Archive for the ‘Investing’ Category

Feb. 1st 2012 SPX

Wednesday, February 1st, 2012

The Constant Debate in Investing Field – The Active over the Passive Investment Funds?

Tuesday, August 23rd, 2011

It has become a common knowledge in investing initiative that there is a constant dispute over which is the best to go for: to approach the active or passive investment funds? This debate can definitely not reach to a single outcome since everything will depend on the preferences and expectations that one might have when looking to invest in something.

Through a passive investment you are supposed to pay lower cost – expense ratio – when approaching the index investment funds. On the other hand with active investments, such as DEF Value Fund or ABC Growth Fund, one of the arguments would be that their target is to achieve better returns even if there is more risk involved. In case you still have this dilemma, into which one to make the investing, then you would better ask yourself the following:

* Should I make the investment myself or should I look for someone to do the investment for me?

The answer is that passive investments require your active management while with the active investment you should do an occasional monitoring. Investing in a series of indexes you must watch the overall asset mix evolution with a close eye. This means that you must wipe off the gain in excess from a single index and put it in an index (belonging to other asset classes) that shows less performance. The fund that is actively managed will keep under control the particular holdings, in this way not only that diminishes the risks but also will free up your time.

* Can I manage the same on my own and get the same results?

With index investing you can be certain that the goal will be achieved through passive investments. This will lead to the idea of getting more exposure to a certain industry, and thus getting stuck into a broader market or you might not reach that stage of aggression to succeed. Indexes are great when they are generally approached, whereas with the active investing this can lead to certain market niches.

* Do track records satisfy me?

When index investing, you are supposed to take the returns that are given. With the active investments you can win even if the index loses. It requires on your behalf some occasional reviewing as in this way you can make sure that the management is functioning properly resulting in a relevant fund’s approach that you need for your portfolio.

Over time you will be able to discern better what is the best investing, following also the market evolution and how the funds perform. As a novice investor however, you should know that selecting one method only might require from you plenty of work, while with the selection of familiar assets classes index this can be a better strategy.

Life Cycle Funds – A Way for Successfully Investing

Tuesday, August 23rd, 2011

Investing in life cycle funds is the same as you would invest in a retirement, except for the fee paid for maintenance. Many people look to invest in something that is very convenient including as well the low risk, so this type of investment can live up to these sorts of expectations. This goes in accordance to your age, as it is a special kind of balanced funds built on fixed in come and equity. Once you come near to retirement years, the investment will be lowered in any risk whatsoever.

It is common to many people nowadays that with aging to become more conservative, therefore investing in life cycle funds can be the right choice for them. Taking higher risks is most of the time attributed to younger generations mainly because they have the time and availability to rebound from any investment that has failed. For instance, investing in funds can be an alternative for those individuals aged between 20 and 40. Stocks are very often seen as high risk investment, because you can have big earnings but also lose big.

Others might consider bonds investment which are seen as medium risk with much lower chances of losing. Asset allocation is recommended for the aged people, this one being easier in customizing to fit one’s flexibility for lower or higher risks presented at different levels of age. Even if you can consider yourself capable enough to venture in a higher risk investment as you approach retirement or being already retired, then you are advised not to do it.

The same goes for the younger ones, who are not very happy with those investments that carry higher risks, so the medium or lower risk investments are preferable. What is great with investing in life cycle funds is that this type of investment offers flexibility in your relation to allocation options. The thing is that you can select the level of risk that is suitable for your financial situation.

Let’s discuss further about the automatic investing. So, you have decided to invest in something, then a good suggestion would be to go for an automatic investment plan through which you will the specific amount automatically transferred from bank account straight into investment fund. In this way you will get into the habit of having more organized type of investing throughout your entire life. With the monthly investments you can get help for lowering the cost applied per share.

Investing has always been seen as a confusing and sometimes pretty demanding task, once you have your goals into this type of activity. But as with any other field, once you set yourself in motion, everything will come easier to you and the things won’t look so confusing any more. This is the reason why many people nowadays take investing in life cycle funds more seriously and think of this choice as a good one to start with.

Investing Online and Make Good Profits

Tuesday, August 23rd, 2011

Many individuals nowadays consider the option of investing online in order to earn some profits. It has become quite popular for many investors to turn their attention to internet access as a gateway to many profitable activities. It has been proven that good profits can be made while being involved in one of the wide ranges of attaining earnings through online activity. However, as it happens with any enterprise that you want to consider investing in, there is the need of doing some research to know what you can expect. The following article is set to show you some tips that will help you stay away from the common pitfalls.

You should first of all see this type of investing as a very dangerous since you have access to the updated information regarding the stocks. This information is constantly brought up to date for those who are already involved in stock market investing, but also for those who are tempted to try this one as well for the first time in their life.

But how can this be dangerous, when all that you need is the information that is displayed to you on regular basis? Well, the fact is that you can have easy access to this sort of information, and once you get there you are less likely to see this from a spectator’s point of view. Instead you will be tempted to get involved as an active trader.

It is true that once you have considered this option, you must have been aware of the risks and prepared to confront with the ups and downs of this sort of trading, but reality shows that in this game there are more losers and winners, unfortunately.

You should keep in mind that whenever you are set to make a transaction, you will have to pay the fee for the broker. This means that you will have some cuts presented right from the start even of you lose or win. Consider that you have many transactions per day, and along with them many money to pay for the fees, then what will you do when losing some? This will add up as well to the costs paid as fees.

Be aware of the fact that on many occasions, a stock price doesn’t have to reflect the status of a company and if investors, in their majority, either buy or sell.

All of the above can be easily avoided if you have the necessary training in reading the signs – such as: the overall status of a company, being good at interpreting the financial statements, and so on. A long term investing would be always preferred over the short term one because with the latter you can never know what can become of a stock price for the closest period of time.

Investing in Any Country and Make Profit

Tuesday, August 23rd, 2011

Many investors nowadays are pretty reluctant at the idea of investing in other countries, other than their own. But with the nowadays status of economy, with so many environments compromised, not to mention the tighter competition, it has become quite dangerous to stay blocked merely in one’s country when there could be a while lot of better opportunities ashore. It is true that financial crisis has struck globally, and there is no country not to be impacted by this, but even so there still are nowadays conservative countries which have preserved their immunity against any type of crisis.

How can this be possible? The fact is that they have become more mature in investing culture and have strict regulations related to guaranteeing the returns of investment. Apart from this, there are countries like Asia, Africa, as well as Latin America where investing is not worthwhile given the unstable climate both political and financial.

But if you have done some research in this matter, you might have seen that some of the countries belonging to these continents, such as China, Brazil and India have emerging markets holding huge potential for future investing, no matter in which field the investment is made. So how can one make safely an investment, given the existing conditions?

* First of all, investors should do a thorough analysis of the investment involving a study that is both professional and also out in the street. This last strategy is very popular with highly developed countries, and should be as well applied in the above mentioned countries. Another method would be to investigate indirectly the people running the industry, the government and the politics to know their points of view and opinions related to the investing initiative of other countries.

* While doing the research, you as a future investor, must get rid of biases and preconceptions about the place where you would consider making the investment. Due to many prejudices that have been built around the investment topic have determined potential investors to avoid the alternative of going abroad. But all these are not in conformity with the reality, therefore you shouldn’t rely on them at all.

* Prove at all times, reasoning and plenty of patience when you consider investing in new markets belonging to other countries. Many investors are tempted to rush into a type of investing simply because this one is seen as the ‘new deal in town’. And it is a pity because you should weigh the alternatives, the possibilities while proving a professional approach to this matter.

* After investing in the chosen market you should show patience by seeing the evolution of the investment before you pull back and think of the investment as a bad step you have taken in this direction.

All of the above should make you think of the alternative of investing in other countries, but proving as well professionalism and trust.

How to Prosper with Investing

Tuesday, August 23rd, 2011

There are many ways through which people can earn a profit and prosper, one of them being investing. It is good to know beforehand what this is all about, regardless of the field you plan to do the investing, but one thing is for sure: if you do not get the proper knowledge you can confront with losing on all plans, so get yourself educated both financially and emotionally to reach a real prosperous life. You will have the satisfaction of not being left out knowing how to invest while including a solid strategy.

Let’s emphasize some aspects that will emphasize the education on investing:

* The basics of investing

This involves a complete strategic plan that will help you understand what investments are incorporated in the package. It is similar to building a house for you: without having the right tools and knowing how to assemble the pieces you can not reach to a final format of the house. So, you need to lay out the foundation on which you build the rest of your investment in order for this one to be successful.

You might be surprised to find out that many people do not make the difference between stocks and bonds. You should therefore read the specialty literature and learn the basics. This means that you should know what the stocks are, what risks are involved and any potential rewards.

You must also learn about mutual funds, all of the above being choices of investing for many average investors. With the mutual funds, for instance, you will be provided with investment packages that can be managed on your own. The asset class should also be comprehended if you need to select the right funds once considering investing in bonds, stocks or any other money market.

* Ways to do the investing

Now that you have the basics you should learn how to combine the pieces while using a solid investment strategy. Find out more about Asset Allocation which is essential in getting financially educated since through this mean you will know how to divide the money into various asset classes. A successful investment in this direction will make you become prosperous in your initiative. Know beforehand how much you are willing to invest in bonds over investing in stocks or over any other type of market.

If you have managed to gather a consistent portfolio of successful investments, then you can say that you have got yourself a great foundation. In case you want to continue with making more profits, you should have an ongoing strategy related to investing that will determine you to bring changes and additions if necessary, that is! Make sure that you keep yourself updated and read everything that is issued in this field, stay in a constant relationship with asset allocation and build slowly but surely your profits.

As you can see, everything is based on what you apprehend, on how you learn about building solid strategies that will help you for the future. Financial future is the thing that everyone needs to attain with lowered risks and more successful investing initiatives.

What is an exchange traded fund and how you can use it

Monday, June 13th, 2011
Bogle on the cover of Common Sense on Mutual Funds

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Exchange traded funds, or ETFs, combine the benefits of mutual funds with the benefits of individual stocks. Like mutual funds, ETF shares represent ownership in many different securities. But unlike mutual funds, ETF shares trade in real time throughout the day, instead of being priced only once at the end of the trading day. If you are looking for a simple and easy to manage portfolio, you can build one with as few as three widely diversified ETFs.

Total Stock Market

Many investors choose to make the ETF that tracks the total U.S. stock market the core of their stock portfolios. It trades under the ticker symbol VTI, and like all ETFs investors can buy and sell it in real time throughout the trading day. That makes it easy for investors to get in and out at the price they choose, providing an important advantage over mutual funds.

Total Bond Market

Investors who need to derive current income from their portfolios can use the total bond market index for exposure to these income producing securities. One of the most widely used bond index ETFs trades under the ticker symbol BND. Keeping your bond market money in an ETF can reduce your expenses while helping you diversify your holdings. If you plan to make periodic investments in this fund, look for a broker that provides commission-free trades for ETFs. A growing number of online brokerage firms now provide commission-free trading for select ETFs.

World Index Fund

International exposure is an important part of any portfolio, and ETF investors can get exposure to the world markets with the ETF trading under the ticker symbol VEU. It represents the FTSE All World ex-US index; which provides broad exposure and wide diversification across both the developed and the developing world. That helps investors build a portfolio that provides a hedge against problems in the United States market while still providing growth opportunities through international exposure.

Balancing Your Portfolio

The percentage you put into each ETF in your portfolio depends on a number of factors including your risk tolerance, how long you can keep the money invested, what you need the money to do and your outlook for the U.S. and world markets. An investor who needs to derive current income from a portfolio might lean more heavily toward the total bond market index; while an investor looking for growth might focus more on the domestic and international ETFs in the portfolio. Keep in mind that your investment needs change over time, so checking and rebalancing the portfolio on an annual basis is always a smart idea.

ETFs provide a lot of advantages over regular traded funds, and if you want to make a quick profit and get out at any time this is the best choice for you.

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Which type of stock broker should you choose

Monday, June 13th, 2011
NASDAQ in Times Square, New York City, USA.

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Have you laughed at the idea of investing in stocks assuming that it’s much too complicated for someone like you? Think again. Learning the ins and outs of investing in the stock market is not as challenging as it might initially appear to you. If you take it one small step at a time, you can easily learn how to invest in the stock market, master the basics of investing, and make some extra money. An important key to succeeding with stock market investing is to find a stock broker who suits your needs and works well on your behalf.

What is a Stock Broker?

Your stock broker is the one who handles the purchasing and selling of your stock market shares. After you’ve selected a stock broker, you’ll open an account. Anytime you buy shares of a company, money will be withdrawn from this account and changed over to company shares. When you sell shares, the opposite happens: shares will be taken from your account and the money is then deposited.

All the details of any buying and selling transactions are handled by your stock broker. You simply let them know how many shares you want to purchase and name your price. This is why it’s so important to have a good stock broker. Although there any many aspects to choosing a good stock broker, the first thing to decide is whether to choose a full service stock broker or a discount stock broker. Here is a brief explanation of each type of stock broker.

Full Service Stock Brokers

Pro: Detailed portfolio advice, personalized services and specific investment recommendations.

Con: High trade commission fees.

A full service stock broker is a good match for you if you have a large amount of capital to invest and plan on making fewer trades.

Discount Stock Brokers

Pro: Low trade commission fees.

Con: Fewer personalized services.

A discount broker is a good match for you if you have a smaller amount of cash on hand and prefer to make more trades.

The Next Step: Choosing a Stock Broker

Now that you understand the difference between a full service stock broker and a discount broker, making the choice between them should be a snap. Your next step now is to choose the specific stock broker with whom you want to work. Ask friends and family for recommendations or compare several online brokers. A good stock broker will have a solid reputation, a transparent fee schedule, and a responsive customer service.

Make sure that you are comfortable with your stock broker before initializing any trades. When you open an account with the stock broker you’ve selected, you’ll first need to deposit cash into your account and fill out some forms. Within a few days, your account should be up and running and you’ll be ready to start trading. It’s as simple as that!

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Understanding the basics of a stock market

Monday, June 13th, 2011
The corner of Wall Street and Broadway, showin...

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Trading on the stock market may seem like a task suited only for those Wall Street magicians, but if you take your time you’ll see that it’s nothing difficult and you can make a good profit yourself. If you are fascinated by technology, you might want to invest part of your stock market portfolio in the companies that make the products you use and love every day. Investing in technology can be a wise move, but as with any type of investing, it is a good idea to do your homework first. Understanding your investment choices will help you make the best decisions.

Invest in What You Know

Investing in what you know and understand is a good rule of thumb for all stock market investors, but it can be particularly important for technology stock investors. Warren Buffett has famously advised investing in companies you like, and few can argue with his success. Investing in the companies that make the products you use every day is one of the best ways to get started with technology investing.

Mutual Funds

Technology shares can be volatile, and choosing individual tech stocks can be risky. As an investor, you might want to choose a few individual stocks based on your personal knowledge and consumer preferences, while keeping the bulk of your tech investments in a mutual fund that invests in a basket of technology stocks instead of just a few.

This diversification can spread the risk in your portfolio and give you an investment that is considerably less volatile than those individual stocks. One way to gauge the volatility of a tech mutual fund is to look at its beta coefficient. The beta coefficient is a measure of a fund’s volatility. The stock market as a whole has a beta of 1, so a fund with a beta of 1.5 would be 50 percent more volatile than the overall stock market.

Exchange Traded Funds

An exchange traded fund combines the advantages of an individual stock with the advantages of a mutual fund. Like a stock, an exchange traded fund can be bought and sold during the trading day, allowing investors to set the price at which they buy and sell the security.

As you can see, there is nothing difficult in stocks – just take some time, use the above tips to get started and go on. Technology funds are a great example to start with, as they are the most popular and some of them are pretty cheap nowadays.

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How to use stock market trading with a self – directed IRA account

Monday, June 13th, 2011
FDIC placard from when the deposit insurance l...

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One of the advantages of setting up a self-directed IRA is the added flexibility it provides. While your 401k or 403b plan might provide only a handful of choices, rolling over that account to a self-directed IRA gives you a host of new investment options.

Individual Stocks

If you set up a self-directed rollover IRA, you can use that fund to buy and sell individual stocks. If you do plan to include individual stocks in your rollover IRA, you might want to choose a low cost online broker to administer your plan. Once the plan is set up, you can buy and sell stocks as you see fit. And since those stocks are held within a tax-deferred account, you will not incur capital gains taxes when you sell stocks at a profit.

Exchange Traded Funds

Exchange traded funds can give you many of the benefits of a mutual fund, combined with the ability to buy and share the shares on the open market. Many of the most popular exchange traded funds track widely used indexes, including the Standard and Poor’s 500 and the total stock market index. If you have a self-directed IRA you can use your account to buy and sell exchange traded funds as you see.

Mutual Funds

If you roll your 401(k) or 403(b) fund into a self-directed IRA with a mutual fund company, you gain access to all of the mutual funds that company offers. Some mutual fund companies also provide access to funds offered by other companies, giving you a wider universe of kinds to choose from.

Certificates of Deposit

If you want to limit the risk in your retirement portfolio, you can invest part of your self-directed rollover IRA in a certificate of deposit. The money you invest in a CD is insured by the FDIC, protecting your principal while you earn a bit of interest. Of course the interest rates on certificates of deposit tend to be quite low, so you might not want to invest your entire IRA rollover that way. But if you are nearing retirement and need to keep the money you need for the first couple years of retirement safe, a CD can be a good choice.

As you can see, a self-directed IRA gives you a lot of choices, but it’s important to know how to make the right decisions. Start with the above tips and work your way up!

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