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Starting an investment portfolio can be intimidating and overwhelming — which is exactly why many put off getting started. Millennials are opting out of investing at higher rates than any other generation. Driving factors include lack of accessible information, misconceptions about investment opportunities, and fear of losing money. As a result, many millennials are opting to save their money in a savings account instead of investing it.
The reticence about investing is understandable, since millennials had a front row seat to the devestating losses their parents suffered during the financial crises. But, as James Chen at Investopedia reports, today’s young adults also face the “most uncertain economic future of perhaps any generation in America since the Great Depression.” With job insecurity, wage stagnation, and a growing divide between the rich and poor affecting the chances for millenial future wealth, it’s more important than ever for young people to start investing their money. Here are some steps to help you get you started.
1. Pay yourself first… then leave your money alone.
The first step is building the habit of investing consistently, little by little — not just when you have some extra cash. Jeremy Delk, founder of investment firm Delk Entreprises, recommends budgeting a percentage of your monthly income to squirrel away. “Sock away a minimum of 20% of your income and put it in a separate account, ideally a different bank where it is hard for you to move money back,” he advises. That way, it’s out of sight, out of mind, and growing your investment.
When it’s hard to access your money, it gives your money time to work for you. Leaving your money alone for extended periods of time gives it a chance to rebound when the market drops.
2. Diversify your investment portfolio to minimize risk.
Even if you wholeheartedly believe in a certain stock or investment, do not put all your eggs in one basket. Diversify your portfolio to make sure you have multiple avenues to see returns. A good way to do this is through mutual funds with a financial advisor. But also consider other potential investment avenues, like startups or cryptocurrency.
You can also diversify your portfolio by picking investments with different rates of return and investing in foreign stocks. That way, even if many investments within your portfolio are doing poorly, you bolster your chance of performing well in other areas.
3. For passive income, consider real estate investment.
Real estate isn’t cheap, but if you have the funds at your dispoal, buying property is one of the best ways to diversify your portfolio. David Brim is cofounder of investment management firm Bright Impact, and he says his first real estate investment payed his rent and added “landlord” to his resume. “I started by investing in a duplex,” Brim says. “I lived on one side and rented the other, which covered expenses and gave me the experience of being a landlord. After moving out we automatically had another rental unit, which generated solid monthly passive income.” Additionally, real estate values generally appreciate over time. So in addition to earning rental income during your ownership, you’ll likely have the opportunity to sell at a higher price.
Alternatively, as opposed to buying a specific property, another great option is to put money in a real estate investment trust (REIT), which currently has an average annual return of 11.8%.
4. Check out financial experts on YouTube.
YouTube is a fantastic resource for beginning investors, with countless videos by financial experts who can explain the markets and tricks of the trade. Just be discerning about which experts are actually DOING the investing–with professional bios and personal stories to prove it– as opposed to “teachers” without obvious experience to back up their advice. Examples of renowned financial investment teachers include people like Dave Ramsey and Graham Stephan.
There are also many financial book summaries on YouTube, which rehash financial planning classics like Rich Dad Poor Dad and The Intelligent Investor. These summaries will help you get a grasp on key investing concepts without spending hours reading the whole books. Although, of course, actually reading the books will help even more!
5. Start ASAP!
Now that you know the basics on how to get started… make money moves! You are never too young and it’s never too early to start investing. In fact, the sooner you learn how to make your money work for you, the better. What all investors will tell you is to use time as your best asset, because a dollar today is worth more than a dollar tomorrow.
Of course, nothing is guaranteed, so it’s always a good idea to get a financial advisor, educate yourself on different types of investments, and diversify your portfolio to try different things, and see what works best for you. Despite the risk, investing rather than saving money yields worthwhile returns in the long run. The odds are worth the gamble, every time.
Ford sees $8.2 billion gain on its investment following Rivian’s IPO – Driving
Ford continues to gain, despite abandoned plans to jointly develop an EV with the startup
Ford Motor Co. expects to record a gain of $8.2 billion in the fourth quarter on its investment in RivianAutomotive Inc. after the electric-truck maker’s blockbuster initial public offering late last year.
The legacy automaker disclosed the gain Tuesday along with several special items it intends to report when Ford releases earnings on Feb. 3. The Dearborn, Michigan-based company will also reclassify a non-cash gain of about $900 million on the Rivian investment from the first quarter of last year as a special item, meaning it will be excluded from the full-year adjusted results, according to a statement.
The disclosures show Ford continues to gain from its connection to the startup even after the auto giant exited Rivian’s board in September and subsequently announced it had abandoned plans to jointly develop an electric vehicle. Ford, which has invested a total of $1.2 billion in Rivian since early 2019, has a 12 per cent stake that the company has said was valued at more than $10 billion in early December.
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Since a November listing that was the largest IPO of 2021, Rivian has been on a roller coaster. The shares peaked at more than $172, but have tumbled 57 per cent since then as the company faced new competition in the electric-vehicle market. Rivian was briefly valued at more than $100 billion, then more valuable than Ford, but Ford has subsequently reclaimed the lead after it topped $100 billion in value for the first time last week.
Ford shares were little changed in after-hours trading Tuesday in New York, while Rivian climbed less than one per cent.
ByteDance reorganizes strategic investment team, causes panic – Yahoo Movies Canada
What a roller coaster day for China’s tech industry. TikTok’s parent company ByteDance has dissolved its strategic investment team, sending worrying messages to other internet giants that have expanded aggressively by investing in other companies.
At the beginning of this year, ByteDance reviewed its “businesses’ needs” and decided to “reduce investments in areas that are not key business focuses,” a company spokesperson said in a statement.
ByteDance isn’t halting external investments outright, though; instead, the investment team will be “restructured” and “integrated across the various business lines to support the growth” of its business.
In other words, some members from its strategic investment team, which has backed 169 companies, according to Chinese startup database IT Juzi (some deals may not be public), will be reassigned roles in other business departments and continue to invest there.
The “restructuring” still stirred up a wave of panic in the industry. China’s cyberspace regulator has drafted new guidelines that will require its “internet behemoths” to get its approval before undertaking any investments or fundraisings, Reuters reported, citing sources. Some Chinese media outlets also reported similar drafted rules.
“Behemoths” refer to any internet platform with more than 100 million users or more than 10 billion yuan ($1.58 billion) in revenue, said Reuters’ sources. That rule, if true, will put a slew of Chinese internet giants, from Tencent, Alibaba, Pinduoduo, JD.com to Baidu, under regulatory review for their investment activities. Tencent in particular is famous for its expansive investment portfolio, which earns it the moniker “the SoftBank of China.”
In a surprising turn, China’s cyberspace regulator said that the “rumored guidelines for internet companies’ IPO, investment and fundraising are untrue.” Furthermore, the authority will “investigate and hold relevant rumormongers responsible in accordance with the law.”
ByteDance’s motive for restructuring may indeed be to generate more synergies between its external investments and internal businesses. We don’t know for sure yet. But there are signs that China’s antitrust action on its internet darlings are nowhere near the end.
Tencent recently sold a great chunk of its shares in two of its most important allies, Chinese online retailer JD.com and Singaporean video games and e-commerce conglomerate Sea. While antitrust pressure wasn’t cited as the cause for its divestments, speculation is rife that China is continuing to blunt the monopolistic power of its largest interent platforms. A handful of them have received various degrees of fines for violating anticompetition rules, but a pause on their investment game will carry much greater consequences. The question now is who’s next.
CSA shines a light on greenwashing – Investment Executive
Greenwashing has become an issue for regulators who worry that investors could be intentionally or inadvertently misled about the green credentials of the funds they buy.
“In addition to leading investors to invest in funds that do not meet their objectives or needs, greenwashing may also have the effect of causing investor confusion and negatively impacting investor confidence in ESG investing,” the CSA warned in its notice setting out the new guidance.
The regulators reported that targeted reviews of investment funds’ continuous disclosure in this area revealed a number of shortcomings. Some funds had potentially misleading disclosure, the CSA found, while others featured inadequate reporting to investors on investment strategies, proxy voting practices and ESG performance.
Many funds “lacked detailed disclosure” about the specific ESG factors considered in their investment strategies and how those factors are evaluated.
Regulators also found that many funds provided more detailed ESG disclosure in their marketing materials than in their prospectuses; that most funds didn’t detail portfolio changes that were driven by ESG considerations; and that more than half of the funds that use proxy voting as part of their ESG strategies didn’t set out specific voting policies.
“In addition, the vast majority of the funds reviewed did not report on their progress or status with regard to meeting their ESG-related investment objectives,” it said.
In the wake of that review, the regulators indicated they don’t believe current disclosure requirements need to be revised to specifically address ESG factors. However, the CSA said “regulatory guidance is needed to clarify how the current disclosure requirements apply to ESG-related funds and other ESG-related disclosure in order to improve the quality of ESG-related disclosure and sales communications.”
The new guidance doesn’t add requirements for fund managers, but it does provide insight into areas where firms may be falling short of meeting existing disclosure expectations.
For investment funds, the regulators are hoping that guidance will be enough by bringing “greater clarity to ESG-related fund disclosure and sales communications to enable investors to make more informed investment decisions.”
Among other things, the guidance recommends that funds that aim to generate a measurable ESG outcome report their results to investors.
“For example, where a fund’s investment objectives refer to the reduction of carbon emissions, investors would benefit from disclosure in the fund’s [performance report] that includes the quantitative key performance indicators for carbon emissions,” it said.
On marketing materials, the CSA said that “a sales communication that does not accurately reflect the extent to which a fund is focused on ESG, as well as the particular aspect(s) of ESG that the fund is focused on, would both be misleading and conflict with the information in the fund’s regulatory offering documents.”
It also said that the use of fund-level ESG ratings, scores or rankings may be misleading. Reasons include conflicts with the rating provider, cherry-picking positive scores, and failing to disclose qualifications or limitations to a rating or ranking that would supply added context.
“Interest in ESG investing is on the rise and this enhanced and practical guidance will play an important role in helping investors make informed decisions about ESG products, as well as preventing potential greenwashing,” said Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers (AMF), in a release.
The CSA indicated that it will continue to review ESG-related disclosures as part of its continuous disclosure reviews.
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