Strategies

Investing Within Your Circle of Competence

Investing within your circle of competence is the belief that people should choose a single area of focus for investments. The area of choice should be one in which they have developed a familiarity far above that of an average investor. The concept was made popular by the great investor Warren Buffett, who [...]

The Benefits and Risks of International Investing

International investing is about putting money into assets outside the United States. International markets can offer greater opportunities for return than U.S.-based investing, simply because these opportunities are less-widely recognized. Mutual funds, exchange-traded funds, U.S.-traded foreign stocks, and American Depositary Receipts are some of the vehicles investors may consider when looking at foreign investments. [...]

Choosing a Stock Market Investing Strategy

For investors and anyone interested in the accumulation of savings and wealth, few topics are more interesting than stock market investing and developing a strategy for success. Over the long-term, stocks have proven to provide the highest potential returns with the opportunity for both capital appreciation and income (through dividends). On the downside, [...]

How Much Investment Risk Can I Handle?

Determining risk tolerance should be one of the first parts of an investing and asset allocation strategy. Without an understanding of the level of risk you can tolerate, it is difficult to know if you are building a portfolio that is consistent with your financial goals. Most investment advisors seek first to classify [...]

Investing in Real Estate Investment Trusts (REITs)

A Real Estate Investment Trust (REIT) is an investment vehicle where a corporation is formed to investment in various types of real estate such as office buildings, shopping centers, hotels, or other types of real estate related assets. REITs enable their investors to directly participate in the ownership or funding of real estate ventures [...]

Sector Investing for Portfolio Balance

Stock investors often classify stocks by the type of business in which the company engages. By grouping like companies in this way, investors are able to more easily make comparisons when analyzing potential stock investments. The most common segmenting identifies a stock as either defensive or cyclical and further segments companies based on [...]

Factors to Consider When Picking Stocks for Investment

When considering any type of stock investment, the investor needs to understand the potential future performance of the company and the factors than can influence that performance. Listed below are the three primary factors that can impact how well a company does in both the near and longer-term.

The Overall Health of the Economy: The [...]

Six Approaches to Asset Allocation

Developing an asset allocation strategy is about diversifying your investments across multiple investment classes (e.g. stocks, bonds, and cash) in order to align this mix of assets with your investment objectives and risk tolerance. With proper diversification, the fluctuations in the performance of the portfolio are minimized as declines in any particular asset class [...]

How and When to Rebalance Your Portfolio

Rebalancing is the process of bringing the various asset classes of your portfolio back to their appropriate weight in order to meet investment and risk objectives. Investors rebalance their portfolios to maintain the mix of stocks, bonds and other assets that was outlined in their original investment plan. If any part of your [...]

Investment Risk and Modern Portfolio Theory

Modern Portfolio Theory (MPT) is a financial hypothesis that proposes the use of diversification by rational investors as a means to minimize risk without sacrificing returns. Originally developed by Nobel Prize winner Harry Markowitz and published in 1952, MPT argues that looking at the expected risk and return of a single stock is not [...]