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The price of an ideal life: how much money is needed for happiness.
How much money does a person need for happiness? Tim Harford, an economist and Financial Times columnist, tried to find an answer to this question.
In his famous essay Economic Opportunities for Our Grandchildren, John Maynard Keynes argued that if incomes rose eightfold from 1930s levels, the economic problem could be solved, or at least would be close to being solved.
Revenues are up, as he expected, but the solution is not yet in sight. This may be because, as Keynes also noted, there is an insatiable desire for needs that make us feel superior to our fellows.
Ten years ago, Daniel Kahneman and Angus Deaton, Nobel laureates in economics, discovered that usd75,000 a year (usd100,000 at todays prices was enough to optimize everyday experience. Having more money did not in any way reduce the amount of time people felt anxious, stressed, or sad.
However, there is another indicator of happiness: do people rate their lives as satisfactory? According to this criterion, Deaton and Kahneman did not find a limit to the use of money: any additional income correlated with a higher level of life satisfaction.
Change of accent.
Recently, psychologists Paul Bain and Renata Bongiorno changed the focus: instead of asking how much money is enough, they asked survey participants to imagine their ideal life. Then they asked how much money would be needed to achieve such a life.
Amounts ranged from usd10,000 (for those whose ideal life involves replacing curtains and upholstery) to usd100 billion (for those whose ideal life involves buying Twitter). The sum of usd10 million was the most popular choice.>
Harford writes that what people often dont realize is that after buying a nicer house and a nicer car, paying off debt, and saving up for a decent retirement, they'll find they could use a few more million dollars.
Writer Malcolm Gladwell has his own theory. He claims that the problem with the usd100 billion is that people greatly complicate the task of choosing. Simple questions (should I pack a lunch or buy a sandwich?) become incredibly complex (should I have dinner in Paris or Copenhagen, or just have a personal chef cook something on my plane?). Life is cognitively stifling, says Gladwell.
Another problem, he says, is that all challenges disappear from life. Do you like to collect stamps, keychains or children's hats? Forget it! You can buy it all at once if you want.
It's not about money.
Harford disagrees. I don't want usd100 billion, but the problem is not cognitive load. I am absolutely sure that billionaires are not intimidated by the prospect of choosing a place to dine. Projects scale: if you liked collecting key chains, switch to collecting fine art, create the world's largest private museum.
The richest people of the past had material needs that they could not satisfy, but which we can easily satisfy, thanks to air conditioning, air travel and antibiotics, the FT columnist notes. Our descendants may well have needs that we hardly even think about because they are beyond our understanding.
The best hope for sustainable development is not to stop wanting what we cannot currently have. The fact is that most of what we value has nothing to do with money,Harford concludes.
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Apple is in first place the brand was valued at USD 322 billion, the amount increased by 38 % over the year.
This year, four companies joined the list of the 100 most valuable brands at once. Instagram, Tesla, YouTube and Zoom. Despite the coronavirus pandemic, the total value of all brands in the ranking increased by 9 % compared to last year and amounted to USD 2 trillion.
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Get the latest news on the stock market and events that move stocks, with in-depth analyses to help you make investing and trading decisions.5 stocks from Goldman Sachs that will bring profit after the pandemic. Goldman Sachs has named the stocks that analysts at the bank said could grow and bring in the greatest profits following the emergence of its own coronavirus vaccine in the US. The most promising securities according to Goldman Sachs. 1.United Airlines. The target level for the airlines shares is usd 60 in the outlook for the year, the growth potential is 60 % of the current levels. The company focused on cutting costs, which helped the carrier to weather the pandemic better than experts initially expected. The airline is adjusting its route network and timetables to reflect the growing demand for tourist travel. Choosing stocks for investment. Berkshire Hathaway shares are by far the most expensive of those traded on the US stock market. But these shares rotate just over 74 million pieces. But Apple shares about 17 billion pieces. Berkshire Hathaway shares are worth much more than Apple shares as they have significantly fewer outstanding shares. However, the market estimates the value of the apple company significantly higher than the company of the legendary investor. If the countrys economy has growth potential, this will increase the chances for the development of companies operating here, and, consequently, for the value of their securities, the prices of companies shares. An example of such investment in government is Warren Buffetts recent acquisition of shares in the five largest Japanese trading companies.universal trading companies, whose activities cover almost all sectors of the economy. The Oracle from Omaha did not miss again. Next, we assess the prospects for the industry in which the company operates. For example, in an economic downturn, quarantine, you should think carefully, invest in a company specializing in the rental of office space. The same goes for the tourism industry, airlines and the like. In order to better understand which sectors are currently developing, you can check the sectoral indices. For example, the S&P 500 index is divided into 11 sector indexes. You can start by simply searching for news and analysts opinions about the company. The main thing is to understand how the current state of the company is assessed, what market share it occupies. A prime example is Disney, which suffered significant losses due to the closure of parks and cinemas during the lockdown period. And the result was a deep drop in its quotes. Despite this, according to the updated consensus forecast of analysts, it was recently revealed that Disney shares will rise to usd 182 per share (on December 14, they traded at usd 170). What made analysts become optimists? The fact is that the management found a way out of a difficult situation the development of its own streaming services. In addition, Disney has announced ambitious plans to release new content, including many new Disney, Star Wars, Marvel, National Geographic, and Pixar shows created specifically for Disney plus. For these purposes, the company will allocate from usd 14 to usd 16 billion in the next 4 years. If you correctly assess the prospects of new products of the company in time, you can earn even more from its shares. For example, the shares of the Swiss company Relief Therapeutics, which is developing a cure for respiratory complications from COVID-19, rose 38,000% over the year. At the beginning of the year, Biotech shares were worth 0.001 Swiss francs, and as of December 14, they are valued at 0.41 francs. Although Relief Therapeutics is only conducting phase two trials. Market capitalization in simple terms is the value of a company, it is how the market values it. Lets go back to our example. Lets say youre choosing between Berkshire Hathaway and Apple. To find out how the stock market values a public company, multiply the value of its share by the total number of shares. From these simple calculations, you will see that Apple costs almost four times as much as Berkshire Hathaway. By the way, it is not necessary to look for financial indicators in company reports. There are a number of specialized investment sites that collect this information. Among them are the already mentioned, as well as INVESTING.COM. How much can you earn in the American stock market in 2025.? CNBC states millionaire investors are in no hurry to flee the market or leave their assets in the cash. The study mentioned showed that 64% of them are optimistic, which is even higher than in the fourth quarter of 2023. 24% of millionaires reported that their risk tolerance increased in the first quarter of 2023, the majority (63%) said that their willingness to take risks has not decreased and remains at the level of the previous quarter. As noted by JPMorgan strategist Nicholas Panigirtzoglu, a significant part of the funds that the US Federal Reserve has poured into the financial system, stuck in cash. So, according to him, money market funds after the start of the pandemic grew by more than usd 1 trillion. The normalization of the situation and the flow of liquidity from cash-like instruments to risky assets will create an avalanche that will provoke a rise in the stock market, the expert predicts. Multiplier price / earnings (P / E, price / earnings).This is the ratio of the companys share price to the companys earnings per share. It shows how many years the investment will pay off if the share price and the companys profit remain at the same level. P / E is one of the metrics already found on investment sites. You, as an investor, always want to find the lowest P / E ratio, because that will mean the highest return, compared to how low the stock is. If a companys P / E ratio is higher than the industry average, the stock could be overvalued and shortsighted to buy. If the P / E ratio is lower, then the stock may be undervalued and can be a good investment. Investors tend to invest in stocks that they expect to grow in the future. Average P / E ratios of S&P 500 companies fluctuate between 15-18. But, for example, the P / E ratio for Tesla shares is around 1200, which is much higher than the average values for S&P 500 companies. The fact is that the high price of Tesla shares indicates high expectations of investors, about the growth potential of the companys shares. Invest in a company, not in formulas. Investing is always a piece of luck. Burton Malkiel, a professor of economics at Princeton University, once said: A blindfolded monkey that throws darts at the financial pages of a newspaper can put together a portfolio that performs just as well as a portfolio of papers that are carefully selected by experts. In 2018, The Wall Street Journal conducted an experiment and put together an investment portfolio by throwing darts. The stocks selected in this way brought a return of 17.3% for the year, which is more than the growth of the market at that time. Therefore, formulas and reports can be a good foundation for starting a search, but then everything will depend on your investment luck.
What is ETF and how to make money on them.? ETFs can be a good alternative to stocks for those who have just paid attention to making money in the stock market. What is ETF ? To build a portfolio of various securities, the average investor may require large funds. Because there are many stocks that are interesting for investments, but they are quite expensive. For example, billionaire Warren Buffetts one Class A share of investment firm Berkshire Hathaway is worth usd 340,185 apiece. One share of the Swiss chocolate manufacturer Lindt is usd 92,639. The share of Booking Holdings, an aggregator of travel services and hotels, can be purchased for usd 1,893. What to do if you have little money, but you want to invest in shares of promising companies? In this situation, an investment fund can help out. It accumulates the money of a large number of private investors. A special organization a management company buys various shares or other assets with the money collected in the fund. Thus, she forms the desired investment portfolio and manages it. By recouping a funds share or share, an investor practically immediately invests in all securities or assets owned by the fund. ETFs (short for Exchange Traded Fund) are funds whose stocks can be bought and sold on an exchange. Such a fund is founded and managed by a company called an ETF provider. One provider can manage several funds at once. How ETFs Work ? Suppose there is an index fund that invests in equal shares in 2 companies: Apple and Samsung. Exactly one year ago, you invested usd 100 in this ETF. Apple shares during this time increased in price by 156 %, and Samsung by 29 %. Thus, the shares of the ETF itself went up by 92.5 %, and your usd 100 turned into usd 192.5. ETF invests money in a much larger number of assets and not in equal parts, but depending on the characteristics of a particular fund. The world is experiencing a boom in ETF interest. At the end of last year, the total amount of investments in such funds amounted to usd 6 trillion, which is twice as much as 4 years ago. According to the forecast of the investment company BlackRock, this amount will reach usd 12 trillion in 2024. What are the benefits of ETFs ? Diversification of investments. When buying a share or share of an ETF, money is actually invested not in one, but in dozens or hundreds of companies at the same time. Thanks to this, a decline in the value of one stock or even bankruptcy will not have a significant impact on savings. Likewise, if the ETF includes stocks of companies from different sectors, it provides investment protection if difficulties arise in one of them. Receiving dividends. If the ETF buys shares of companies that pay dividends, the investor will also receive these funds. As a rule, such income ranges from 1 to 4% per annum of the invested funds. There are no uniform rules here, and in each case you should check what dividends the fund pays. Ease of trading. The principle of buying ETFs is the same as for any stock on the stock market. The main thing is to open an account with a broker and then all transactions are concluded remotely on a computer or mobile phone. Investment transparency. When you invest in index funds, you know in advance where they are investing money. Also, in open sources, you can see their profitability for previous years and monitor ETF price fluctuations online. High liquidity. At any time, you can sell your ETF stake and enter the cash. What are ETFs ? More than 5 thousand ETFs are registered in the world, only about 1.8 thousand of them are traded on the US stock market. In order to better navigate them, it is worth considering the main types of index funds, depending on the direction of investment. Index ETFs. ETFs based on the S&P 500 index are of particular interest to investors. This index shows the total dynamics of the 500 largest US companies. In fact, by investing in it, the investor is investing money in the American economy. According to some eminent investors, the S&P 500 is an ideal investment option. In particular, according to the will of Warren Buffett, 90% of the funds that he will leave to his wife will be invested in ETFs based on this index. The advantage of this ETF is traditionally good long-range profitability. So, over 5 years, the S&P 500 index has risen in price by 67 %, and over 10 years by 205 %. As Buffett calculated, if he invested usd 10.000 in this index fund in 1942, he would now receive usd 51 million. S&P 500 Index Growth Since 1970.SEE ON INVESTING.COM. Another plus of such ETFs is in almost perfect diversification, because an investor invests money simultaneously in 500 companies from various sectors of the economy. Dont look for a needle in a haystack, just buy the whole haystack, advised investor John Bogle. In his opinion, it makes no sense to independently choose the shares of various companies all the same, most investors fail to earn more than the average growth rates of the S&P 500 index. There are 3 large ETFs in the stock market tied to the S&P 500, these are. • SPDR S&P 500. • iShares S&P 500 Index. • Vanguard S&P 500. There are ETFs that are linked to other key indices. For example, the PowerShares QQQ fund ranks on the Nasdaq 100, which includes predominantly tech companies. There are also ETFs that are guided by the American industrial index Dow Jones, German DAX, Japanese Nikkei 225, Chinese Shanghai Composite, etc. Sectoral ETFs. If you think about any sector of the economy, chances are there is an ETF that invests in companies that work in this area. For example, there are index funds aimed at the agricultural sector, metallurgy, oil companies, retail, financial sector, pharmaceuticals and a huge number of other areas. Lets take an example of when it is worth investing in them. Lets say you are convinced that the automotive industry will show good growth rates in the coming years. They say that the population on the planet, like its income, is growing, oil is getting cheaper, which means that people will buy more and more cars. At the same time, you do not know the state of the specific auto companies: who is increasing production, who is credited, who has promising technologies, etc. In this case, you can invest in the First Trust NASDAQ Global Auto Index Fund, a fund that specializes in investing in automakers. Thus, you will invest in virtually all key companies in the industry and diversify your risks. Commodity ETFs. ETFs do not necessarily invest in company stocks. For example, investing through index funds in precious metals is quite popular. These ETFs buy gold or silver and, accordingly, if the metal becomes more expensive, the funds shares rise. Thanks to this mechanism, it is possible to invest money in metals without having to face the problems of saving bullion and without paying the difference for buying and selling gold or silver. You can also invest in other resources through ETFs. For example, some of them buy oil and gas futures contracts. Examples of such funds are the United States Oil Fund and ProShares Ultra DJ-UBS Natural Gas ETF. Currency ETFs. Another lesser known ETF option is currency. Such funds reproduce changes in the quotes of currencies traded on the international foreign exchange market in relation to the US dollar or a basket of currencies. This is achieved through the use of cash deposits, for example, the content of euros or Swiss francs, or financial derivatives such as futures and swap contracts when forming such an ETF. A natural question arises, if there is a desire to make money on exchange rates, then why not just open an account with a forex company. As experts explain, such ETFs allow you to earn money without withdrawing money from the brokerage account once again, for example, there are no interesting investment options yet. High-risk ETFs. Some index funds offer purely speculative instruments. For example, if the market is bearish, investors can buy reverse ETFs - their value rises if the underlying index becomes cheaper. The advantage of such funds is their ease of use. You do not need to understand the complex instruments to play a slide. In addition, there are leveraged ETFs. They can double or triple their profits. However, they also increase the risks. Therefore, such tools should be approached with extreme caution. How to choose an ETF.? In order to choose an index fund, the first step is to determine which of the types you are interested in. After that, you should check the key information about this index fund. what kind of profitability did he demonstrate in previous years. what assets does he invest in. how much it pays dividends. what service fees are charged. what is the capitalization of the fund. CONSULTATION ABOUT EFTS CLICK BANNER STOCK ANALISYS SOWTWARE. Alternatively, you can visit the ETF issuer website to check the ETF. The key players in this market are investment companies SPDR, iShares and VanEck. Typically, the name of the issuer appears at the beginning of the index fund. For example, SPDR S&P 500 or VanEck Vectors Gold Miners ETF. In addition, you should pay attention to those index funds that are already in demand. The five most popular ETFs are as follows: SPDR S&P 500. Invesco QQQ Trust. iShares MSCI EAFE. iShares Russell 2000. Technology Select Sector SPDR. In order to determine the estimated earnings, you can look at the profitability of funds in previous years. For example, SPDR S&P 500 has risen in price by 15 % over the year, Invesco QQQ Trust by 48 %. Forecasts for the year 2025.
The overwhelming majority of international investors expect the key stock indices to continue to rise. Thus, according to estimates of the American investment bank Jefferies in 2024, stock markets will grow by 7%. The Wall Street Journal also conducted its survey of representatives of 8 American banks and investment companies. As a result, representatives of all companies expressed confidence that by the end of this year the S&P 500 index will be higher than it is now. Growth is predicted on average by almost 9%. Experts of the largest US banking holding JPMorgan Chase are looking at the situation most optimistically. According to their estimates, this index could grow by 19%. Investors invited to Barrons roundtable think stocks are likely to outperform in the first half of the year and worse in the next. Most expect high volatility. The final growth of the S&P 500 is expected to average 6-10%. Growth companies will continue to be more attractive. Which stocks will grow the fastest ? Among the stocks that experts most often recommend for acquisition in 2025 are companies that have lost in value due to quarantine, but in the context of economic recovery, they have a chance for rapid growth. In particular, these are representatives of the oil sector SHELL, Exxon Mobil and Chevron and the aircraft giant Boeing. Another bet is the growth of the media sphere. As experts explain, in the conditions of economic recovery, advertising costs will rise again. According to experts interviewed by the American channel CNBC, one of those who will benefit from this will be Google. Moreover, the corporation now lags behind other tech giants in its financial indicators and must catch up with them. Another media company that is advised to look out for is Disney. Its shares should rise not only thanks to the revival of the advertising market, but also after the return to the usual operation of cinemas and amusement parks. Biotechnology and pharmaceuticals are also among the current leaders. Among the pharma giants, whose shares may show 20-30% growth, are Bristol Myers Squibb and Amgen. Morgan Stanley also prepared its recommendations for the most promising shares in the new year. The banks specialists have selected companies that have sustainable competitive advantages and demonstrate a cyclical increase in market share. Among such companies, experts advise paying attention to Apple, Tesla, Alphabet and Docusign. Barrons magazine has prepared its selection of the most promising stocks. His analysts advise looking at medical giant Abbott Laboratories, gold mining company Newmont, mobile tower operator SBA Communications and roofing manufacturer Carlisle. Research firm MKM Partners advises looking at Facebook, McDonalds, toy maker Hasbro and cannabis maker Curaleaf. The latter company was included in this list due to Joe Bidens loyalty to the legalization of marijuana at the federal level in the United States. Most experts are convinced that now is a good time to invest.Everything looks like the beginning of a new economic growth cycle, which may last for the next 5 years.