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CTSSHAH
@ctsshah
#SafeInvestments If someone tells you that something is a sure bet with investing ... take it with a healthy dose of skepticism. At the very least, do your own due diligence and figure out what risks you are exposing yourself to with any investment you make and what core assumptions were made. If you look at the chart below this includes the top 3 in the S&P500 and the S&P500 index fund - over this time period all 4 have decreaesed in value. Just because a company is a "blue chip" or the investment is labeled as "safe" such as the S&P500 doesn't mean you can't lose money on the investment ... context matters. #IndexFunds Dollar cost averaging into an index fund such as one tracking the S&P500 is generally considered to be a safe investment strategy as it utilizes diversification, but the key factor to remember is that it is also dependent on TIME. This is only considered "safe" if your investing timeline is long enough for short term price fluctations and factors to even out. While the overall trend is one that is going up, if you are trying to make money in a short period of time or may need to pull the money out of the market in a short period of time ... investing in the S&P500 can be speculative in nature rather than a sound investment. In fact, there are plenty of people trying to swing trade index funds via leveraged ETFs, inverse ETFs, or utilizing leverage with options trading. #BlueChips While these companies are large, highly visible, and quality companies ... the PRICE you pay to become a shareholder is incredibly important. There is an idea of value investing popularized by Benjamin Graham and Warren Buffett where one only purchases a company if it is trading at a market price that is considered undervalued. This means that that intrinsic value of the company is worth more than what the market price says it thinks it is worth. If the difference between market price and intrisic value is sufficiently large then there is felt to be a margin of safety and the money put into this is considered an investment rather than a speculative purchase. I doubt I did the explanation justice with only a couple of sentences and so I left Benjamin Graham's book links below as well. #Ibonds "An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative." (Security Analysis p 106) With the above quote in mind, I would venture to guess that Series I Bonds at the current rate of 7.12% with the forecasted future rate to be even greater would likely satisfy the criteria of an investment operation. The bond is backed by the US government and interest can not be negative, and so the principal is protected against deprecation of principal. In addition, the returns are linked to the rate of inflation and so at the very least with inflation at recent highs should remain a modest return until inflation falls. While not traded on an exchange, Series I Bonds can provide a potential investment opportunity with margin of safety for those interested - can be bought on Treasury Direct. Again, context matters and as inflation drops the return on these will as well ... so while it may hold true now this might not be the case in the future. #Resources The Intelligent Investor - https://amzn.to/3Ldt0zF Security Analysis - https://amzn.to/37IuUK5 What is a Series I Bond: https://www.youtube.com/watch?v=aMu67V0bZ2E&list=PLn0fZqMvSiYD_q9RrSFhRMlg6YDLLOOiR&index=3 What is a Leveraged ETF: https://www.youtube.com/watch?v=4IkOZtAaWPo&list=PLn0fZqMvSiYBqYepxNcr-Ka5wz7wqN70Y&index=7 What is a Inverse ETF: https://www.youtube.com/watch?v=8iNNlX11qDc&list=PLn0fZqMvSiYBqYepxNcr-Ka5wz7wqN70Y&index=8 What is swing trading: https://www.youtube.com/watch?v=4cC3Oqb5CP8&list=PLn0fZqMvSiYCjqEeIxlz7QZbMl7kOwMpt&index=6 What is option trading: https://www.youtube.com/watch?v=qifKJOAAE6k&list=PLn0fZqMvSiYCjqEeIxlz7QZbMl7kOwMpt&index=7
Mar 24 - Apr 22, 2022
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