RISK AWARE INVESTMENT GUIDE FOR EVERYONE

  Now let’s turn our attention to a less exciting topic: the cost of investing. In investing, a penny saved is a penny earned.   Only net returns matter! Recall that the ultimate goal of any investment is to implement the formula max(Net Return) = max (Gross Return) - min (Total Cost), where Total C ost refers to all of the costs incurred to make an investment, which includes the cost of the investment, plus any broker commissions, taxes, licenses, and fees related to the asset management and transaction s . The good news is that c utting costs while i ntroducing a cost-control system is a sure-fire way to improve the profitability of your portfolio without taking on any additional risk .   You may want to examine each of these categories of expenses and minimize them wherever possible : 1. The expense ratio The expense ratio is calculated by dividing total fund costs by total fund assets [1] . It includes annual operating costs, including managemen...

  The previous Section addressed the scientific aspect of financial fundamentals in a quantitative way that is easy to follow. This aspect of finance is a solid place to start and should not be ignored. In addition, you can read books, articles, blogs or take an in-depth investment course that deals with advanced financial ideas beyond the scope of this guide (see Resources). Once you know what works in the market, let’s come up with a simple portfolio plan implemented as a roadmap and checklist that work for you. Warren Buffett once said that “An idiot with a plan can beat a genius without a plan”, and so the ultimate goal of this guide is to outline a sequence of key steps to get ready to invest by developing a financially attractive and risk aware investment plan. This leads to the following 1-week sequence of steps: Day 1: Preparation Phase ( Workspace Setup) This is about selecting the appropriate investment platform and exploring investor online databases, stock APIs and rela...