Do you invest your money on something like stocks, mutual funds, or bonds?
There are trade off between volatility and return. Some people invest a lot on extremely high risk. Some people are too busy to think of investment so as they follow financial advisor's recommendation in spite of high advisory fee. After starting my job, I gradully start to invest a part of my salary.
Here I would like to highlight the importance of life-long intermediate-risk investment and their benefits.
The intermediate-risk investment is
- start with small amount of money every month like 50$ in a month
- long-span from now to your retirement
- taking an full advantage of tax benefit
- distributed investment and dollar-cost averaging
- aiming for asset building after the retirement and extra support for daily life
- selecting Index fund or ETF
- not changing the strategy i.e., do not buy or sell even if you really want to.
The benefits of this methodogy are as follows:
- our eye is more open to economy and society, international affiars.
- we learn the sense of trade-off between risk and return. Our life is filled with trade-off. All decision making is involved with risk and return.
- we understand what is our investment trait and phychological tendency when we see our money is increasing or decreasing. This is more important when you need to deal with more bigger amount of money in the future.
Let me know if you have your recommended strategy for novice.