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Passive Investment: What Is This?

Buy and Hold is the passive investment strategy which is not assuming active purchasing or security sale from the moment of creation of a portfolio and before the termination of the period of investment.

Followers of the given strategy of trade with on the basis of schedules of two hundred year’s history for the American stock market prove that such approach is almost “god-send” for private investors.

As confirmation of the above-stated theory, Burton Melkil, within 30 years defends and proves the theory of passive index investment, in the book ?Casual walk on Wall Street? writes that the investor who in 1969 has enclosed 10 thousand dollars in the investment fund taking shares according to a stock index?Standard and Poor ` s 500?(S&P 500), in 2002 had 327 thousand dollars provided that all received dividends also were put in business.

All other followers of the specified strategy result similar examples as the correctness, referring to historical inevitability of growth of stock market.

In their opinion to create the pension capital it is necessary simply monthly, without depending on any cataclysms of stock market and personal financial position to buy on 10 part of the monthly income of the share, without caring of their further destiny.

But we will return to the above-stated example. It is easy to notice that for income acquisition at a rate of 317 000 dollars we would need 33 years of passive supervision over the enclosed money. All is simple and beautiful. But if to reject aside a colorful wrapper and to plunge into abyss of a banal reality, having set to yourself above-stated “gurus” of stock market number it is possible to see that the picture looks not such iridescent.

For example:

- Whether the specified income in comparison in due course necessary for its reception is impressive?

- What will be our profit if the world economic crisis which we observe now would start again?

- For what period of time the received profit will be sufficient?

- What summary income we would receive, actively managing the specified money funds instead of inactive contemplation?

And it is valid, let’s count up theoretical profit which we could receive in case of use for the above-stated 10 000 dollars not only potential of growth of stock market as a whole, but also would add to it also work of a principle of compound interests.

For example,we would achieve what result, if have simply put initial 10 thousand on the deposit with the rate in 12 % annual (or have provided the specified profitableness, having invested the specified means in other financial tools), but wouldn’t forget about them for 33 years, and annually, removing the drawn interest, would reinvest them together with original capital for a new year.

Without troubling you mathematical calculations, I will tell at once that at such active method of management means in 33 years us would get profit at a rate of 410 000 dollars.

In a case if we managed to provide profitableness not in 12 %, but in 20 % annual (actually achievement of such profitableness isn’t something extremely impracticable) the total sum would constitute 4 090 000 dollars instead of 317 000 dollars.

The times when governments have been flooding people with all types of grants have passed. At least for a while. But that does not imply that one should forget the idea of getting small business grants.

Everything is possible with nicely balanced approach; small business grants including.

Visit this blog for more practical tips about grants, how to apply for grants, grant examples, ups and downs of the grants. This info will help you to get small business grants or any other grants faster.

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