Submission Guide for Investment Handbook Investment Handbook

To earn money by investment, you just need to solve 3 questions. However, I believe that these 3 questions are the most difficult questions in the world. The answer to the questions varies from different people & different periods of time. Luckily, there is an answer that is suitable for most people (especially newbies) and most of the time.

  1. What to buy
  2. When to buy
  3. How much to buy

For those who are experienced with the market & investment, you may probably have your own investment theory. You may find this article too simple too easy. However, for those who are new to the market but wish to learn investment. I am going to introduce a standard method for your starting point. Obviously, this method is not the best way to earn a lot of money but is a much more safe method to earn money. Thus, it is probably the best starting point to learn how to invest. While you are learning investment, you should modify the below standard strategy to fit your needs and increase the profits.

There are 2 types of investment products you must know, plus one type of product I suggest you learn.


The most common investment product. The reason to buy a stock is to BUY THE FUTURE. However, which company should we buy? It is a complex subject to learn. I suggest you to study “How much to buy” & “When to buy” first, and put this at the last of your study-list. Instead, you should buy ETF, a group of well-known and quality companies selected by the index. I highly recommend you to start with VTI, tracking CRSP US Total Market Index, which represents the whole US stock market. VOO is also a good product. It tracks the S&P 500 index. I believe all of you know what is the S&P 500 index.


The reason to buy bonds is to prevent huge losses when the stock market collapses. Most of the time, bond prices rise when the stock market falls down. However, for most of the newbie, you are not eligible to buy bonds since the entry requirement is quite high. Most of the bonds need at least $100k USD to invest. You can simply use cash to replace it until you have enough money.

P.s. The bond fund is totally different from the bond. Here I am talking about bonds, not the bond fund. When you invest bonds, you are guaranteed with the listed revenue if the company does not bankrupt. However, you can not enjoy this benefit if you invest in bond funds.


REITs can be simply treated as the intermediate of the stock market and bonds. It consists of the characteristic of both stock and bonds. Thus, the reason to buy REITs is to gain the advantage of the company growth while preventing huge losses when the stock market collapses. It sounds good, right? But bear in mind, there is no free lunch in the world. Consisting of the characteristic of both stock and bonds means both the pros and cons. Actually, when the stock market collapses, you are also expecting losing money from REITs, just not as much as common stock.

Well, It is also a difficult question. No one can predict the future right? And I believe you don’t want to risk your valuable asset based on your prediction. So, an easy & useful & practical way is dollar-cost averaging. Just buy stock periodically with fix lump sum amount. Again, It is not the best way to earn a lot of money, but the best way to start experiencing & learning investment.

This is the perfect entry question to investment. However, I find that little people care about this. According to the book “The Intelligent Asset Allocator”, it says most of the portfolio profits come from asset allocation rather than “What to buy” & “When to buy”.

In the most extreme case that you wish to bear the high risk with the potential of high return, you should invest 80% of stock & 20% of bonds in your portfolio.

In the safest case that you wish to protect your asset when investing, you should allocate 80% to bonds and 20% to stocks.

You should allocate your assets between these 2 extreme cases base on your own needs and market changes.

As I say, the entry requirement of bonds is high. Using cash/ REITs can be a substitute. For example, if your target is 20% of bonds, you can start with 15% REITs and 5% cash or 10% REITs and 10% cash.

These 3 questions provide you a concrete full picture of what investment is, leading you the correct direction to learn investment. Bear these 3 questions in your mind, when you saw any new strategies or theories, they are just trying to solve one of these questions.

To start learning & experiencing investment, try the dollar-cost averaging method. Periodically buy VTI with a fix lump sum. Pick an appropriate asset allocation that you are comfortable with.

Last but not least, I believe that investment is like an art more than a science. Therefore, there is no absolutely correct answer (or say model answer) to these 3 questions. You should find your own answer.

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