vania-janet/multiturn-rag-retrieval-data huggingface dataset:
There are a number of scholarly articles on the subject including a number at the end of the Vanguard article you reference.  However, unfortunately like much of financial research you can't look at the articles without paying quite a bit. It is not easy to make a generic comparison between lump-sum and dollar cost averaging because there are many ways to do dollar cost averaging.  How long do you average over?  Do you evenly average or exponentially put the money to work?  The easiest way to think about this problem though is does the extra compounding from investing more of the money immediately outweigh the chance that you may have invested all the money when the market is overvalued.  Since the market is usually near the correct value investing in lump sum will usually win out as the Vanguard article suggests. As a side note, while using DCA on a large one time sum of money is generally not optimal, if you have a consistent salary DCA by frequently investing a portion of your salary has been frequently shown to be a very good idea of long periods over saving up a bunch of money and investing it all at once.  In this case you get the compounding advantage of investing early and you avoid investing a large chunk of money when the market is overvalued.
Two ideas. EDIT: you should also do alot of research about how to invest this money properly. Something low risk but will beat inflation by a margin.
"A kid can lose everything he owns in a crap shoot and live. But a senior citizen might not afford medical treatment if interest rates turn and their bonds underperform. In modern portfolio theory, risk/""aggression"" is measured by beta and you get more return by increasing risk. Risk-adjusted return is measured by the Sharpe ratio and the efficient frontier shows how much return you get for each level of risk. For simplicity, we will assume that choosing beta is the only investment choice you make. You are buying a house tomorrow all cash, you should set aside that much in liquid assets today. (Return = who cares, Beta = 0) Your kids go to college in 5 years, so you invest funds now with a 5 year investment horizon to produce, with a reasonable level of certainty, the needed cash then. (Beta = low) You wish to leave money in your estate. Invest for the highest return with a horizon of your lifetime. (Return = maximum, Beta = who cares) In other words, you set risk based on how important your expenses are now or later. And your portfolio is a weighted average. On paper, let's say you have sold yourself into indentured servitude. In return you have received a paid-up-front annuity which pays dividends and increases annually. For someone in their twenties: This adds up to a present value of $1 million. When young, the value of lifetime remaining wages is high. It is also low risk, you will probably find a job eventually in any market condition. If your portfolio is significantly smaller than $1 million this means that the low risk of future wages pulls down your beta, and therefore: Youth invest aggressively with available funds because they compensate large, low-risk future earnings to meet their desired risk appetite."
http://i.imgur.com/qvayKiB.jpg  I bet many mathematicians would tell you that learning math makes you a better investor. And programmers would tell you that learning how to code makes you a better investor. And similarly for [biologists](https://www.bloomberg.com/news/articles/2017-07-20/hedge-fund-quant-posting-21-return-says-biology-is-secret-sauce) and sociologists and psychologists and [linguists](https://tepper.cmu.edu/-/media/files/tepper/extranet/academic%20programs/phd/dissertations/gao%20dissertation%20pdf.pdf) (PDF). Admittedly I have my own preconceived notions about [literary criticism](http://xkcd.com/451/), but I'd be tempted to believe the argument of an expert in any of those fields over a literary critic's.
I thought the Finance Buff made a pretty solid argument for a financial advisor the other day: http://thefinancebuff.com/the-average-investor-should-use-an-investment-advisor-how-to-find-one.html But 1.5% is too expensive. The blog post at Finance Buff suggests several alternatives. He also has the great suggestion to use Vanguard's cheap financial planning service if you go with Vanguard. A lot of investing advice fails to consider the human factor. Sure it'd be great to rebalance exactly every 6 months and take precisely the amount of risk to theoretically maximize returns. But, yeah right. It's well-known that in the aggregate individual investors go to cash near market bottoms and then buy near market tops. It's not that they don't know the right thing to do necessarily, it's just that the emotional aspect is stronger than any of us expect. You shouldn't rely on sticking to your investments any more than you rely on sticking to your diet and exercise program ;-) the theoretically optimal solution is not the real-world-people-are-involved optimal solution. My own blog post on this suggests a balanced fund rather than a financial advisor, but I think the right financial advisor could well be a better approach: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ Anyway, I think people are too quick to think of the main risk as volatility, and to think of investing as simple. Sure in theory it is simple. But the main risk is yourself. Fear at market bottoms, greed at market tops, laziness the rest of the time... so there's potential value in taking yourself out of the picture. The human part is the part that isn't simple. On whether to get a financial advisor in general (not just for investments), see also: What exactly can a financial advisor do for me, and is it worth the money?
"Buy term and invest the difference is certainly the standard recommendation, and for good reason. When you start looking at some sample numbers the ""buy term and invest the difference"" strategy starts to look very good. Here are the rates I found (27 yr old in Texas with good health, non-smoker, etc): $200k term life: $21/month $200k whole life: $177/month If you were to invest the difference in a retirement account for 40 years, assuming a 7% rate of return (many retirement planning estimates use 10%) you would have $411,859 at the end of that period. (If you use 10% that figure jumps to over $994k.) Needless to say, $400k in a retirement account is better than a $200k death benefit. Especially since you can't get the death benefit AND the cash value. Certainly one big difficulty is making sure you invest that difference. The best way to handle that is to set up a direct deposit that goes straight from your paycheck to the retirement account before it even touches your bank account. The next best thing would be an automatic transfer from your bank account. You may wonder 'What if I can no longer afford to invest that money?' First off, take a second and third look at your finances before you start eating into that. But if financial crisis comes and you truly can't afford to fund your own life insurance / retirement account then perhaps it will be a good thing you're not locked into a life insurance policy that forces you to pay those premiums. That extra freedom is another benefit of the ""buy term and invest the difference"" strategy. It is great that you are asking this question now while you are young. Because it is much easier to put this strategy into play now while you are young. As far as using a cash value policy to help diversify your portfolio: I am no expert in how to allocate long term investments after maxing out my IRA and 401k. (My IRA maxes out at $5k/year, another $5k for my wife's, another $16.5k for my 401k.)
From a mathematical expected-value standpoint, there is no difference between gambling (e.g. buying a lottery ticket) and investing (e.g. buying a share of stock).  The former probably has negative expected value while the latter probably has positive expected value, but that is not a distinction to include in a definition (else every company that gives a bad quarterly earnings report suddenly changes categories). However, investment professionals have a vested interest in claiming there is a difference; that justifies them charging fees to steer you into the right investment.  Consequently, hair-splitting ideas like the motive behind a purchase are introduced.  The classification of an item to be purchased should not depend on the mental state of its purchaser. Depending on the situation, it may be right to engage in negative EV behavior.  For example, if you have $1000 and need $2000 by next week or else you can't have an operation and you will die (and you can't find anyone to give you a loan).  Your optimal strategy is to gamble your $1000, at the best odds you can get, with a possible outcome of $2000.  So even if you only have a 1/3 chance of winning and getting that operation, it's still the right bet if you can't find a better one.
At your young age, the most of your wealth is your future labor income (unless you are already rich). Your most profitable investment at this time is most likely to be investment in your human capital (your professional skills, career opportunities).  Depending on how you plan to earn your money, invest time and effort to enable you to earn better wages in that activity. So focus on education or professional training. Also, consider that it is probably your total lifetime utility/welfare you should maximize (but you decide!). I suggest you do not focus narrowly on earning as much money as possible. Consider what sort of life you want and what you need to do to enable it. Best of luck!
Unless your brokerage will sell you fractional shares, the most obvious difference (without us knowing the actual identify of the companies) is that with the $260 one, you will have 3 shares plus you will have $220 minus commission left over that you wanted to invest but weren't able to simply because of the mechanics of long division. You could put that $220 into one of the cheaper stocks, but now the multiple commissions will start to eat your returns. My personal opinion is you should go for a low cost index mutual fund or ETF, and wait to pick individual stocks until you have more than $1000 to work with (and even then, probably still go with the low cost index fund)
"MD-Tech's answer is correct. Let me only point out that there are easier ways to invest in the DJIA index without having to buy individual stocks. You can buy a mutual fund or ETF that will track the index and your return will be almost identical to the performance of the underlying index. It's ""almost"" identical because the fund will take a small management fee, you will have to pay annual taxes on capital gains (if you hold the investment in a taxable account), and because the fund has to actually invest in the underlying stocks, there will be small differences due to rounding and timing of the fund's trades. You also ask: Assuming that I calculated those numbers correctly, is this gain   approximately better, equal to, or worse than an average investment   for that timespan? While people argue about the numbers, index funds tend to do better than average (depends on what you call ""average"", of course). They do better than most actively managed funds, too. And since they have low management fees, index funds are often considered to be an important part of a long-term investment portfolio because they require very little activity on your part other than buying and holding."
Gas engines and oil power generation show no promise for greater efficiencies..  Extraction costs for oil are growing.  Solar has has grown much more efficient and has more room for growths in efficiency.  Recent research into batteries  also shows great promise for increases in energy storage efficiency.   Should we continue to subsidize the past or invest in the future?
Yes - it's called the rate of inflation. The rate of return over the rate of inflation is called the real rate of return.   So if a currency experiences a 2% rate of inflation, and your investment makes a 3% rate of return, your real rate of return is only 1%. One problem is that inflation is always backwards-looking, while investment returns are always forward-looking. There are ways to calculate an expected rate of inflation from foreign exchange futures and other market instruments, though. That said, when comparing investments, typically all investments are in the same currency, so the effect of inflation is the same, and inflation makes  no difference in a comparative analysis.  When comparing investments in different currencies, then the rate of inflation may become important.
The fact that you are choosing index fund means you are surely not one of those investors who can correctly judge dips. But buying on dips is still important. You can use a method called Dollar Value Averaging. It is better than Dollar Cost Averaging. Just make sure you apply a lower limit and an upper limit to be more predictable. Suppose you have 10000 to invest. Use limits like minimum 200 investment when index is high, maximum 600 investment when index is down and when index gives normal returns, invest 400. Do this for about 2 years. More than 2 years is not recommended. I myself use this method and benefit a lot.
Let us consider the risks in the investment opportunities: Now, what are the returns in each of the investment: What are the alternatives to these investments, then?
There is a clear difference between investing and gambling.  When you invest, you are purchasing an asset that has value. It is purchased in the hopes that the asset will either increase in value or generate income. This definition holds true whether you are investing in shares of stock, in real estate, or in a comic book collection. You can also purchase debt: if you loan money, you own debt that will (hopefully) be repaid and generate income.  Gambling is playing a game for chance. When you gamble, you have not purchased an asset; you have only paid to participate in a game. Some games have a degree of skill (blackjack, poker), others are pure chance (slot machine). In most gambling games, the odds are against the player and in favor of the one running the game.  Lottery tickets, without a doubt, are gambling.  There is a good article on Investopedia that discusses the difference between investing and gambling in more detail.  One thing that this article discusses is the house edge, or the advantage that the people running a gambling game have over the players.  With most casino games, the house has an advantage of between 1 and 15% over the players.  With a typical lottery, the house edge is 50%. To address some of the points made by the OP's recent edit and in the comments: I do not think the definitions of investment and gambling need to be dependent on expected value.  There can be bad investments, where the odds of a good result are low.  Similarly, there could be gambling games where the odds are in the player's favor, either due to the skill of the player or through some quirk of the game; it's still gambling. Investing is purchasing an asset; gambling is a game of chance. I do not consider a lottery ticket an asset.  When you buy a lottery ticket, you are just paying a fee to participate in a game.  It is the same as putting a coin in a slot machine.  The fact that you are given a piece of paper and made to wait a few days for the result do not change this. Assets have inherent value.  They might be valuable because of their ability to generate income (stocks, bonds, debt), their utility (precious metals, commodities, real estate), or their desirability as a thing of beauty (collectibles), for example.  A lottery ticket, however, is only an element of a game.  It has no value other than in the game.
You will maximize your expected wealth by investing all the money you intend to invest, as soon as you have it available. Don't let the mythos of dollar cost averaging induce you to allocate more much money to a savings account than is optimal.  If you want the positive expected return of the market, don't put your money in a savings account.  That's especially true now, when you are certainly earning a negative real interest rate on your savings account. Dollar cost averaging and putting all your money in at the beginning would have the same expected return except that if you put all your money in earlier, it spends more time in the market, so your expected return is higher.  Your volatility is also higher (because your savings account would have very low volatility) but your preference for investment tells me that you view the expected return and volatility tradeoff of the stock market as acceptable. If you need something to help you feel less stress about investing right away, think of it as dollar cost averaging on a yearly basis instead of monthly.  Further, you take take comfort in knowing that you have allocated your wealth as you can instead of letting it fizzle away in real terms in a bank account.
Foreign currency might be a little bit better than the Euro, but as we've seen in the past year or so, the Swiss Franc has been devalued to match the Euro in the proverbial ""race to the bottom"". It's probably not much better than another fiat currency. I don't know anything about Norway. Edit: Depending on your time horizon, my personal opinion would be to put no less than 5-10% of your savings in a hard store of value (e.g. gold, silver, platinum). Depending on your risk appetite, you could probably stand to put a lot more into it, especially given the Eurozone turmoil. Of course, as with anything else, your mileage may vary, past performance does not guarantee future results, this is not investment advice, seek professional medical help if you experience an erection lasting longer than four hours."
Financial Aid - the government gives you better interest rates and is a better lender.  Credit Cards - are for idiots.  Mortgage and Loans - Credit Unions give a much better deal. They actually re-invest in the community.  You can take you big banks and shove em' up your ass.
If you decide you need the extra money, you can always go refinance and get more cash out.  At the end of the day, though, if you pay off your house sooner you can invest more of your income sooner; that's just a matter of discipline.
I don't see a contrast. It's really hard to predict which mutual funds will do well in the future. Predicting that ones which have done well recently will continue to do well works slightly better than chance. The WSJ article and Morningstar agree on all the objective facts, they just spin them differently.
If you are calculating simple ROI, the answer is straightforward math.  See This Answer for some examples, but yes, with more leverage you will always see better ROI on a property IF you can maintain a positive cash flow.  The most complete answer is to factor in your total risk. That high ROI of a leveraged property is far more volatile and sensitive to any unexpected expenses. Additionally, a loss of equity in the property (or an upside-down mortgage) will further impact your long term position. To put this more simply (as noted in the comments below), your losses will be amplified. You cannot say a leveraged property will always give you a better ROI because you cannot predict your losses.
You can make a start to learn how to make better investing decisions by learning and understanding what your current super funds are invested in. Does the super fund give you choices of where you can invest your funds, and how often does it allow you to change your investment choices each year? If you are interested in one area of investing over others, eg property or shares, then you should learn more on this subject, as you can also start investing outside of superannuation. Your funds in superannuation are taxed less but you are unable to touch them for another 30 to 35 years. You also need to consider investing outside super to help meet your more medium term goals and grow your wealth outside of super as well. If you are interested in shares then I believe you should learn about both fundamental and technical analysis, they can help you to make wiser decisions about what to invest in and when to invest. Above is a chart of the ASX200 over the last 20 years until January 2015. It shows the Rate Of Change (ROC) indicator below the chart. This can be used to make medium to long term decisions in the stock market by investing when the ROC is above zero and getting out of the market when the ROC is below zero. Regarding your aggressiveness in your investments, most would say that yes because you are still young you should be aggressive because you have time on your side, so if there is a downturn in your investments then you still have plenty of time for them to recover. I have a different view, and I will use the stock market as an example. Refer back to the chart above, I would be more aggressive when the ROC is above zero and less aggressive when the ROC is below zero. How can you relate this to your super fund? If it does provide you to change your investment choices, then I would be invested in more aggressive investments like shares when the ROC crosses above zero, and then when the ROC moves below zero take a less aggressive approach by moving your investments in the super fund to a more balanced or capital guaranteed strategy where less of your funds are invested in shares and more are invested in bonds and cash. You can also have a similar approach with property.
Start now.   It's a lot easier to save now than it is to start to save later.
"Of course. ""Best"" is a subjective term. However relying on the resources of the larger institutions by pooling with them will definitely reduce your own burden with regards to the research and keeping track. So yes, investing in mutual funds and ETFs is a very sound strategy. It would be better to diversify, and not to invest all your money in one fund, or in one industry/area. That said, there are more than enough individuals who do their own research and stock picking and invest, with various degrees of success, in individual securities. Some also employe more advanced strategies such as leveraging, options, futures, margins, etc. These advance strategies come at a greater risk, but may bring a greater rewards as well. So the answer to the question in the subject line is YES. For all the rest - there's no one right or wrong answer, it depends greatly on your abilities, time, risk tolerance, cash available to invest, etc etc."
"In an ""efficient"" investment market the amount of risk premium would EXACTLY offset the likelihood of loss, such that over long time frames the expected return on investment would be equal for all investment options.  In practice, we usually see that riskier investments yield a higher long-term return because the risk premium is larger than that ""efficient"" amount. This is because many investors don't have a long-term time horizon, and the pain of loss is greater than the reward of gain (""asymmetric preferences""). It's also important to think about the risk-reward interaction as being PERCEIVED risk to EXPECTED reward.  If I'm lending money to somebody who is likely not to pay me back, I'd want a better deal than if I were lending to somebody who is certain to pay. I think that addresses your confusion, but if I misinterpreted what's puzzling you, please let me know and I"
With robo-advisor services, you don't select which funds you buy or sell. All you do is decide on a risk profile, and when you add or remove funds to your account, they decide what to buy or sell based on that profile.  Each service might decide how to do this differently. Looking at Betterment's case, it looks like they try to do rebalancing when you buy. So if you put a deposit in each month, they'll buy the lower priced funds to rebalance your account to the desired ratio. In a taxable account, Betterment likes to optimize your tax liability when you withdraw, so they sell the funds that have lost money before they sell the ones that have gained.