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Showing posts with the label performance fee

Common investing mistakes

When trying to learn any skill and reach excellence, mistakes are the natural part of process. There is no way around it, but beginner investor are usually more prone to making these mistakes. Even famous and successful investor have made some of these mistakes at least once. We will look over some of the most common mistakes in hope to raise awareness among future and current investors and help them avoid repeating them. First of all, investing in business and industry that you don't know that well is not a good idea. There is always some "hot" and "up and coming" industry sector but if you don't have much knowledge about that particular industry and don't understand its business model avoid it. For example crypotocurrencies were massive hit, year and a half ago when bitcoin reached its all-time high of $19,500 and then fell to $3,000 a year later. Inexperienced investor could suffer a massive loss if he doesn't fully understand complexity ...

What is a hedge fund?

A hedge fund is an investment fund that collects pools capital from accredited and institutional investors and invest in securities or other type of investments with a goal to generate high returns. What makes them different from mutual funds besides type of investors and diversity of investments is that they are less regulated and have more freedom when utilizing  investing strategies that carry greater risk and potential for loss. Reason why it is available to wealthy investors is their knowledge and understanding of risks involved and ability to afford higher fees and potential loses. This means they can use short selling and other speculative activities unlike mutual funds. To be considered accredited investor individual must have a net worth of $1,000,000 at least or annual income of at least $200,000. Term accredited investor is defined in Rule 501 of Regulation D of Securities and Exchange Commission. Even though hedge funds are not subject to some regulation that...