https://millennial.investments/blogs/markets.atomMillennial Investments - Markets đ2023-03-27T19:29:25-04:00Millennial Investmentshttps://millennial.investments/blogs/markets/shining-bright-why-investing-in-gold-could-be-your-golden-opportunity2023-03-27T19:29:25-04:002023-03-27T19:30:26-04:00Shining Bright: Why Investing in Gold Could be Your Golden Opportunity đĽGarrett RamelaMore]]>
Gold can be a good investment option for some investors, depending on their investment objectives, risk tolerance, and overall financial situation. Here are some key points to consider:
Historically, gold has been considered a safe haven asset, providing a hedge against inflation and market volatility.
Gold tends to have a low correlation with other asset classes, such as stocks and bonds, making it a diversification tool for portfolios.
Gold can be purchased in various forms, including physical bullion, ETFs, and mining stocks, providing investors with different options for investing in the precious metal.
However, like any investment, gold comes with its own risks, including price fluctuations, storage costs, and liquidity constraints.
Gold does not generate any income or cash flows, unlike stocks or bonds, so it may not be suitable for investors who prioritize income.
The price of gold is influenced by various factors, such as global economic conditions, interest rates, and geopolitical risks, which can make it difficult to predict its future performance.
Ultimately, whether gold is a good investment for you depends on your individual financial goals, risk tolerance, and investment time horizon. It is important to conduct thorough research and seek professional advice before making any investment decisions.
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https://millennial.investments/blogs/markets/top-5-investors-of-all-time2023-02-21T23:59:44-05:002023-02-22T15:44:28-05:00Top 5 Investors Of All Time âGarrett RamelaMore]]>
Determining the top five investors of all time is a subjective exercise as there are different metrics that can be used to evaluate their performance. However, based on their historical performance and impact on the financial world, here are five investors who are often mentioned among the greatest of all time:
Warren Buffett
Known as the Oracle of Omaha, Warren Buffett is one of the most successful investors in history, with a net worth of over $100 billion. He is the chairman and CEO of Berkshire Hathaway and is famous for his value investing approach, which involves buying undervalued stocks and holding them for the long term.
What are Warren Buffett's top 5 investments?
Apple (AAPL): As of Berkshire Hathaway's latest 13F filing, Apple was the company's largest holding, making up over 41% of the portfolio. Berkshire Hathaway has been steadily increasing its stake in Apple over the years and currently holds over 900 million shares.
Bank of America (BAC): Berkshire Hathaway has a sizable stake in Bank of America, with over 1 billion shares as of the latest 13F filing. This represents about 14% of the portfolio.
Coca-Cola (KO): Coca-Cola is a long-standing holding in Buffett's portfolio, with Berkshire Hathaway owning over 400 million shares, or about 9% of the company.
American Express (AXP): Berkshire Hathaway has been invested in American Express for decades, owning over 150 million shares, or about 5% of the company.
Berkshire Hathaway (BRK.A, BRK.B): Buffett is also invested heavily in his own company, Berkshire Hathaway. The company makes up about 20% of the portfolio, with shares of both the A and B class of stock held by the company.
George Soros
George Soros is a billionaire investor, philanthropist, and political activist. He is known for his hedge fund management and his ability to predict market trends. Soros famously made a billion dollars in a single day by shorting the British pound in 1992, a trade that is often referred to as "Black Wednesday."
What are George Soros' top 5 investments?
Amazon (AMZN): Soros Fund Management purchased a large stake in Amazon in the second quarter of 2020, which was valued at over $530 million.
Alphabet (GOOGL): Soros Fund Management also held a large position in Alphabet, Google's parent company, with a stake worth over $417 million as of the end of the second quarter of 2020.
Facebook (FB): The Soros Fund Management owned approximately $280 million worth of Facebook shares at the end of the second quarter of 2020.
Netflix (NFLX): Soros Fund Management owned approximately $140 million worth of Netflix shares at the end of the second quarter of 2020.
Liberty Broadband (LBRDK): Soros Fund Management had a significant stake in Liberty Broadband, a telecommunications and media holding company, with a position worth approximately $129 million as of the end of the second quarter of 2020.
Benjamin Graham
Benjamin Graham is considered the father of value investing and is known for his book "The Intelligent Investor," which is still widely read today. Graham's investment philosophy focused on finding stocks that were undervalued by the market and had a margin of safety.
What are Benjamin Graham's top 5 investments?
Northern Pipeline Company: In the early 1930s, Graham invested in Northern Pipeline Company, a Canadian company that owned a network of oil pipelines. Graham identified the company as undervalued and recommended it to his clients, and the investment paid off handsomely.
Net-Net Stocks: Graham developed a strategy of investing in net-net stocks, which were companies whose market value was lower than their net current assets (i.e., cash, inventory, and receivables minus liabilities). Graham believed that these stocks were significantly undervalued and had the potential for high returns. He applied this strategy to a number of companies in the 1930s and 1940s.
American Telephone and Telegraph (AT&T): In the 1940s, Graham purchased shares of AT&T, the telecommunications giant, when the stock was trading at a discount to its intrinsic value. The investment paid off handsomely as the stock rebounded.
GEICO: In the 1950s, Graham invested in Government Employees Insurance Company (GEICO), an insurance company that was then struggling financially. Graham saw value in the company's business model and purchased shares, which eventually became a major holding for his investment partnership.
Burlington Industries: In the 1970s, Graham invested in Burlington Industries, a textile company that was facing financial difficulties. Graham saw potential in the company's assets and cash flow and purchased shares, which eventually resulted in a significant gain for his investment partnership.
Peter Lynch
Peter Lynch is a former fund manager who ran the Fidelity Magellan Fund from 1977 to 1990. During his tenure, the fund outperformed the S&P 500 index by an average of 13.5% per year. Lynch is known for his common-sense approach to investing, which involved researching companies and investing in what he knew.
What are Peter Lynch's top 5 investments?
Ford Motor Company (F): Lynch was a big believer in the American automobile industry and believed that Ford was undervalued in the 1980s. He invested heavily in the company, and the investment paid off handsomely as the stock price rose.
Wal-Mart Stores Inc. (WMT): Lynch saw potential in the then-up-and-coming discount retailer and invested in Wal-Mart in the early 1980s. The investment paid off handsomely as the company became one of the most successful retailers in the world.
PepsiCo Inc. (PEP): Lynch was attracted to PepsiCo's diversified business model, which included not only soft drinks but also snack foods such as Fritos and Doritos. He invested in the company in the early 1980s, and the investment proved successful.
Amazon.com Inc. (AMZN): Lynch saw the potential of the then-emerging online retailer and invested in Amazon in the 1990s, well before it became the e-commerce giant it is today. The investment was one of the most successful in Lynch's career.
The Limited Inc.: Lynch invested in The Limited, a retailer that owned popular brands such as Victoria's Secret and Bath & Body Works, in the 1980s. The investment paid off handsomely as the company's brands became more popular and successful.
John Paulson
John Paulson is a billionaire hedge fund manager who is known for his profitable bets against the housing market in 2007 and 2008. His firm, Paulson & Co., made $15 billion in profits from those trades. Paulson is also known for his philanthropy, having donated over $1 billion to charitable causes.
What are John Paulson's top 5 investments?
SPDR Gold Trust (GLD): Paulson is a well-known gold bull and has a significant portion of his portfolio invested in the precious metal. He famously made a large bet on gold through the GLD ETF in the late 2000s, which paid off handsomely as the price of gold rose.
Valeant Pharmaceuticals International Inc. (now Bausch Health Companies Inc., BHC): In 2010, Paulson's hedge fund invested in Valeant, a Canadian pharmaceutical company that was aggressively acquiring other companies. The investment initially paid off as Valeant's stock price rose, but the company later became embroiled in controversy and its stock price plummeted.
Shire PLC (now part of Takeda Pharmaceutical Company Limited): In 2014, Paulson's hedge fund invested in Shire, a biopharmaceutical company based in Ireland. The investment paid off handsomely when the company was acquired by Takeda for $62 billion in 2018.
Extended Stay America Inc.: In 2013, Paulson's hedge fund took a large position in Extended Stay America, a chain of hotels that caters to extended-stay guests. The investment paid off as the company's stock price rose, and Paulson eventually sold his stake for a significant profit.
Sprint Corporation (now part of T-Mobile US Inc.): In 2017, Paulson's hedge fund invested in Sprint, the telecommunications company. The investment paid off when the company was acquired by T-Mobile for $26 billion in 2020.
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https://millennial.investments/blogs/markets/how-to-invest-like-warren-buffett2023-02-20T15:18:25-05:002023-02-27T00:38:40-05:00How to Invest Like Warren Buffett? đ´đťđ°Garrett RamelaMore]]>
This image of the "Oracle of Omaha", Warren Buffett, was create using our Canva Pro đ¨ subscription. Get yours today!
Warren Buffett's Background
Warren Buffett is an American business magnate, investor, and philanthropist. He was born on August 30, 1930 in Omaha, Nebraska, and is often referred to as the "Oracle of Omaha" for his successful investing strategies and his leadership of Berkshire Hathaway, a conglomerate holding company that owns a number of subsidiary businesses.
Buffett began his investing career at a young age, buying his first stock at the age of 11, and went on to study under the famous value investor Benjamin Graham at Columbia University. He then started his own investment partnerships, which eventually led him to take control of Berkshire Hathaway in 1965.
Over the years, Buffett has become one of the most successful investors in history, consistently delivering strong returns for his shareholders and building a personal fortune estimated to be worth over $100 billion as of 2021. He is also known for his philanthropy, having pledged to give away the majority of his wealth to charitable causes.
To invest like Warren Buffett, consider the following principles:
Value investing
Look for undervalued companies with strong potential for growth, a proven track record, and a durable competitive advantage.
Value investing is an investment strategy that involves buying stocks or other assets that are trading at a price lower than their intrinsic value. The idea behind value investing is that the market may occasionally undervalue a company, providing investors with an opportunity to purchase its shares at a discount and profit from its eventual rise in value.
Value investors typically look for companies that have strong financials, good management teams, and a history of stable earnings growth. They also look for companies with a "margin of safety," which means that the company's stock is trading at a price significantly lower than its estimated intrinsic value, providing a cushion against any potential losses.
Value investing is often contrasted with growth investing, which focuses on buying stocks of companies with high growth potential, even if the stock is trading at a high price-to-earnings (P/E) ratio. Value investors, on the other hand, are often more interested in a company's earnings history and valuation metrics, such as price-to-earnings, price-to-book value, and dividend yield, among others.
Warren Buffett is perhaps the most famous value investor, and his investment philosophy is heavily influenced by his mentor, Benjamin Graham, who is widely considered the father of value investing.
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Long-term focus
Buffet has a long-term investment horizon and believes in holding onto stocks for the long-term.
A long-term focus is important in value investing for a number of reasons:
It takes time for the market to recognize a company's true value: In many cases, the market may undervalue a company for an extended period of time, sometimes several years, before recognizing its true value. A long-term investor who is patient can benefit from this inefficiency.
The value of a company can appreciate over time: A company with a solid business model, strong management team, and competitive advantages can grow in value over time. This growth can be reflected in higher stock prices, dividends, and other metrics that benefit long-term investors.
Avoiding short-term fluctuations and noise: Short-term events, such as quarterly earnings reports or market volatility, can cause stocks to fluctuate in price. By taking a long-term view, investors can avoid getting caught up in the noise and instead focus on the underlying fundamentals of the company.
Capitalizing on the power of compounding: Long-term investors can benefit from the power of compounding, which is the ability of an investment to generate returns that are reinvested and generate even more returns over time. By staying invested in a company over the long term, investors can take advantage of the compounding effect and potentially earn significant returns.
For value investors, a long-term focus is often a key part of their investment strategy, as it allows them to take advantage of the inherent inefficiencies in the market and the potential for significant long-term gains.
Fundamental analysis
Focus on the financial health and performance of a company, including its revenue, earnings, and debt.
Fundamental analysis is a method of evaluating the value of a company or asset by analyzing its financial and economic fundamentals. The purpose of fundamental analysis is to estimate the intrinsic value of the asset, which is the value that the asset would have if it were priced solely based on its fundamentals.
Fundamental analysis typically involves analyzing financial statements, such as the balance sheet, income statement, and cash flow statement, to gain insight into a company's financial health, profitability, and growth prospects. Other factors that may be considered include the company's industry and competitive landscape, its management team, its strategy and future growth prospects, and any regulatory or political factors that may affect its operations.
One of the key goals of fundamental analysis is to identify undervalued assets that are trading at a discount to their intrinsic value. This can be done by comparing the asset's current price to various fundamental metrics, such as earnings per share, price-to-earnings ratio, and price-to-book ratio, among others.
Fundamental analysis is often contrasted with technical analysis, which focuses on analyzing past market data, such as price and volume, to identify trends and predict future price movements. While technical analysis can be useful for short-term trading strategies, fundamental analysis is typically more appropriate for long-term investment strategies, as it provides a more comprehensive understanding of the underlying value of the asset.
Diversification
Spread your investments across a range of industries and companies to minimize risk.
Diversification is important in investing because it can help reduce risk and improve overall investment performance. By spreading your investment across different asset classes, industries, and geographies, you can lower the risk of loss from any one particular investment, and potentially generate more stable long-term returns.
Here are a few reasons why diversification is important:
Reducing risk: Investing in a single asset or company exposes you to the risk of that company or asset's performance. If the company or asset performs poorly, you may experience significant losses. Diversifying your portfolio can help reduce this risk by spreading your investment across multiple assets or companies.
Capitalizing on different economic cycles: Different asset classes and industries tend to perform differently at different points in the economic cycle. By diversifying your portfolio, you can potentially capitalize on different economic conditions, and generate returns even in times of market turbulence.
Maximizing long-term returns: Diversification can help you maximize your long-term returns by reducing the volatility of your portfolio. By investing in a variety of assets, you can smooth out the peaks and valleys of your portfolio's performance and potentially generate more stable long-term returns.
Mitigating the impact of currency fluctuations: Investing in assets denominated in different currencies can help mitigate the impact of currency fluctuations on your portfolio. This can be particularly important for investors who are exposed to a single currency, as currency fluctuations can significantly impact the value of their investments.
Diversification is important in investing because it can help reduce risk, improve overall investment performance, and potentially provide more stable long-term returns.
Avoid trendy or speculative investments
Buffet is known for avoiding speculative investments and instead focuses on stable, well-established companies.
It is important to avoid trendy or speculative investments for several reasons:
High risk: Trendy or speculative investments are often high-risk investments with the potential for significant losses. These investments are often driven by hype or speculation rather than solid fundamentals, and can be subject to significant price fluctuations that can lead to large losses.
Lack of intrinsic value: Trendy or speculative investments often lack intrinsic value, meaning that they are not based on real-world assets or business models. Instead, their value is often based on hype, buzz, or future expectations, which can be difficult to predict or quantify.
Difficulty in timing the market: Trendy or speculative investments are often subject to sudden and unpredictable shifts in sentiment, which can make it difficult to time the market and maximize returns. Trying to time the market can be risky, and it's often better to focus on a long-term investment strategy based on fundamentals.
Lack of diversification: Trendy or speculative investments often focus on a single industry or asset class, which can lead to a lack of diversification in your portfolio. A lack of diversification can increase risk and volatility, and potentially lead to significant losses.
Potential for fraud: Trendy or speculative investments can be particularly vulnerable to fraud or scams, as unscrupulous individuals may seek to take advantage of investors' excitement or greed to lure them into fraudulent schemes.
In summary, it is important to avoid trendy or speculative investments because they are often high-risk, lack intrinsic value, can be difficult to time, lack diversification, and can be vulnerable to fraud. It's generally better to focus on a long-term investment strategy based on solid fundamentals and diversification to help mitigate risk and potentially generate more stable returns.
Patience
Buffet is known for his patience and discipline, which is a key component of his investment strategy.
Patience is important in investing for several reasons:
Allowing time for compounding: One of the key benefits of investing is the power of compounding, where the returns on your investments generate additional returns over time. By patiently holding your investments over a longer period, you can benefit from the compounding effect and potentially generate higher returns.
Avoiding emotional decision-making: Patience can help you avoid making emotional decisions based on short-term market fluctuations or news events. Making impulsive decisions based on fear or greed can often lead to poor investment outcomes, whereas taking a more patient and disciplined approach can help you make more rational decisions based on long-term fundamentals.
Riding out market cycles: Markets are inherently cyclical, with periods of ups and downs. By being patient and maintaining a long-term perspective, you can avoid the temptation to sell during market downturns and potentially miss out on the recovery that often follows.
Avoiding excessive trading: Excessive trading can lead to higher costs, including transaction fees and taxes, and can also increase the risk of making emotional or impulsive decisions. By taking a patient approach and focusing on the long-term, you can avoid the temptation to trade too frequently and potentially generate higher net returns.
Allowing time for value to be realized: Some investments may take longer to realize their full potential than others, particularly in cases where a company is undergoing a turnaround or has a long-term growth trajectory. By being patient and allowing time for the value of your investments to be realized, you can potentially generate higher returns over the long-term.
In summary, patience is important in investing because it allows time for the power of compounding, helps avoid emotional decision-making, enables you to ride out market cycles, avoids excessive trading, and allows time for the value of your investments to be realized.
Remember, investing like Warren Buffett requires discipline, patience, and a deep understanding of the market and the companies you're investing in. It's important to do your own research and not blindly follow any investment strategy.
Thanks for Reading!
Let us know if you enjoyed reading this article or if you have recommendations for other investor profiles in the comments below! Happy reading!
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https://millennial.investments/blogs/markets/compound-interest-and-how-it-works2021-01-26T14:29:04-05:002021-01-26T20:50:40-05:00Compound Interest and How It Works đGarrett RamelaMore]]>
What is Compound Interest? âď¸
Compound interest is simply the interest added to the principal amount of money that is invested or borrowed. The principal amount and the initial interest earned yield more interest over time, resulting in a compound effect. It is making interest from interest, which will eventually lead to enormous growth in interest â and subsequently, wealth. Compound interest benefits the investor, who will continue to earn money as long as their investment is not tampered with.
How Does Compound Interest Work? âď¸
Let's assume you deposited $1,000 in your bank account. And your bank offers you an interest rate of 10%/year. So, at the end of the year, you get $100 in the form of interest from your bank. That is, you now have $1,100 in total. At the end of the second year, your bank gives you another 10% as interest. Remember, you currently have $1,100 ($1,000 as your initial deposit and $100 as interest in the first year). Therefore, you will earn $110 in interestâ-âmeaning you now have $1,210. This is how your money will continue to increase exponentially every year, even though you don't make any additional deposits.
Rather than calculating your interest based on the amount you deposited (or principal for short), compound interest calculates your yearly interest based on the initial amount you deposited plus the previous interest you have received from that amount.
This simply means that by the end of the 20th year, you'll have $6,727 without saving any more moneyâ-âthat is, more than five times your initial deposit! This is how compound interest works, very enticing, isn't it?
Below we put together an interactive graph đ that lets you visualize the power of compounding interest. This example considers taking $1,000 and putting it into an investment account that earns 10%/year for 20 years. You can see by year 20, you'll have made $5,727 just in interest, which is more than 5 times your initial deposit. The single best way to maximize the effects of compound interest is to start investing early and have time on your side. â
Also, let us know in the comments if you like the graph! We can start using them more often if you find them valuable! đ
Do you hate math and calculations but also wanna get wealthy? Well, if the concept of compound interest interests you, I'm sorry to tell you, but you may have to find a compromise with math. Because compound interest has its formula with which you can calculate your earnings after each year. Don't worry; it's not as complicated as the quadratic formula or any of those formulas you dreaded in school.
A = P(1+r/n)nt
The formula is that simple. But before you can apply it to calculate how much your bank will deposit in your account each year, you have to know what each symbol/letter represents.
P = Principal
r = the interest rate/year, written in decimals (10% = 0.10)
n = the number of times a year interest accrues (often daily = 365, monthly = 12, or yearly = 1)
t = the number of years interest will accrue (5 years = 5)
A = the total amount of money you will receive at the time the compound interest ends
It feels so lucky that you don't need to be a mathematician to understand this simple formula. I know, right? You can also use online calculators to calculate your earnings if you don't want to use the formula. However, the formula gives a better understanding of how compound interest works.
Whether you are an investor or a borrower, you already know that (P) is the amount of money you have invested or borrowed within a particular period (t). In essence, these are two of the most essential variables to consider in determining your future earnings â your interest rate (r) and the frequency at which your interest accrues (n).
The impact of your interest rate is significant. A higher interest rate means you will earn more interest within a year, while a lower interest rate means you will make less. Simultaneously, the more interest you earn within a year, the higher your money goes (of course, assuming you're an investor).
How Compound Interest Affects Debt đď¸
Like earlier stated, compound interest only puts you in an advantageous position if you are the investor or lender. However, if you are a borrower, the reverse scenario occurs â it will work against you. For example, many credit cards include rates with daily compounding interest. That is, your debts go higher and higher as each month goes by, without paying them off. This is the fundamental reason why paying off credit card debts can be very hard â and why you must try to pay off your debts at the end of each month. By doing so, the bank does not charge you for interests, and you wouldnât bother about your debts compounding.
Putting Your Knowledge to Work đ
People who understand compound interest' fundamental aspect tend to make smarter, strategic, and well-planned financial moves. For instance, you can save your money in banks that allow dailyâ-âinstead of monthly or yearlyâ-âcompounding and deposit money to the account as often as possible. On the other hand, you can also develop a habit of paying off your credit card debts monthly rather than rolling them over to the next month.
Take Advantage of Compound Interest đŽ
There are many ways you can take advantage of compound interests. Below are some of the most popular ones: I. Save Early And Frequently: make great use of time when trying to increase your savings. That is, the more time your money is left untouched, the higher it increases. This is simply because compounding interests will grow exponentially over time. For example, if you deposit $200 every month for five years, at a 5% interest (compounded per month), you will have $12,000 in your account by the end of that timeframe. II. Pay Off Your Credit Card Debts As Quickly As Possible: it will not be in your favor if you pay the minimum on your credit cards. It barely changes anything in the interest charges, and your debts will continue to increase. Such a move may likely come back to haunt you later. III. Keep Borrowing Rates Low: apart from significantly affecting your monthly payment, the interest rates on your loans ascertain how fast your debts increase, as well as the time it may take for you to settle them. Most credit cards use a double-digit rate, and it's hard to contend with. See if you can pay off several debts with a single loan. This may help decrease your interest rate, speed up paying off your debts, and help save you some cash.
Thanks for Reading!
Let us know if you enjoyed reading this article in the comments! If you want more related content, be sure to check out Markets đ! Don't forget to subscribe at Millennial Investments đ° to learn more wealth building tips and tricks! Happy reading, and thanks for supporting our work! đđ
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https://millennial.investments/blogs/markets/how-to-invest-in-cryptocurrency-%E2%9A%A12021-01-21T22:05:32-05:002021-01-21T22:06:46-05:00How to Invest in Cryptocurrency âĄGarrett RamelaMore]]>
You may have heard stories of people who have become millionaires through investing in cryptocurrency. There are positive testimonies of how some individuals made significant gains from digital currenciesâ price explosions in recent times. Cryptocurrency is also becoming popular as an alternative global currency, with Bitcoin leading the pack.
Youâre probably wondering how you can invest in crypto to make a return on your investment? But hold on a second! Arenât theyâre people who have lost their cryptocurrency investment. So, you have to do proper research to avoid running into debt when you hurriedly invest all your money in cryptocurrency. Due to its volatility, it can be a risky investment. There are certain things you need to know about crypto that will help you invest wisely. And if you want to make the most out of crypto, learn the smart way to invest in it.
Are Digital Cryptocurrencies Valuable? đ
Cryptocurrency is solely a digital payment system. Unlike fiat currency (physical money like the Euro and Dollar) traded and exchanged for goods and services, payments with digital currencies are entries on the online database for an underlying transaction. Cryptocurrencies include Bitcoin, alternative coins (or altcoins for short), and stable coins.
Digital currencies are a medium of exchange, meaning they exchange value from one entity to another. However, only a few merchants accept them as they are not yet widely used for payment. They are not backed by a precious metal such as gold or a government like some other currencies. Their values are determined by market forces. A coin has value as far as the people consider it to be valuable. Consequently, there are fluctuations in the prices of cryptocurrencies.
There is still an opportunity for you to earn a high return on crypto investments. A lot of people invest in crypto to hold popular digital currencies such as Bitcoin and Ethereum. They make big gains from a significant increase in the prices of the coins. Also, some crypto investors buy obscure coins low and sell high when the price rises.
Tips for Safe Crypto-Investing âď¸
The price explosion of any coin can draw the attention of both investors and speculators. However, you need to be informed to make the right investment choices. Here is what you should know about investing in cryptocurrency.
Choose a Platform to Purchase Cryptocurrencies đť
Digital currencies are not yet available for sale at investment brokerage firms or local banks, but you make purchases from cryptocurrency exchanges such as CoinDesk, CoinBase, Binance, and Bitfinex. You can purchase coins like Bitcoin and Ethereum with your debit card on some popular platforms. You can buy fractions of a coin from the exchanges. So, you donât need thousands of dollars to invest in cryptocurrency. On the other hand, you canât purchase altcoins with physical money. However, youâll need Ethereum or Bitcoin to buy them on the exchanges.
Cryptocurrency exchanges charge transaction fees when you buy and sell coins. Other platforms are commission-free, where you can buy cryptocurrencies. Websites like LocalBitcoin allows you to directly interact with other users who have coins for sale. However, this process is risky because you have to deal with a stranger. You canât verify the userâs claim of having cryptocurrencies. It is safe to use exchanges for your transactions if you are new to crypto investingâââresearch exchanges in-depth before choosing.
Study the Coins Before You Invest đ
You are likely to run into trouble if you invest in a cryptocurrency you know nothing about. Learn about your coins of interest and their historical performance before you make a choice. You donât have to make decisions like a gambler. Bitcoin is the top cryptocurrency because it appears to be the most reliable of the digital currencies.
Other coins performed better than the king of cryptocurrency. Thatâs why you need to monitor the price action of the coins. Besides, other coins have disappeared from the market. You will lose your money if you invest in such cryptocurrencies.
Decide the Portion of Your Portfolio You Will Allocate to Cryptocurrency đ§
Your risk strength will help you determine the amount you will invest in crypto. Invest the amount you will willingly lose if things go wrong. Donât invest above your limit just because your friends invested more. There arenât dividends paid on crypto investments. Your returns depend on the increase in the currency price.
Diversify Your Investment đŻ
Investing in more than one coin helps to reduce risk with the power of diversification. Though it may have disadvantages, diversification is a great investment strategy. Donât just invest only in Bitcoin because of its dominant position in the crypto market. There are other good performers in the market.
Research the coins to identify the real digital currencies since fake coins exist. Opt for currencies with the potential to yield returns and invest in them.
Research the Storage Options đŚ
When you purchase cryptocurrency, you store it in a digital wallet. The wallet allows you to access your digital currencies on the blockchain. Each wallet has a private key, known only to the user, and a public key that other users see. You need both to unlock, send, and receive digital currencies. A digital wallet also keeps records of your current balance and transactions on the blockchain.
There are different types of wallets, each with its security and technical requirements. Software wallets allow you to access your crypto often, and hardware wallets are used for storing crypto that you usually donât need to use often. The latter is more secure than the former. The private keys of hardware wallets are not stored online, denying unauthorized users access to the wallets.
Investing in cryptocurrency comes with challenges, so get ready for its ups and downs. Be smart as you make decisions relating to your investment. Donât depend on peopleâs opinions about a coin to invest in crypto. Seek guidance from crypto experts and calculate the risks involved before you invest.
And it doesnât end here! Cryptocurrencies are not predictable. Monitor the performances of the coins in the market. You need to gain knowledge about cryptocurrency and be patient to make money from crypto investing.
Thanks for Reading!
Let us know if you invest in crypto or are considering investing below in the comments! If you enjoyed reading this article, please consider subscribing for more content and sharing with someone you think can benefit from it. Our mission is to help others better understand how to build wealth for themselves and make more well-informed life decisions. If you have an excellent idea and want to write our next piece, apply here.
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https://millennial.investments/blogs/markets/how-to-think-about-stock-market-investing2021-01-03T20:58:18-05:002021-01-06T11:06:33-05:00How to Think About Stock Market InvestingGarrett Ramela
Three insights into the world of stock market investing.
The stock market a wild place. One in which makes millionaires and also takes millions from others. It is wildly complicated but is also extremely valuable to understand. This article will walk you through how to think about the stock market, whether you are new to investing or simply want to hone your skills as a seasoned investor. Weâll start our discussion with an overview of the stock market. Next, weâll look at the effort required to pick good individual stocks. Finally, weâll end with a discussion on the risks and leave you with some final thoughts. Okay, letâs start off by talking about the stock market!
What is the Stock Market?
A stock market is simply a centralized place where people buy and sell stuff. Itâs similar to a fruit market where people come together to exchange money for delicious fruit. The difference with the stock market is in what people are buying. Instead of buying fruit, people purchase companies in the form of stock. Stock is nothing more than a piece of paper (often only digital in todayâs world) that says that you own a part of the company printed on the stock certificate. Owning stock is super powerful because it provides a medium and opportunity to potentially make a lot of money while minimizing your potential losses. Stock allows companies to raise money from the general public to use that money to make even more money. When people purchase a companyâs stock, they bet that the company will do well in the future. âDoing wellâ can mean anything like becoming more profitable, growing sales, and/or expanding operations. All of which are increases in value for the company. Understanding value is a central concept to learn if you want to better understand stock market investing. Your job as an investor is to identify companies that will create the most value in the future relative to all the other company choices available. But how do we find these companies? It depends, and the answer is complicated and subjective. Some investors rely on their intuition or mathematical models, while others simply take advice from others. However, weâre not here to tell you what stocks to buy, but rather give you a better understanding of how to think about which stocks to buy. Letâs take a look at the effort needed to pick individual stocks.
Are Picking Individual Stocks Worth the Effort?
You may have heard on the news or your friends talk about how one company is doing really fantastic and that its stock is going through the roof. These stories are all around us and often leave us wishing we would have simply bought the stock when it was at its cheapest. Looking backward is so easy, everything seems to make sense, and we frequently spend a lot of time and effort wishing we would have just bought at the âright time.â We know that feeling is hard to fight, but we suggest taking a different approach. Stay focused on the future. Itâs hard, we know, but it wonât leave you feeling like crap when you watch the news, and it positions you to make better decisions. We donât even recommend trying to find single companies poised to do well in the future. Itâs really tough and requires a lot of work. We first recommend assessing your willingness to be involved in the decision-making of your investment portfolio. Are you the type of person who is willing to do the due diligence often needed to find the next successful company or the person who just wants to put money away monthly in hopes of a brighter future? Many folks think that spending time on due diligence often leads to making more money. However, that usually isnât the case, and this is a great time to introduce the term âmarket.â
There are hundreds of thousands of companies around the world where people can buy stock in companies. There are also many different stock markets, just like there are many fruit markets. Financial experts and news broadcasters like to report on these marketsâ overall health instead of reporting on each and every company daily. So, to help make life easier, experts created indexes, which are simply a sample of stocks within a stock market that generally assess the entire marketâs overall health. Two well-known examples in the United States are the Standard & Poorâs 500 (S&P 500) and the Dow Jones Industrial Average (or the Dow). These two indexes use a set of rules to pick and track the performance of approximately 500 (SP& 500) and 30 (Dow) stocks based in the United States and serve as a benchmark. Professional investors assess their performance not against whether they made money or lost money but instead did they perform better than their benchmark index or not.
Here lies a crucial decision for investors. Do we just purchase the index stocks, or do we work really hard to try and make more money than the index? The choice is up to you, but statistically speaking, many people do not do better than the market. Many professional investors whose job it is to find great stocks donât even do better than the market. Thatâs probably painful to hear, but the numbers donât lie. And if anything, it may even eliminate some of your worries as an investor. If you are the person who just wants to put money away, consider buying the market, and donât worry or stress about finding the next great company. Now, letâs hop over to the risks of investing in the stock market.
What are the Risks of Investing in Stocks?
Investing in the stock market often gets a bad reputation as a place where many people lose millions of dollars to greedy Wall Street people. Is this true? Letâs look at the actual risks of investing. Remember when we discussed purchasing a stock? We mentioned that you buy it from a stock market, but we didnât say from who. You donât usually buy stock directly from a company unless you make a direct investment or gain access to stock from an initial public offering (IPO). When you purchase stock in whatâs called the secondary market, you buy it from other investors. This is weird to think about because it essentially means that one party believes the stock will go down while the other thinks it is going to go up. There are certainly other reasons why someone may buy or sell stock, but generally, we own stock because we believe it will go up in value. As we all hope the value of the stock we purchase goes up in the future, the reality is that the value can actually drop to zero. As an investor in a company, this means your investment in the company is worthless. The risk of losing your money in the stock market is always apparent, but there are ways to minimize this risk in ways such as diversification.
Final Thoughts
Thereâs one thing we didnât really touch on yet but assumed as we put this piece together, and that is on you participating in the stock market. Millions of people worldwide can invest in stocks and have access to execute but donât. This makes us really sad because the ability to own a public company is perhaps one of the most remarkable ways to build wealth. We encourage you to consider investing if you donât already. If your goal is to build large amounts of wealth and donât invest in companies, your journey will undoubtedly be challenging.
Thanks for Reading!
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https://millennial.investments/blogs/markets/welcome-to-our-markets-blog2020-12-09T21:29:32-05:002020-12-09T21:29:32-05:00Welcome to Our Markets Blog!Garrett RamelaMarkets are the foundation of wealth and capitalism. They are the central point of buyers and sellers meeting to exchange resources to push society forward.
Markets are the foundation of wealth and capitalism. They are the central point of buyers and sellers meeting to exchange resources to push society forward.
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