Charlie Munger’s investing strategy helped build Berkshire Hathaway’s $785 billion empire

He has covered financial topics as an editor for more than a decade. Before joining NerdWallet, he served as senior editorial manager of QuinStreet’s insurance sites and managing editor of In addition, he served as an online media manager for the University of Nevada, Reno.

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Is a Hedge Fund an Investment Company?

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Enroll in your 401(k) or similar retirement plan at work

Some mutual funds are actively managed, but those tend to have higher fees and they don’t often deliver better returns than passively managed funds, which are commonly known as index funds. Some investors opt to invest based on suggestions from automated financial advisors. Powered by algorithms and artificial intelligence, roboadvisors gather critical information about the investor and their risk profile to make suitable recommendations. With little to no human interference, roboadvisors offer a cost-effective way of investing with services similar to what a human investment advisor offers. With advancements in technology, roboadvisors are capable of more than selecting investments. They can also help people develop retirement plans and manage trusts and other retirement accounts, such as 401s. Investment companies are business entities, both privately and publicly owned, that manage, sell and market funds to the public.

The stock market is premised on the fact that investors will only invest if they’re compensated for taking the risk of buying stock. Nobody would invest in any stock that they expected to rise 1.5% annually. You could potentially get the same or better returns from something like a smart savings investment account to any number of other investments that don’t carry as much risk as stocks do. They’d be insane to take more risk in order to collect an identical return. You may be tempted to buy the latest “hot stock” with the idea of selling it quickly at a profit. But trying to capitalize on short-term changes in a stock price or in the market — a strategy that requires you to time when to be in the market and when to get out- could end up costing you in the long run.

The idea is to spread your risk and smooth out the ups and downs in your portfolio. Savings accounts are one of the better places to hold your money if you’ll need it soon. You can easily transfer that money to a checking account in an emergency, and you’ll earn a trickle of interest while your money sits in the account. If you don’t yet have a savings account paying a competitive interest rate, opening one takes 15 minutes and is probably the best thing you can do for your money. You specify how much money to invest, and your employer deducts the amount directly from your paycheck.

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