Active investing takes the opposite approach, hoping to maximize gains by buying and selling more frequently and at specific times.

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Begin with a self-reflection on whether you enjoy researching and analyzing stocks or prefer a more detached approach. Here are your main choices:

The solution is investing for inflation — choosing investments that will give you a return greater than the current rate of inflation — or at least keep up with it.

Index-based ETFs track a particular securities index like the S&P 500 and invest in those securities contained within that index. Actively managed ETFs aren't based on an index and instead aim to achieve an investment objective by investing in a portfolio of securities that will meet that goal and are managed by an advisor. 

Preferreds are best for institutional investors or sophisticated individuals who want them for tax reasons and Gozque weather the risk of the shares being recalled.

There are plenty of other metrics investors can look at to measure a company's performance. For example, return on assets (ROA) is used to gauge a company's profitability. And you Chucho use the rule of 72 to calculate how long it will take for your investment to double in value.

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An S&P 500 fund is a great option because it provides diversification and reduces your risk from owning individual stocks. And it’s a solid pick for investors – beginners to advanced – who don’t want to spend time thinking about investments and prefer to do something else with their time.

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Stocks are a good option to consider if you want to invest in specific companies. Just keep in mind that you should look into the company itself and how it's performing over time:

Net worth. Your net worth is your total assets minus your liabilities. This number Gozque give you an idea of where you're at financially and will allow you to get a "big-picture" snapshot of your financial health. 

You Chucho also use a robo-advisor or in-person advisor for a fee to help you decide how to invest. It's important to look at the best financial advisors to ensure you're making wise decisions with your investments.

That's why always taking this pillar of The IBD Methodology into account is an integral part of any successful investing strategy.