Book of Wise Investors

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Most of us are either working for or own businesses. It doesn’t matter, be it employees or employers (business owners), we still need to increase the profitability of the businesses. In simple words, more profits simply mean generate more revenue than expenses.

We always heard that productivity is important if employee wants to do well in his career and companies want to do well in their businesses. To use an engineering perspective to explain productivity – amount of work done per unit time. I know it should be called power in physics and engineering. As you can see, the more…

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There is more we can do for a fulfilling life, and increase our bank accounts values along the way.

Another year has passed; do you lament at another forgettable year or feel satisfied at a life well live?

End of a year is a good time to review your investment performance and career progressions. For students, other than checking examinations results, read widely, doing self reflection and learning about managing own personal finances now is equally important.

No one knows what 2010 holds, maybe new world order? But there ways to make it less than ordinary and an unforgettable year.…

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Given the inherent risks involved and minimum capital required for adequate diversification when owning the three main asset classes directly – stocks, bonds and real estate, most of us can only participate in the long run returns from them through active management of passive managed index funds, and to reduce risks of losing everything as well.

This post is going to talk about the different ways in which stock mutual funds are classified, knowing what types of stock mutual funds you are buying aids greatly in determining the levels of risks and rewards that one is exposed to. As such,…

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The author of this website recommends equity exposure through index funds and exchange traded funds as opposed to direct stocks ownership (if not enough capital) and actively managed mutual funds. See that there are basically only three ways to own stocks, not considering an investment linked insurance policies that invest some of the policy holders’ premiums in equities.

As of now, there are more than 1000 index funds and exchanged traded funds available in the United States, without including other countries. Out of these 1000 passively managed funds, around 300 consisted of index mutual funds and…

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Benjamin Graham value investing principles pay handsome dividends to those who follow it, the most famous example of which is Warren Buffet. Given the large similarities between businesses and physical properties, it is clear that some principles can be ported when one is going to buy properties.

No one places 100% cash down when buying properties for investments, other than primary residence. Although the price of a physical property seldom drop to zero, unlike that of stocks where even for a well know blue chip like Enron and Lehman Brothers can fall, its price can still dropped in the short…

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The standard and most talked about measure of risk in finance is standard deviation. While standard deviation has its reasons for existence in academic literature, a more applicable and intuitive measure of risk would be drawdown.

The drawdown of an investment is simply defined as the largest loss that occurs in the past. That is the difference between the highest and lowest price in all the historical price movements of the asset. Measurement of drawdown needs to consider the time period. In other words, the percentage lost from the highest point to the lowest point within a period.

In equation…

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When it comes to financial planning and investing, the first thing is wealth protection. Other than medical insurance for citizens and permanent residents of countries without universal health care, one other type of insurance that is essential for almost everyone but not everyone is life insurance.

Most will probably knows what it is, a life insurance insure against accidental death, total permanent disability and some common critical illnesses.

Although there are many types of life insurance, the protection part being offered by them is about the same, that is pay a sum…

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There is increasing popularity of indexing investing as Internet breaks down the informational advantage that the high priests of finance once have. People start to realize the premise that professional fund managers can beat the market is false, at least for the majority because they are the market. Even in index investing, which is basically buying into index mutual funds and/or exchanged-traded funds that tracks certain indexes, there is still a need for an average investor to acquire knowledge in this area of index investing to prevent being screwed by salesman in expensive suits.

However, though index funds…

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