Thank you for the continuous feedback on the blog, one of them was how did I invest my first 100K once I was able to save :) Did I invest in Marijuana stocks ? Hell NO !!
The thumb rule is to invest your first 100K in Index funds and that is what I did as well and invested my first 100K in an Index Fund. To start with I configured my bank account to automatically transfer 10K every month on the salary day so that it could be regular and I could systematically invest, also I would transfer what ever was left at the end of the month to the stock broker account to invest.
I had opened up an Aktie and Fond Konto to start with then moved the money to ISK to invest in mutual funds. There are three types of accounts that you can use to trade in Sweden.
I will explain the difference between them later in one of my blogs this month with their advantages and disadvantages.
Allocation and Diversification
Allocation and Diversification can be achieved in multiple ways
As the investments were for long term and I was young I could take more risk be aggressive and hence invested 100% into equities and distributed them across growth and blend.Started diversifying geographically and later started diversifying by industry.
Things I consider when I invest in a Mutual Funds
Management Fees - The lower the management fees the better the ROI, I have seen average management fees from 0.05% to 3% in Sweden. In India when I started investing in mutual funds I remember seeing management fees as high at 5% ..really 5% !!??. One of the reasons I stopped investing in mutual funds in India was the management fees. Also I realized that the friendly neighborhood investment 'uncle' who used to have the UTI mutual fund form available and was to happy to help you fill up the form used to get a cut every year , yes EVERY YEAR for rest of his life a percentage from my investment , which wasn't too transparent until you knew exactly how the mutual fund commissions work. Now a days you have direct funds available after people have understood the -ve impact on the overall return that they have started to give a close attention to the management fees.
Performance wrt the Index in Short, Medium and Long-term alias 'Alpha' (the deviation from index is called 'Alpha')
Checked how the Mutual fund was doing wrt to index fund or any benchmark index that the fund claim to follow to see what was the performance . I normally measure Alpha between one month to 36 month performance and hopefully its a +ve one. Will explain how even a + 1% a year Alpha could have long term impact on the performance of a Mutual fund in one of the blogs , its a very interesting observation I made when I was comparing the performances of mutual funds.
Here you can find the mutual funds that I invested in and have updated with new ones that and available in the market.
The thumb rule is to invest your first 100K in Index funds and that is what I did as well and invested my first 100K in an Index Fund. To start with I configured my bank account to automatically transfer 10K every month on the salary day so that it could be regular and I could systematically invest, also I would transfer what ever was left at the end of the month to the stock broker account to invest.
I had opened up an Aktie and Fond Konto to start with then moved the money to ISK to invest in mutual funds. There are three types of accounts that you can use to trade in Sweden.
- Aktie & Fond konto (Stock and Fund Account)
- ISK - InvesteringsSparKonto
- KF - Kapital Försäkring
I will explain the difference between them later in one of my blogs this month with their advantages and disadvantages.
Allocation and Diversification
Allocation and Diversification can be achieved in multiple ways
- Asset Classes (Equities or Debt)
- Market Capitalization (Small, Mid and Large)
- Performance (Growth,Value and Blended)
- Geographical (Sweden, Nordics, US, Latin America, Japan, China, Emerging Markets, ect)
- Industry (Technology, Bio-Tech, Real-Estate, Energy, Financials, FMCG, ect)
As the investments were for long term and I was young I could take more risk be aggressive and hence invested 100% into equities and distributed them across growth and blend.Started diversifying geographically and later started diversifying by industry.
Things I consider when I invest in a Mutual Funds
Management Fees - The lower the management fees the better the ROI, I have seen average management fees from 0.05% to 3% in Sweden. In India when I started investing in mutual funds I remember seeing management fees as high at 5% ..really 5% !!??. One of the reasons I stopped investing in mutual funds in India was the management fees. Also I realized that the friendly neighborhood investment 'uncle' who used to have the UTI mutual fund form available and was to happy to help you fill up the form used to get a cut every year , yes EVERY YEAR for rest of his life a percentage from my investment , which wasn't too transparent until you knew exactly how the mutual fund commissions work. Now a days you have direct funds available after people have understood the -ve impact on the overall return that they have started to give a close attention to the management fees.
Performance wrt the Index in Short, Medium and Long-term alias 'Alpha' (the deviation from index is called 'Alpha')
Checked how the Mutual fund was doing wrt to index fund or any benchmark index that the fund claim to follow to see what was the performance . I normally measure Alpha between one month to 36 month performance and hopefully its a +ve one. Will explain how even a + 1% a year Alpha could have long term impact on the performance of a Mutual fund in one of the blogs , its a very interesting observation I made when I was comparing the performances of mutual funds.
Here you can find the mutual funds that I invested in and have updated with new ones that and available in the market.
Geography
|
%
|
Suggestive Funds
|
Management
Fees
|
USA
|
25
|
0.22%
|
|
Sweden
|
20
|
ZERO
|
|
Emerging Market
|
15
|
0.29%
|
|
EU
|
15
|
0.24%
|
|
Japan
|
5
|
0.21%
|
|
SE Small& Medium
|
5
|
0.44%
|
|
Latin America
|
5
|
2.60%
|
|
USA Small & Mediu
|
5
|
1.53%
|
|
Russia
|
5
|
2.39%
|
Geographic Diversification Chart
Feel free to leave a comment below if you have a different opinion on the diversification and what has worked for you.
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