volatility
How to invest in ETFs
If youâre wondering what an ETF is and how to get one â Iâve got your covered! Check out our step-by-step guide on how to buy an ETF.If youâre wondering what an ETF is and how to get one â Iâve got your covered! Check out our step-by-step guide on how to buy an ETF.
The post How to invest in ETFs appeared first on Money Under 30.
10 Best Investments for Monthly Income
The post 10 Best Investments for Monthly Income appeared first on Well Kept Wallet.
How to Invest in the S&P 500: What You Need to Know
Does it make sense for ALL investors to invest in the S&P 500? What if youâre not 100% comfortable investing all your money in the stock market? This article looks at how the S&P 500 works, along with some pros and cons of investing in the S&P 500, so you can make a more informed decision for YOUR portfolio.
The post How to Invest in the S&P 500: What You Need to Know appeared first on Good Financial Cents®.
How to diversify your investment portfolio
Diversification can help you create a more stable investment approach, while enjoying the growth of different types of investments.Diversification can help you create a more stable investment approach, while enjoying the growth of different types of investments.
The post How to diversify your investment portfolio appeared first on Money Under 30.
Single-family rental market slammed by headwinds
Single-family rental investors and their lenders face challenges: rent growth is slipping, vacancy rates are growing and a possible recession looms.
Bitcoin Annual Total Returns (1 – 10 years)
8 ways to cash out your Bitcoin
Cashing out your Bitcoin? Here are 8 simple ways to do it, and a few things you may want to consider before selling it all.Cashing out your Bitcoin? Here are 8 simple ways to do it, and a few things you may want to consider before selling it all.
The post 8 ways to cash out your Bitcoin appeared first on Money Under 30.
Mint Offers Budget Tools for Tracking Bitcoin Assets
Mint Offers Budget Tools for Tracking Bitcoin Assets Bitcoin is an electronic payment system that allows one party to pay another without the involvement of a financial institution like a bank, credit card processor, or online processor like Paypal. Since it’s self-governing and outside of any government-regulated currency system, the value of Bitcoin has shown
The post Mint Offers Budget Tools for Tracking Bitcoin Assets appeared first on MintLife Blog.
What’s the best long-term investment?
What’s the best long-term investment? Because you’re a money nerd (and a GRS reader), I hope your answer to this question was, “Stocks!” If the future is anything like the past, that’s the correct answer. History has shown that stocks are the best long-term investment — and by a wide margin.
Unfortunately, most Americans believe otherwise.
As a part of its annual Economy and Personal Finance survey (conducted during the first two weeks of April), Gallup News asked 1017 American adults, “Which of the following do you think is the best long-term investment: bonds, real estate, savings accounts or CDs, stocks or mutual funds, or gold?”
Here’s how people answered:
- 35% of respondents said that real estate is the best-long term investment
- 21% said that stocks or mutual funds are the best long-term investment
- 17% said that savings accounts or certificates of deposit are the best long-term investment
- 16% said gold is the best long-term investment
- 8% said bonds are the best long-term investment
While acknowledging that past results are no guarantee of future performance — let’s take a look at why I think Americans haven’t got a clue when it comes to figuring out the best long-term investment strategy.
The Rate of Return on Everything
The August 2019 issue of The Quarterly Journal of Economics included a paper entitled “The Rate of Return on Everything, 1870-2015”. Over an astounding 74 pages of discussion, the authors attempt to analyze the long-term (145-year) rate of return on a variety of assets around the world.
The paper examines four popular investment vehicles:
- Bills, by which the authors mean Treasury bills, are short-term government bonds. At present, these are a good proxy for the rates you can earn with a high-yield savings account. (I don’t think this is always the case, though.)
- Bonds, which in this case refers to ten-year government bonds (such as a 10-year Treasury note).
- Equity, which is another way to describe common stock. Here, the authors are measuring overall stock market performance.
- Housing, including rental properties.
We’ll look at each of these in greater detail in a moment (and we’ll look at gold too), but for now let’s look at this paper’s overall findings. While the authors looked at data for many countries, I’m only going to share results for the U.S. The following table shows the rates of return for these different asset classes over three different time periods. (Remember that, for our purposes, Bills are a stand-in for savings accounts.)
From this table, it’s clear that equities (i.e., stocks) have been the highest return investments over long periods of time. Nothing else comes close. (Outside the U.S., this isn’t always true.)
Now, while stocks provide the best long-term returns, they also come with the greatest volatility. Here’s a a chart (Figure VII) from the paper that shows just how crazy the ride with stocks can be. (Also note how closely equities and real estate tracked each other until the Great Depression.)
It’s this volatility that scares so many people away from the stock market. They’re afraid that a sharp decline can come at any time. And that’s true. But what’s also true is that a prolonged bull market can occur at anytime, as we experienced from March 2009 to February 2020! If you’re a long-term investor, you don’t give a fig about short-term market movement.
Let’s dive deeper into the long-term investment returns provided by the asset classes in the Gallup poll: real estate, stocks, savings accounts, gold, and bonds.