InvestExplore

Welcome, New Investor!

These are exciting times to be an investor in equities globally. We say this despite the turbulence of COVID-19 which has caused tremendous volatility in the markets. COVID-19 has caused a disruption which is spurring innovation in different sectors and this is bound to offer plenty of long term opportunities. As a new investor, hopefully young as well, we believe your focus should be on building wealth as a prudent investor.

Key Factors To Building Wealth

In our investing experience we have found these to be the key factors to building wealth:

Build a long term diversified multi asset class portfolio (using ETFS/Mutual Funds) and rebalance it periodically. To learn about the basics of asset allocation click here.

Invest for the intermediate term only in high quality individual stocks and sell them when substantial capital gains are achieved.

For Traders Only: Trading Stocks/ETFS with the trend by keeping a strong check on emotion-driven trading.

Also, you have to remember you cannot build wealth overnight. It is a process which begins with starting small.

Start Small, Aim Big - A New Investor Sample Roadmap

As a new and young investor you might be wondering how to participate in the market. Even if are not young, if you haven't really invested in the markets then you may be asking the same question.

Our answer to this question is very simple: These investors we believe must start small but aim big over the long term. Here is a roadmap which we have put together for new investors. This roadmap is highly predicated by the extent of risk these investors can take.

Assumption: Capital Available to Invest: $5000

Determine Risk Aversion Level

Investing in Stocks and ETFS involves risks. The risk of losing money is real.

Determining the risk aversion level first before jumping into buying Stocks or ETFS is the most prudent action.

In general, if the risk aversion level is very high, holding individual stocks is not going to be a pleasant experience.

If the risk aversion level is low, holding high quality individual stocks can provide excellent long term wealth creation benefits in a diversified portfolio.

Can Take No Risk At All

This category of investors have to park or invest their money in highly safe US Treasury Securities and Bank Certificate of Deposits.

This will help keep the money safe but its earning power is likely to diminish over time.

All the more important to remember: the long term purchasing power of this money also will diminish because of inflation.

Can Take Moderate Risk

This category of investor is not perturbed to see their investments fluctuate in value to some extent in tune with the broader market such as the S&P 500.

These investors will need to focus on building a diversified long term portfolio made up of ETFS and Stocks and here is a roadmap from our perspective:

Separate the available capital into two buckets. Bucket 1 can have about $4000. Bucket 2 can have the rest: $1000.

Start a Long Term Asset Allocation (Diversified) Portfolio with $4000 in Bucket 1 for the long term and periodically rebalance this asset allocation portfolio. Keep investing additional money every year to grow this base.

Invest in High Quality Individual Stocks with $1000 in Bucket 2 keeping a long term/intermediate term (1+ years) perspective.

Can Take High Risk

This category of investor is very aggressive and is not affected at all when their investments fluctuate in value very sharply.

These kinds of investors are not perturbed by the volatility in the stock market and keep a cool demeanor even if they lose all the money invested.

Investors falling in this category may be interested in short term investing and trading.

In investing,the general principle to always remember is: the risk-reward ratio is linear.

This means: The higher the reward potential for an investment, the higher the risk in that investment. Keeping this in mind, these investors may want to explore these options:

Separate the available capital into two buckets. Bucket 1 can have $2500. Bucket 2 can have the rest: $2500

Trade High Quality Stocks With Capital Allocated in Bucket 1 - being fully aware all of this money may be lost in periods of extreme market correction.

Trade High Quality ETFS With Capital Allocated in Bucket 2 - being fully aware all of this money may be lost in periods of extreme market correction.

How We Can Help

InvestExplore aims to help many types of investors. We publish the InvesTrak E-NewsLetter which offers a variety of services.

Asset Allocation Model Portfolios	We track 3 Long Term ETF Asset Allocation Model Portfolios since 2010 in our E-Newsletter. Learn more about these here.
Monthly Stock Ideas	Using our unique multi-factor approach we feature one or more stocks in our E-Newsletter every month which we believe can be tracked for both long term and short term investing.
Monthly ETF Ideas	Using our unique technical approach we feature one or more ETFS in our E-Newsletter every month which is aimed for short term investing.
Weekly Highlights	We provide a quick market review email every week and also highlight attractive Stock and ETF Ideas for you to track.
Implementation Strategies	We have developed unique strategies to implement these approaches. Learn more about these here. Also check out the performance of these strategies here.

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