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Investing - Coggle Diagram
Investing
Passive Investments
Diversification to gain exposure to whole market
Tries to mimic or ride the market
Buy investments when they have money to invest
EMH - Stocks prices reflect their value - set over time
Believe market is fair and/or efficient
No research - often choose stocks after they've already gone through their largest gain
Active Investments
Goal is outperform the benchmark
Alpha Return - Amount investment outperforms benchmark
Monitoring prices of positions
Believe stock prices aren't always what they are worth
Believe market is irrational
Look for stocks that are about to dramatically increase in value
How to Invest
Lower Fees
Be careful of personal biases
Diversify
Focus on the long-term
Choose funds that outperform the market
Just start investing! You can't make money if you don't try
Mutual Funds
Large Cap Fund - Blue Chip Fund
Slow to fall and rise
Most stable
Growth Fund - Mid Cap Fund
S&P 500 is an example
Relatively stable
Aggressive Growth Fund - Small Cap Fund
Small tech companies and startups
Very volatile
Goes up and down quickly
International and Global Funds
Worst performing type of funds