2 ways to increase your profits
Whether you are an institutional investor or retail investor, capital is always a constraint.
Institutional investor has more capital to deploy naturally and thus they may not need that high a growth percentage to make the desired returns/profits for their customers. Plus they take a fee for that.
On the other hand, retail investors like you and me would have lesser capital, say 1K to 100k to start with. And some lost it all midway and have to work harder to save funds again. Opportunity costs here !
From the chart, you can see the importance of riding on trend early, spotting the right timing to get into the market.
At 1K and 3 different investors get into SPX500 at different time would yield 3 different returns. The higher you buy at , the lesser you made and the higher the risks when the market turns the other way.
If you grasp this concept, that means with more capital later as you becomes more skilful and experienced, you can identify growth stocks like Biotech, Disruptive Tech, Healthcare,etc to ride the growth up.
So, basically there are 2 ways to increase your returns/profits :
1. A large capital base (1M compared to 1K) at same ROI - x%
2. A small capita base (1K compared to 1M) at high ROI - Y%
Now, you can understand why there are many millionaires who just invested in 1-2 stocks but held it for some years like FB, Amazon , Apple compared to the traditional ones like Coca-Cola, P&G, J&J,etc.
Growth stocks are not for every type of investors. It carries a much higher risks as it has higher volatility so the investors must be able to stomach this risk appetite well. If you get sleepless night or become anxious over seeing your account temporarily in the red, then growth investing may not be your cup of tea.
The challenge is the risk averse hanker after the high returns at shorter time frame yet is unwilling to take on the risks that comes attached with it. There is no free lunch on this planet.
The faster one recognise that and find stocks/products that matches their personality, the better and more at peace they become.
Read John 16.33
Institutional investor has more capital to deploy naturally and thus they may not need that high a growth percentage to make the desired returns/profits for their customers. Plus they take a fee for that.
On the other hand, retail investors like you and me would have lesser capital, say 1K to 100k to start with. And some lost it all midway and have to work harder to save funds again. Opportunity costs here !
From the chart, you can see the importance of riding on trend early, spotting the right timing to get into the market.
At 1K and 3 different investors get into SPX500 at different time would yield 3 different returns. The higher you buy at , the lesser you made and the higher the risks when the market turns the other way.
If you grasp this concept, that means with more capital later as you becomes more skilful and experienced, you can identify growth stocks like Biotech, Disruptive Tech, Healthcare,etc to ride the growth up.
So, basically there are 2 ways to increase your returns/profits :
1. A large capital base (1M compared to 1K) at same ROI - x%
2. A small capita base (1K compared to 1M) at high ROI - Y%
Now, you can understand why there are many millionaires who just invested in 1-2 stocks but held it for some years like FB, Amazon , Apple compared to the traditional ones like Coca-Cola, P&G, J&J,etc.
Growth stocks are not for every type of investors. It carries a much higher risks as it has higher volatility so the investors must be able to stomach this risk appetite well. If you get sleepless night or become anxious over seeing your account temporarily in the red, then growth investing may not be your cup of tea.
The challenge is the risk averse hanker after the high returns at shorter time frame yet is unwilling to take on the risks that comes attached with it. There is no free lunch on this planet.
The faster one recognise that and find stocks/products that matches their personality, the better and more at peace they become.
Read John 16.33
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