Lesson 10. Ready-made investment portfolios
Effective trading advice sounds simple – buy and hold. This is how investors earn billions by monotonously holding their assets. But what should you buy? And how long to hold?
In this case, a competent tool called "Nobel Portfolios" will help. It has proven its effectiveness in practice – many investors have become millionaires using this trading tool.
The principle of portfolio formation was outlined by Harry Markowitz, for which the economist received the Nobel Prize. The bottom line is simple: the instruments selected for the portfolio are the least interconnected with each other, and trades are opened once a year. After that, the investor sits on his hands for a year.
For example, let's say you bought two apartments in the same building to rent them out. If a fire breaks out in the house, both apartments will be damaged. Therefore, different houses are needed. But if a natural disaster suddenly occurs, many buildings will suffer. Therefore, it is better to choose different cities. And if there is a political crisis? Then the ideal option is apartments in different countries. Of course, we can talk about such unlikely events all day long, but a competent investor should remember this as well. Is the principle clear? To reduce risks, we purchase apartments in different countries.
The same goes with the choice of instruments chosen for the Nobel Portfolio – they must have minimum dependence on each other. Let's take a look at one of the best examples of such a portfolio. This set of instruments brought in 34.5% per annum in 2016. And for 2020 – 17.3%.
To determine which products should be in the portfolio, you need to work out how the charts depend on each other and select only the products with the least dependence on each other. In this case, you can pick from a wide range of assets.
If we talk about average values, since 2013 the strategy has brought in 17.4% per annum. The more you want to earn, the more you need to invest. You can do it yourself, or you can connect to the strategy in the form of a "ready-made solution". This is one of the simplest and most reliable solutions, where you use the intellectual capital of the best analysts to multiply your savings.