Quora Answer: What Investment Can You Do With Less Money?

The following is my answer to a Quora question: “What investment can you do with less money?”

If you are able to put aside at least $100 a month, you have the option of investing in an index fund, or if you are young enough, an investment-linked insurance plan.  There are a multitude of such collective investment schemes, with or without the insurance aspect.

If you were to look it up online, there are a lot of articles by people who are purportedly finance experts claiming this or that option does not work.  And they have some convincing data.  The problem with these investment plans is that they are not as straightforward as people imagine.  They involve some fund management skills.  Brokers, insurance agents and financial consultants may be skilled enough to sell you the investment plan.  It does not mean that they are skilled at managing it.  That is the difference between a salesman and an actual financial consultant.

My clients do not lose money over the extended investment horizon, or when the market is down, they do not lose much before bouncing back in a reasonable amount of time.  This is not rocket science.  My investment philosophy is best summed up like this: when everybody is panning for gold, there is money to be made selling the shovels and pans.

In that light, I pick funds that invest in the most fundamental things, because that market is essentially recession proof.  The most fundamental from an investment perspective is not necessarily commodities since they are extremely volatile.  For example, you could invest in a technology fund that has money in Apple and Samsung.  But we have to remember that Nokia was once very big.  These are front end products.  But if you put your money in the chips, it does not matter which company does well since they all have to buy those chips.  Whether the economy is up or down, these chip makers have business.

There is a certain skill in finding this type of value in the market and picking your funds and counters based in where you expect them to be in 15 or 20 years-time, which is the expected investment horizon.