Browsing Category: "Investing"
The stock market
Fortunes are made and lost overnight in the stock market. I once heard that over 95% of the people who invest in the stock market actually lose money. It’s a risky game for most of us, but with some research and luck many investors make hundreds of thousands of dollars from investing in the stock market. If you are interested in investing in the stock market, take a minute to read this post. I will give a brief overview of how the stock market works, I will teach you why you should invest, show you how to start investing, and how you can actually profit from investing in the stock market.
How the Stock Market Works
The beginning concept of the stock market dates back to 12th century France. Since then it has grown into a huge business and created full time jobs for millions of people. The stock market is vital to our economy chiefly because it is the most important way for companies to raise capitol for their business. Investors buy stock in a company which gives this company more money to invest to grow the business. Hopefully, the business will thrive increasing the value of the stock, the investor will sale the stock and make money.
Why should you invest in the stock market?
Many people use the stock market to earn extra income or to invest in their future retirement. Almost everyone could use some extra cash, right? From personal experience it is very difficult for the average investor to actually make a lot of extra income from the stock market. In order to earn huge gains from the stock market you have to have a lot of money to invest. Because of the “per trade” fee that investment companies charge you, investors have to purchase large quantities of a stock in order to offset the costs of investments. Also, any gains from the sale of stock are taxed more than personal income tax. I would recommend waiting to do this type of investment after you learn the basics of investing and have your retirement funded.
So, back to the original question, why should you invest in the stock market? Investing for your future retirement is a great reason to learn the ropes of the stock market. Many people don’t realize the importance of having their retirement funded. The earlier you start investing for retirement to more prepared you will be when the time comes. It may also allow you to retire sooner than your friends and co-workers.
So, Ready to start investing in the Stock Market?
Not so fast, investing in the stock market can be risky, know what you are doing before you sign up.
First, learn the lingo of the business. There are many websites online you can research and learn the basic lingo of the stock market. At least learn the basics before you start. It’s just like the rule of reading the instructions before you try to put together furniture. Sure you can jump right in and try to put it together, but you will probably miss a step or do something out of order and the whole piece of furniture is ruined. Take some time to read the stock market instruction book before throwing away your money.
Second, open a virtual portfolio at an online stock market trading website. There are many websites online that let you play the stock market game without investing a dime. You can choose any real stocks you want and they will track your progress over time. You can buy and sales just like the real market. After several months if you aren’t making virtual money odds are you won’t be very successful at the real game either.
Research, research, research is the key to success. Obviously, no one knows exactly how the market will work but if you know what to look for sometimes you can get a heads up over the competition. Key factors such as the company earnings reports can have an impact on the stocks value. You can also watch trends of stocks, sometimes the values of stocks peak at certain times of the year. There are many theories on stock market fluctuations but knowing the inner workings of a company can help you invest smarter.
Now, you have earned some virtual money and done some research on your favorite stocks you are to try your luck at the real stock market. There are many places that will allow you to invest in the stock market: two that I use and recommend are Zecco and Sharebuilder. These two programs do not require you to keep a minimum balance and their fees are very low for investing. Once you choose a place to start investing you must decide your investment goals. Do you want to invest for retirement or invest to make money right now?
I would always suggest to the beginning investor to invest for retirement. My choice of retirement investment would be a Roth IRA. A Roth IRA allows you to invest funds after taxes and those profits can be withdrawn at retirement tax free. A Roth IRA allows you to invest in stocks, bonds, mutual funds or ETF’s. It allows you to have a diversified portfolio and still have complete flexibility of your choice.
If you plan to invest to make money now, you should be aware of what this entails. Any gains you make from stock sales in a year are taxed at a different rate than income taxes. These gains are taxed harder so take this into consideration when investing.
Profit from investing in the Stock Market
Again, I obviously don’t know all the secrets to the stock market. If I did I probably wouldn’t be taking the time to write this article. However, there are some simple rules to follow in order to profit from the stock market.
First, buy low sale high. It’s an age old rule that investors still struggle with today. If a stock jumps in price to a peak, you may want to consider a sale and keep the profits. If a stock drops to a new low you may want to consider buying.
Remain calm. If a stock drops a considerable amount in one day, don’t panic. Unless the company is in danger of bankruptcy the stock price will rise. The best thing to do would be buy more of the stock at the lower price.
Diversify your portfolio. As the ole saying goes, don’t put all your eggs in one basket. If you put all your money into a single stock you are living very dangerous. If anything happens to this company your entire portfolio could disappear. It is a good idea to invest in different types of funds including, stocks, bonds, mutual funds and ETF’s. Spread your money around and even if something happens to a single company you will still make money in the long run.
Watch your portfolio. If you are going to make money you want to keep an eye on your investments. Track their progress over time and make necessary changes to your portfolio. You may need to sale some of your investments that have reached highs and maybe buy more of investments that are at all-time lows.
Change your investments with your lifestyle. As you grow older you should move more of your investments to safer areas of the stock market. Individual stocks are considered extremely risky and should be avoided the closer you get to retirement. Instead consider safer investments such as bonds and CD’s.
Conclusion
There is a lot of money to be made in the stock market and there is a lot of money to be lost. If you are going to play the game be sure you understand the rules. Know exactly where you are putting your money and why. Staying on top of your portfolio will increases your changes of winning with the stock market
Get in now, the market is warm!
Alright, every financial advisor will tell you to buy low and sell high. I’m here to tell you there is still time to buy low. It’s no secret that our economy is still not doing as well as it was a couple of years ago.
The DOW was at it’s peak in October of 2007, topping the 14,000 mark. From that point it started to take a slow downward pace and then took a nose dive in September of 2008 reaching levels in the mid 6,000′s.
With just a little research you can notice it’s slowly climbed back up to almost 9,000 now. Do a little more research and you’ll discover the market has took a couple more dives in the past, but it’s always climbed back up.
The government is currently taking many steps to help ensure the success of the U.S. economy, and the past few months have proved this. Stocks have slowly climbed back up, but not to their peak levels. Now is the time to invest!
I wouldn’t recommend investing in individual stocks, especially if you aren’t an experienced investor. Financial advisors, and investors are paid to do in dept research into companies. Most of them know what they are doing. Find a reputable financial investor and let them help you make some money. They will have a large list of mutual funds, index funds, and other investment opportunities to suite your individual investment style.
The market is definitely warm and moving toward HOT, don’t miss a great opportunity to secure your financial future!
McDonalds, the best stock to buy ever?
Everyone is always looking for the perfect stock to buy for their portfolio, could it be McDonald’s? As unhealthy as it may be, I have to admit I love just about all of their food. Another pro of McDonald’s is that for the most part all their food is cheap. For under $6 you can get a sandwich, fry, and drink which is more than enough calories for your entire day.
As many of you know just about every retirement portfolio in America has taking a beating the past 12 or more months. My personal 401k has lost over 40% of it’s value in the past 12 months. However, if you take a look at the last two years of McDonald’s stock it has actually increased in value. January 30, 2007 McDonald’s stock was trading at about $43.00 per share and yesterday it closed at $58.83! Even in the worst market McDonald’s has managed to stay strong and increase in value.
Want another reason to invest in McDonald’s? They also pay a dividend over 3% per year. In today’s down market and financial disasters many companies are no longer paying dividends. Companies that have paid dividends for years are ending this prized bonus to it’s investors. McDonald’s however has no reason to end the dividend because of their continued success.
Just for you information I do not own McDonalds stock, yet. I do however plan to purchase McDonalds over the next few months to add a solid company to my portfolio.
Buying a duplex is a great investment.
Six years ago my wife and I decided to purchase a home just before our wedding day. After a few months of looking we decided to build a starter home close to my work. It seemed like the perfect decision to make at the time. Interest rates were low, around 5.5% for a 30 years fixed mortgage. After looking at multiple apartments we realized that our rent at a nice apartment would be about the same price as 1,600 square foot home.
I’m not writing this article to tell you I regret purchasing the home, I’m writing to tell you I could have made an even better financial move than purchasing the home. We lived in the home for just over 2 years and sold it for a profit of about $8,000, not great but not bad for newly weds just out of college.
If you are ready to purchase your first house or home then you are entering the market at a great time. Right now home prices are down all across the nation, bad for those of us who already own a home, but great for those just entering the market. Also interest rates are still pretty low even for a fixed rate loan. Getting a great deal on real estate is pretty easy right now and it could be one of the most important moves you can make financially.
If I could make a suggestion to those of you looking to purchase that starter home, don’t. Think about purchasing a duplex instead of the traditional home. We could have purchased a nice duplex for about $175,000 instead of our home for $112,000. It might sound like a lot more money but you live in one side fo the duplex and rent out the other side. Remember I told you our rent would be about the same for a nice apartment as a new home? Same deal here, that duplex was being rented for $1,000 per month I know because that’s where my wife was living before we got married. The payment, tax and insurance on $175,000 loan would have been about $1,200 per month, you can do the math here.
Now, of course there are many risks associated with renting especially if you depend on that income to make your payment so consider this before jumping to purchase the duplex. I’ll write another article soon about all the risks and rewards associated with renting.
Honest Financial Adviser
How to find an Honest Financial adviser
Finding an honest financial adviser is the most important part of preparing for retirement. It doesn’t matter if you make $10,000 or $1,000,000 per year you should use a financial adviser. You may think you are the best person to manage your money, but let’s face it, you are always busy, usually lazy and are the world’s worst procrastinator. Before finding a financial adviser you need to understand their function and how they are compensated for their hard earned work.
Good real estate investment ideas?
Before you take your good real estate investment ideas and spend your life savings think carefully about the consequences. Over the past several months several hundreds of thousands of families lost their homes due to rising interest rates and a gloomy economy. Millions of investors are watching their retirement savings plunge with no signs of relief.
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Prosper Lending Club
Prosper Lending Club
Ok, thought I would give it a try. Made my first $100 deposit on Friday and funds should be available this week. Prosper is basically a lending club that either gives you access to loans that are a little better rates than you could get from banks and credit card companies or gives you the opportunity to loan your money to other consumers that need the money, giving you a better return on your investment than any savings account, CD, or money market account.
How cheap can you send your kids to a four year college or university?
How cheap can you go to a four year college or university?
A four year college or university is an important step in a successful career oriented life. It’s obvious that college graduates earn higher salaries than those who only graduate high school. College also stimulates the mind and leads the brain down creative avenues. College also gives you the opportunity to meet many unique people from different cultures and provide you with the opportunity to make job connections for the future. With this said, it’s obvious there are advantages related to attending college, but can everyone afford the rising costs of a four year degree? The average cost to attend a public university might be lower than you think, about $6,000, but this is still almost $25,000 over the course of four years. So just how cheap can you send your children to a four year post secondary school?
Securing your child’s retirement
Securing your child’s retirement
It may sound like a strange idea, especially when a very small percentage of us have our own retirement secured, but just imagine how you could change your family tree forever! The only problem with the concept is that most people are too greedy or selfish to actually follow through with the plan.
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Good news, Our economy is going down?
Good news, Our economy is going down?
If you haven’t noticed, the US economy is taken a huge turn for the bad. Stocks have tumbled and the over the past three days The Dow Jones industrial average has fell nearly 515 points. It’s a little scary to think that many stocks, especially those in the financial sector may continue to fall even more over the next few months. Why is this good news?
