Other Article: Five golden ideas for making money by throwing things
It may sound ridiculous, but when you retire, you may really need to know how to invest one million dollars or the like. That’s exactly the question you want to answer, isn’t it?
Other Article: Automobile insurance that you must know when you are afraid to ask
If you have worked for 40 years or more and saved 10% of each working income, you will find that your personal pension is 10 to 15 times your annual income. Based on your annual income, your savings are likely to exceed $1 million. If you are still young, take this as your goal. If you keep investing, your pension will exceed one million dollars.
Other Article: How to judge whether my income is reasonable?
Now, let’s talk about how to use the money.
Other Article: Wealth Thinking Series: Eight truths about getting rich
Investment distribution: the first principle is to establish the concept of asset allocation. You can divide a million into three groups. A group of investment stocks. A group of investment bonds. One group is saved as cash. If you have just retired, you can put 30% to 40% of your money into stocks, 40% to 60% into bonds, and save the remaining 10% to 20%. The greater the proportion of stock investment, the greater the risk and the higher the expected return. There is no risk in cash saving. If you are conservative, save more cash and buy fewer stocks. Retired people should regard bonds as the core of investment plans and enjoy the income they bring.
Other Article: Wealth Thinking Series: The true law of wealth
Diversified investment: Don’t bet all your money on one or two stocks. Don’t invest all this money in 12 stocks in the same industry. The market divides assets into different price combinations; No one can take the risk of centralized investment for you. The practice of investing in different kinds of stocks is called “diversified investment”. Do the same when investing in bonds.
Other Article: Just paid off the car loan, do you want to change a new car now?
Fund: The simplest way to diversify investment is to buy public funds or exchange traded funds (ETFs). When investing in funds, you can choose different kinds of stocks or bonds to achieve investment diversification. Each fund has a specific investment objective. It is prudent to purchase funds with different investment objectives. When you have $1 million, you can invest in up to 10 different types of funds. You can refer to the Morningstar Fund List to select the appropriate fund type. The investment distribution in this example is: 40% stocks, 50% bonds and 10% cash deposits.
- 1. Small and growth oriented: the fund is invested in small and growth oriented companies
- 2. Real estate: funds invested in real estate related assets including REIT
- 3. Medium market cap portfolio: the fund is invested in growth stocks and value stocks in medium-sized companies
- 4. Large enterprise value stocks: large companies whose fund investment value is considered undervalued
- 5. Multi industry bonds: the fund is invested in government bonds, foreign bonds and high-yield bonds (also known as junk bonds)
- 6. Long term bonds: the fund is invested in the company’s long-term bonds
- 7. Medium term bonds: corporate bonds mature within ten years after the fund is invested
- 8. Short term bonds: the fund is invested in the company’s short-term bonds
- 9. Short term government bonds: funds are invested in short-term government bonds
- 10. Money market: The return of such funds is very low, but the cash is safe here
Other Article: Eight golden ideas that are prudent and decent
Each of the above categories corresponds to a different fund. Contact the broker to find out the fund without sales fees and commissions and with low expense ratio. You can find funds that meet all these conditions through almost any “public fund filter”; You can first go to the Internet and use the “public fund filter” as a keyword to find such a tool.
Other Article: Doing nothing can kick start your savings plan!
This is the way to get started: no matter how much money you have, you can adopt the above basic investment principles. If your capital is far less than 100000 dollars, reduce the investment category of the fund. Once your pension reaches 10000 dollars, you can buy at least five funds to realize diversified investment and consider the corresponding income distribution of investment.