There may have been more than one occasion when you might have had to borrow money from a friend: at the coffee shop, in the office, or even for the cab service. When you run out of money, borrowing is usually your only way out. Juxtaposing the same with big corporations and the federal government, one would find it is not that easy for them. Not only have they to repay the money owed, but to top that amount with interest. That is why companies are made to sign a bond by law, promising the repayment of the money owed. It is a formal kind of security to ensure due payment.
However, certain criteria ought to be considered before investing in a bond. Let us take a short tour through how investing in a bond could benefit you.
Before Investing
The working of a bond primarily depends on whether you need to invest money for a long or short term. Besides, it also depends on your tax status, the period and investment goals. There are some basic strategies on hand, which should be considered before making any investments. For instance, putting all your assets and risks in one single asset class would not be a good idea. It is better to diversify the risks by creating a portfolio of several bonds within the bond. By choosing different issuer's bonds, you could protect yourself from the possibility that one of the issuer's may not be able to pay back the amount owed.
After Investing
After investing, a par value, or the amount of money the investor receives after maturity of the bond, is calculated. This means the amount (principal) owed should be returned to the investor. The coupon rate is the amount received by the bondholder as the percentage of the par value. Lastly, a maturity date is arrived at wherein the bond issuer needs to return the principal amount to the lender.
To arrive at how much a bond would yield, one could divide the amount of interest paid over the course of a year by the current price of the bond. Prices of bonds fluctuate; hence, the current price is always taken into consideration. However, if you decide to sell before the maturity date, it is advisable to do it at the current rate of the market.
Types of bonds
There are different types of bonds available. For example, government, corporate, agency, mortgage-backed securities, municipal, etc. In addition, different maturity level bonds are also available; these help in managing the interest rate risk.
The treasury bonds available from the US government have maturity dates ranging from 3 to 5 months to thirty years.
Corporate bonds, on the other hand, which are sold through public security markets, are a little risky and have high interest rates.
Local and state government bonds have higher interest rates, as unlike the federal government, there are more chances of them going bankrupt.
Foreign bonds are difficult to buy, and is mostly done as a part of a mutual fund. However, investing in them can turn out to be risky.
To conclude, even though certain bonds may be risky, or offer a lower rate of interest, buying bonds are a safe option, as they are sound investments. Securing a number of bonds gives the owner a good credit rating and helps to prove his or her financial stability.
Friday, September 19, 2008
Introduction to Bonds
If you are relatively new to investing, you probably have heard of stocks, but know absolutely nothing about bonds. They do not offer the same sex appeal as stocks. Movies such as Wall Street and Boiler Room have gotten many neophyte investors excited about the stock market, and not once are bonds even mentioned in these films. Bonds are somewhat perplexing; the terminology is a little confusing. This article will hopefully help you understand how bonds work and whether or not they sound like an appropriate investment vehicle for you.
Simply put, corporations, governments, and municipalities borrow money by issuing bonds for sale to the general public. Companies sometimes need additional monies to expand their business, while governments need money for infrastructure. And just like any other loan, the bondholders are paid an interest rate on their money. And, generally speaking, at the end of a certain term, the borrower has to pay back the face amount of that loan.
Interest payments are made at a predetermined rate and schedule. The interest rate is usually referred to as a coupon. The date on which the borrower has to pay back the principal is known as the maturity date. If the lender holds the bond until maturity, he or she will get their principal back. So, for example, if you lend a company $10,000 by purchasing a corporate bond, and it pays an 8% coupon and has a maturity date of 10 years from now, that means you will be paid $800 per year for the next 10 years, and then you will get back the entire initial investment on the maturity date.
Bonds are considered debt instruments, whereas stocks are equity. The reason why stocks represent equity, or ownership, in a corporation, is because stockholders are entitled to receive a portion of the earnings in a corporation, whereas bondholders are only entitled to receive interest payments on their loan. If the bond issuer goes bankrupt, bondholders have a higher claim on the assets derived from the liquidation of the company; stockholders are compensated only after everyone else if a company goes belly up, and sometimes get nothing at all.
There are basically 3 different types of bonds. Government bonds are issued by the federal government, and are considered the safest as is the debt of any country with economic stability. Municipal bonds are issued by local governments, and are also considered safe. More importantly, municipals are exempted from federal tax and often from state taxes as well, making them a very lucrative investment. Finally, there are corporate bonds, which can be risky, depending on the financial condition of the company that is doing the issue.
I hope this information has helped you become familiar with bonds. Try to set aside some money for investing and start while you are still young. The earlier you begin, the more money you can potentially make down the road. Carefully research the credit rating of the company when investing in corporate bonds, and go for municipals or government issues if looking for security.
Simply put, corporations, governments, and municipalities borrow money by issuing bonds for sale to the general public. Companies sometimes need additional monies to expand their business, while governments need money for infrastructure. And just like any other loan, the bondholders are paid an interest rate on their money. And, generally speaking, at the end of a certain term, the borrower has to pay back the face amount of that loan.
Interest payments are made at a predetermined rate and schedule. The interest rate is usually referred to as a coupon. The date on which the borrower has to pay back the principal is known as the maturity date. If the lender holds the bond until maturity, he or she will get their principal back. So, for example, if you lend a company $10,000 by purchasing a corporate bond, and it pays an 8% coupon and has a maturity date of 10 years from now, that means you will be paid $800 per year for the next 10 years, and then you will get back the entire initial investment on the maturity date.
Bonds are considered debt instruments, whereas stocks are equity. The reason why stocks represent equity, or ownership, in a corporation, is because stockholders are entitled to receive a portion of the earnings in a corporation, whereas bondholders are only entitled to receive interest payments on their loan. If the bond issuer goes bankrupt, bondholders have a higher claim on the assets derived from the liquidation of the company; stockholders are compensated only after everyone else if a company goes belly up, and sometimes get nothing at all.
There are basically 3 different types of bonds. Government bonds are issued by the federal government, and are considered the safest as is the debt of any country with economic stability. Municipal bonds are issued by local governments, and are also considered safe. More importantly, municipals are exempted from federal tax and often from state taxes as well, making them a very lucrative investment. Finally, there are corporate bonds, which can be risky, depending on the financial condition of the company that is doing the issue.
I hope this information has helped you become familiar with bonds. Try to set aside some money for investing and start while you are still young. The earlier you begin, the more money you can potentially make down the road. Carefully research the credit rating of the company when investing in corporate bonds, and go for municipals or government issues if looking for security.
Avoid Common Real Estate Marketing Mistakes
Similar homes in the area are attracting competitive offers and selling quickly while others seem to stay on the market forever. Whats the key to making sure that your house sells and doesnt remain on the market indefinitely? The answer is marketing.
The reason why some real estate properties attract more attention than other similar properties is that they are marketed well. It takes more than posting a sign in the front yard to bring in buyers, and investors that realize this are more likely to sell their properties quicker and for more money.
Granted, you may have a great house to sell, but youre not going to sell it if nobody knows about it. And youre not going to attract competitive bids unless more than a few people know about it and want to call the property their own. To make sure that your real estate investment attracts the attention of buyers in your area, avoid these common marketing mistakes:
No marketing strategy - Many investors select their properties based on numbers. If they can get the house for a great price, fix it up cheap, and resale it for a much higher price, they feel like they made a good investment. But you have to sell the house to earn the profit. Not having a good marketing strategy for selling the house before you buy it is perhaps the most common mistake made by novice investors. Your marketing strategy should be decided before you purchase the house.
Going over budget.
You should have a good idea how much money it is going to take to market your house. Stick to this number and avoid going over it at all costs. Use strategies that fit into your budget instead of stretching your budget to fit certain marketing strategies.
Ignoring successful strategies.
In the world of real estate investing, there is always something new to learn. One of the best ways to learn which marketing strategies work and which ones dont is to watch your competition. See what they are doing. Are their houses selling quicker and for more profit than yours? If so, why not try what is working for them?
Once you have found a successful marketing strategy, stick with it. While different homes or different residential areas might require a different marketing approach, dont forget the strategies that worked. Sometimes all that is needed is a new spin to an old idea to bring in the buyers.
The reason why some real estate properties attract more attention than other similar properties is that they are marketed well. It takes more than posting a sign in the front yard to bring in buyers, and investors that realize this are more likely to sell their properties quicker and for more money.
Granted, you may have a great house to sell, but youre not going to sell it if nobody knows about it. And youre not going to attract competitive bids unless more than a few people know about it and want to call the property their own. To make sure that your real estate investment attracts the attention of buyers in your area, avoid these common marketing mistakes:
No marketing strategy - Many investors select their properties based on numbers. If they can get the house for a great price, fix it up cheap, and resale it for a much higher price, they feel like they made a good investment. But you have to sell the house to earn the profit. Not having a good marketing strategy for selling the house before you buy it is perhaps the most common mistake made by novice investors. Your marketing strategy should be decided before you purchase the house.
Going over budget.
You should have a good idea how much money it is going to take to market your house. Stick to this number and avoid going over it at all costs. Use strategies that fit into your budget instead of stretching your budget to fit certain marketing strategies.
Ignoring successful strategies.
In the world of real estate investing, there is always something new to learn. One of the best ways to learn which marketing strategies work and which ones dont is to watch your competition. See what they are doing. Are their houses selling quicker and for more profit than yours? If so, why not try what is working for them?
Once you have found a successful marketing strategy, stick with it. While different homes or different residential areas might require a different marketing approach, dont forget the strategies that worked. Sometimes all that is needed is a new spin to an old idea to bring in the buyers.
Are Bonds Really Risk Free?
If you are a neophyte investor, perhaps you have never invested in bonds before. Before you invest, you need to understand some of the risks associated with investing in bonds. Most people assume that all fixed-income investment instruments are completely risk free, but this is not the case. Even if you are an experienced investor, you may not be aware of all the potential shortcomings of bonds. For the purposes of this discussion, we are going to carefully examine the pitfalls and risks associated with bonds.
The most important risk factor you need to take into account is the interest rate. Even if you are new to investing, you are probably aware that every 6-8 weeks, the Federal Reserve (also known as the Fed) meets to evaluate the current condition of the economy. At each meeting, the Fed renders a decision regarding interest rates. If inflation has been increasing, the Fed will need to raise interest rates. If inflation is moderate or contained, the Fed will likely maintain the current interest rate level. However, if the economy is slowing down and there is very little inflation or maybe even deflation, then the Fed might decrease interest rates to stimulate the economy by making it easier for businesses to borrow money.
The reason why the current and future level of interest rates are important for bonds is because as interest rates go up, bond prices go down, and vice versa. If you are able to hold a bond until maturity, then interest rate movements do not really matter, because you will redeem the principal upon maturity. But often, investors have to sell their bonds well before the maturity date. If interest rates have moved up since you bought the bond, and you sell it prior to maturity, then the bond will be worth less that what you paid for it.
It is also important to understand the claim status of the bond you are buying. Claim status refers to your ability to recover your investment in the event the bond issuer goes bankrupt. If you are buying a government bond, such as a Treasury Bill, claim status is irrelevant, because the odds of the Federal Government going bankrupt are slim and none.
If you are buying a corporate bond, however, there is always a chance that the issuer could go out of business. In the event of liquidation, bondholders are given priority over stockholders. However, there are often several classes of bondholders. Senior note holders can often claim against certain kinds of physical collateral in the event of bankruptcy, such as equipment (computers, machines, etc.). Regular bondholders claim after senior note holders. You should check your bond portfolio to determine what class your bonds are in. If you can not determine the class of your bonds, call your broker.
Next, you should always check the three most basic features of a bond; the coupon rate, the maturity date, and the call provisions. The coupon rate is the interest rate. Most bonds pay an interest rate semiannually or annually. The maturity date is the date that the bond will be redeemed by the issuer; simply put, the maturity date is when the company must pay back to you the principal you loaned to them. The call provisions refer to the rights of the issuer to buy back your bond prior to maturity. Some bonds are non-callable, while others are callable, meaning that the company can buy your bond back before maturity, usually at a premium.
Finally, you should also understand that if economic conditions become more favorable after you a buy a bond, and interest rates start to go down again, the issuer will likely issue a lot more bonds to take advantage of the low interest rates, and will use the proceeds to try to buy back any callable bonds it issued previously. So, when interest rates go down, there is an increasing likelihood that your bond will be redeemed prior to maturity, if in fact the bond is callable.
I hope this information will help you formulate a strategy for making wise decisions when investing in bonds. Even though bonds are normally classified as fixed-income securities, you now understand that there are risks associated with them. So, follow all of the procedures outlined in this article when evaluating the risk characteristics of bonds, and you will do fine.
The most important risk factor you need to take into account is the interest rate. Even if you are new to investing, you are probably aware that every 6-8 weeks, the Federal Reserve (also known as the Fed) meets to evaluate the current condition of the economy. At each meeting, the Fed renders a decision regarding interest rates. If inflation has been increasing, the Fed will need to raise interest rates. If inflation is moderate or contained, the Fed will likely maintain the current interest rate level. However, if the economy is slowing down and there is very little inflation or maybe even deflation, then the Fed might decrease interest rates to stimulate the economy by making it easier for businesses to borrow money.
The reason why the current and future level of interest rates are important for bonds is because as interest rates go up, bond prices go down, and vice versa. If you are able to hold a bond until maturity, then interest rate movements do not really matter, because you will redeem the principal upon maturity. But often, investors have to sell their bonds well before the maturity date. If interest rates have moved up since you bought the bond, and you sell it prior to maturity, then the bond will be worth less that what you paid for it.
It is also important to understand the claim status of the bond you are buying. Claim status refers to your ability to recover your investment in the event the bond issuer goes bankrupt. If you are buying a government bond, such as a Treasury Bill, claim status is irrelevant, because the odds of the Federal Government going bankrupt are slim and none.
If you are buying a corporate bond, however, there is always a chance that the issuer could go out of business. In the event of liquidation, bondholders are given priority over stockholders. However, there are often several classes of bondholders. Senior note holders can often claim against certain kinds of physical collateral in the event of bankruptcy, such as equipment (computers, machines, etc.). Regular bondholders claim after senior note holders. You should check your bond portfolio to determine what class your bonds are in. If you can not determine the class of your bonds, call your broker.
Next, you should always check the three most basic features of a bond; the coupon rate, the maturity date, and the call provisions. The coupon rate is the interest rate. Most bonds pay an interest rate semiannually or annually. The maturity date is the date that the bond will be redeemed by the issuer; simply put, the maturity date is when the company must pay back to you the principal you loaned to them. The call provisions refer to the rights of the issuer to buy back your bond prior to maturity. Some bonds are non-callable, while others are callable, meaning that the company can buy your bond back before maturity, usually at a premium.
Finally, you should also understand that if economic conditions become more favorable after you a buy a bond, and interest rates start to go down again, the issuer will likely issue a lot more bonds to take advantage of the low interest rates, and will use the proceeds to try to buy back any callable bonds it issued previously. So, when interest rates go down, there is an increasing likelihood that your bond will be redeemed prior to maturity, if in fact the bond is callable.
I hope this information will help you formulate a strategy for making wise decisions when investing in bonds. Even though bonds are normally classified as fixed-income securities, you now understand that there are risks associated with them. So, follow all of the procedures outlined in this article when evaluating the risk characteristics of bonds, and you will do fine.
What Is Bond Market?
A bond is a debt obligation or security, where the the holder or buyer expects the holder to repay the principal and interest at maturity (a date in the future). The bond market is a financial market where these bonds are bought and sold. To get an estimate of the size of these debt securities markets you should bear in mind that the international bond market is approximately $45 trillion and the size of U.S. bond market debt is about $25.2 trillion.
How are these markets structured?
Quite different from the stock, futures and options markets, most of the trading volume in bond markets takes place between brokers and large financial institutions in an over-the-counter market. But, a couple of bonds, primarily corporate ones, are listed on exchanges. This is partly due to the differences in bonds.
What are the various types of bond markets?
The Securities Industry and Financial Markets Association(SIFMA) classifies the bond market into the following categories:
1) Corporate
In simple terms, corporate debt securities are IOU's issued by corporations so that they can use this cash to support their day-to-day operations and generate greater profits in the future. All sorts of corporations issue corportate debt. These could range from industrial, financial companies to service-related ones.
2) Government and Agency
As the name suggests, government and agency debt is issued by different government-sponsored enterprises (GSEs). These entities have been created by Congress to fund loans at affordable rates to certain kinds of borrowers (such as students, farmers and homeowners). GSEs mostly rely on debt financing for their daily operations. Some examples of GSEs in this regard - Fannie Mae, Sallie Mae, Federal Farm Credit System Banks etc.
3) Municipal
Municipal securities are debt securities issued by counties, cities, states, and other governmental entities to raise money to build/maintain infrastructure such as highways, schools, hospitals, and drainage systems. This is perhaps the the state and local governments in the United States finance their cash flow requirements. One great appeal of investing in municipal bonds is that the interest on these securities is exempt from the federal income taxes.
4) Mortgage Backed Securities and Asset-Backed Securities
Financial institutions issue mortgage debt securities to those interested in ownership of mortgage loans. These are loans that are used to finance the borrower's purchase of homes or other real estate. As the underlying loans (mortgages) are being paid off, the investors receive interest payments in addition to their principal being paid off.
Some examples of agencies that issue these debt securities are - Ginnie Mae (Government National Mortgage Association), Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation).
Asset-backed securities (ABS) are similar in mortgage securities in that they represent an interest in a variety of assets such as auto loans, auto leases, home equity loans, or credit card receivables. The investors in these debt securities receive interest payments in addition to their principal as the underlying loan is being paid off.
In summary, you have learnt what bond markets are, the different types of bond markets and the different players in these markets.
How are these markets structured?
Quite different from the stock, futures and options markets, most of the trading volume in bond markets takes place between brokers and large financial institutions in an over-the-counter market. But, a couple of bonds, primarily corporate ones, are listed on exchanges. This is partly due to the differences in bonds.
What are the various types of bond markets?
The Securities Industry and Financial Markets Association(SIFMA) classifies the bond market into the following categories:
1) Corporate
In simple terms, corporate debt securities are IOU's issued by corporations so that they can use this cash to support their day-to-day operations and generate greater profits in the future. All sorts of corporations issue corportate debt. These could range from industrial, financial companies to service-related ones.
2) Government and Agency
As the name suggests, government and agency debt is issued by different government-sponsored enterprises (GSEs). These entities have been created by Congress to fund loans at affordable rates to certain kinds of borrowers (such as students, farmers and homeowners). GSEs mostly rely on debt financing for their daily operations. Some examples of GSEs in this regard - Fannie Mae, Sallie Mae, Federal Farm Credit System Banks etc.
3) Municipal
Municipal securities are debt securities issued by counties, cities, states, and other governmental entities to raise money to build/maintain infrastructure such as highways, schools, hospitals, and drainage systems. This is perhaps the the state and local governments in the United States finance their cash flow requirements. One great appeal of investing in municipal bonds is that the interest on these securities is exempt from the federal income taxes.
4) Mortgage Backed Securities and Asset-Backed Securities
Financial institutions issue mortgage debt securities to those interested in ownership of mortgage loans. These are loans that are used to finance the borrower's purchase of homes or other real estate. As the underlying loans (mortgages) are being paid off, the investors receive interest payments in addition to their principal being paid off.
Some examples of agencies that issue these debt securities are - Ginnie Mae (Government National Mortgage Association), Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation).
Asset-backed securities (ABS) are similar in mortgage securities in that they represent an interest in a variety of assets such as auto loans, auto leases, home equity loans, or credit card receivables. The investors in these debt securities receive interest payments in addition to their principal as the underlying loan is being paid off.
In summary, you have learnt what bond markets are, the different types of bond markets and the different players in these markets.
The Three Golden Rules of Investing
The whole aim of investing is, of course, to create a passive income stream, so while you're out on the golf course, hanging with friends or whatever, your money is working for you, rather than you working for money.
There are three golden rules to investing that, if you follow, will lead to great wealth and financial freedom!
The first golden rule is to just get started! One of the main reasons people fail to create wealth is because they don't understand the power of compound interest as they think investing just a few dollars, or even putting coins in a jar will never be enough to invest, so why bother.
The truth is many successful wealthy people started out by just investing a tiny amount then watching it grow thanks to the power of compound interest.
The second golden rule is to start young! If you invest say, $2000 when you're 30 you will end up with more money than if you invest that same amount at 35. The reason is compound interest. Imagine planting a seed, then fertilizing it for 30 days.
That seed will just grow and grow, spread more seeds and turn into a big bush! Now, imagine planting the same type of seed 1 year later and only giving it half the amount of fertilizer. This plant will grow but won't catch up in size to its counterpart. That's what compound interest is like!
The third rule is to have a plan. There's an old, and very true, saying: Fail to plan - plan to fail. Write your plan down, review it regularly and above all, keep your eye on the goal.
The most common forms of investment for most people are real estate and the stock market. When you invest in the market, you are literally buying stock in a company, which then uses the money raised to run its business, expand, pay down debt, or buy another company.
You can either buy shares through a broker who will charge a fee, or trade on your own online. The advantage of a broker is that they follow the market continuously and should know what the stocks are doing. If you plan to trade online on your own, be prepared to study the market extensively and learn how it works as it can be confusing.
Real estate has been a popular form of investment for thousands of years and with good reason! The aim of your investment is to get someone else to pay off the debt while your asset increases in value.
The keys to this are to invest in a high demand area, don't borrow too much and be prepared to hold the property for at least five years. Always look for property in a prime location and that needs only minor maintenance or repairs that you can undertake at minimal expense to add thousands of dollars to its value.
When buying real estate, always have an expert check the property for structural soundness and don't buy anything that requires major work unless you have a builder or trades person in the family!
There are three golden rules to investing that, if you follow, will lead to great wealth and financial freedom!
The first golden rule is to just get started! One of the main reasons people fail to create wealth is because they don't understand the power of compound interest as they think investing just a few dollars, or even putting coins in a jar will never be enough to invest, so why bother.
The truth is many successful wealthy people started out by just investing a tiny amount then watching it grow thanks to the power of compound interest.
The second golden rule is to start young! If you invest say, $2000 when you're 30 you will end up with more money than if you invest that same amount at 35. The reason is compound interest. Imagine planting a seed, then fertilizing it for 30 days.
That seed will just grow and grow, spread more seeds and turn into a big bush! Now, imagine planting the same type of seed 1 year later and only giving it half the amount of fertilizer. This plant will grow but won't catch up in size to its counterpart. That's what compound interest is like!
The third rule is to have a plan. There's an old, and very true, saying: Fail to plan - plan to fail. Write your plan down, review it regularly and above all, keep your eye on the goal.
The most common forms of investment for most people are real estate and the stock market. When you invest in the market, you are literally buying stock in a company, which then uses the money raised to run its business, expand, pay down debt, or buy another company.
You can either buy shares through a broker who will charge a fee, or trade on your own online. The advantage of a broker is that they follow the market continuously and should know what the stocks are doing. If you plan to trade online on your own, be prepared to study the market extensively and learn how it works as it can be confusing.
Real estate has been a popular form of investment for thousands of years and with good reason! The aim of your investment is to get someone else to pay off the debt while your asset increases in value.
The keys to this are to invest in a high demand area, don't borrow too much and be prepared to hold the property for at least five years. Always look for property in a prime location and that needs only minor maintenance or repairs that you can undertake at minimal expense to add thousands of dollars to its value.
When buying real estate, always have an expert check the property for structural soundness and don't buy anything that requires major work unless you have a builder or trades person in the family!
Be A Responsible Investor!
According to the Cashflow quadrants by Robert Kiyosaki, I will need to switch to either a business owner or an investor to become wealthy. If I were to choose the path as an investor, I realized that there are certain responsibilities that I need to fulfill.
What are the responsibilities?
To answer this question, let use the example of investing in mutual funds.
As we all know, fund managers managed mutual funds. They are expert and more qualified than the average investor in stock investment. Thus they are in a better position to make money from the stock market.
Another advantage of mutual funds is that there is diversification to reduce risk. The amount of money is pooled to invest in different stocks, thus achieving diversification. These are the two selling points of investing in mutual funds.
When I initially started to invest in mutual funds, I never do any detailed research. Like most people, I simply invest in a mutual fund that I think it will make money. The decision is usually purely based on the information presented by the sale persons. Happily, I invested and forget about it. I felt that since the expert fund manager is managing my investment, I had nothing to worry about. And I never really monitor the performance of the mutual funds.
This did not just happen to mutual funds investment. I did that to other kind of investments as well. I felt that I wanted to spend as little time as possible and leave everything to the experts. I was lazy to learn and manage my own investments actively.
Later, I learned from the Rich Dad's series by Robert Kiyosaki that financial education is essential. Since I always desire to be wealthy, I have decided to gain financial literacy. After studying for a few years, I have learned a lot of things and that really open my open eyes.
As an investor, I am responsible for the outcome of my investments. No one else is responsible for the result of my investments. This is the part where most people missed out. They thought that they could leave things to the expert and do nothing.
Firstly, I have the responsibility of selecting the expert to manage my investments. I need to select expert based on their track records. In the case of mutual funds investment, I need to select the fund manager who has track records to increase my odds of winning.
Secondly, I have the responsibility of monitoring my investments regularly. If things are not in order, I should consider cutting loss and get out of the investments. In the case of mutual funds investment, if I have invested in a particular sector, I need to check that there are no bad news regarding the sector that may affect my investments. If the sector is expected to perform badly for the next few years, then my mutual funds investment will definitely perform badly. Then, I should consider cutting loss.
Thirdly, I have the responsibility of choosing the correct investment company. If an investment company has financial problems, then I face the risk of losing money if the company were to liquidate. In the case of mutual funds investment, if the fund house had financial woes, I would be asking for trouble by investing my money with them.
Next, I have the responsibility of choosing the right investment product. If I choose the wrong investment products, I am almost guaranteed to loss money. In case of mutual funds investment, if I had chosen a dotcom fund just after the dotcom bubble had burst, I would definitely be losing money.
Then, I have the responsibility of getting the cheapest investment cost. If I have choose an investment with high investment cost, then it simply means that my investment return needs to perform better than the high investment cost before I can make money. In the case of mutual funds investment, I should look out for ways to reduce sales charge, expensive ratio, fund management fees and so on.
Lastly, I have the responsibility of planning for my investment. Like what I have learned from the Rich Dad's series by Robert Kiyosaki, investment is a plan. In the case of mutual funds investment, I should time my entry and my exit properly. The performance of the mutual funds goes up and down over the years. If I had not set any profit target for my mutual funds investment, then I would be holding on to the funds indefinitely. I would end up not selling my mutual funds when there is a reasonable profit. If I needed my money when the market had dropped, then I would be losing money by cashing out at the wrong time.
The above are just some responsibilities as an investor. They are by no means complete. I believe when I learn more, the list of responsibilities will grow. In short, one need to be responsible for one's investments.
* DISCLAIMER *
The author only provides the material and information as a layperson's views about an important subject. The materials and information are from sources believed to be reliable and from his own personal experience, but he neither implies nor intends any guarantee of accuracy.
All the materials, information and procedure in this book are only the author's personal opinion. You must consult your own professional advisor and other reputable sources on any matter that concerns you or others.
The author, publishers and distributors are not competent and do not profess to give legal, accounting, medical or any other type of professional advice. The reader must always seek those services from competent professionals who can review your own particular circumstances.
The author, publisher and distributors particularly disclaim any liability, loss, or risk taken by individuals who directly or indirectly act on the information contained herein. All readers must accept full responsibility for their use of this material.
What are the responsibilities?
To answer this question, let use the example of investing in mutual funds.
As we all know, fund managers managed mutual funds. They are expert and more qualified than the average investor in stock investment. Thus they are in a better position to make money from the stock market.
Another advantage of mutual funds is that there is diversification to reduce risk. The amount of money is pooled to invest in different stocks, thus achieving diversification. These are the two selling points of investing in mutual funds.
When I initially started to invest in mutual funds, I never do any detailed research. Like most people, I simply invest in a mutual fund that I think it will make money. The decision is usually purely based on the information presented by the sale persons. Happily, I invested and forget about it. I felt that since the expert fund manager is managing my investment, I had nothing to worry about. And I never really monitor the performance of the mutual funds.
This did not just happen to mutual funds investment. I did that to other kind of investments as well. I felt that I wanted to spend as little time as possible and leave everything to the experts. I was lazy to learn and manage my own investments actively.
Later, I learned from the Rich Dad's series by Robert Kiyosaki that financial education is essential. Since I always desire to be wealthy, I have decided to gain financial literacy. After studying for a few years, I have learned a lot of things and that really open my open eyes.
As an investor, I am responsible for the outcome of my investments. No one else is responsible for the result of my investments. This is the part where most people missed out. They thought that they could leave things to the expert and do nothing.
Firstly, I have the responsibility of selecting the expert to manage my investments. I need to select expert based on their track records. In the case of mutual funds investment, I need to select the fund manager who has track records to increase my odds of winning.
Secondly, I have the responsibility of monitoring my investments regularly. If things are not in order, I should consider cutting loss and get out of the investments. In the case of mutual funds investment, if I have invested in a particular sector, I need to check that there are no bad news regarding the sector that may affect my investments. If the sector is expected to perform badly for the next few years, then my mutual funds investment will definitely perform badly. Then, I should consider cutting loss.
Thirdly, I have the responsibility of choosing the correct investment company. If an investment company has financial problems, then I face the risk of losing money if the company were to liquidate. In the case of mutual funds investment, if the fund house had financial woes, I would be asking for trouble by investing my money with them.
Next, I have the responsibility of choosing the right investment product. If I choose the wrong investment products, I am almost guaranteed to loss money. In case of mutual funds investment, if I had chosen a dotcom fund just after the dotcom bubble had burst, I would definitely be losing money.
Then, I have the responsibility of getting the cheapest investment cost. If I have choose an investment with high investment cost, then it simply means that my investment return needs to perform better than the high investment cost before I can make money. In the case of mutual funds investment, I should look out for ways to reduce sales charge, expensive ratio, fund management fees and so on.
Lastly, I have the responsibility of planning for my investment. Like what I have learned from the Rich Dad's series by Robert Kiyosaki, investment is a plan. In the case of mutual funds investment, I should time my entry and my exit properly. The performance of the mutual funds goes up and down over the years. If I had not set any profit target for my mutual funds investment, then I would be holding on to the funds indefinitely. I would end up not selling my mutual funds when there is a reasonable profit. If I needed my money when the market had dropped, then I would be losing money by cashing out at the wrong time.
The above are just some responsibilities as an investor. They are by no means complete. I believe when I learn more, the list of responsibilities will grow. In short, one need to be responsible for one's investments.
* DISCLAIMER *
The author only provides the material and information as a layperson's views about an important subject. The materials and information are from sources believed to be reliable and from his own personal experience, but he neither implies nor intends any guarantee of accuracy.
All the materials, information and procedure in this book are only the author's personal opinion. You must consult your own professional advisor and other reputable sources on any matter that concerns you or others.
The author, publishers and distributors are not competent and do not profess to give legal, accounting, medical or any other type of professional advice. The reader must always seek those services from competent professionals who can review your own particular circumstances.
The author, publisher and distributors particularly disclaim any liability, loss, or risk taken by individuals who directly or indirectly act on the information contained herein. All readers must accept full responsibility for their use of this material.
Hidden Investment Risks!
Financial education plays an important role in my life. Ever since I have realized that it is important to make money work harder for me, I have been constantly reading and learning about financial education. With the new knowledge that I have gained each day, I have realized that I am improving in my ability to identify risks in an investment.
Identify risks is the first step to evaluate an investment. If I want to be a sophisticated investor as defined in the Rich Dad's series by Robert Kiyosaki, then I definitely need to be able to identify risks in an investment. If I do not know what are the risks involved, I will not be able to manage the risks. If I cannot manage the risks, then I will have a high chance of losing money in the investment. That is something that I want to avoid. If I had foolishly invested without the knowledge of the inherent risks in the investment, then I would be considered to be a gambler than an investor.
Every investment has risks that are obvious and risks that are hidden. Someone with a little knowledge can easily detect the obvious risks. But for the hidden risks, it takes someone who is experienced in that field to see.
Take stock investment as an example, what are the obvious risks and hidden risks involved?
The first obvious risk is the risk of losing money. If I have invested in a stock and the share price drops, then I will be losing money.
The second obvious risk is that a company can go bankrupt. When a company go bankrupt, the shares of the company become worthless.
The third obvious risk is that a company may de-list from the stock exchange. When a company de-list from the stock exchange, the shares become worthless.
What about the hidden risks?
Firstly, there is a risk of addiction in stock investment. This will cloud my judgment in selecting stocks to invest. Where does the addiction come about? When the share price goes up, I feel excited because I am making money. The effect of excitement is like drinking liquor to feel high. When the share price goes down, I feel depressed because I am losing money. The effect of depression is like taking alcohol to feel low. This up and down of emotions is a source of addiction. In fact, this risk exists in investments such as options, currencies and commodities.
Secondly, there is a risk of falling in love with a stock. Again, this will impair my judgment in selecting stocks to invest. How do I fall in love with a stock? Well, all I need to do is to make money from a particular stock a few times. Thus, I have attached a positive experience of making money by investing in that stock. When I am selecting stocks to invest, I will have tendency to select that stock again even though the technical analysis or fundamental analysis says otherwise.
Thirdly, there is a risk of the government changing the policy thus affecting the stock market. If a government changes the policy that impacts investment negatively, foreign investors may withdraw their funds from the stock market. This will result in the stock market crashing. In other words, I will lose money in my stock investment.
Next, there is a risk of external events that will affect the stock market. For instance, a terrorist attack will affect the stock market because the confidence of investors is shaken. Similarly, a great natural disaster will affect the stock market.
Then, there is currency exchange rate risk. This is true if I have invested in stock that is listed in foreign currency in a local stock exchange. Another possibility is that I have invested in a stock listed in a foreign stock exchange. If the share price increases, then I should be making money. But if the foreign currency depreciates in value against the local currency, then I may end up losing money.
Lastly, there is a risk of leverage. Before I am allowed to trade in a stock market, I will need to have a brokerage account with some money. Usually, the brokerage firm will allow me to leverage by trading up to several times the amount of money in my brokerage account. Sometime, the brokerage firm provides margin account for trading to enhance leveraging.
Leveraging is a two edged sword. It can work both ways. If the share price goes up, I can make more money by leveraging. If share price goes down, I will end up with a lot more money to pay because of leveraging. Leveraging is like a magnifying glass that will magnify my trading mistake.
The list of hidden risks may not be incomplete since I am still learning about stock investment. The main point that I want to raise is that financial literacy is important as highlighted in the Rich Dad's series by Robert Kiyosaki. I have simply used stock investment to illustrate my point.
* DISCLAIMER *
The author only provides the material and information as a layperson's views about an important subject. The materials and information are from sources believed to be reliable and from his own personal experience, but he neither implies nor intends any guarantee of accuracy.
All the materials, information and procedure in this book are only the author's personal opinion. You must consult your own professional advisor and other reputable sources on any matter that concerns you or others.
The author, publishers and distributors are not competent and do not profess to give legal, accounting, medical or any other type of professional advice. The reader must always seek those services from competent professionals who can review your own particular circumstances.
The author, publisher and distributors particularly disclaim any liability, loss, or risk taken by individuals who directly or indirectly act on the information contained herein. All readers must accept full responsibility for their use of this material.
Identify risks is the first step to evaluate an investment. If I want to be a sophisticated investor as defined in the Rich Dad's series by Robert Kiyosaki, then I definitely need to be able to identify risks in an investment. If I do not know what are the risks involved, I will not be able to manage the risks. If I cannot manage the risks, then I will have a high chance of losing money in the investment. That is something that I want to avoid. If I had foolishly invested without the knowledge of the inherent risks in the investment, then I would be considered to be a gambler than an investor.
Every investment has risks that are obvious and risks that are hidden. Someone with a little knowledge can easily detect the obvious risks. But for the hidden risks, it takes someone who is experienced in that field to see.
Take stock investment as an example, what are the obvious risks and hidden risks involved?
The first obvious risk is the risk of losing money. If I have invested in a stock and the share price drops, then I will be losing money.
The second obvious risk is that a company can go bankrupt. When a company go bankrupt, the shares of the company become worthless.
The third obvious risk is that a company may de-list from the stock exchange. When a company de-list from the stock exchange, the shares become worthless.
What about the hidden risks?
Firstly, there is a risk of addiction in stock investment. This will cloud my judgment in selecting stocks to invest. Where does the addiction come about? When the share price goes up, I feel excited because I am making money. The effect of excitement is like drinking liquor to feel high. When the share price goes down, I feel depressed because I am losing money. The effect of depression is like taking alcohol to feel low. This up and down of emotions is a source of addiction. In fact, this risk exists in investments such as options, currencies and commodities.
Secondly, there is a risk of falling in love with a stock. Again, this will impair my judgment in selecting stocks to invest. How do I fall in love with a stock? Well, all I need to do is to make money from a particular stock a few times. Thus, I have attached a positive experience of making money by investing in that stock. When I am selecting stocks to invest, I will have tendency to select that stock again even though the technical analysis or fundamental analysis says otherwise.
Thirdly, there is a risk of the government changing the policy thus affecting the stock market. If a government changes the policy that impacts investment negatively, foreign investors may withdraw their funds from the stock market. This will result in the stock market crashing. In other words, I will lose money in my stock investment.
Next, there is a risk of external events that will affect the stock market. For instance, a terrorist attack will affect the stock market because the confidence of investors is shaken. Similarly, a great natural disaster will affect the stock market.
Then, there is currency exchange rate risk. This is true if I have invested in stock that is listed in foreign currency in a local stock exchange. Another possibility is that I have invested in a stock listed in a foreign stock exchange. If the share price increases, then I should be making money. But if the foreign currency depreciates in value against the local currency, then I may end up losing money.
Lastly, there is a risk of leverage. Before I am allowed to trade in a stock market, I will need to have a brokerage account with some money. Usually, the brokerage firm will allow me to leverage by trading up to several times the amount of money in my brokerage account. Sometime, the brokerage firm provides margin account for trading to enhance leveraging.
Leveraging is a two edged sword. It can work both ways. If the share price goes up, I can make more money by leveraging. If share price goes down, I will end up with a lot more money to pay because of leveraging. Leveraging is like a magnifying glass that will magnify my trading mistake.
The list of hidden risks may not be incomplete since I am still learning about stock investment. The main point that I want to raise is that financial literacy is important as highlighted in the Rich Dad's series by Robert Kiyosaki. I have simply used stock investment to illustrate my point.
* DISCLAIMER *
The author only provides the material and information as a layperson's views about an important subject. The materials and information are from sources believed to be reliable and from his own personal experience, but he neither implies nor intends any guarantee of accuracy.
All the materials, information and procedure in this book are only the author's personal opinion. You must consult your own professional advisor and other reputable sources on any matter that concerns you or others.
The author, publishers and distributors are not competent and do not profess to give legal, accounting, medical or any other type of professional advice. The reader must always seek those services from competent professionals who can review your own particular circumstances.
The author, publisher and distributors particularly disclaim any liability, loss, or risk taken by individuals who directly or indirectly act on the information contained herein. All readers must accept full responsibility for their use of this material.
How To Select Mutual Funds
If you are new to investing, you may have heard of mutual funds but do not know exactly what they are or how to select the right one. A mutual fund is a collective investment security, and there are many different types. It may consist of a mix of several different types of investment vehicles, such as stocks, bonds, or derivatives, or it may consist of nothing but stocks that are part of a certain sector of the economy, or it could be just bonds.
For example, there are mutual funds that consist of nothing but technology stocks. There are also funds that are comprised of stocks that have a similar market capitalization (such as mid-cap funds, large-cap funds, or small-cap funds). And some might contain several different types of securities (such as stocks, bonds, etc.) that all fall within the same risk classification (high-risk, medium-risk, low-risk).
Just like stocks, mutual funds have a price per share, also known as the Net Asset Value (NAV). The NAV is calculated by dividing the total value of the fund divided by the number of shares outstanding. As with stocks, the price fluctuates on a daily basis and it can be sold just like any other security.
When deciding what fund to invest in, you need to consider your investment goals. Are you looking for long-term capital appreciation, or would you prefer to receive immediate income from your investment? You also need to evaluate your risk tolerance. Are you willing to take a chance on a speculative fund to potentially receive a better return, or is capital preservation a high priority?
If capital preservation is your goal, then you should consider a mutual fund that consists of low risk equities and conservative bond and money market instruments. If you want a mix of investments, then you should look for a balanced fund. If you want explosive capital appreciation, then you should consider a high-risk common stock or high-yielding bond fund.
They are different than stocks when it comes to fees and expenses. As with stocks, funds are subject to capital gains taxes. But a fund is sometimes subject to a front-end and/or back-end load. If there is a front-end load, that means that a percentage of the initial investment is automatically deducted to pay for commissions to the fund. If there is a back-end load, the investor must pay a fee when the security is sold.
Also, there is a 12b-1 fee that is often deducted to pay for advertising expenses incurred for the marketing of the fund to the public. Sometimes there is no 12b-1 fee, it depends. Investors might be unaware of the 12b-1 fee because it is sometimes deducted from the share price, so in a way, it is an invisible fee.
I hope this introduction to mutual funds will help you make some decisions regarding your investments. There are literally thousands of different funds available, and brokerage houses often have their own set of funds that they create for sale to their customers. Talk to your broker and see if he or she can help you identify the best investment vehicle for you. Just make sure you review the fee structure of the mutual fund you are interested in before you invest.
For example, there are mutual funds that consist of nothing but technology stocks. There are also funds that are comprised of stocks that have a similar market capitalization (such as mid-cap funds, large-cap funds, or small-cap funds). And some might contain several different types of securities (such as stocks, bonds, etc.) that all fall within the same risk classification (high-risk, medium-risk, low-risk).
Just like stocks, mutual funds have a price per share, also known as the Net Asset Value (NAV). The NAV is calculated by dividing the total value of the fund divided by the number of shares outstanding. As with stocks, the price fluctuates on a daily basis and it can be sold just like any other security.
When deciding what fund to invest in, you need to consider your investment goals. Are you looking for long-term capital appreciation, or would you prefer to receive immediate income from your investment? You also need to evaluate your risk tolerance. Are you willing to take a chance on a speculative fund to potentially receive a better return, or is capital preservation a high priority?
If capital preservation is your goal, then you should consider a mutual fund that consists of low risk equities and conservative bond and money market instruments. If you want a mix of investments, then you should look for a balanced fund. If you want explosive capital appreciation, then you should consider a high-risk common stock or high-yielding bond fund.
They are different than stocks when it comes to fees and expenses. As with stocks, funds are subject to capital gains taxes. But a fund is sometimes subject to a front-end and/or back-end load. If there is a front-end load, that means that a percentage of the initial investment is automatically deducted to pay for commissions to the fund. If there is a back-end load, the investor must pay a fee when the security is sold.
Also, there is a 12b-1 fee that is often deducted to pay for advertising expenses incurred for the marketing of the fund to the public. Sometimes there is no 12b-1 fee, it depends. Investors might be unaware of the 12b-1 fee because it is sometimes deducted from the share price, so in a way, it is an invisible fee.
I hope this introduction to mutual funds will help you make some decisions regarding your investments. There are literally thousands of different funds available, and brokerage houses often have their own set of funds that they create for sale to their customers. Talk to your broker and see if he or she can help you identify the best investment vehicle for you. Just make sure you review the fee structure of the mutual fund you are interested in before you invest.
How I Reduce My Investment Risk
Ideally, investors try to buy a stock when the price has reached a support level (a level at which the price is as low as it will go) and sell the stock when it hits a resistance level (a level at which the price is as high as it will go). This is easier said than done. Most investors end up missing out on a continual rise by waiting for a stock to plummet first, or sell way to early by underestimating how high the price will go. In this article, we will focus on the two most popular strategies that you can use to invest without having to worry about market timing.
Dollar cost averaging (DCA) is an investing technique intended to reduce exposure to risk associated with making a single large purchase. According to this technique, shares of stock are purchased in a specific amount on a specified periodic basis (often monthly), regardless of current performance. The theory is that this will lead to greater returns overall, since smaller numbers of shares will be bought when the cost is high, while larger number of shares will be bought while the cost is low.
An example of DCA would be as follows: If I want to buy 1,200 shares of IBM stock using DCA, then I might decide to purchase 400 shares of IBM per month over the course of the next three months. Hypothetically, during month one, the price of IBM may be $105 per share, and then it might drop to $95 per share during month two, and then rise to $100 during month three. If I bought all 1,200 shares during month one, I would have cost me $105 per share. But, by spreading the purchase over a three month period, I managed to buy IBM at an average price of $100 per share.
The primary drawback of using DCA is that you may not be maximizing your overall return. If there is an indication that a certain stock is currently undervalued and might shoot up in price, you would actually make less money using DCA than if you had bought all the shares in the beginning before the price skyrocketed. So, it is not always a winning strategy to spread your purchases over a period of time.
Value averaging, also known as dollar value averaging (DVA), is a technique of adding to an investment portfolio to provide greater return than similar methods such as dollar cost averaging and random investment. With the method, investors contribute to their portfolios in such a way that the portfolio balance increases by a set amount, regardless of market fluctuations. As a result, in periods of market declines, the investor contributes more money, while in periods of market climbs, the investor contributes less.
Here is an example of DVA: I want to invest in Yahoo using DVA. For the sake of argument, we will say that Yahoo is currently $10 per share. I determine that the value of the amount I am going to invest over the course of 1 year will rise, on average, $1,000 each quarter as I make additional investments. If I use DVA, I invest $1,000 to start. If, at the end of the first quarter, the share price has risen to $15 per share, that means that the value of my investment is now $1,500, which means I will only have to invest $500 at the start of the second quarter in order to bring the total amount of my investment for the first and second quarter to $2,000. So, I am investing less as the stock price increases.
Dollar value averaging usually works better than cost averaging because value averaging results in less money being invested as the stock price goes up, whereas with cost averaging you continue to invest the same number of dollars regardless of the share price. But, neither of these strategies are necessarily full-proof. Make sure you know something about the company you are going to invest in before you go forward.
Dollar cost averaging (DCA) is an investing technique intended to reduce exposure to risk associated with making a single large purchase. According to this technique, shares of stock are purchased in a specific amount on a specified periodic basis (often monthly), regardless of current performance. The theory is that this will lead to greater returns overall, since smaller numbers of shares will be bought when the cost is high, while larger number of shares will be bought while the cost is low.
An example of DCA would be as follows: If I want to buy 1,200 shares of IBM stock using DCA, then I might decide to purchase 400 shares of IBM per month over the course of the next three months. Hypothetically, during month one, the price of IBM may be $105 per share, and then it might drop to $95 per share during month two, and then rise to $100 during month three. If I bought all 1,200 shares during month one, I would have cost me $105 per share. But, by spreading the purchase over a three month period, I managed to buy IBM at an average price of $100 per share.
The primary drawback of using DCA is that you may not be maximizing your overall return. If there is an indication that a certain stock is currently undervalued and might shoot up in price, you would actually make less money using DCA than if you had bought all the shares in the beginning before the price skyrocketed. So, it is not always a winning strategy to spread your purchases over a period of time.
Value averaging, also known as dollar value averaging (DVA), is a technique of adding to an investment portfolio to provide greater return than similar methods such as dollar cost averaging and random investment. With the method, investors contribute to their portfolios in such a way that the portfolio balance increases by a set amount, regardless of market fluctuations. As a result, in periods of market declines, the investor contributes more money, while in periods of market climbs, the investor contributes less.
Here is an example of DVA: I want to invest in Yahoo using DVA. For the sake of argument, we will say that Yahoo is currently $10 per share. I determine that the value of the amount I am going to invest over the course of 1 year will rise, on average, $1,000 each quarter as I make additional investments. If I use DVA, I invest $1,000 to start. If, at the end of the first quarter, the share price has risen to $15 per share, that means that the value of my investment is now $1,500, which means I will only have to invest $500 at the start of the second quarter in order to bring the total amount of my investment for the first and second quarter to $2,000. So, I am investing less as the stock price increases.
Dollar value averaging usually works better than cost averaging because value averaging results in less money being invested as the stock price goes up, whereas with cost averaging you continue to invest the same number of dollars regardless of the share price. But, neither of these strategies are necessarily full-proof. Make sure you know something about the company you are going to invest in before you go forward.
About Different Kinds Of Investments
INVESTMENT is the placing of funds for the purpose of getting some income return and/or an increase in the invested principal. Return in the form of interest constitutes a rental for the use of the money and as such has been socially acceptable for thousands of years; indeed, tablets and inscriptions from ancient Egyptian and at a specified rate was a common business transaction even in those days. The modern world contains many investment media; among them are real estate, life insurance, commodities, bonds, stocks, and savings accounts.
All forms of investment have in common the following characteristics :
1. the amount in-vested, called the principal;
2. the rate of re- turn, usually stated as an annual rate in per cent;
3. the degree of risk;
4. the liquidity, or how quickly the investment may be converted into cash;
5. the capital gain, or increase in the value of the principal, sometimes termed the grown factor.
Assuming a certain principal amount, the other four factors vary widely with the nature of the investment.
In order to achieve high safety and high liquidity, growth and rate of return must be sacrificed. On the other hand should high return or growth be desired, it is equally apparent that some degree of safety and liquidity must be sacrificed. No investment will combine high safety with a high rate of return; these are always in inverse relationship, and it must be borne in mind that this is a basic fact of both savings and investment in general.
If you like to be an investor you must first accumulate funds for investment, and to keep your savings safe must be your first consideration. This will immediately limit the number of media into which such funds may be placed. After you have accumulated an adequate amount, then will be the time to consider whether higher risks are justified.
How much should be the goal before further investment, with attendant higher risks, is attempted? The answer cannot be given in the form of an exact amount, because your total income and expenditures will influence the latter; but most authorities agree that a "nest egg" or "rainy day fund" must first be obtained which is the equivalent of at least three months' salary. After that, further savings may be made for investment at a somewhat higher risk. Thus, if you guard against unforeseen emergencies, a program of investment with some degree of security and peace of mind may be
undertaken. We must emphasize that no short cut should be resorted to here.
Investment for the person with an average income adds up to different steps:
1. A slow accumulation of cash for retirement or as an emergency fund,
2. The built up of an additional fund for investment,
3. using those savings for investments in different areas like stocks, options and/or property.
All forms of investment have in common the following characteristics :
1. the amount in-vested, called the principal;
2. the rate of re- turn, usually stated as an annual rate in per cent;
3. the degree of risk;
4. the liquidity, or how quickly the investment may be converted into cash;
5. the capital gain, or increase in the value of the principal, sometimes termed the grown factor.
Assuming a certain principal amount, the other four factors vary widely with the nature of the investment.
In order to achieve high safety and high liquidity, growth and rate of return must be sacrificed. On the other hand should high return or growth be desired, it is equally apparent that some degree of safety and liquidity must be sacrificed. No investment will combine high safety with a high rate of return; these are always in inverse relationship, and it must be borne in mind that this is a basic fact of both savings and investment in general.
If you like to be an investor you must first accumulate funds for investment, and to keep your savings safe must be your first consideration. This will immediately limit the number of media into which such funds may be placed. After you have accumulated an adequate amount, then will be the time to consider whether higher risks are justified.
How much should be the goal before further investment, with attendant higher risks, is attempted? The answer cannot be given in the form of an exact amount, because your total income and expenditures will influence the latter; but most authorities agree that a "nest egg" or "rainy day fund" must first be obtained which is the equivalent of at least three months' salary. After that, further savings may be made for investment at a somewhat higher risk. Thus, if you guard against unforeseen emergencies, a program of investment with some degree of security and peace of mind may be
undertaken. We must emphasize that no short cut should be resorted to here.
Investment for the person with an average income adds up to different steps:
1. A slow accumulation of cash for retirement or as an emergency fund,
2. The built up of an additional fund for investment,
3. using those savings for investments in different areas like stocks, options and/or property.
Different Types of Investments
Overall, there are several different kinds of investments. These include stocks, bonds, and cash. Sounds simple, right? Well, unfortunately, it gets very complicated from there. You see, each type of investment has numerous types of investments that fall under it.
There is quite a bit to learn about each different investment type. The stock market can be a big scary place for those who know little or nothing about investing. Fortunately, the amount of information that you need to learn has a direct relation to the type of investor that you are. There are also three types of investors: conservative, moderate, and aggressive. The different types of investments also cater to the two levels of risk tolerance: high risk and low risk.
Conservative investors often invest in cash. This means that they put their money in interest bearing savings accounts, money market accounts, mutual funds, US Treasury bills, and Certificates of Deposit. These are very safe investments that grow over a long period of time. These are also low risk investments.
Moderate investors often invest in cash and bonds, and may dabble in the stock market. Moderate investing may be low or moderate risks. Moderate investors often also invest in real estate, providing that it is low risk real estate.
Aggressive investors commonly do most of their investing in the stock market, which is higher risk. The different types of stock can confuse first time investors. That confusion causes people to turn away from the stock market altogether, or to make unwise investments. If you are going to play the stock market, you must know what types of stock are available and what it all means!
Common stock is a term that you will hear quite often. Anyone can purchase common stock, regardless of age, income, age, or financial standing. Common stock is essentially part ownership in the business you are investing in. As the company grows and earns money, the value of your stock rises. On the other hand, if the company does poorly or goes bankrupt, the value of your stock falls. Common stock holders do not participate in the day to day operations of a business, but they do have the power to elect the board of directors.
Along with common stock, there are also different classes of stock. The different classes of stock in one company are often called Class A and Class B. The first class, class A, essentially gives the stock owner more votes per share of stock than the owners of class B stock. The ability to create different classes of stock in a corporation has existed since 1987. Many investors avoid stock that has more than one class, and stocks that have more than one class are not called common stock.
The most upscale type of stock is of course Preferred Stock. Preferred stock isn't exactly a stock. It is a mix of a stock and a bond. The owners of preferred stock can lay claim to the assets of the company in the case of bankruptcy, and preferred stock holders get the proceeds of the profits from a company before the common stock owners. If you think that you may prefer this preferred stock, be aware that the company typically has the right to buy the stock back from the stock owner and stop paying dividends.
Before you start investing, it is very important that you learn about the different types of investments, and what those investments can do for you. Understand the risks involved, and pay attention to past trends as well. History does indeed repeat itself, and investors know this first hand!
There is quite a bit to learn about each different investment type. The stock market can be a big scary place for those who know little or nothing about investing. Fortunately, the amount of information that you need to learn has a direct relation to the type of investor that you are. There are also three types of investors: conservative, moderate, and aggressive. The different types of investments also cater to the two levels of risk tolerance: high risk and low risk.
Conservative investors often invest in cash. This means that they put their money in interest bearing savings accounts, money market accounts, mutual funds, US Treasury bills, and Certificates of Deposit. These are very safe investments that grow over a long period of time. These are also low risk investments.
Moderate investors often invest in cash and bonds, and may dabble in the stock market. Moderate investing may be low or moderate risks. Moderate investors often also invest in real estate, providing that it is low risk real estate.
Aggressive investors commonly do most of their investing in the stock market, which is higher risk. The different types of stock can confuse first time investors. That confusion causes people to turn away from the stock market altogether, or to make unwise investments. If you are going to play the stock market, you must know what types of stock are available and what it all means!
Common stock is a term that you will hear quite often. Anyone can purchase common stock, regardless of age, income, age, or financial standing. Common stock is essentially part ownership in the business you are investing in. As the company grows and earns money, the value of your stock rises. On the other hand, if the company does poorly or goes bankrupt, the value of your stock falls. Common stock holders do not participate in the day to day operations of a business, but they do have the power to elect the board of directors.
Along with common stock, there are also different classes of stock. The different classes of stock in one company are often called Class A and Class B. The first class, class A, essentially gives the stock owner more votes per share of stock than the owners of class B stock. The ability to create different classes of stock in a corporation has existed since 1987. Many investors avoid stock that has more than one class, and stocks that have more than one class are not called common stock.
The most upscale type of stock is of course Preferred Stock. Preferred stock isn't exactly a stock. It is a mix of a stock and a bond. The owners of preferred stock can lay claim to the assets of the company in the case of bankruptcy, and preferred stock holders get the proceeds of the profits from a company before the common stock owners. If you think that you may prefer this preferred stock, be aware that the company typically has the right to buy the stock back from the stock owner and stop paying dividends.
Before you start investing, it is very important that you learn about the different types of investments, and what those investments can do for you. Understand the risks involved, and pay attention to past trends as well. History does indeed repeat itself, and investors know this first hand!
Learning From Lemons To Invest Your Cash
Investing money doesn't need to be a big deal. As a child, you may possibly have sold lemonade on the front lawn in the summer. Your mommy bought the lemons, as well as the sugar. You made the lemonade and then you took your business outside onto the street.
Perchance you made a profit, maybe you didn't. The point is, if you were dealing with a crowd of other lemonade vendors, you'd think of approaches to make yours more adept. Perhaps the best way to invest your money for this lemonade stand would be to buy the highest quality of lemons, maybe throw in a lot of ice plus get some bright streamers or balloons to make your lemonade stand stand-out from the rest.
As adults, most of us basically aren't educated enough to be able to understand what our top techniques to invest cash should be. There are so many possibilities. You have the 401K and IRA funds, mutual funds, stocks as well as commodities, day trading, Certificates of Deposit as well as bonds. These are long-term investments with varied risks and payback amounts. These also call for loads of paperwork, tax reporting and the inevitable special schedule to fill out. If you can afford it, it's probably best to employ a professional to keep up with all these different varieties of investments.
Your financial condition will decide the scope of your investment prospects. Starting up a small business on the internet probably only needs a little investment but it also needs loads of potential as a business idea. In this case, your top way to invest money in your business would be to start out with your business plan, your product or products and an advertising drive.
If there's a market for your product and you manage to get a foothold in that market, you might well be able to give up your day job. Many individuals, with suitable planning as well as a quality product, have comfortably begun businesses that make a good living. And they've probably spent very little controlling the business once it's off the ground. An online business allows you total freedom of movement. You may be holidaying in Greece while still advertising your products and receiving income.
Some persons believe the absolute best way to invest cash is in land or a house. It's a difficult case to argue with, if you time your purchase to maximize your return.
If you explore real-estate market trends, you'll uncover cycles of boom and bust markets. Remember the dot.com bust? While times were rich and interest rates were relatively low, dot-commers were purchasing mansions in Lake Tahoe for awfully high prices. A couple of years afterwards, house prices fell back into reality, and many people found themselves lumbered with a mortgage payment that didn't match up to the current market value of the house. Many found themselves faced with foreclosure.
If you save your money and have some patience, you'll be the one with cash in a buyer's market. As a durable long-term investment, land may well prove to be your finest way to invest cash. Land often appreciates in value, over time. Given well thought-out lawful arrangements, you could pass the value of this investment on to your kids, tax free. Now that's what I'd call the best way to invest cash!
Perchance you made a profit, maybe you didn't. The point is, if you were dealing with a crowd of other lemonade vendors, you'd think of approaches to make yours more adept. Perhaps the best way to invest your money for this lemonade stand would be to buy the highest quality of lemons, maybe throw in a lot of ice plus get some bright streamers or balloons to make your lemonade stand stand-out from the rest.
As adults, most of us basically aren't educated enough to be able to understand what our top techniques to invest cash should be. There are so many possibilities. You have the 401K and IRA funds, mutual funds, stocks as well as commodities, day trading, Certificates of Deposit as well as bonds. These are long-term investments with varied risks and payback amounts. These also call for loads of paperwork, tax reporting and the inevitable special schedule to fill out. If you can afford it, it's probably best to employ a professional to keep up with all these different varieties of investments.
Your financial condition will decide the scope of your investment prospects. Starting up a small business on the internet probably only needs a little investment but it also needs loads of potential as a business idea. In this case, your top way to invest money in your business would be to start out with your business plan, your product or products and an advertising drive.
If there's a market for your product and you manage to get a foothold in that market, you might well be able to give up your day job. Many individuals, with suitable planning as well as a quality product, have comfortably begun businesses that make a good living. And they've probably spent very little controlling the business once it's off the ground. An online business allows you total freedom of movement. You may be holidaying in Greece while still advertising your products and receiving income.
Some persons believe the absolute best way to invest cash is in land or a house. It's a difficult case to argue with, if you time your purchase to maximize your return.
If you explore real-estate market trends, you'll uncover cycles of boom and bust markets. Remember the dot.com bust? While times were rich and interest rates were relatively low, dot-commers were purchasing mansions in Lake Tahoe for awfully high prices. A couple of years afterwards, house prices fell back into reality, and many people found themselves lumbered with a mortgage payment that didn't match up to the current market value of the house. Many found themselves faced with foreclosure.
If you save your money and have some patience, you'll be the one with cash in a buyer's market. As a durable long-term investment, land may well prove to be your finest way to invest cash. Land often appreciates in value, over time. Given well thought-out lawful arrangements, you could pass the value of this investment on to your kids, tax free. Now that's what I'd call the best way to invest cash!
Why You Should Invest In Penny Stocks
Most people consider penny stocks to be a poor investment. I, on the other hand, think that investing in a penny stock before that company becomes profitable company is the best way to invest, because you can make a lot more money with penny stocks than would ever be possible with blue-chip stocks. I will now outline for you what you need to know about penny stocks and how to find the best one in which to invest.
Penny stocks are defined differently depending on who you talk to. Stockbrokers define them as any stock that trades below $5 per share. Regulatory agencies sometimes classify them as a stock with a price below $2. But, generally speaking, a penny stock is any low-priced security that trades on one of two exchanges; the Pink Sheets or the OTC Bulletin Board.
The Pink Sheets are an exchange where most startup companies first get listed. There are no listing requirements to be traded on this exchange. A company does not have to have any sales, nor does it have to reveal how many shares outstanding it has to qualify for the Pink Sheets.
The reason why a company tries to get listed on the Pink Sheets, even though their stock will not go up in price because they have no sales to speak of, is because it gives their company more substance and credibility; it is typically easier to attract additional capital, obtain financing, and execute contracts and agreements if a company is publicly traded, even if it is on the Pink Sheets.
Also, it is easier to get transferred from the Pink Sheets to one of the larger exchanges than it is to go from being a private company to hopping directly on to one of the major exchanges, such as the NASDAQ or NYSE. Companies listed on the Pink Sheets trade as ridiculously low as $0.00001 per share, all the way up to $500 per share and sometimes beyond. Foreign companies often have some of their shares sold in the United States by listing them on the Pink Sheets.
The OTC (Over-The-Counter) Bulletin Board is similar to the Pink Sheets. This exchange consists of relatively young companies either with no sales or a small amount of sales. Companies listed on it are sometimes fully reporting (meaning that they reveal how many shares they have outstanding and what their balance sheet looks like). Often, companies go from the Pink Sheets to the Bulletin Board once they are ready to become fully or semi-reporting.
Most publicly traded companies that are now listed on one of the major exchanges (NASADAQ, AMEX, NYSE), at one time or another, were penny stocks listed on the Pink Sheets or Bulletin Board. Rarely does a company go from being private directly to one of the 3 major exchanges. Google is a rare example of a company that was able to do that, because they were so successful so quickly. But, most companies have to pay their dues and edge their way up from the penny stock exchanges to the bigger ones.
So, investing in penny stocks can be an excellent investment because some of these young companies will one day be worth a fortune. The hard part is finding the right company to invest in, because for every successful startup company, there is also one that fails within the first year or two.
To find the right company, there are a few things you need to look for. Number one, you need to do some research and try to find out how many shares the company has in its float. The float is the number of shares that are currently being traded. Companies listed on the Pink Sheets usually do not officially report this number to the public, but with a little research, you can usually find out. It is usually contained in articles written about the company, or in TV or radio interviews with company officials that are sometimes archived on certain websites.
You can also look for the information on message boards or forums where stock traders chat with each other. Simply do a search on Google and read every article ever written about the company, and you will likely find out about their float. This is important because you do not want to invest in a company that already has something like 500 million shares in its float. Companies with this kind of share count are likely having problems moving forward, so they have issued more and more shares to raise money just to stay alive. You want to look for companies that have approximately 5 to 100 million shares in their float.
Other things that you should look for in a new company are barriers to entry, patents, and consumer demand. Here are the questions you need to ask yourself when analyzing the probability that a company will be successful:
1) Barriers to Entry: Are there are obstacles that will make it difficult for the company to sell its products or services?
2) Patents: Is the product that the company is going to sell patented? A patent will prevent other companies from producing the exact same product.
3) Consumer Demand: Will there be a demand for what the company is selling? Sometimes a company has a great new invention or an exciting technology, but if it is not something practical that consumers are going to want or need, then it does not matter how great it is.
Try to set aside some money for investing in penny stocks and start while you are still young. The earlier you get started, the more money you can make in the long run. Just make sure you do your homework before you invest and you should do extremely well.
Penny stocks are defined differently depending on who you talk to. Stockbrokers define them as any stock that trades below $5 per share. Regulatory agencies sometimes classify them as a stock with a price below $2. But, generally speaking, a penny stock is any low-priced security that trades on one of two exchanges; the Pink Sheets or the OTC Bulletin Board.
The Pink Sheets are an exchange where most startup companies first get listed. There are no listing requirements to be traded on this exchange. A company does not have to have any sales, nor does it have to reveal how many shares outstanding it has to qualify for the Pink Sheets.
The reason why a company tries to get listed on the Pink Sheets, even though their stock will not go up in price because they have no sales to speak of, is because it gives their company more substance and credibility; it is typically easier to attract additional capital, obtain financing, and execute contracts and agreements if a company is publicly traded, even if it is on the Pink Sheets.
Also, it is easier to get transferred from the Pink Sheets to one of the larger exchanges than it is to go from being a private company to hopping directly on to one of the major exchanges, such as the NASDAQ or NYSE. Companies listed on the Pink Sheets trade as ridiculously low as $0.00001 per share, all the way up to $500 per share and sometimes beyond. Foreign companies often have some of their shares sold in the United States by listing them on the Pink Sheets.
The OTC (Over-The-Counter) Bulletin Board is similar to the Pink Sheets. This exchange consists of relatively young companies either with no sales or a small amount of sales. Companies listed on it are sometimes fully reporting (meaning that they reveal how many shares they have outstanding and what their balance sheet looks like). Often, companies go from the Pink Sheets to the Bulletin Board once they are ready to become fully or semi-reporting.
Most publicly traded companies that are now listed on one of the major exchanges (NASADAQ, AMEX, NYSE), at one time or another, were penny stocks listed on the Pink Sheets or Bulletin Board. Rarely does a company go from being private directly to one of the 3 major exchanges. Google is a rare example of a company that was able to do that, because they were so successful so quickly. But, most companies have to pay their dues and edge their way up from the penny stock exchanges to the bigger ones.
So, investing in penny stocks can be an excellent investment because some of these young companies will one day be worth a fortune. The hard part is finding the right company to invest in, because for every successful startup company, there is also one that fails within the first year or two.
To find the right company, there are a few things you need to look for. Number one, you need to do some research and try to find out how many shares the company has in its float. The float is the number of shares that are currently being traded. Companies listed on the Pink Sheets usually do not officially report this number to the public, but with a little research, you can usually find out. It is usually contained in articles written about the company, or in TV or radio interviews with company officials that are sometimes archived on certain websites.
You can also look for the information on message boards or forums where stock traders chat with each other. Simply do a search on Google and read every article ever written about the company, and you will likely find out about their float. This is important because you do not want to invest in a company that already has something like 500 million shares in its float. Companies with this kind of share count are likely having problems moving forward, so they have issued more and more shares to raise money just to stay alive. You want to look for companies that have approximately 5 to 100 million shares in their float.
Other things that you should look for in a new company are barriers to entry, patents, and consumer demand. Here are the questions you need to ask yourself when analyzing the probability that a company will be successful:
1) Barriers to Entry: Are there are obstacles that will make it difficult for the company to sell its products or services?
2) Patents: Is the product that the company is going to sell patented? A patent will prevent other companies from producing the exact same product.
3) Consumer Demand: Will there be a demand for what the company is selling? Sometimes a company has a great new invention or an exciting technology, but if it is not something practical that consumers are going to want or need, then it does not matter how great it is.
Try to set aside some money for investing in penny stocks and start while you are still young. The earlier you get started, the more money you can make in the long run. Just make sure you do your homework before you invest and you should do extremely well.
Why Reinvest Profit Earned From Real Estate Investing?
Creating a business plan with the future in mind can be a daunting task. I mean who knows what tomorrow is going to bring, and if you can not see the future, how can you plan for it? One thing that you know for certain is that there will be problems; there always is with real estate investing. So what can you do to ease the burden of those problems when they occur?
The best buffer that you can create to protect yourself from unforeseen problems with real estate investments is to put aside some cash for a rainy day. A buffer of several thousands of dollars can take care of any number of setbacks including excessive carrying costs, unplanned repairs, illness, budgeting miscalculation and inclement weather.
While you may not be able to begin your career in real estate investing with this type of cash insurance policy in the bank, you can build one over time if you are smart with your money. Every time that you pull off a successful investment, you will have a large chunk of profit that you will need to use to pay off any outstanding bills and to finance your life. But before you do this, you should take a flat percentage of your profit and put a portion of it in the bank and reinvest the rest into your next project.
By constantly reinvesting a small portion of your profit into subsequent projects, you will increase the amount of profit that you make with each investment. This is because many repairs and upgrades that you make to a property add value to the property that is well above the amount originally invested. Having more money to work with in real estate investing will also allow you to purchase high end properties that can bring high end profits.
Another reason that you should always reinvest a portion of your profits is that homes and properties appreciate in value. This is the very thing that makes you money in real estate investing, but it is also the very thing that makes the purchase price for investments continue to rise. You cannot expect to pay the same for a property next year as you paid for it this year even if it is in the same condition. It is just not going to happen, and you need to be prepared to meet this reality with a little extra cash on hand to make initial investments.
Reinvesting profits is also a smart way to compound profit on money that you earn through real estate investing. Think about it this way. If you took the money you earned from an investment and ran with it, you would have nothing to show for it. But if you took the profit earned and reinvested it to make more profit, you could increase your profit margin without increasing the amount of work that you have to do. Now, that is smart business.
The best buffer that you can create to protect yourself from unforeseen problems with real estate investments is to put aside some cash for a rainy day. A buffer of several thousands of dollars can take care of any number of setbacks including excessive carrying costs, unplanned repairs, illness, budgeting miscalculation and inclement weather.
While you may not be able to begin your career in real estate investing with this type of cash insurance policy in the bank, you can build one over time if you are smart with your money. Every time that you pull off a successful investment, you will have a large chunk of profit that you will need to use to pay off any outstanding bills and to finance your life. But before you do this, you should take a flat percentage of your profit and put a portion of it in the bank and reinvest the rest into your next project.
By constantly reinvesting a small portion of your profit into subsequent projects, you will increase the amount of profit that you make with each investment. This is because many repairs and upgrades that you make to a property add value to the property that is well above the amount originally invested. Having more money to work with in real estate investing will also allow you to purchase high end properties that can bring high end profits.
Another reason that you should always reinvest a portion of your profits is that homes and properties appreciate in value. This is the very thing that makes you money in real estate investing, but it is also the very thing that makes the purchase price for investments continue to rise. You cannot expect to pay the same for a property next year as you paid for it this year even if it is in the same condition. It is just not going to happen, and you need to be prepared to meet this reality with a little extra cash on hand to make initial investments.
Reinvesting profits is also a smart way to compound profit on money that you earn through real estate investing. Think about it this way. If you took the money you earned from an investment and ran with it, you would have nothing to show for it. But if you took the profit earned and reinvested it to make more profit, you could increase your profit margin without increasing the amount of work that you have to do. Now, that is smart business.
Major Costs Associated With Selling A Home For Profit
Have you ever watched those popular real estate flipping shows that seem to dominate the home and do it yourself networks? They make it seem so easy to make a profit flipping real estate. First, they begin by telling you how much a property was purchased for. After tallying up the construction costs and subtracting them from the amount that the property sold for, they produce a number that is supposed to be the amount of profit that the investor put in his pocket. Sometimes these numbers are astronomical and too good to be true.
While many investors make a phenomenal amount of money through real estate investing and flipping properties in particular, there are numerous costs associated with selling a property that documentary shows like those mentioned above just do not mention. These costs can reach into the thousands of dollars, so it is important that you become familiar with each and every one of them before you start counting your profit.
The most expensive cost associated with selling a home is the real estate agent or brokerage fee. This is the percentage that your broker takes directly out of your profit for securing a buyer and making a sale. Normally these fees average about 5 to 6 percent, but they can vary according to the sale price of the property and the area that it is located. If you do not wish to hire an agent, you will still have to figure in costs of advertising the property and taking time out to show the property yourself. All of which can add up pretty quickly.
Inspections are another expense that can cut into your real estate investing profit margin. In many areas, health inspections are mandated and must be provided by the seller. Any needed repairs found during these inspections must also be provided by the seller. These
inspections can include septic, termite, mold, lead paint, electrical, ground water, and a host of other inspections mandated by the area in which the property is located or by the buyers themselves. These inspections are individually priced and vary according to the location, size of the home, and purchase price. You may also opt to have a general professional inspection performed on the property although this is normally done by the buyer. This costs anywhere from $100 to $200 and depends on the purchase price.
Before you sell the property, you may have to have it appraised to determine the value of the home. This costs around $100. Other fees associated with selling a home include legal fees if you decide to have a lawyer look at the sales contract; prepayment penalty if you
have taken out a mortgage to buy the property; and capital gains taxes on any profit secured from the sale of the property.
As you can imagine, all of these costs add up quickly. Do not forget to take them into account when calculating your real estate investing profit.
While many investors make a phenomenal amount of money through real estate investing and flipping properties in particular, there are numerous costs associated with selling a property that documentary shows like those mentioned above just do not mention. These costs can reach into the thousands of dollars, so it is important that you become familiar with each and every one of them before you start counting your profit.
The most expensive cost associated with selling a home is the real estate agent or brokerage fee. This is the percentage that your broker takes directly out of your profit for securing a buyer and making a sale. Normally these fees average about 5 to 6 percent, but they can vary according to the sale price of the property and the area that it is located. If you do not wish to hire an agent, you will still have to figure in costs of advertising the property and taking time out to show the property yourself. All of which can add up pretty quickly.
Inspections are another expense that can cut into your real estate investing profit margin. In many areas, health inspections are mandated and must be provided by the seller. Any needed repairs found during these inspections must also be provided by the seller. These
inspections can include septic, termite, mold, lead paint, electrical, ground water, and a host of other inspections mandated by the area in which the property is located or by the buyers themselves. These inspections are individually priced and vary according to the location, size of the home, and purchase price. You may also opt to have a general professional inspection performed on the property although this is normally done by the buyer. This costs anywhere from $100 to $200 and depends on the purchase price.
Before you sell the property, you may have to have it appraised to determine the value of the home. This costs around $100. Other fees associated with selling a home include legal fees if you decide to have a lawyer look at the sales contract; prepayment penalty if you
have taken out a mortgage to buy the property; and capital gains taxes on any profit secured from the sale of the property.
As you can imagine, all of these costs add up quickly. Do not forget to take them into account when calculating your real estate investing profit.
Can You Afford To Retire?
Looking to make investments for retirement always seems to be something that you think I'll do it in another few years. However, anyone thinking in this way couldn't be more wrong. It is vital that these days you start to think about that rainy day whilst still in your twenties and thirties because everyday you put it off could mean you have to work longer, and who really wants to work until they are in their seventies?
The way our country is today things do look pretty bleak for the future. The government is more involved with making money available to go to war than keeping the social security system in a healthy state. For many retirement seems to be fading into the distances - more of a maybe than a reality. So it is down to you as an individual whether you purchase IRS's or put your money towards the purchase of gold coins to safeguard your future, it is something that has to be done.
Really, I am not qualified to give you advice about investing for retirement. No one simply writing an article can explain to you what plan is right for your long term financial needs. The best way to learn how to invest for retirement is to talk to a qualified financial consultant. That way, you will get the opinions of an expert, custom tailored for your needs and your financial situation. Honestly, although everyone needs to think about investing for retirement, not everyone needs to go about it in just the same way, and so having a plan that is correctly made to fit your needs is the only sure way of doing it.
The best thing about investing for retirement today is that it will eliminate years of worry. Not planning for retirement is not going to make the problem go away, and the chances are that you will be concerned about the future whether or not you have an investment plan. If you can begin investing for retirement sooner, then that will be one more thing that you can get off of your mind, and cease to worry about. Your independent financial expert will be able to advise you on your individual circumstances and have it all taken care of for you, then you will be able to sit back and watch your savings grow at a steady and useful rate. There is nothing better than that.
The way our country is today things do look pretty bleak for the future. The government is more involved with making money available to go to war than keeping the social security system in a healthy state. For many retirement seems to be fading into the distances - more of a maybe than a reality. So it is down to you as an individual whether you purchase IRS's or put your money towards the purchase of gold coins to safeguard your future, it is something that has to be done.
Really, I am not qualified to give you advice about investing for retirement. No one simply writing an article can explain to you what plan is right for your long term financial needs. The best way to learn how to invest for retirement is to talk to a qualified financial consultant. That way, you will get the opinions of an expert, custom tailored for your needs and your financial situation. Honestly, although everyone needs to think about investing for retirement, not everyone needs to go about it in just the same way, and so having a plan that is correctly made to fit your needs is the only sure way of doing it.
The best thing about investing for retirement today is that it will eliminate years of worry. Not planning for retirement is not going to make the problem go away, and the chances are that you will be concerned about the future whether or not you have an investment plan. If you can begin investing for retirement sooner, then that will be one more thing that you can get off of your mind, and cease to worry about. Your independent financial expert will be able to advise you on your individual circumstances and have it all taken care of for you, then you will be able to sit back and watch your savings grow at a steady and useful rate. There is nothing better than that.
How To Make Money To Work For You Safely
Most of us know how to spend the money but many do not know how to make use of money to work for them. Spending is not your only option when comes to make the smart choices about using money. You can smartly combine Savings and Investing of your money to make your money work for you and help you to generate passive cash stream to your account.
Savings Vs Investing
Saving and investing are two different things. When you save you earn interest, when you invest, your money makes money. Saving is for the short term, investing is for the long term. When you combine saving and investing, you're not only setting money aside, you're also putting your money to work for you.
You create your emergency fund through savings. This fund is important to protect you if you lose or quit your job and need time to find a new job. An emergency fund is important to save you from any financial crisis and helps you to sleep well at night because you know you are prepared for what might happen.
After protecting your short-term needs through savings, you can grow a portion of you money for long-term needs or generating a steady stream of income to improve your living style. Here's comes the important of Investing. The main purpose of investing is to use money to make more money for you. Almost all investments have certain level of risk; in general, the higher the risk, the better the potential return. It's also means that the higher the risk, the higher the potential loses. You may need to take on additional level of risk in exchange for a higher level of return than what you can earn in an ordinary savings account. That's why the combination of savings and investing are a work perfectly to make your money work for you through investing while protecting you from any financial disaster through savings.
When we talk about investing the money, commonly it means that putting your money into the money markets. Money markets are really mutual funds of cash investments like U.S Treasury bills, CDs (certificates of deposit), and cash, and are managed by professional money managers. Many investment companies that offer a money market account will waive your initial investment if you set you a regular investment plan with them such as $25 or $50 per month. You can utilize this advantage to get your money market account open and put your money to work for you.
In Summary
Investing into money market get you a higher return than savings accounts, it is a good way to use your money to makes more money for you. While investing your money into the money market, you need to create your emergency fund in your savings account so that you are protected from any unexpected financial crisis.
Savings Vs Investing
Saving and investing are two different things. When you save you earn interest, when you invest, your money makes money. Saving is for the short term, investing is for the long term. When you combine saving and investing, you're not only setting money aside, you're also putting your money to work for you.
You create your emergency fund through savings. This fund is important to protect you if you lose or quit your job and need time to find a new job. An emergency fund is important to save you from any financial crisis and helps you to sleep well at night because you know you are prepared for what might happen.
After protecting your short-term needs through savings, you can grow a portion of you money for long-term needs or generating a steady stream of income to improve your living style. Here's comes the important of Investing. The main purpose of investing is to use money to make more money for you. Almost all investments have certain level of risk; in general, the higher the risk, the better the potential return. It's also means that the higher the risk, the higher the potential loses. You may need to take on additional level of risk in exchange for a higher level of return than what you can earn in an ordinary savings account. That's why the combination of savings and investing are a work perfectly to make your money work for you through investing while protecting you from any financial disaster through savings.
When we talk about investing the money, commonly it means that putting your money into the money markets. Money markets are really mutual funds of cash investments like U.S Treasury bills, CDs (certificates of deposit), and cash, and are managed by professional money managers. Many investment companies that offer a money market account will waive your initial investment if you set you a regular investment plan with them such as $25 or $50 per month. You can utilize this advantage to get your money market account open and put your money to work for you.
In Summary
Investing into money market get you a higher return than savings accounts, it is a good way to use your money to makes more money for you. While investing your money into the money market, you need to create your emergency fund in your savings account so that you are protected from any unexpected financial crisis.
Want to Live Debt Free? These Tips Will Help
Do you dream about being debt free some day? This can be a reality if you follow some basic rules and do what it takes. To start down the road to financial freedom you need to do a few things first. Are you ready? Let's go.
Tip #1. You need to admit there is a problem.
Is there not enough cash coming in or is it spent too quickly, or both? Is the money being spent on non-essentials? Is the income being spent unwisely on luxury items that you cannot really afford? Do you know how much you really have to spend? Do you know how much you owe and to whom?
You need to honestly answer these questions and be prepared to take some action.
Tip #2. You need a make a plan and stick to it.
First of all, you need to know your financial situation. Take out all your credit cards' statements and add up the outstanding balances. Make a plan to reduce the debt to a certain level within a fixed period of time. Once this is done there are tools you can use from the Internet to track your spending and your debt reduction.
Imagine what you will be able to do with the money you currently use to pay off debt.
Tip #3. Never add to your debt. Cut up the credit cards and live within your means.
Work out ways to cut down on your expenses so that you can live within your means. Start to put some funds aside for emergencies. You can cut down your expenses easily if you just think creatively. Here are a few suggestions to get you started.
a) Anything you need (not just want) can usually be bought at a sale. Commit to not buying at retail prices again. Look in newspapers, wait for sales and be patient.
b) Cook at home a lot more often. Freeze leftovers. Plan you food needs for the week. Make your lunch for work instead of buying it each day.
c) Read magazines, get DVDs and Videos for free from your local library.
d) Take up a hobby. Get busy - shop less. Maybe your hobby can create some income?
e) Give up the coffee bought while shopping or at work.
f) Maybe if you tried you could get away with only 1 car. Travel by bus or train if possible.
Tip #4. Don't compare yourself with others.
If you spend to keep up with others, think whether they may be in a similar position to you. Work out and understand how much you can spend and how much needs to be put aside for saving or emergencies.
Tip #5. Pay off one small debt completely.
This will give you a boost and help you keep on track more easily and you'll be more motivated to pay off all the debts.
Tip #6. Keep some fun money.
This process needs to be fun, not a misery. If it becomes a chore you will be tempted not to meet your goals. Keep some money aside that allows you the freedom to spend on things you want, occasionally. You'll feel so much better about spending on items that you can afford.
To truly solve your debt problems you need to keep yourself under control. There's no one else who can do this for you. Ask for God's help also. You'll be so glad you did, once the debt burden has been lifted and you can become your own person.
Tip #1. You need to admit there is a problem.
Is there not enough cash coming in or is it spent too quickly, or both? Is the money being spent on non-essentials? Is the income being spent unwisely on luxury items that you cannot really afford? Do you know how much you really have to spend? Do you know how much you owe and to whom?
You need to honestly answer these questions and be prepared to take some action.
Tip #2. You need a make a plan and stick to it.
First of all, you need to know your financial situation. Take out all your credit cards' statements and add up the outstanding balances. Make a plan to reduce the debt to a certain level within a fixed period of time. Once this is done there are tools you can use from the Internet to track your spending and your debt reduction.
Imagine what you will be able to do with the money you currently use to pay off debt.
Tip #3. Never add to your debt. Cut up the credit cards and live within your means.
Work out ways to cut down on your expenses so that you can live within your means. Start to put some funds aside for emergencies. You can cut down your expenses easily if you just think creatively. Here are a few suggestions to get you started.
a) Anything you need (not just want) can usually be bought at a sale. Commit to not buying at retail prices again. Look in newspapers, wait for sales and be patient.
b) Cook at home a lot more often. Freeze leftovers. Plan you food needs for the week. Make your lunch for work instead of buying it each day.
c) Read magazines, get DVDs and Videos for free from your local library.
d) Take up a hobby. Get busy - shop less. Maybe your hobby can create some income?
e) Give up the coffee bought while shopping or at work.
f) Maybe if you tried you could get away with only 1 car. Travel by bus or train if possible.
Tip #4. Don't compare yourself with others.
If you spend to keep up with others, think whether they may be in a similar position to you. Work out and understand how much you can spend and how much needs to be put aside for saving or emergencies.
Tip #5. Pay off one small debt completely.
This will give you a boost and help you keep on track more easily and you'll be more motivated to pay off all the debts.
Tip #6. Keep some fun money.
This process needs to be fun, not a misery. If it becomes a chore you will be tempted not to meet your goals. Keep some money aside that allows you the freedom to spend on things you want, occasionally. You'll feel so much better about spending on items that you can afford.
To truly solve your debt problems you need to keep yourself under control. There's no one else who can do this for you. Ask for God's help also. You'll be so glad you did, once the debt burden has been lifted and you can become your own person.
6 Little Spending Mistakes That Can Cost You Your Financial Freedom
Can't seem to get ahead financially? Debts piling up? Maybe you're making some of these mistake unknowingly. These mistakes listed below will help you understand where you may be going wrong and how to get back on track quickly. You can be debt free.
Mistake 1. Living Beyond Your Means
This is the real cause of your worry and stress. If you are spending more than you are earning, whose money are you spending? It's the credit card provider's or the bank's. The cost of this money is interest.
The way out - Make a Commitment to yourself only to spend within your income limits. Maybe you could increase your income (or cash in) by applying for more skilled positions, selling some of your unused articles or assets. Is the second car really a necessity? What about working out ways to make your hobby pay for itself?
Why not find ways to reduce your spending? How much would you save each year if you decided not to have the daily coffee shop coffee? Why not make your work lunch each day rather than buying it? Commit to only buying the necessities.
Mistake 2. Paying Off Less Than the Full Credit Card Balance Each Month
Get this debt under control and your life will be much easier. If you are like many others and only pay the minimum balance each month, the interest on the interest makes those purchases oh so expensive.
The way out - Find ways to put aside more money to apply to the credit cards. It will take time to reach this goal. However, if you don't make a start now you may never pay them off. This situation did not occur overnight and neither will the solution. But, by diligence and commitment you'll get there.
Mistake 3. Not Really Knowing Your Financial Situation
Before you can set meaningful goals and develop savings strategies you need to know your financial situation now. The best, proven and tested method by far, is by developing your own personal budget. This is not hard to do. Please don't give up now. Just follow these simple steps:
The way out -
a)Find your latest credit card statements. Write down all the unpaid balances.
b)Are there any other unpaid debts (not home or car) then include these balances as well.
c)List out your (or family) monthly income. Only the amounts "brought home". Include all types of income.
d) Work out your monthly spending. List out where all the money goes. Don't leave anything out.
e) Minus the monthly spending total from the monthly income total and review the answer.
This will give you an initial idea as to whether you are living within your means or on borrowed money.
Mistake 4. Continually Adding to Your Debt
If debt has got you into this situation it is critically important not to add to the state of affairs and thus make it worse.
The way out - cut up the credit cards, keeping only 1 for emergencies. Don't buy on impulse. Ask yourself twice or three times before you buy anything "Do I really need this?" before you hand over your hard-earned money. Don't buy at the height of the fashion or fad. Commit to never paying full retail for anything. Get it on sale or negotiate a lower price.
Mistake 5. Spending All Your Income
It may sound OK to spend any money you earn but there are risks attached to this strategy. How are you going to pay for emergency items? What about major car repairs. What about major electrical appliance replacement? Are you going to pay for these on credit? Bad idea! How are you going to save for a substantial deposit on the next car?
The way out - Once you've prepared your budget you will clearly see what you need to do to put some income aside for other needs such are emergencies and repairs.
Mistake 6. Spending Without Caring About Your Future
Unless you are planning for your future and financial security, you cannot be really happy. There are always worries lurking in your mind about how you would survive in a financial emergency if you have no savings. It can be very rewarding to see how quickly your savings multiply over time with only a small investment each payday.
The way out - Take stock of your life and realize that tomorrow won't look after itself. It needs your attention. Keep some funds aside to put away for your retirement, children's college costs, emergencies, holidays and major purchases.
Avoid these 6 spending mistakes and you'll be well on your way to financial freedom. Guaranteed.
Mistake 1. Living Beyond Your Means
This is the real cause of your worry and stress. If you are spending more than you are earning, whose money are you spending? It's the credit card provider's or the bank's. The cost of this money is interest.
The way out - Make a Commitment to yourself only to spend within your income limits. Maybe you could increase your income (or cash in) by applying for more skilled positions, selling some of your unused articles or assets. Is the second car really a necessity? What about working out ways to make your hobby pay for itself?
Why not find ways to reduce your spending? How much would you save each year if you decided not to have the daily coffee shop coffee? Why not make your work lunch each day rather than buying it? Commit to only buying the necessities.
Mistake 2. Paying Off Less Than the Full Credit Card Balance Each Month
Get this debt under control and your life will be much easier. If you are like many others and only pay the minimum balance each month, the interest on the interest makes those purchases oh so expensive.
The way out - Find ways to put aside more money to apply to the credit cards. It will take time to reach this goal. However, if you don't make a start now you may never pay them off. This situation did not occur overnight and neither will the solution. But, by diligence and commitment you'll get there.
Mistake 3. Not Really Knowing Your Financial Situation
Before you can set meaningful goals and develop savings strategies you need to know your financial situation now. The best, proven and tested method by far, is by developing your own personal budget. This is not hard to do. Please don't give up now. Just follow these simple steps:
The way out -
a)Find your latest credit card statements. Write down all the unpaid balances.
b)Are there any other unpaid debts (not home or car) then include these balances as well.
c)List out your (or family) monthly income. Only the amounts "brought home". Include all types of income.
d) Work out your monthly spending. List out where all the money goes. Don't leave anything out.
e) Minus the monthly spending total from the monthly income total and review the answer.
This will give you an initial idea as to whether you are living within your means or on borrowed money.
Mistake 4. Continually Adding to Your Debt
If debt has got you into this situation it is critically important not to add to the state of affairs and thus make it worse.
The way out - cut up the credit cards, keeping only 1 for emergencies. Don't buy on impulse. Ask yourself twice or three times before you buy anything "Do I really need this?" before you hand over your hard-earned money. Don't buy at the height of the fashion or fad. Commit to never paying full retail for anything. Get it on sale or negotiate a lower price.
Mistake 5. Spending All Your Income
It may sound OK to spend any money you earn but there are risks attached to this strategy. How are you going to pay for emergency items? What about major car repairs. What about major electrical appliance replacement? Are you going to pay for these on credit? Bad idea! How are you going to save for a substantial deposit on the next car?
The way out - Once you've prepared your budget you will clearly see what you need to do to put some income aside for other needs such are emergencies and repairs.
Mistake 6. Spending Without Caring About Your Future
Unless you are planning for your future and financial security, you cannot be really happy. There are always worries lurking in your mind about how you would survive in a financial emergency if you have no savings. It can be very rewarding to see how quickly your savings multiply over time with only a small investment each payday.
The way out - Take stock of your life and realize that tomorrow won't look after itself. It needs your attention. Keep some funds aside to put away for your retirement, children's college costs, emergencies, holidays and major purchases.
Avoid these 6 spending mistakes and you'll be well on your way to financial freedom. Guaranteed.
Tips For Choosing High-Performance Mutual Fund
Most people who invest in mutual funds don't know what they are doing. They take advice from someone at a bank or perhaps a friend and plunk down money into a fund. Sometimes this strategy works, but most of the time, it doesn't.
When you invest your money in a mutual fund, you are trusting someone to invest in the stock market for you. Because of this, you want to be sure this person knows what he or she is doing. Also, you want to make sure that this person is not charging you too much to manage your money for you. Mutual funds fees are "hidden," in the sense that they do not charge you an upfront fee but rather a percentage of the amount of money in your account. If this percentage is too high, you would do better just blindly picking stocks yourself.
Here are five helpful tips for choosing the right mutual funds.
1. Keep the fees low. Generally, expense fees should not be much higher than 1% if it is just a basic domestic equity fund. You should never invest money in a fund that also charges a "load," which is an additional fee that is ridiculous to pay. Never invest in funds that charge loads; those funds are for suckers.
2. Check the asset base. Mutual fund managers only know of so many good investments. When they have too much money to manage, they begin investing in stocks they don't like much but need to invest in anyway or else they'll just have money laying around. There's little reason to invest in a fund with over $5 billion in assets. It's best if it's under $2 billion generally.
3. Consider an index fund. This is a fund that tracks a stock index, such as the S&P 500. For these funds, the manager just buys whatever stocks happen to be in the index. Since this is not much work, the fees are much lower. Even though this method is simple, it has proven to perform better than most mutual funds. Some high performance index funds include FSMKX (Fidelity S&P 500) and VIMSX (Vanguard S&P 400 Midcap.
4. Evaluate the fund's strategy. If you have a long term outlook, look for a more aggressive fund that invests in small-cap stocks, international stocks, and riskier stocks in general. High risk tends to result in high performance in the long run. If you are more risk-averse, consider an S&P 500 index fund.
5. Keep the fees low. Did I mention this already? Well, I'll mention it again. This is where most people mess up. Make sure you are not paying a load or paying too much in fees to the mutual fund.
When you invest your money in a mutual fund, you are trusting someone to invest in the stock market for you. Because of this, you want to be sure this person knows what he or she is doing. Also, you want to make sure that this person is not charging you too much to manage your money for you. Mutual funds fees are "hidden," in the sense that they do not charge you an upfront fee but rather a percentage of the amount of money in your account. If this percentage is too high, you would do better just blindly picking stocks yourself.
Here are five helpful tips for choosing the right mutual funds.
1. Keep the fees low. Generally, expense fees should not be much higher than 1% if it is just a basic domestic equity fund. You should never invest money in a fund that also charges a "load," which is an additional fee that is ridiculous to pay. Never invest in funds that charge loads; those funds are for suckers.
2. Check the asset base. Mutual fund managers only know of so many good investments. When they have too much money to manage, they begin investing in stocks they don't like much but need to invest in anyway or else they'll just have money laying around. There's little reason to invest in a fund with over $5 billion in assets. It's best if it's under $2 billion generally.
3. Consider an index fund. This is a fund that tracks a stock index, such as the S&P 500. For these funds, the manager just buys whatever stocks happen to be in the index. Since this is not much work, the fees are much lower. Even though this method is simple, it has proven to perform better than most mutual funds. Some high performance index funds include FSMKX (Fidelity S&P 500) and VIMSX (Vanguard S&P 400 Midcap.
4. Evaluate the fund's strategy. If you have a long term outlook, look for a more aggressive fund that invests in small-cap stocks, international stocks, and riskier stocks in general. High risk tends to result in high performance in the long run. If you are more risk-averse, consider an S&P 500 index fund.
5. Keep the fees low. Did I mention this already? Well, I'll mention it again. This is where most people mess up. Make sure you are not paying a load or paying too much in fees to the mutual fund.
Pros And Cons of Different Types Of Investments
When deciding where to invest your money, you need to always take into account your investment goals and objectives. Different types of investments carry varying degrees of risks and potential return.
CD
A bank CD is a very safe investment. The CD is FDIC insured up to $100,000, so there truly is minimal risk. The only downside is that you cannot withdraw that money in the CD for a specific amount of time or else you'll receive a penalty. Bank CDs generally only pay up to 5% interest.
Bonds
A bond is essentially a loan you make to a company or a government. Bonds have varying degrees of risk, from essentially risk-free treasuries to junk bonds. The higher the risk of the bond, the higher the return will generally be.
Stocks
Stocks are investments in companies. Depending on the company, the risk of the investment can be high or low. Obviously, buying stock in Johnson and Johnson is a lot less risky than a new internet startup company. In general, the stock market returns on average about 10% a year, though the actual return of any given stock will vary significantly.
Mutual Funds
A mutual fund typically invests in over 100 stocks, so it's an instant way to diversify your portfolio. However, the mutual fund generally charges a fee, which is about 1% of your assets per year. Because of this fee, most mutual funds do not outperform the market; a monkey blindly picking 100 stocks but not charging you a fee could easily outperform most mutual funds.
Real Estate
Real estate is a popular investment. The most obvious real estate investment you'll make is when you purchase your home. Your home can go up or down in value when you sell it; it depends on the housing market in your area.
CD
A bank CD is a very safe investment. The CD is FDIC insured up to $100,000, so there truly is minimal risk. The only downside is that you cannot withdraw that money in the CD for a specific amount of time or else you'll receive a penalty. Bank CDs generally only pay up to 5% interest.
Bonds
A bond is essentially a loan you make to a company or a government. Bonds have varying degrees of risk, from essentially risk-free treasuries to junk bonds. The higher the risk of the bond, the higher the return will generally be.
Stocks
Stocks are investments in companies. Depending on the company, the risk of the investment can be high or low. Obviously, buying stock in Johnson and Johnson is a lot less risky than a new internet startup company. In general, the stock market returns on average about 10% a year, though the actual return of any given stock will vary significantly.
Mutual Funds
A mutual fund typically invests in over 100 stocks, so it's an instant way to diversify your portfolio. However, the mutual fund generally charges a fee, which is about 1% of your assets per year. Because of this fee, most mutual funds do not outperform the market; a monkey blindly picking 100 stocks but not charging you a fee could easily outperform most mutual funds.
Real Estate
Real estate is a popular investment. The most obvious real estate investment you'll make is when you purchase your home. Your home can go up or down in value when you sell it; it depends on the housing market in your area.
Global Economic Power Shifts From The U.S. And Europe To Asia
India just reported GDP growth of 9.4 predicted rate of growth and moving toward China’s stunning 10.4 in the last quarter, and with close to double digit growth in India and China there is little doubt that the U.S. will lose its status as the world’s biggest economy within a decade if these trends persist.
We are American, and we are pro-America, but we are also realists. Let us invest in those areas where the money is to be made. Let us invest in the countries that are growing fast and in the commodities and precious metals which will benefit from these trends. Let us look at the transportation companies whose products and services are necessary to effectuate this growth and at the energy and base metals which are the building blocks of any economy. Let us also look at the global financial intermediaries that will provide the financing for this growth and at the precious metals stocks where many of the profits will be invested.
In our opinion, gold will play a major part as a vehicle that central banks will acquire to strengthen their balance sheets. Recently, Spain sold some gold. The buyers were the central banks of countries with growing economies-the buyers were Asian central banks.
As power shifts from the U.S. and Europe to Asia, so do the central bank gold holdings shift from U.S. and Europe to Asia.
For more information on global investment visit http://www.howtoinvestglobally.com For more information on Monty Guild's investment management visit http://www.guildinvestment.com
These articles are for informational purposes only and are not intended to be a solicitation, offering or recommendation of any security. Guild Investment Management does not represent that the securities, products, or services discussed in this web site are suitable or appropriate for all investors. Any market analysis constitutes an opinion that may not be correct. Readers must make their own independent investment decisions. The information in this article is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject Guild Investment Management to any registration requirement within such jurisdiction or country.
Any opinions expressed herein, are subject to change without notice. In addition, there are many market, currency, economic, political, business, technological and other risks that are beyond our control. We make reasonable efforts to provide accurate content in these articles; however, some content and some of the assumptions, formulas, algorithms and other data that impact the content may be inaccurate, outdated, or otherwise inappropriate. In addition, we may have conflicts of interest with respect to any investments mentioned. Our principals and our clients may hold positions in investments mentioned on the site or we may take positions contrary to investments mentioned.
Guild’s current and past market commentaries are protected by copyright. Apart from any use permitted under the Copyright Act, you must not copy, frame, modify, transmit or distribute the market commentaries, without seeking the prior consent of Guild.
We are American, and we are pro-America, but we are also realists. Let us invest in those areas where the money is to be made. Let us invest in the countries that are growing fast and in the commodities and precious metals which will benefit from these trends. Let us look at the transportation companies whose products and services are necessary to effectuate this growth and at the energy and base metals which are the building blocks of any economy. Let us also look at the global financial intermediaries that will provide the financing for this growth and at the precious metals stocks where many of the profits will be invested.
In our opinion, gold will play a major part as a vehicle that central banks will acquire to strengthen their balance sheets. Recently, Spain sold some gold. The buyers were the central banks of countries with growing economies-the buyers were Asian central banks.
As power shifts from the U.S. and Europe to Asia, so do the central bank gold holdings shift from U.S. and Europe to Asia.
For more information on global investment visit http://www.howtoinvestglobally.com For more information on Monty Guild's investment management visit http://www.guildinvestment.com
These articles are for informational purposes only and are not intended to be a solicitation, offering or recommendation of any security. Guild Investment Management does not represent that the securities, products, or services discussed in this web site are suitable or appropriate for all investors. Any market analysis constitutes an opinion that may not be correct. Readers must make their own independent investment decisions. The information in this article is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject Guild Investment Management to any registration requirement within such jurisdiction or country.
Any opinions expressed herein, are subject to change without notice. In addition, there are many market, currency, economic, political, business, technological and other risks that are beyond our control. We make reasonable efforts to provide accurate content in these articles; however, some content and some of the assumptions, formulas, algorithms and other data that impact the content may be inaccurate, outdated, or otherwise inappropriate. In addition, we may have conflicts of interest with respect to any investments mentioned. Our principals and our clients may hold positions in investments mentioned on the site or we may take positions contrary to investments mentioned.
Guild’s current and past market commentaries are protected by copyright. Apart from any use permitted under the Copyright Act, you must not copy, frame, modify, transmit or distribute the market commentaries, without seeking the prior consent of Guild.
Different kind of investment funds explained
Investment fund is the investment of money for profit. An investment fund is a financial investment vehicle, which is aimed at private investors - little or large-or institutional investors-insurance companies, banks - and offers the following five key advantages over direct investment in shares, bonds and property:
1. Risk is spread and hence reduced.
2. Funds allow you to tap into professional, expert and full time investment management expertise.
3. Funds are cost effective.
4. Funds offer access to markets that may otherwise be closed or too technical for retail/individual investors.
5. Funds benefit from institutional safety, which means they are heavily regulated and supervised.
The benefits of investment funds, where individuals from all walks of life pool their savings together, can be summed up as offering everybody - from professional or institutional investors to people with limited time, or limited investment skills or modest means - access to investment returns otherwise only available to more sophisticated investors, who are able to buy their own professional portfolio management advice.
Investment funds generally entail less risk than direct holdings of securities, and offer economies of scale. It is a firm that invests the pooled funds of retail investors for a fee.
Information on the product you, as an investor, are contemplating buying is crucial.
Usually, all vital information must be included in an investment fund's prospectus. However, prospectuses have become increasingly complex and difficult to understand, thus discouraging investors from reading them.
Investment funds are suitable for anyone who:
1. Is planning to invest in the capital markets but does not want the risks or costs associated with direct investment in equities or bonds.
2. Already has enough money to cover their everyday spending needs and has some spare cash.
3. Can accept possible temporary falls in the value of their investment.
Investment funds should be considered as a long-term savings product. Investments should be held for at least three to five years, preferably longer. In fact, the longer the time scale, the greater the potential to make money grow.
Investment funds can be classified according to their investment objectives.
1. Money Market Funds
Money market funds invest a sizeable portion of the fund's portfolio in short-term bonds and/or money market instruments (such as certificates of deposit, commercial paper, treasury bills,).
2. Bond Funds
Bond funds invest in fixed interest rate securities as a sizeable portion of the fund's portfolio. These funds generally have a global average maturity of more than one year and its investments can consist of different instruments with very different quality ratings.
3. Equity Funds
Equity funds invest in the stock market at a significant portion of the fund's portfolio. These funds are frequently also called stock funds.
4. Balanced Funds
Balanced funds spread their portfolio over the three main classes described above.
For more details please visit www.wealthcapfund.com
1. Risk is spread and hence reduced.
2. Funds allow you to tap into professional, expert and full time investment management expertise.
3. Funds are cost effective.
4. Funds offer access to markets that may otherwise be closed or too technical for retail/individual investors.
5. Funds benefit from institutional safety, which means they are heavily regulated and supervised.
The benefits of investment funds, where individuals from all walks of life pool their savings together, can be summed up as offering everybody - from professional or institutional investors to people with limited time, or limited investment skills or modest means - access to investment returns otherwise only available to more sophisticated investors, who are able to buy their own professional portfolio management advice.
Investment funds generally entail less risk than direct holdings of securities, and offer economies of scale. It is a firm that invests the pooled funds of retail investors for a fee.
Information on the product you, as an investor, are contemplating buying is crucial.
Usually, all vital information must be included in an investment fund's prospectus. However, prospectuses have become increasingly complex and difficult to understand, thus discouraging investors from reading them.
Investment funds are suitable for anyone who:
1. Is planning to invest in the capital markets but does not want the risks or costs associated with direct investment in equities or bonds.
2. Already has enough money to cover their everyday spending needs and has some spare cash.
3. Can accept possible temporary falls in the value of their investment.
Investment funds should be considered as a long-term savings product. Investments should be held for at least three to five years, preferably longer. In fact, the longer the time scale, the greater the potential to make money grow.
Investment funds can be classified according to their investment objectives.
1. Money Market Funds
Money market funds invest a sizeable portion of the fund's portfolio in short-term bonds and/or money market instruments (such as certificates of deposit, commercial paper, treasury bills,).
2. Bond Funds
Bond funds invest in fixed interest rate securities as a sizeable portion of the fund's portfolio. These funds generally have a global average maturity of more than one year and its investments can consist of different instruments with very different quality ratings.
3. Equity Funds
Equity funds invest in the stock market at a significant portion of the fund's portfolio. These funds are frequently also called stock funds.
4. Balanced Funds
Balanced funds spread their portfolio over the three main classes described above.
For more details please visit www.wealthcapfund.com
Advantages of Mutual Funds
A mutual fund is also known as an open-end fund and is an investment company that spreads its money across a diversified portfolio of securities- including stocks, bonds or money market instruments.
Shareholders who invest in a fund each own a representative portion of those investments, less any expenses charged by the fund.
Advantages of Investing in Mutual Funds
1. Professional Management
2. Liquidity
3. Explicit investment goals
4. Simple reinvestment programs
5. Investment diversification.
Disadvantages of Investing in Mutual Funds
1. Mutual funds cannot be bought or sold during regular trading hours, but instead are priced just once per day.
2. Many funds charge hefty fees, leading to lower overall returns.
3. Overtime, statistics reveal that most actively managed funds tend to under perform their benchmark averages.
Mutual fund investors make money either by receiving dividends and interest from their investment, or by the rise n value of the securities. Dividends interest and profits from the sale of any securities (capital gains) are passed on to the shareholders in the form of distributions. And shareholders generally are allowed to sell (redeem) their shares at any time for the closing market price of the fund on that day.
Reasons to Invest in Mutual Funds:
There are various reasons for the investors to choose mutual funds over other investments such as bonds and stocks.
Diversity can both increase and decrease your potential returns and decrease your overall risk. Mutual funds allow an investor to spread out his or her money across a few as a handful to as many as several thousand companies at one time.
Funds can be beneficial for small investors who would be forced to pay enormous transaction fees if they bought the securities individually and for people who don't have time to research their own investments or who don't trust their own investment expertise.
Mutual funds are not necessarily low cost investments. Many of them charge one time "load fees" to new purchasers.
Types of Mutual Funds:
1. Closed End Mutual Funds:
These funds issue a fixed number of shares to the investing public and usually trade on the major exchanges just like corporate stocks.
2. Open End Mutual Funds:
These funds stand ready to issue and redeem shares on a continuous basis. Shareholders buy the shares at the net asset value and can redeem them at the current market price.
3. Load Funds:
Load funds refer to sales charge paid by an investor who purchases shares in a mutual fund. When sales charge is imposed at the time of purchase, it is known as a front-end load. Back end loads represent charges that are assessed when the investor sells the fund.
4. No Load Funds:
A No Load Fund is sold without a sales charge.
For more investment opportunities please visit www.wealthcapfund.com
Shareholders who invest in a fund each own a representative portion of those investments, less any expenses charged by the fund.
Advantages of Investing in Mutual Funds
1. Professional Management
2. Liquidity
3. Explicit investment goals
4. Simple reinvestment programs
5. Investment diversification.
Disadvantages of Investing in Mutual Funds
1. Mutual funds cannot be bought or sold during regular trading hours, but instead are priced just once per day.
2. Many funds charge hefty fees, leading to lower overall returns.
3. Overtime, statistics reveal that most actively managed funds tend to under perform their benchmark averages.
Mutual fund investors make money either by receiving dividends and interest from their investment, or by the rise n value of the securities. Dividends interest and profits from the sale of any securities (capital gains) are passed on to the shareholders in the form of distributions. And shareholders generally are allowed to sell (redeem) their shares at any time for the closing market price of the fund on that day.
Reasons to Invest in Mutual Funds:
There are various reasons for the investors to choose mutual funds over other investments such as bonds and stocks.
Diversity can both increase and decrease your potential returns and decrease your overall risk. Mutual funds allow an investor to spread out his or her money across a few as a handful to as many as several thousand companies at one time.
Funds can be beneficial for small investors who would be forced to pay enormous transaction fees if they bought the securities individually and for people who don't have time to research their own investments or who don't trust their own investment expertise.
Mutual funds are not necessarily low cost investments. Many of them charge one time "load fees" to new purchasers.
Types of Mutual Funds:
1. Closed End Mutual Funds:
These funds issue a fixed number of shares to the investing public and usually trade on the major exchanges just like corporate stocks.
2. Open End Mutual Funds:
These funds stand ready to issue and redeem shares on a continuous basis. Shareholders buy the shares at the net asset value and can redeem them at the current market price.
3. Load Funds:
Load funds refer to sales charge paid by an investor who purchases shares in a mutual fund. When sales charge is imposed at the time of purchase, it is known as a front-end load. Back end loads represent charges that are assessed when the investor sells the fund.
4. No Load Funds:
A No Load Fund is sold without a sales charge.
For more investment opportunities please visit www.wealthcapfund.com
Strategies of a growth fund
Wealth Cap takes pride on being entrepreneur friendly investors and work to add value before, during and after the investment process. The main aim of growth fund, which is basically a mutual fund, is to achieve capital appreciation by investing in growth stocks. They focus on companies that are experiencing significant earnings or revenue growth, rather than companies that pay out dividends. Growth fund is a diversified portfolio of stocks that has capital appreciation as its primary goal, and thereby invests in companies that reinvest their earnings into expansion, acquisitions and/or research and development.
The hope is that these companies that are rapidly growing will continue to increase in value, thereby allowing the fund to reap the benefits of large capital gains. In general, growth funds are more volatile than other types of funds, rising more than other funds in bull markets and falling more in bear markets.
Growth fund investment is mainly for those who are on the look out for inflation -beating growth with a higher level of risk. A minimum scheduled payment of R40 per month or R500 lump sum is required. Most growth funds offer higher potential growth but usually at a higher risk.
WealthCapfund supports growth funds with the following benefits for you
* Aims to achieve maximum growth for investors
* The fund invests in the industrial, financial and resources sectors
* Funds are managed by the Trusts
* The fund aims to invest in equities only.
The main investment objective of WealthCapfund is to maximize capital appreciation. The fund pursues its objective by investing primarily in the equity securities of emerging market companies. At least 65% of the fund assets will be invested in the equity securities of emerging markets companies.
Investment Strategy
Wealth Cap invests principally in equity securities of companies that are believed to have prospects for robust and sustainable growth of revenues and earnings. The equity securities of companies are selected of any size. They may also invest in equity securities of foreign issuers through ADRs and similar investments.
Capital appreciation is a rise in the market price of an asset. It is one of two major ways for investors to profit from an investment in a company. The other is through the dividend income.
Growth funds can earn you a lot of money quickly, but their risk level is fairly high. So don't get involved with a growth fund if you are unsure of what you are doing or if you can’t afford to lose the money you invest.
Just follow the market carefully to see how your fund is doing. You can consider any advice from your manager or broker about selling. Unless you have a thorough understanding of investing and the stock market, your best bet is to hire a fund manager.
For more details please visit www.wealthcapfund.com
The hope is that these companies that are rapidly growing will continue to increase in value, thereby allowing the fund to reap the benefits of large capital gains. In general, growth funds are more volatile than other types of funds, rising more than other funds in bull markets and falling more in bear markets.
Growth fund investment is mainly for those who are on the look out for inflation -beating growth with a higher level of risk. A minimum scheduled payment of R40 per month or R500 lump sum is required. Most growth funds offer higher potential growth but usually at a higher risk.
WealthCapfund supports growth funds with the following benefits for you
* Aims to achieve maximum growth for investors
* The fund invests in the industrial, financial and resources sectors
* Funds are managed by the Trusts
* The fund aims to invest in equities only.
The main investment objective of WealthCapfund is to maximize capital appreciation. The fund pursues its objective by investing primarily in the equity securities of emerging market companies. At least 65% of the fund assets will be invested in the equity securities of emerging markets companies.
Investment Strategy
Wealth Cap invests principally in equity securities of companies that are believed to have prospects for robust and sustainable growth of revenues and earnings. The equity securities of companies are selected of any size. They may also invest in equity securities of foreign issuers through ADRs and similar investments.
Capital appreciation is a rise in the market price of an asset. It is one of two major ways for investors to profit from an investment in a company. The other is through the dividend income.
Growth funds can earn you a lot of money quickly, but their risk level is fairly high. So don't get involved with a growth fund if you are unsure of what you are doing or if you can’t afford to lose the money you invest.
Just follow the market carefully to see how your fund is doing. You can consider any advice from your manager or broker about selling. Unless you have a thorough understanding of investing and the stock market, your best bet is to hire a fund manager.
For more details please visit www.wealthcapfund.com
China and the United States - Fdi Opportunities
Last month, while the world watched in awe the spectacle of the Beijing Olympics and the numerous world records that were set, China was quietly setting an economic record of its own - the country’s trade surplus reached a monthly high of $28.7 billion, a 14.9% jump from the same time last year. China’s trade surplus with the United States also rose 16.6% to $17.5 billion. While these numbers may cause concern in some quarters, China’s trade surplus, combined with massive capital reserves, means an additional increase in liquidity and incredible opportunities for companies and governments that recognize the potential benefits of this liquidity.
China’s current position as the world’s cash king makes many institutions and individuals nervous. For some, it represents a perceived shift in the balance of economic power, while for others, the prospect of enduring another period of foreign acquisition of national assets may be difficult to stomach. But unlike the mid to late 1980’s when Japanese investment in the United States reached an all-time high, causing significant political consternation, this period of Chinese liquidity need not cause such xenophobic reactions. Indeed, increased Chinese direct investment in the United States would benefit both economies and would have the additional effect of helping to stabilize one of the world’s most important bilateral relationships.
So far this year, China’s reserves have increased by an average of $80 billion per month. If that pace continues, China will have added approximately $1 trillion to its foreign reserves by year end. Much of those reserves are in US dollars, but with the US economy is such disarray and the US dollar in decline, it is in China’s interest to do something to help stabilize both. One strategy that China is pursuing is to promote direct investments abroad by Chinese corporations and sovereign wealth funds by relaxing restrictions on private capital outflows. The creation of the $200 billion sovereign wealth fund China Investment Corporation (CIC) is an example of China’s commitment to foreign direct investment (FDI).
From China’s perspective, the promotion of FDI is a long-term strategy that is but one aspect of the country’s broader strategic interests and development. FDI gives China the opportunity to secure critical raw materials, increase overall corporate profitability and scale of production, and to diversify trade.
From an American perspective, allowing FDI may, on the surface, appear to be a short-term solution to the current economic crisis. But upon closer examination, direct investment from China represents more than just an economic bailout and an infusion of cash into a cash-strapped economy. It also means increased bilateral ties and possible improved political, economic and cultural exchanges in a relationship that is vital to the health and stability of the world’s economy.
A recently released report from the Asia Foundation, entitled America’s Role in Asia: Asian and American Views, advocates just such an increase in ties between the two countries. Written by 20 distinguished Asian and US foreign policy experts after a year of high-level discussions, states that “although relations with China are generally constructive, the US must, in order to minimize threats to American security and prosperity, maintain a constructive response as China continues to rise.” In other words, the US must engage with China and build an ongoing positive relationship rather than build barriers to trade and investment as a reaction to a perceived “threat of Chinese economic domination”.
The report goes on to state that “Asian leaders calculate that enmeshing China in a web of agreements and dialogues encourages peaceful and cooperative behavior and a greater degree of openness.” Interconnectedness brings about peace and prosperity, so if this can be achieved between the US and China, China’s relationships in the region and in the rest of the world will likely stabilize as well.
So while the Olympics represented China’s symbolic entrance onto the “world stage, it was also just a first step in an increasingly necessary improvement in political, economic and cultural ties between China and the rest of the world. The United States, as the world’s economic leader, must recognize the opportunity that allowing increased foreign direct investment from China represents. It is an opportunity to alleviate short-term capital needs, improve long-term economic prospects and increase bilateral ties in one of the world’s most important relationships. China has the capital. The US has the assets. It’s time to bring them together.
China’s current position as the world’s cash king makes many institutions and individuals nervous. For some, it represents a perceived shift in the balance of economic power, while for others, the prospect of enduring another period of foreign acquisition of national assets may be difficult to stomach. But unlike the mid to late 1980’s when Japanese investment in the United States reached an all-time high, causing significant political consternation, this period of Chinese liquidity need not cause such xenophobic reactions. Indeed, increased Chinese direct investment in the United States would benefit both economies and would have the additional effect of helping to stabilize one of the world’s most important bilateral relationships.
So far this year, China’s reserves have increased by an average of $80 billion per month. If that pace continues, China will have added approximately $1 trillion to its foreign reserves by year end. Much of those reserves are in US dollars, but with the US economy is such disarray and the US dollar in decline, it is in China’s interest to do something to help stabilize both. One strategy that China is pursuing is to promote direct investments abroad by Chinese corporations and sovereign wealth funds by relaxing restrictions on private capital outflows. The creation of the $200 billion sovereign wealth fund China Investment Corporation (CIC) is an example of China’s commitment to foreign direct investment (FDI).
From China’s perspective, the promotion of FDI is a long-term strategy that is but one aspect of the country’s broader strategic interests and development. FDI gives China the opportunity to secure critical raw materials, increase overall corporate profitability and scale of production, and to diversify trade.
From an American perspective, allowing FDI may, on the surface, appear to be a short-term solution to the current economic crisis. But upon closer examination, direct investment from China represents more than just an economic bailout and an infusion of cash into a cash-strapped economy. It also means increased bilateral ties and possible improved political, economic and cultural exchanges in a relationship that is vital to the health and stability of the world’s economy.
A recently released report from the Asia Foundation, entitled America’s Role in Asia: Asian and American Views, advocates just such an increase in ties between the two countries. Written by 20 distinguished Asian and US foreign policy experts after a year of high-level discussions, states that “although relations with China are generally constructive, the US must, in order to minimize threats to American security and prosperity, maintain a constructive response as China continues to rise.” In other words, the US must engage with China and build an ongoing positive relationship rather than build barriers to trade and investment as a reaction to a perceived “threat of Chinese economic domination”.
The report goes on to state that “Asian leaders calculate that enmeshing China in a web of agreements and dialogues encourages peaceful and cooperative behavior and a greater degree of openness.” Interconnectedness brings about peace and prosperity, so if this can be achieved between the US and China, China’s relationships in the region and in the rest of the world will likely stabilize as well.
So while the Olympics represented China’s symbolic entrance onto the “world stage, it was also just a first step in an increasingly necessary improvement in political, economic and cultural ties between China and the rest of the world. The United States, as the world’s economic leader, must recognize the opportunity that allowing increased foreign direct investment from China represents. It is an opportunity to alleviate short-term capital needs, improve long-term economic prospects and increase bilateral ties in one of the world’s most important relationships. China has the capital. The US has the assets. It’s time to bring them together.
Risks of Oil Investing and Energy Derivatives
Spot Crude Oil Trading
As one of the most potentially profitable financial markets in the world, online crude oil trading is becoming increasingly popular with all types of traders and speculators.
Due to their price transparency and extreme liquidity, crude oil contracts are used as main international pricing benchmarks. Crude oil futures (and options) are also a good way for companies in the energy industry - on the production side as well as on the consumption side –to hedge their price risk and protect themselves against adverse price movements.
Volatility
Due to a record demand for oil throughout the world, increasing political tensions surrounding Iran’s nuclear program and various other global and local issues, crude oil prices have been breaking new records on a quasi-daily basis. In recent years, the high volatility of crude futures has made crude oil trading an investment with an extremely interesting potential return.
Start Trading Spot Crude Oil with ANG MARKETS
ANG MARKETS allows you to trade spot oil in the most convenient and efficient way on our platform, with competitive spread. Online Crude oil trading on our platform is facilitated by a complete set of technical tools which you can add to real-time charts and graphs. So don't wait any longer
To learn more about trading oil and to step into the world's most important commodity market and take advantage of the benefits that go together with a leading oil spot broker.
Energy Derivatives
ANG MARKETS provides a full advisory and post-trade service on all Crude Oil and Crude Product Instruments
ANG MARKETS Mini Rolling Spot Oil Contract
You can now trade a mini rolling spot oil contract on our FX trading platforms. This contract is an OTC contract ¼ of the size of the standard ICE Brent future and can be traded between 09.15 and 19.30 London time.
Margin Requirements
Margin requirements are 1%, the contract size is 250 barrels and the tick size is $2.50.
Expiration
The contract is rolled on a monthly basis at the settlement of the front spread of the ICE Brent contract at the day before expiry.
Exchange Traded Derivatives during and outside exchange hours
Access to ICE Brent Crude and Gas Oil Exchange Options, during and outside exchange hours
Access to NYMEX WTI Crude, Heating Oil and Gasoline Exchange Options, during and outside exchange hours
Execution-only and advisory services offering trading strategies covering all risk profiles
Novice and experienced traders welcome
Full technical analysis available by qualified technicians
Structured OTC Products
ANG MARKETS partners have strong relationships with all Energy OTC market participants, ranging from AAA rated financial institutions and major oil companies through to upstream/downstream physical hedgers and speculative traders
Derivative instruments available on the following:
Brent Crude and the following products
- 0.2 Gasoil
- ULSD
- Jet
- Fuel Oil
WTI Crude and the following products
- Gasoline
- Heating Oil
Structured strategies including options (Asian and American style) - exotic options and swaps
Gold & Silver
Spot Gold Trading
Through our state-of-the-art iTrader 7.5 trading platform, you can buy and sell Spot gold and other commodities in just one click.
Start Trading Gold with ANG MARKETS:
One of the main advantages of trading spot gold is that you can short sell, which means that you can benefit from a falling market.
You buy (go long) if you think prices will rise and you sell (go short) if you think they will fall.
Another great advantage of spot trading is leverage.
Unlike the bullion market, traders can enter the gold futures market with a relatively small capital thanks to margin trading opportunities provided by brokerage firms.
Also, when trading gold, you benefit from a greater liquidity which in turn provides accurate real-time prices.
Spot Silver Trading
Experienced traders and speculators know better and are quietly getting their hands on the silver trading market.
Indeed, as one of the most volatile major commodities, silver is becoming increasingly popular with all types of traders.
With ANG MARKETS, you too can become a savvy trader and take advantage of a thriving market.
Through its user-friendly and sophisticated trading system, ANG MARKETS gives you the opportunity to buy and sell silver spot contracts at very tight spreads.
You also have access to a complete of trading tools to make informed decisions.
Trading silver spot as opposed to physical silver is a relatively new opportunity in the world of financial investment and has extraordinary potential, so take advantage of it with ANG MARKETS.
Start Trading Silver with ANG MARKETS
Take advantage of those unique qualities with a world leader in online silver spot trading. ANG MARKETS provides you with full support and all the tools you need to make wise decisions concerning silver.
Via our state-of-the-art trading platform, you can trade silver as well as gold and other commodities and track your position in the easiest way.
As one of the most potentially profitable financial markets in the world, online crude oil trading is becoming increasingly popular with all types of traders and speculators.
Due to their price transparency and extreme liquidity, crude oil contracts are used as main international pricing benchmarks. Crude oil futures (and options) are also a good way for companies in the energy industry - on the production side as well as on the consumption side –to hedge their price risk and protect themselves against adverse price movements.
Volatility
Due to a record demand for oil throughout the world, increasing political tensions surrounding Iran’s nuclear program and various other global and local issues, crude oil prices have been breaking new records on a quasi-daily basis. In recent years, the high volatility of crude futures has made crude oil trading an investment with an extremely interesting potential return.
Start Trading Spot Crude Oil with ANG MARKETS
ANG MARKETS allows you to trade spot oil in the most convenient and efficient way on our platform, with competitive spread. Online Crude oil trading on our platform is facilitated by a complete set of technical tools which you can add to real-time charts and graphs. So don't wait any longer
To learn more about trading oil and to step into the world's most important commodity market and take advantage of the benefits that go together with a leading oil spot broker.
Energy Derivatives
ANG MARKETS provides a full advisory and post-trade service on all Crude Oil and Crude Product Instruments
ANG MARKETS Mini Rolling Spot Oil Contract
You can now trade a mini rolling spot oil contract on our FX trading platforms. This contract is an OTC contract ¼ of the size of the standard ICE Brent future and can be traded between 09.15 and 19.30 London time.
Margin Requirements
Margin requirements are 1%, the contract size is 250 barrels and the tick size is $2.50.
Expiration
The contract is rolled on a monthly basis at the settlement of the front spread of the ICE Brent contract at the day before expiry.
Exchange Traded Derivatives during and outside exchange hours
Access to ICE Brent Crude and Gas Oil Exchange Options, during and outside exchange hours
Access to NYMEX WTI Crude, Heating Oil and Gasoline Exchange Options, during and outside exchange hours
Execution-only and advisory services offering trading strategies covering all risk profiles
Novice and experienced traders welcome
Full technical analysis available by qualified technicians
Structured OTC Products
ANG MARKETS partners have strong relationships with all Energy OTC market participants, ranging from AAA rated financial institutions and major oil companies through to upstream/downstream physical hedgers and speculative traders
Derivative instruments available on the following:
Brent Crude and the following products
- 0.2 Gasoil
- ULSD
- Jet
- Fuel Oil
WTI Crude and the following products
- Gasoline
- Heating Oil
Structured strategies including options (Asian and American style) - exotic options and swaps
Gold & Silver
Spot Gold Trading
Through our state-of-the-art iTrader 7.5 trading platform, you can buy and sell Spot gold and other commodities in just one click.
Start Trading Gold with ANG MARKETS:
One of the main advantages of trading spot gold is that you can short sell, which means that you can benefit from a falling market.
You buy (go long) if you think prices will rise and you sell (go short) if you think they will fall.
Another great advantage of spot trading is leverage.
Unlike the bullion market, traders can enter the gold futures market with a relatively small capital thanks to margin trading opportunities provided by brokerage firms.
Also, when trading gold, you benefit from a greater liquidity which in turn provides accurate real-time prices.
Spot Silver Trading
Experienced traders and speculators know better and are quietly getting their hands on the silver trading market.
Indeed, as one of the most volatile major commodities, silver is becoming increasingly popular with all types of traders.
With ANG MARKETS, you too can become a savvy trader and take advantage of a thriving market.
Through its user-friendly and sophisticated trading system, ANG MARKETS gives you the opportunity to buy and sell silver spot contracts at very tight spreads.
You also have access to a complete of trading tools to make informed decisions.
Trading silver spot as opposed to physical silver is a relatively new opportunity in the world of financial investment and has extraordinary potential, so take advantage of it with ANG MARKETS.
Start Trading Silver with ANG MARKETS
Take advantage of those unique qualities with a world leader in online silver spot trading. ANG MARKETS provides you with full support and all the tools you need to make wise decisions concerning silver.
Via our state-of-the-art trading platform, you can trade silver as well as gold and other commodities and track your position in the easiest way.
Safe Investment With Good Returns
Currently the stock market is very volatile and it is in bearish trend, so on such situations most of the people have negative thoughts about stock market.
Yes, it is true that stock market is very risky especially day trading or intraday trading as it needs huge experience and over all knowledge about stock market. But on the other of this scenario, the stock trading is profitable and also safety – How and when?
Everybody is concerned of safety and security in their respective lives, especially regarding their financial investments.
This article will give you overall information about safe stock investments and how to tap such strategies.
Those who want to think of safety investments in stock market or those who want to become safe investor than he/she should think of investing in high dividend yielding stocks. This article will give you details of same
First of all what is High Dividend Yielding Stocks
High dividend yielding stock is one that gives you a high dividend per share when compared to the current market price of the share.
The investor should look for such stocks particularly when the market is in a bearish phase because it has been observed in the past, that high dividend yielding stocks proven to be more defensive (safe and less volatile) in downtrend of the market.
Tax-free Returns
The advantage of investing in such stocks is that you can earn decent tax-free returns on investments as dividends are not taxable.
There is always the possibility of these stocks appreciating when the equity markets rise in the medium to long term. There may be a case where the dividend yield could even exceed the current bank interest rate.
Precautions while investing in high dividend yield stocks
When investing in high dividend yielding stocks, one must need to look carefully at the numbers shown by the company, as many of the stocks in the high yielding type are rather cheap, and need to verify what dividends they are actually giving.
Make sure that the company is consistently paying good dividends, also look for the previous year’s performances, which could have been altered by extra ordinary events, so by comparing the current yield of a scrip over a period of time, one can determine whether the growth in the dividend payout has been proportionate to the increase in the market value of the stock.
You also have to look for the fundamentals of the stock in terms of growth, creditability of the management, financial ratios and hidden assets on the company’s balance sheet. If the fundamentals have declined in the recent past, the company may not pay the dividends at the previous rates and there will also be a capital risk in terms of the stock price going down.
Advantages
Generally it has been observed that companies consistent paying dividend year after year carry strong fundamentals.
Recommended stocks
If you are looking to investing in high dividend yielding stocks, then please visit following link,
http://www.daytradingshares.com/High_dividend_yield_stocks.php
Yes, it is true that stock market is very risky especially day trading or intraday trading as it needs huge experience and over all knowledge about stock market. But on the other of this scenario, the stock trading is profitable and also safety – How and when?
Everybody is concerned of safety and security in their respective lives, especially regarding their financial investments.
This article will give you overall information about safe stock investments and how to tap such strategies.
Those who want to think of safety investments in stock market or those who want to become safe investor than he/she should think of investing in high dividend yielding stocks. This article will give you details of same
First of all what is High Dividend Yielding Stocks
High dividend yielding stock is one that gives you a high dividend per share when compared to the current market price of the share.
The investor should look for such stocks particularly when the market is in a bearish phase because it has been observed in the past, that high dividend yielding stocks proven to be more defensive (safe and less volatile) in downtrend of the market.
Tax-free Returns
The advantage of investing in such stocks is that you can earn decent tax-free returns on investments as dividends are not taxable.
There is always the possibility of these stocks appreciating when the equity markets rise in the medium to long term. There may be a case where the dividend yield could even exceed the current bank interest rate.
Precautions while investing in high dividend yield stocks
When investing in high dividend yielding stocks, one must need to look carefully at the numbers shown by the company, as many of the stocks in the high yielding type are rather cheap, and need to verify what dividends they are actually giving.
Make sure that the company is consistently paying good dividends, also look for the previous year’s performances, which could have been altered by extra ordinary events, so by comparing the current yield of a scrip over a period of time, one can determine whether the growth in the dividend payout has been proportionate to the increase in the market value of the stock.
You also have to look for the fundamentals of the stock in terms of growth, creditability of the management, financial ratios and hidden assets on the company’s balance sheet. If the fundamentals have declined in the recent past, the company may not pay the dividends at the previous rates and there will also be a capital risk in terms of the stock price going down.
Advantages
Generally it has been observed that companies consistent paying dividend year after year carry strong fundamentals.
Recommended stocks
If you are looking to investing in high dividend yielding stocks, then please visit following link,
http://www.daytradingshares.com/High_dividend_yield_stocks.php
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