Finance

The Intelligent Investor by Benjamin Graham is considered the bible of investing.

Money has to be held in some form or the other. It could be cash, physical gold, land, or more conveniently accounts. The blog post is only about the last one. Normal accounts (or non-retirement accounts) - held at banks Checking account - Post-tax contributions Earnings are realized immediately and taxed as ordinary income Account will never go down in value (insured by FDIC for up to the first 250K $) money is highly liquid - can be deposited/withdrawn at any time (and absolute limits on deposit/withdrawal are usually of the order of 10, 000$ per day) Savings account Post-tax contributions Earnings are realized immediately and taxed as ordinary income Account will never go down in value (insured by FDIC for up to the first 250K $) Money can be deposited anytime but can only be withdrawn six times per month Investment accounts (for lack of a better term) - held at stock brokers These can be held as retirement or non-retirement accounts....

Contributions - Money being put into an account is called a “contribution” to that account. Earnings - Money “earned” in an account. Usually, as an interest or dividend on the money contributed but can also include things like bank bonuses. As a concrete example, a person opened a new bank account and “contributed” 1000$ in the account, the bank gave him a 150$ bonus and by the end of 31 Dec, the account earned and interest of 35$, the “earnings” will be 185$ (150 + 35)....

(Notes from Burton Malkiel’s talk at Google in 2010) Lesson #1: Buy-and-hold is still the best strategy Not only timing the market is tough but people who are trying to time the market loose more often than not. Lesson #2: Dollar-cost Averaging Since it is impossible to guess whether the market is going to go bull or a bear, it is better to invest over a period rather than in one-shot....