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What’s your goal? That’s the first question that needs to be answered here before trying to identify an investment strategy.

aboodman 6y ago
Investment managers always ask this question and I never know what to answer. I feel like everyone's answer must be the same: maximize return, minimize risk. What are possible answers to this question you're looking for?
- symmitchry 6y ago
  You could be interested in retiring early (or immediately), or you could be interested in buying property overseas and spending your winters in Spain. Also "minimize risk" is not consistent with "maximize return" so that's not even a valid answer. Someone might say "I wanna put it all on Black", and someone else might be saving for their child. Lots of really varied answers are possible.
- blahbhthrow3748 6y ago
  Time frame - if you need the money next year your risk tolerance is very different compared to if you need the money in 10 years. You can't minimize both risk _and_ return, there's no free lunch
- PaulDavisThe1st 6y ago
  Time period would be a good place to start.
- mensetmanusman 6y ago
  Are you looking to help others, or help yourself? E.g. your goal could be to help low income children have better lives. Your goal could be to live on an island mansion in 20 years.
- kqr 6y ago
  You can't both minimise risk and maximise return. They're polar opposites. ("Risk" is a bad word for the concept. It's more about volatility. The more volatile the asset, the higher the fluctuations, and the less you can expect to still have tomorrow, but the more you'll have in 20 years.) The expected answer is mainly about what risk you are able to tolerate, i.e. how soon you will need the money back again.
- jayrobin 6y ago
  The general aim is to figure out how much money you need at different points in your life, for example: - how many years until you plan to retire? - how much do you need in retirement? How much do you expect to receive from social security/other income sources? - do you have/are you planning to have kids? Are you going to pay for college? If yes, how much might that cost? - are you expecting any other big expenses in the future? e.g. wedding, down payment on a house - are you planning to take a sabbatical at any point? If yes, for how long and how much do you expect to spend?
shansense 6y ago
Absolutely! Let me also put other things in perspective: 1. Any “investment” is basically putting your resources in the hands of others (planners, CEOs of other companies etc) in the hopes that they can manage the money better than you. This is a conclusion only if you don’t believe you can manage the resources. Are you sure of this? 2. Why not invest in yourself? Depending on your life situation- getting into a good school, a good network/club, a good society might actually be a better payoff! 3. Building a startup might give you a much better reward if you are so inclined. The opportunity cost is very real (again depends on your life situation) 4. If you know where you’ll live for a foreseeable future AND if you tend to be shaken by market events, buying a house might be better (people don’t generally sell off their house so they tend to let their investment compound inadvertently!). 5. Investing in new experiences like doing an internship (no regard for pay) in fields you are interested in might open up new avenues. I firmly believe that only when you are clear on your goal and having invested in oneself and having thought of everything else should you get to the problem of whether a particular etf is better or whatever.

aboodman 6y ago

Investment managers always ask this question and I never know what to answer. I feel like everyone's answer must be the same: maximize return, minimize risk. What are possible answers to this question you're looking for?

symmitchry 6y ago
You could be interested in retiring early (or immediately), or you could be interested in buying property overseas and spending your winters in Spain. Also "minimize risk" is not consistent with "maximize return" so that's not even a valid answer. Someone might say "I wanna put it all on Black", and someone else might be saving for their child. Lots of really varied answers are possible.
blahbhthrow3748 6y ago
Time frame - if you need the money next year your risk tolerance is very different compared to if you need the money in 10 years. You can't minimize both risk _and_ return, there's no free lunch
PaulDavisThe1st 6y ago
Time period would be a good place to start.
mensetmanusman 6y ago
Are you looking to help others, or help yourself? E.g. your goal could be to help low income children have better lives. Your goal could be to live on an island mansion in 20 years.
kqr 6y ago
You can't both minimise risk and maximise return. They're polar opposites. ("Risk" is a bad word for the concept. It's more about volatility. The more volatile the asset, the higher the fluctuations, and the less you can expect to still have tomorrow, but the more you'll have in 20 years.) The expected answer is mainly about what risk you are able to tolerate, i.e. how soon you will need the money back again.
jayrobin 6y ago
The general aim is to figure out how much money you need at different points in your life, for example: - how many years until you plan to retire? - how much do you need in retirement? How much do you expect to receive from social security/other income sources? - do you have/are you planning to have kids? Are you going to pay for college? If yes, how much might that cost? - are you expecting any other big expenses in the future? e.g. wedding, down payment on a house - are you planning to take a sabbatical at any point? If yes, for how long and how much do you expect to spend?

shansense 6y ago

Absolutely! Let me also put other things in perspective: 1. Any “investment” is basically putting your resources in the hands of others (planners, CEOs of other companies etc) in the hopes that they can manage the money better than you. This is a conclusion only if you don’t believe you can manage the resources. Are you sure of this? 2. Why not invest in yourself? Depending on your life situation- getting into a good school, a good network/club, a good society might actually be a better payoff! 3. Building a startup might give you a much better reward if you are so inclined. The opportunity cost is very real (again depends on your life situation) 4. If you know where you’ll live for a foreseeable future AND if you tend to be shaken by market events, buying a house might be better (people don’t generally sell off their house so they tend to let their investment compound inadvertently!). 5. Investing in new experiences like doing an internship (no regard for pay) in fields you are interested in might open up new avenues. I firmly believe that only when you are clear on your goal and having invested in oneself and having thought of everything else should you get to the problem of whether a particular etf is better or whatever.