Posts with keyword stock-fund→

(This post is a part of the series Basics of Finance and Investing.)

It did not surprise anyone when Warren Buffett, while recently hosting a group of business students from the University of Pennsylvania’s Wharton School (his alma mater) for a two-hour question-answer session, began by pointing out the folly of the efficient market theory (EMT). After all, his objection to EMT is as legendary as his support for fundamental analysis (FA), as the foundation for smart investing.
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Well, there is the handy “Rule of 72″, which says the number of years it takes for the money to double at x% yearly (compounded) rate is roughly 72 divided by x. For example, if you have $10,000 in a money market fund earning a sedate 5%, it will grow to $20,000 in about 14 (=72/5) years. By contrast, if the same $10,000 is invested fully in a stock fund that appreciates at a healthy 10% (not a fairytale), doubling your kitty should take only 7 years.
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  I am a scientist working in a US university, and I also study the dynamics of financial markets and their impact on our financial health. More...

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