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

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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How to get the best bang for your buck when investing in the stock market

June 13th, 2011
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No matter how you choose to invest your money, investment costs count. The more you spend on commissions and costs, the less you will have left to invest, so it is important to choose your brokerage firm with care. There are a number of large online discount brokerage firms, but not all of those firms will be right for everyone. In order to get the biggest bang for your buck, it is important to do your homework and understand your own priorities.

Keep Your Costs Low

One of the most important considerations, of course, is the cost of each trade you make. When you make the right choice you can keep your costs as low as possible, so it is important to look at the costs you will face each time you make a trade. When evaluating the costs of each trade, it is important to look at the entire cost of trading. Some firms will charge a flat fee for up to 1000 shares of stock, with an additional charge for each share above that level. Others will charge a flat fee no matter how many shares you transact. It is important to look at these costs and make a decision based on your own trading needs.

Research Minimum Balances

If you are new to investing, you may not have a great deal of money to invest. If that is the case, you will need to choose a fund that has a low minimum balance requirement. Some online discount brokers will charge a maintenance fee if your balance is below a certain threshold, so it is important to ask about those fees if your initial balance will be a low one. In some cases the brokerage firm may waive fees for investors who set up an automatic investment program, so be sure to ask about that as well.

Real World vs. Online Only

Even though investing online is easy and convenient, there may be times when you want to actually sit down and talk to a real live person. If the ability to consult in person with an investment advisor is important to you, it is a good idea to seek out an online discount broker that also has a presence in the real world. A number of large online brokers, including Scottrade, TD Ameritrade and Charles Schwab, also have a presence in the brick and mortar world. If this is important to you, be sure to research the location of these real world offices before you make your final decision.

If you plan everything correctly and follow the above tips, you can easily trade in stock markets without spending huge amounts of money on the operations themselves.

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How to build wealth in mutual funds using dollar cost averaging

June 13th, 2011
Mutual fund

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Dollar cost averaging is one of the most effective ways to build long-term wealth in mutual funds. While it may seem complicated, dollar cost averaging simply means that you invest the same amount of money on a constant plan, regardless of what the stock market is doing. Making those regular investments on a weekly instead of a monthly basis can help you build your mutual fund holdings even faster. You can use this weekly investment strategy to build a portfolio in a number of different mutual fund categories. Each of those categories is described in greater detail in the sections listed below.

Index Funds

Index mutual funds hold all of the stocks in a given index, such as the Standard and Poor’s 500 or the NASDAQ 100. When you buy such a fund, you become part owner of all those companies giving you a greater level of diversification than you could achieve on your own. Making weekly investments into your favorite index mutual fund allows you to build up a greater number of shares more quickly, helping you grow your portfolio for the future.

Growth Stock Funds

Investing money weekly in a growth stock fund allows you to profit from the inherent volatility of the stock market. The net asset value of a growth stock fund can bounce around quite a bit in response to the daily gyrations of the stock market. By making weekly purchases, you can accumulate more shares during periods of stock market weakness, and that can give you a good profit when stocks pick back up again.

Bond Funds

If you need to beef up your bond portfolio, you can do so with weekly transfers from your bank account to the bond mutual fund of your choice. You can choose from a variety of bond funds, from safe government bond funds to corporate and high-yield funds. The type of bond fund you should choose depends on a number of factors, including your risk tolerance and your need for current income.

Exchange Traded Funds

While exchange traded funds are not technically mutual funds, they do have a lot in common with those financial instruments. For instance, the ETF that trades under ticker symbol SPY tracks the performance of the Standard and Poor’s 500 index, just like an index fund does. Many brokerage firms now allow customers to make commission-free trades in the ETFs they offer, and that allows investors to buy ETFs as often as they would like. You can set up a weekly transfer from the cash account at your brokerage firm, or your bank account, into the ETF of your choice.

Investing consistently over time is one of the best ways to build long-term wealth for the future. By implementing a weekly strategy of saving and investing, you can reach your financial goals that much more quickly.

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6 perks that many stock brokers can offer you.

June 13th, 2011
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When choosing a discount stock broker, you probably compare commission fees and opt for a broker who offers low-cost trades. But commission fees aren’t all there is to choosing a discount stock broker. In addition to low-cost trades it’s worthwhile to compare the perks offered by various discount brokers. If all else is equal, then choosing a discount stock broker who offers tempting perks can help make trading a cinch and save you money. Here are a few cool perks to look for.

Sign-up Perks. Some discount brokers will fully or partially refund your transfer charges when you switch your account from another broker. Others will offer a certain number of free trades for new accounts. If no sign-up promotions are currently running, tell the broker you’re considering giving them some business but are reluctant to switch. They just might make you a special offer.

Online Tools and Calculators. Some discount stock brokers offer nifty tools to help you calculate your target prices for your trades. These types of tools are useful and can save you loads of time and energy.

Multiple Customer Service Gateways. All discount brokers offer some form of customer service, but those that provide several options can make your life a whole lot easier. Look for instant live chat, onsite email, 1M, and easy 800 numbers with no long delays. Also check the working hours—it’s frustrating to call customer service only to find that they closed the doors at 4pm.

Referral Bonuses. If you like your discount brokers, you’re going to want to refer your friends and family to them anyway, right? Getting paid for doing so is a nice touch and makes you more motivated to keep sending along referrals.

Free Trades. Free trades are sometimes hard to come by unless you’re opening an account with a good-sized chunk of money. Look around for a discount broker who offers free trades at a minimum you can handle. If you have limited financial resources to start with, you can also look for a broker who offers free trades as a reward for being a frequent trader. For example, some discount brokers offer 10 free trades for every 25 trades you make each month.

Help with Taxes. April 15 can be the most stressful day of the year for some people. If you are one of them, you’ll be glad to know that some discount brokers offer extra help with your taxes. They provide all the information you need to accurately include your stock trading information in your tax return.

No Sneaky Charges. This isn’t really a perk, but it’s worth mentioning because the additional charges and invisible fees that some brokers tack on can be a real headache. Look for a discount broker who promises not to smack you with a hefty commission fee every time you need extra help, and who doesn’t charge inactivity fees if you don’t trade regularly.

Does your current discount stock broker offer any of the above perks? If not, it might be time to explore other options.

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1/20/2011 Top is in correction has started

January 21st, 2011

The Secret Formula To Portfolio Diversification

January 20th, 2011
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Portfolio diversification is more than just a tough phrase to say, it is the most important part of long term stock trading. Stocks aren’t always kind and because of this diversification was formed. If you want to earn a profit off your trades then it is highly advisable to diversify your portfolio using a winning system.

Do you know what it takes to diversify your portfolio properly? Most investors have no idea what it takes to properly diversify their portfolio and because of that their stocks drop and their net worth plummets all because they didn’t bother taking the time to learn how to diversify their portfolio the right way. Do yourself and your family a favor and diversify everything from the companies you trade in to the CEO’s growth strategy.

When it comes to stock portfolio diversification there is many things that can get in your way and make things complicated, but don’t let things out of your control. The most important thing about investing is that you have a handle on everything that you do and every trade that is made. Never make a trade if you aren’t certain of how that company will fit into your diversified portfolio because this will spell disaster.

Secret formula to portfolio diversification

Company growth – Do you know what the growth plan of the company is? Does the company release reports at least twice per year to tell you their current plans and what significant changes have taken place since the last report? If you don’t know what the company plans to do then you really know nothing about the company and because of that you have no idea how they plan to grow. Some companies will grow slower than others and you want to make sure you have your portfolio packed with both fast growers and slow movers.

Industry –There are many different industries that you can trade inside of and that is exactly what you need to do. If you are trading in real estate and nowhere else then you are in a world of hurt. You need to make sure you are trading within no less than 5 different industries that way you can maximize your profits while cutting back your risks. Always remember what industries you are in that way you don’t make a trade that will blow up your entire portfolio.

Price – What is the normal price that you are trading in? Most people will get themselves in a rut of price and never work their way out of it. For instance people who first start out trading online or for themselves will find they like to trade stocks that are less than $15 because they can always buy more than they could if the price was $100 per share. Stocks that are priced around $100 more up and down in quicker but they are normally fairly consistent.

Location – Another great way to diversify your portfolio is to make sure you don’t have stocks that are all headquartered in one location. For instance if you wanted to get some great stocks and you chose to buy Boing, Microsoft, Startbucks and Costco you would be in just one location, Washington State. Buy stocks that are spread all over the globe that way you aren’t getting effected by local economies.

This is the secret formula that you must follow in order to diversify your portfolio enough that you will never run the risks of losing money. The most important part of trading stocks is managing your risks so the first thing you want to ensure is that you are well diversified throughout every part of the market.

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The Millionaires Guide to Trading Stocks Successfully

January 20th, 2011
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Everyone wants to be a millionaire and lots of people choose the stock market to help make this dream a reality. If you want to become a millionaire then you need to learn from a millionaire, not the average trader off the street.

Becoming a millionaire is probably pretty high on everybody’s list these days and rightfully so. Who wouldn’t want to be a millionaire and have the luxury to do what they want when they want to. Millionaires all have one thing in common, they trade stocks successfully whether they do it daily or for long term growth is irrelevant. The reason trading stocks successfully is because where else do you know of that you can take a little amount of cash and turn it into something substantial? Nowhere I know.

There are a few things that millionaire traders do that not everybody does. The first thing that millionaire stock traders do is they always stick to a single strategy and do it without flaws over and over again. What most novice traders do is jump around from certain stocks and from different strategies just trying to find something that works. Don’t do this, stick with one method and perfect it, this is the only way you are ever going to become a millionaire through the stock market.

Another thing that millionaires do better than anybody is pay themselves first. What this means is that instead of taking the cash out of the account and blowing it on something they take out a very small percentage while leaving the bulk of the money inside the account so that they have more cash handy. Don’t make the mistake of taking money out when you don’t need it, money in a trading account is more valuable than you know. Money in the right hands is like water in the desert, it is always useful.

Did you know that most millionaires don’t trade stocks daily, they almost always make a trade one week and come back the next week to see where it has gone? The reason millionaires aren’t too curious about what their stock is doing is because they know that the market will change dramatically overnight and they don’t want to stress themselves out with the daily price changes. The reason it is best to wait is because spending all your free time worrying about your trade will just make you waste your day and possibly make a shotgun decision to pull out early.

Millionaire trade tips

Always read the paper – Whether it is the Wall Street Journal of the local newspaper, you should always read it. If there is any hot story then it will be in the paper no matter where in the world you are. Remember that.

The Wall Street Journal is your bible – If you are a trader then you already know this, the Wall Street Journal is your bible and it always will be as long as you are an active trader. Not many people will wake up and read the Wall Street Journal unless they are serious about stocks and the market in general. Be more than just a novice trader, use the tricks that all big time traders use and read the paper that has all the answers.

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Stock Trading – Make Each Trade Profitable

January 20th, 2011
NASDAQ in Times Square, New York City, USA.
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Do you know what it takes to make each stock trade profitable? Trading in the stock market isn’t rocket science, it is just a matter of understanding the market and their charts. In order to make a profit on stocks the first thing you need to know is that it all starts with the buy-in price.

Stock trading is something that many people fear and the simple reason is because stocks are risky. The one thing you need to know is that anything dealing with money is risky. For instance your job, if you work for yourself then it is risky and if your work for somebody else then it is risky too. There is never anywhere you can make money without the risk, but there are ways to make sure each trade you do remains profitable.

In order to make each trade you do profitable you need to follow a few steps. The steps are; buy 3 times, never trade the news, and always back up your trades.

Buy 3 times – Buying 3 times just means that whatever amount you want in each stock you will divide by 3 and then buy equal shares of that stock over the next 3 days. You do this so you can average into the stock and to make sure if it dips you will have ground to stand on. Another reason you want to buy 3 times is to make sure that you don’t buy when the price is high, this is normally what happens when you buy something that is in the news.

Never trade the news – Just like I said, never trade the news. You never want to trade a stock that is in the news because there will always be people that are worried about the stock dropping or others who think it will skyrocket and because of this they tend to over buy/sell and it will make the price fluctuate more than it should. So just remember to never trade the news or else could risk losing your money.

Always back up your trades – Something most people don’t do is make a counter trade with each trade you do. The importance of the counter trade is just as important as the trade itself. How you make this work is you save up enough money that if the stock drops you can buy in at the low and adjust your total investment. It is always important to have a back up so never buy more than you can afford.

Now that you have these 3 tips to make each trade profitable you need to make sure you have a strategy that you are trading on. If you trade and you don’t know why you are then you will just lose money. Something that many people do is trade the trends which is a great way to make money. If you are new try looking for daily trends that happen without failure. These are the stocks you want to trade daily for steady income and then find others that you can trade for long term growth and profits.

Trading stocks isn’t for the unorganized, you need to have a system that is organized and tested in order to make a decent profit. The last thing I want to leave you with is that a single stock strategy doesn’t always work, you will need to monitor it to ensure that it stays profitable for the long haul.

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Stock Strategies For Profitable Investing

January 20th, 2011
The New York Stock Exchange, the world's large...
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When it comes to stocks the most important part about turning a profit is your strategy. Do you have a strategy that you are following to make money? Investing is like having a baby, you have to have a plan for everything that you do. Don’t think that the stock market is going to treat you well, if you don’t have a strategy in place then the stock market will hurt you.

Do you have a strategy that works for investing in stocks? Something that is hard to figure out is what strategies others are using and the reason is because most people don’t want anybody to know. If you have a strategy that you have been using and modifying to meet your needs you should hold onto that and not leak it to anybody.

The following 3 strategies are basic strategies that are used by many big time investors, it is up to you to modify each strategy to meet your goals and financial expectations. One thing that I just want to make sure you understand is that with stock strategies everything will progressively change so you need to watch out for that. If you have been using a stock trading strategy for a while then it might be time that you re-evaluate where it is at and how profitable it has been to you recently because it might be time to make a change.

3 Stock trading strategies for profitable investing

Gap trading – Gap trading is very simple, all you are doing is buying into a stock that is about to hit a gap (normally the next day opening). The reason this works is because you sit around looking for stocks in the news or stocks that have just rose in price substantially and didn’t stop at the closing bell. The reason these work so well is because stocks that are rising and didn’t stop before the market ended almost always increase in price even more overnight. The one thing you will want to make sure you have happen is that you sell the stock at the opening bell without restriction. If you wait for an hour or even less the stock price could drop below your buy-in price and you will be out money. Don’t let this happen, once you have made the trade for the stock put a sell on it for the open of the next trading day. Also never do this strategy over the weekend because there are still people who will trade and 2 days is much too long to wait to see what happens.

Shorting stocks – Shorting stocks is something that has got a bad name in recent years and it is a real shame that it has because it’s a great way to make money. Shorting is simply where you bank on the stock dropping in price. The great part about this strategy is that you can short almost any stock as long as you have the deal in place, but you only want to short stocks that you know are about to go down. The biggest thing you need to watch out for is that the stock doesn’t go under because then there will be no buyer to take the stock over so you can profit on the deal.

Dividend stocks – This is pretty straight forward. This strategy is just where you find stocks that pay a decent sized dividend and hold them for the guaranteed income. It is always good to have these in any portfolio, just make sure you aren’t too involved with dividend stocks

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Advantages of Trading Penny Stocks

January 20th, 2011
Penny
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What is a penny stock and why are so many people talking about them? First of all a penny stock is being talked about so much because of all they have done to help investors portfolios. Something many people don’t understand is just how easy you can make money investing in penny stocks.

The biggest reason anybody ever trades in the stock market is just for the pure money to be made. How many people do you know that trade just for the sake of trading? Everybody wants to make money from the stock market and that is why penny stocks have become so popular these days. What most people don’t know about penny stocks is they aren’t really worth a penny and they are so volatile that you can easily turn a profit within a couple hours.

Penny stocks are considered any stock that is trading under $5 but some people think penny stocks are any stocks under $10. Whatever you want them to be they will be, just know that the lower a price of a stock is, the more you can buy, and the less the price has to move in order to make money. Don’t listen to others that have no idea about penny stocks and say they are a poor investment because they aren’t. The only poor investment is no investment at all.

There are many great advantages of trading penny stocks both for novice traders and the seasoned professional. Have you ever traded penny stocks and if so what was your initial reaction to them? What about now, do you still feel the same way you did when you first traded them?

Advantages of trading penny stocks

Cheaper – The first thing anybody will notice about penny stocks is the fact that they are cheaper than anything else. Most people will stay away from penny stocks because of this but I see it as a good thing, you can buy more for less money. Another reason it is an advantage to buy cheaper stocks is the fact that you can easily tell where is the low and the high because decent stocks will only fluctuate so much before taking off one way or the other.

More volatile – Penny stocks are very volatile which for a trader that is always watching the market is very good news. The more volatile a stock is the more you can make off each trader each day. Don’t think that volatility is bad because it is only bad if you buy at the high and sell at the low, not the other way around.

Could be next Starbucks – If you know anything about stocks then you know how many people though Startbucks was going to be a dud early on and they proved almost everybody wrong. Do you know what would have happened if you spent a mere $10,000 on Starbucks stock when they first came onto the public market? You would be a multi millionaire now and that is only with the share price, not to mention the dividends each year.

Still great companies –  The last thing is that penny stocks are often still great companies. There are many stocks out there that are trading well below the $5 mark but I would never consider them bad companies are run by terrible leaders, they are just hitting rough spots in the road and need time to rebound. Always give a company a chance and you will see what they can do when they are being supported.

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