Investing for Organizational Sustainability

wall street survivor • investing 101
• Precious metals and commodity ETFs: Many people invest directly in
precious metals such as gold and silver, or indirectly through commodity
ETFs tied to precious metal indices, as diversification and risk-mitigation
tools. Once again, you should become familiar and comfortable with the
historic movement of precious metals and the global economic conditions
that preceded or existed during these price movements. In addition,
precious metals have inherent value along with market pricing.
• Dollar Cost Averaging (buying and selling): Designed to reduce risk, dollar
cost averaging strategies dictate that you buy smaller blocks of the same
securities over time to reach the investment position you want, instead of
making large lump-sum purchases. This often smoothes out the cost factor
of these securities to help you manage the vagaries of market price changes
– both up and down.
There’s more than one way to get a 10% return. Graph 1 below shows a
smooth, upward portfolio increase to a 10% return over the year; graph
2 shows a 10% return but with rollercoaster performance over the year.
Which portfolio would you rather have?
$11,000.00
$10,000 over 12 Months at 10% Annual Interest
$10,500.00
$10,000.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
$12,000.00
10% Annual Return with Market Volatility
$11,425.00
$10,850.00
$10,275.00
Jan 2009 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2010
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