three and five years, those numbers were 73.24 percent and 67.72 percent, respectively."

Think about that ... Those "fairly experienced guys" you are talking about failed almost 90% of the time, last year. Every few years they manage to eek out a win in one asset category or another, but never consistently, and you never know in advance when they're going to get lucky, and given how infrequently and inconsistently they win, you're better off avoiding actively-managed funds.

They do know what they're doing - they're making money off of your investing, by charging expense rates that are up to 2000% higher than comparable index funds. You're well-advised to be concerned more about making money for yourself than for the manager of the funds you purchase. And the way to do that is by passive investing - investing in total market index funds.

Hey thanks for the advice, so Market Index Funds give more benefit than Mutual Funds, is what I have got through your post, can you explain a bit in detail about Market Index Funds, what are they and how can investing in them can be beneficial???

**bUU** · 03-08-2013, 12:14 AM

Originally posted by swapnil View Post

Hey thanks for the advice, so Market Index Funds give more benefit than Mutual Funds

Technically, index funds provide "consistent low costs result in greater than average relative performance over long holding periods". [William Bernstein, The Magic of Percentile Compounding, Efficient Frontier, April, 1999]

Originally posted by swapnil View Post

can you explain a bit in detail about Market Index Funds, what are they and how can investing in them can be beneficial???

I'll recommend you read "The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns" (Little Books. Big Profits), John C. Bogle (Author). That'll answer many of your questions, in a relatively small book. There are numerous other resources you can find to learn more about the efficient market hypothesis and how index funds work.

**Rainbow Traveller** · 03-14-2013, 01:17 AM

If you are working, place the money in a Roth IRA. You might consider an investment management company such Annaly (NLY) or Chimera (CIM) both of which carry a nice dividend. With a market that is very choppy or unstable day to day, income stocks would be a safe way to go. With respect, I would avoid local investments especially if it involves money and friends. My personal experience is that those "investments" turn out to be losers in more than one way. Please, no investments with friends based on your resources and your wish to be a passive investor.

**Donal** · 03-19-2013, 08:53 PM

There are many places where you can invest money like you can go for a good life insurance policy, you can also go for share market(it is a bit risky). You can deal in properties and you can also invest money in gold.

**dunnrobert700** · 03-21-2013, 06:45 PM

Total market Index is a good way for you to get the equity part, but the diversification that helps the most is asset class diversification so you want to add some bonds and real estate. I like TIP for bonds but any respectable long or intermediate bond index fund with do. Then find a REIT from a respectable company. Maybe add something commodity based also. NOT gold in my opinion. I like the VAW ETF which is companies that produce various commodities.

There are a few rules that all but guarantee long term success...

1. Don't pick stocks. You cannot win this game. You are more outclassed by people with better access to information than you can possibly imagine.

2. Never freak out and sell when things go south. Things are going to go south. Sometime horribly, dramatically...the news will be in full freakout mode. Your alarm clock will turn out to have a siren you never knew about signalling the permanent death of equities. Ignore it all. It has always always come back.

3. Compose your portfolio such that 2 will be psychologically possible for you. Mainly this means equity:bonds ratio. More equity means more volatility and higher overall returns typically.

4. Look at respectable index funds (like vanguard, fidelity etc.) then just pick based on expense ratios. You want very very low expense ratios and no loads (ratios well below 1% for the equity index funds).

Good luck!

**Rboone** · 03-22-2013, 12:04 AM

taxi medallions is great investment that has performed quite well over the years in the Chicago and NY market. That is something to consider.

**lewiskelly** · 03-22-2013, 01:12 AM

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**clydefreeman** · 03-25-2013, 06:35 PM

The best place to invest your money is find a company that sell their stock market. Stock market is one of the best way to get big income or make your money have big interest.

**snafu** · 03-26-2013, 03:30 PM

Before you give anyone your money you need to learn a little about the products they sell. The firs thing to remember is not to put all your money in one product or one type of mutual funds or Exchange Traded Fund. New to money management it's not a good idea to buy individual stocks until you understand this better. The USA is the biggest trading market and we don't know much about the stock/bond market in India. If corruption is a factor, it's a no win for the small, individual investor.

Where to Invest money