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investing - Coggle Diagram
investing
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investing
Account types:
- wealth management accounts
2% fees
have custody and discretion
minimum account size
- traditional financial advisors
fee only ( specific fees a year )
Asset under management ( AUM )--- percentage taken every year for the total amount being managed for you
understand if they need custody
- retail brokerages [ do it your self ]
do not have custody of discretion
self directed investing
you pay only when you trade (charge per trade)
- internet based low cost advisors
use data to provide financial advice
robo-advisers
concepts:
- Custody: when a custodian manages your account for you
- Discretion : buying and selling in your behalf without your approval
look into financial people that are Fiduciary duty meaning that they're not sales people and they'll act on your best interest to help you
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when you want to invest you ask your self
- commission
- annual fees
- access to money
- tax implications
Manage Risk:
- Bongs:
bonds raring agencies
- Stock:
depend on supply and demand
stock analyst
research
know your risk limits
balance you portfolio
Systemic of market risks ( large events that important financial market )Nonsystemic risks ( risks that affects specific companies, industries, countries ) and Diversification is the best protection against this risk
- asset class ( stock, bonds, Cash, and ETF's )
- geography
- industry
you want to buy companies that have a future and value
- price to earnings ratio (P/E):
this will show how much investor money is needed to generate 1$ of company profit
if the P/E = 100 --> means that the company invest 100$ ---> profit 1$
- PEG ratio:
dividing the P/E ratio by predicted growth
100 (P/E) / (100% predicted growth ) = 1 ( and we want 1 or less than one )
- we want also to compare this companies to competition or market average for the industry:
-profit margins
-cash flow
-debt to equity ratios
-dividends (every 3 months)
-wall street talk( positive buy rating )
- check Earnings data ( every 3 months )