1. Be a long- term, passive investor
Since my investment horizon is long (meaning I expect to be working for at least the next 30 years), I have the luxury to be aggressive in my investment choices. However, looking at my current state of income and savings, apparently it is rather pathetic. Hence, I have to be pragmatic in my approach.
Below pointers are what I have implemented:
- Buying REITS to collect dividends
- Buying Blue Chip stocks as they are more stable and some even pay out dividends
- Buying into Indexes and ETF's
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Subscribing to Peter Lynch's concept of Beating the Street for my investments
1. Fund's Longevity
How many years have the fund been effective. Longer history suggests stability and track record to see the results. That said, past data does not imply future performance.
2. Fund Size
At least USD 100 million AUM (Assets under Management).
Larger AUM is better.
3. Expense Ratio
The % of funds that the AM (Asset Manager can withdraw each year to pay for the fund's operating expenses.
Lower, better. Vanguard is known for having low expense ratios.
4. Tracking Error
The deviation from the underlying index.
Less is better.