(photo: iStockphoto) One of the unrecognized dangers in the market is found in the attraction of exotic or complex strategies. Newcomers may find themselves drawn to complex (and risky) investments or investing strategies, when in fact they are better suited...
Smart investors use a simple approach to personal investing that delivers the goods: asset allocation. Using asset allocation, you divvy up your investment portfolio among different types of investments (called asset classes) based on the level of risk you’re willing to take.
Most traders have heard of options, but few really understand them. And while the old adage that “a little knowledge is a dangerous thing” applies here, it makes sense to at least have a basic knowledge about options and how they work.
To be a successful investor, you have to recalibrate your brain. You can teach an old dog new tricks—behavioral research shows that you can adopt better habits, and as you do, you build new neural pathways that strengthen that behavior. Each success reinforces your new good habits, and they grow stronger until they eventually become second nature.
There are many investors who, after years of researching and managing their investments, have built up a solid knowledge base of stock or fund picking and are willing to take it to the next level. (Others can simply afford to set aside a certain amount of cash to “play with” on the stock market.) Those people move money in and out of positions on a daily basis — and take their profits from day to day rather than waiting for months or years.
The Securities and Exchange Commission proposed new regulations for the marketing of target-date retirement funds (TDFs) recently — a development that, more likely than not, escaped most investors’ attention.
Betterment is betting that simplicity is a feature investors will pay for, and they’ve created a web-based product that makes investing as easy as opening a savings account. In doing so, they’ve earned plenty of fans (the company hit its summer goals in its first week), but also critics who say the site is misleading and overpriced.