Investment Articles

It’s rare for a day to pass by without hearing a new proposal to help save the environment. Our morals and ethics often summon us to ‘do our bit’. However despite the efforts being made, it seems the world’s many problems show little sign of dispersion.

The ethical problems we are warned about do not stop at global warming and environmental pollution. We are often encouraged to also avoid companies seen as unethical due to testing their products on animals, questionable lending practices or gambling. These are all personal choices that we can make based on our beliefs and ethics. But how many of us know that we can extend these ethical beliefs to our investments?

What is an ethical fund?

An ethical funds is “any fund which decides that shares are acceptable, or not, according to positive or negative ethical criteria (including environmental criteria)” as denoted by the Ethical Investment Research Service (EIRS).

This gives environmentally or ethically conscientious investors the opportunity to apply their ethical beliefs to choosing the funds that they invest in. Ethical funds must meet additional social, ethical or environmental criterion in addition to the other investment criterion. These funds are described as SRIs (socially responsible investments.)

These type of ethical funds are divided into categories based on their level of green credentials in order to help investors make informed decisions when choosing their SRIs.

Light Green investments

Light green investments are at the lowest end of the scale. These type of investments often avoid company sectors such as gambling, pornography, arms manufacturers, military, defence and usually nuclear energy.

As the bottom step of the green investments ladder, light green investments often include controversial sectors where opinions are largely divided. These tend to be excluded from the higher level of SRIs.

Medium Green investments

Medium green investments play the middleman of the ethical fund. There is some overlap between light green and medium green investments. However medium green investments often avoid companies such as tobacco and oil/gas companies often fall under this sector.

Dark Green investments

Dark green investments give investors the highest level of ethical assurance by adhering to the strictest ethical criterion. Investments included in the dark green banding filter out all sectors deemed unethical but also look at additional areas such as checking that human rights are correctly adhered to in these companies and that there is no evidence of child labour or other breaches. Other factors like animal testing and genetic engineering would also be avoided in this sector. Promotion of renewable or sustainable sources is often favoured.

Positive screening

All of the different types of green investments are based on ‘negative screening’ of companies; exclusions criterion in order to refine the ethical credential of companies invested in.

Positive screening however chooses companies based on their ethical positivities. Companies which are actively engaged in ‘doing good’ such as water purification, solar energy or recycling sectors are likely to fall into this category.

Is it worth it?

Not everyone is concerned about the ethics of their investment however if you are someone who is environmentally conscious or feel strongly about investing in certain sectors then assurance that your investment is ethical may offer you peace of mind.

As with all investments, it is important that you do your research and are inform yourself fully before making any decisions. Speaking to an ethical investment advisor could offer you additional information and help you to consider the option which works best for you.

It is important to acknowledge that the returns on ethical investments are often lower than traditional investments. These investments also carry all the same risks come with other investments and you should be aware that you are not guaranteed any returns and could lose your capital completely.

John T Hughes writes for Best Bonds, a site dedicated to helping you to find leading savings or investment bonds options that may be suited to your needs.

With some things in life, it can pay to jump in head first and think later. Others take careful consideration and a lot of thought before initiating. Investments definitely fall into the latter category. With their high risk and financial implications, often investments prove to be one of the biggest decisions of many people’s lives.

Investing should never be a light-hearted decision. Before making any investment, there are a number of factors that you should consider.

Think About Why You’re Investing

There are a number of reasons why people choose to invest. Some people invest to help form a nest-egg for their retirement, others may want to help boost their property assets. The obvious incentive is the possibility of growing your money. However investments should never been seen as a means of overcoming a cash flow shortfall and they will not provide a short term fix.

You should never go into any investment blind and it is crucial that you fully understand your investment. You may have dreams of a self-named personal yacht carrying you on to the Mediterranean shore upon retirement but unfortunately there are no guarantees of returns with investments.

You should think about your goals, priorities and what you are hoping to achieve from investing. It is also important to consult the experts and do thorough research before making any investment decisions. Only when you fully understand all aspects of the investment process should you consider making one.

Think About The Risks

Often with investments, the potential fruitfulness can glaze over the dangers. However it is undeniable that investments are a risky business. A fundamental aspect of investment is taking calculated risks in an attempt to reap the rewards if they are successful. Typically in the investment world, smaller risk will also often mean lower potential growth of your money which is why many investors make bigger brave decisions whilst understanding the risks that they may bring.

In addition to the overall risk of losing your investments and receiving no returns, there are a number of factors out of your control with investments which enhance the risk factor. The economic climate can change rapidly and shares can fall and quickly as they rise. “Although you may be urged investors to make decisions quickly due to the regular fluctuations of the market, make sure you know the pitfalls first.

The bottom line is that you should never invest money that you cannot afford to lose. The best investors are those who prepare themselves for short-term losses in order to try and make long-term gains.

Speak to The Professionals

Seeking investment advice could help to save you money. Whether you are a novice or an experienced investor, investment advisors can offer you expert guidance on making investments that best suit your circumstances. They can also talk you through the risks involved and help you to make calculated decisions to try and help boost your wealth.

John T Hughes writes for Share Dealing Account, a leading online source of information on share dealing accounts in the UK.

You sure hear the “evil speculator” term being thrown around a lot these days. From the sound of it, speculators are the source of all of our troubles. I swear, I’m just waiting for someone to try to round them all up and burn them as witches or something.

But before everyone gets a bit too hasty, maybe we should think about what a speculator is. And maybe we should all take a look at ourselves in the process. Because I think there might be some surprises in store if we do.

Definitions vary, of course, but a speculator is someone who’s main intention is to make a profit in the financial markets by buying low and selling high. They focus more on price.

An investor, on the other hand, probably does some serious research into the value and profits of the company they are investing in. They are trying to make a return on their capital through dividends.

There may be some overlap here, but you get the idea. Speculators want to make money primarily by investment prices going up.

So let’s think about this?

Have you ever bought a stock, and the reason you bought was you were hoping it’s price would go up so you could sell it at a profit?

Hmmmm… you might be a speculator.

Do you have a 401k at work, and you invest in it, hoping the price of the stock(s) goes up? Did you do your due diligence in researching the company(s), their cash flow, earnings, dividends, ability to pay those dividends, etc.?

You didn’t? You just invested hoping the price would go up?

Hmmmm… you just might be a speculator.

Did you invest in some mutual funds hoping the price would go up? Did you do any due diligence – like at least look at the different company stocks in the mutual fund? Anything like that?

You didn’t? You just bought hoping the price would go up?

You are sounding an awful lot like an evil speculator to me.

And if you didn’t even look at the companies in your mutual fund, there is a good chance one of them is an OIL COMPANY.

Which makes you an EVIL OIL SPECULATOR!

And we all know they are the worst kind. After all, they are TOTALLY responsible for the rising gas and oil prices, right? Of course, it has nothing to do with the following, right?

1) supply and demand,
2) the spring season when gas prices always go up
3) the expensive government mandated changeover to summer gasoline blends
4) the government inflating the currency

It’s just the fault of the evil oil speculators.

Hey, about the only good thing you can say about those evil oil speculators is that if they round them all up to burn as witches, well, they ignite rather easily.

Now I’m kidding about that last part, rounding them up and such, but you take my point that the evil speculator thing is being thrown around a bit too loosely, don’t you think? Because most of us are probably speculators to some degree. And I think most of us are not so evil.

Now if you’re truly looking for evil, consider this. Speculators are often confused with market manipulators. And that’s a whole different story.

Market manipulators bend the rules, don’t play fair, often cut special deals to use the force and favors of government, and don’t want to work within the free market system in a fair way.

They take unfair advantage. And to my way of thinking, they truly are evil. Because they can harm or destroy markets. And cause all kinds of price distortions.

So if you really need a boogieman to blame all of our troubles on – I’d vote for the market manipulators for sure.

And I’d leave the speculators out of the picture. Because that picture may be a mirror, and we just might see an image of ourselves staring right back at us.

To your health and prosperity – John

P.S. Note that I said “Speculators want to make money primarily by investment prices going up,” earlier just to keep the idea simple to get the point across. But speculators can also make money betting on the price going down by selling short.

Short selling is when you sell high, then buy low, as opposed to buy low, sell high. You’re doing the same thing really, just in a different sequence. And both are all about price action, which is the point about speculators we were making.

John Roberts is the founder and CEO of Live Learn And Prosper.com, a leading newsletter/website featuring simple tips and explanations for informed living and investment success.

You can learn more about Stock Market For Beginners here… http://www.livelearnandprosper.com/stock_market_for_beginners/.

Investing is always an interesting subject, because just like everybody is interested in making money, the next step is always finding a way to keep that income, and hopefully grow it somehow. With the current economy, the first phase is harder than ever, and simply making enough to live comfortably on can be a big challenge. So when you do manage to get some extra cash, you want the best possible option for investing. In this article, I want to talk about some different options on where to invest in 2012, some tips you can use, and some words of caution.

The investment choices in 2012 haven’t really changed much from the past years. The options you have are still quite similar; it’s just that the risks and rewards have shifted a bit.

Let’s start with the safest options, and move on to more risky ones. Even though the US dollar is said to be sinking by a lot of pundits, it’s still a very good investment. This means vehicles like treasury bonds, or the dollar itself are still deemed as the safer bets. Opening a standard investment savings account at a local bank is pretty much the safest thing you can do, and even if the bank defaults, you’re protected by the federal government. The downside of choosing the safer option is that of course, your potential income will be very low. Interest rates aren’t that great, and you won’t be doubling your money any time soon.

If you want to go with more risky investments, then you can start by looking at mutual funds and the stock market. Over the past few years the stock market has suffered because of the economic downturn. Now however, we’re starting to slowly get out of it, and many experts think it’s a good time to get back in. Of course, that’s no guarantee. To make money trading stocks, you’ll need a lot of knowledge and skills, and unless you’re prepared to risk big, you should probably look into some form of managed funds, something that a good broker or financial adviser can offer you, with limited risks and decent returns. Then there’s also real estate. The past few years have been hard on the property market, thanks to all the debt and foreclosures around the nation. Still, when prices go down, it’s time to buy. I’ve recently watched an episode of Ellen, where a fourteen year old girl bought a house for twelve thousand dollars! She’s now making good returns monthly by renting out her house. If you plan to put real estate into your portfolio, it’s probably a good time for you to get in on the action now.

If you’re feeling more adventurous, then there are other possibilities as well. A lot has been said about commodities lately, especially energy commodities like lithium, and precious metals like silver and gold have seen a huge gain in the past 2 years. Typically when the dollar goes down, commodities like gold, silver and many others start to climb. So you might want to look into these alternative opportunities.

As always, before you decide where to invest, make sure you do your own research or talk to a financial consultant first. Everyone has different goals and expectations, and it’s important that you select the investment vehicle that is right for you. Thanks for reading. Please visit http://www.wheretoinvest101.com for more expert investment tips and advice.

The United Nations does it. Governments do it. Companies do it. Fund managers do it. Millions of ordinary working people – from business owners to factory workers – do it. Housewives do it. Even farmers and children do it.

‘It’ here is investing: the science and art of creating, protecting and enhancing your wealth in the financial markets. This article introduces some of the most important concerns in the world of investment.

Let’s start with your objectives. While clearly the goal is to make more money, there are 3 specific reasons institutions, professionals and retail investors (people like you and me) invest:

For Security, ie for protection against inflation or market crashes
For Income, ie to receive regular income from their investments
For Growth, ie for long-term growth in the value of their investments

Investments are generally structured to focus on one or other of these objectives, and investment professionals (such as fund managers) spend a lot of time balancing these competing objectives. With a little bit of education and time, you can do almost the same thing yourself.

One of the first questions to ask yourself is how much risk you’re comfortable with. To put it more plainly: how much money are you prepared to lose? Your risk tolerance level depends on your personality, experiences, number of dependents, age, level of financial knowledge and several other factors. Investment advisors measure your risk tolerance level so they can classify you by risk profile (eg, ‘Conservative’, ‘Moderate’, ‘Aggressive’) and recommend the appropriate investment portfolio (explained below).

However, understanding your personal risk tolerance level is necessary for you too, especially with something as important as your own money. Your investments should be a source of comfort, not pain. Nobody can guarantee you’ll make a profit; even the most sensible investment decisions can turn against you; there are always ‘good years’ and ‘bad years’. You may lose part or all of your investment so always invest only what you are prepared to lose.

At some point you’ll want to withdraw some or all of your investment funds. When is that point likely to be: in 1 year, 5 years, 10 years or 25 years? Clearly, you’ll want an investment that allows you to withdraw at least part of your funds at this point. Your investment timeframe – short-term, medium-term or long-term – will often determine what kinds of investments you can go for and what kinds of returns to expect.

All investments involve a degree of risk. One of the ‘golden rules’ of investing is that reward is related to risk: the higher the reward you want, the higher the risk you have to take. Different investments can come with very different levels of risk (and associated reward); it’s important that you appreciate the risks associated with any investment you’re planning to make. There’s no such thing as a risk-free investment, and your bank deposits are no exception. Firstly, while Singapore bank deposits are rightly considered very safe, banks in other countries have failed before and continue to fail. More importantly, in 2010 the highest interest rate on Singapore dollar deposits up to $10,000 was 0.375%, while the average inflation rate from Jan-Nov 2010 was 2.66%. You were losing money just by leaving your savings in the bank.

Today, there are many, many types of investments (’asset classes’) available. Some – such as bank deposits, stocks (shares) and unit trusts – you’re already familiar with, but there are several others you should be aware of. Some of the most common ones:

Bank Deposits
Shares
Investment-Linked Product1
Unit Trusts2
ETFs3
Gold4

1 An Investment-Linked Product (ILP) is an insurance plan that combines protection and investment. ILPs main advantage is that they offer life insurance.

2 A Unit Trust is a pool of money professionally managed according to a specific, long-term management objective (eg, a unit trust may invest in well-known companies all over the world to try to provide a balance of high returns and diversification). The main advantage of unit trusts is that you don’t have to pay brokers’ commissions.

3 An ETF or Exchange-Traded Fund comes in many different forms: for example, there are equity ETFs that hold, or track the performance of, a basket of stocks (eg Singapore, emerging economies); commodity ETFs that hold, or track the price of, a single commodity or basket of commodities (eg Silver, metals); and currency ETFs that track a major currency or basket of currencies (eg Euro). ETFs offer two main advantages: they trade like shares (on stock exchanges such as the SGX) and typically come with very low management fees.

The main difference between ETFs and Unit Trusts is that ETFs are publicly-traded assets while Unit Trusts are privately-traded assets, meaning that you can buy and sell them yourself anytime during market hours.

4 ‘Gold’ here refers to gold bullion, certificates of ownership or gold savings accounts. However, note that you can invest in gold in many other ways, including gold ETFs, gold Unit Trusts; and shares in gold mining companies.

With the advent of the Internet and online brokers, there are so many investment alternatives available today that even a beginner investor with $5,000 to invest can find several investment options suited to her objectives, risk profile and timeframe.

Diversification basically means trying to reduce risk by making a variety of investments, ie investing your money in multiple companies, industries and countries (and as your financial knowledge and wealth grows, in different ‘asset classes’ – cash, stocks, ETFs, commodities such as gold and silver, etc). This collection of investments is termed your Investment Portfolio.

Some level of diversification is important because in times of crisis, similar investments tend to behave similarly. Two of the best examples in recent history are the Singapore stock market crashes of late-2008/early-2009, during the US ‘Subprime’ crisis, and 1997, during the ‘Asian Financial Crisis’, when the price of large numbers of stocks plunged. ‘Diversifying’ by investing in different stocks wouldn’t have helped you very much on these occasions.

The concept and power of compounding are best explained by example. Assume we have 3 investments: the first returns 0.25% a year; the second returns 5% a year; and the third returns 10% a year. For each investment, we compare 2 scenarios:

Without compounding, ie the annual interest is taken out of the account.
With compounding, ie the annual interest is left (re-invested) in the account.

Let’s look at the returns over 25 years for all 3 investments, assuming we start off with $10,000 in Year 0:

With 0.25% return a year, your investment will grow to $10,625 after 25 years without compounding; your investment becomes $10,644 after 25 years with compounding.
With 5% return a year, your investment will grow to $22,500 after 25 years without compounding; your investment becomes $33,864 after 25 years with compounding.
With 10% return a year, your investment will grow to $35,000 after 25 years without compounding; your investment becomes $108,347 after 25 years with compounding.

This shows the dramatic effects of both higher returns and compounding: 10% annual returns coupled with 25 years of compounding will return you more than 10 times your initial investment. And 10% returns are by no means unrealistic: educated investors who actively manage their portfolio themselves and practise diversification can achieve even higher returns, even with some losing years.

People of all ages and backgrounds need practical and customised guidance in developing their financial knowledge and skills in order to reach their financial goals. In this article we’ve tried to describe in simple terms some of the most important concepts and principles you need to understand on this journey.

Thomas Saw is the founder of the Traders Round Table ( http://www.tradersroundtable.com.sg ), a community of committed traders and investors. TRT’s mission is to help people be more successful in Creating, Protecting and Enhancing their wealth in the financial markets. We help fellow traders and investors by providing holistic, broad-based financial trading and investment education, mentorship and psychology. Vinay Kumar Rai is a freelance writer and a member of the TRT.

The investment market can be complex to navigate, especially for the novice, and knowing the characteristics and details of any product that you are considering investing in is an important step in building a successful investment portfolio. Structured bonds, which come in a wide variety of guises, can be particularly complicated.

What is a structured Bond?

Sometimes know as structured products, or structured deposits, they can be offered with the potential to generate a regular income or capital growth.

Such bonds are usually put together by the provider to suit the needs of a particular type of investor. This means that finding the right structured bond product for your needs will depend on your individual circumstances.

Different types of product will provide different levels of risk and return. Your investment will usually be linked to a particular index, such as the FTSE 100, depending on the structured bond product that you choose. This means that any return that you receive will depend in large part upon the performance of the index that your bond investment is linked to. The investment objectives of a structured bond product should be clearly stated and made available to the investor at the outset.

Structured bonds are usually taken out for a fixed period of time, this period can vary according to the product that you choose, from a matter of months, usually up to six years. Like other fixed term investment products you may be charged exit penalties if you wish to withdraw you money before the fixed period is over. This means that you should carefully consider the length of commitment that you are able to make, or you could end up losing out.

A plan provider will usually have your investment underwritten by a counter-party such as an investment bank. before embarking on a structured bond investment you should be aware of any compensation that you would be eligible for should the firm that you are invested with, or the counter-party go bust.

Sometimes structured bonds will be sold as “kick out” products. This means that if the index to which your investment is linked reaches a certain level, the products may be “kicked out” early, usually on the following anniversary. However, if this does happen you will usually have already received a certain level of growth on your investment.

Some structured bond products will offer a degree of capital protection, but yield may fluctuate. Investing through a structured product can often be a safer option than investing directly in stocks and shares, but it is important to remember that any risks involved should be carefully considered and you could end up getting back less than you originally invested.

There are many different types of structured bonds available, and negotiating the terms and individual characteristics associated with each product can be difficult without the help of independent investment advice, particularly for the novice investor. Nevertheless, structured products can bring greater diversity to your portfolio, and with the right advice you may be able to find a product that is suited to both your attitude to risk and your desire to generate a desirable level of return for your capital.

John T Hughes writes for Savings Bonds, a site dedicated to helping you to find leading savings or investment bonds options that may be suited to your needs.

Diversification based on your age is often cited as critical yet this is extremely fraught with misconceptions. Diversification is absolutely critical to a good investment plan but it should be based on a number of factors, not just your age.

Age based diversification is just another way of saying, “I think I am going to live a long time” or “I don’t have much time left.” Or it’s like a batter coming up against Nolan Ryan or Greg Maddux with either an “oh well” attitude or an “I can hit this guy” attitude.

Some of the keys to diversification are:

• Term: are your investments for the long-term, short-term, mid-term or a mix?

But don’t confuse these “terms” with how long you will be investing; rather they are terms that describe how long you typically expect to hold a position (stock, ETF or fund). If you are going to trade daily then long-term positions are not very likely. On the other hand if you only want to trade occasionally or monthly then most of your positions will generally be mid-term or long-term.

o How you determine the length of your average holdings will be decided by how much time and how frequently you can manage your investment portfolio, AND what are your goals, your objectives.

• Type: where are you going to place your investment dollars? In other words do you favor stocks or ETFs or mutual funds or perhaps a little of all?

o Stocks can offer the greatest opportunity for gain, for profit because you are investing in on particular company. Investing in stocks also allows you to buy and sell just about any day at any time. However stocks tend to be more susceptible to the ups and downs of the markets and world events.

o Mutual Funds offer diversification by their very nature. Each fund is composed of many individual stocks of the same type or objective, utilities or large corporations, for example. Because a fund contains stock in many companies it is not as dependent on any one company for it success in producing gains or increase value. While funds are less susceptible to major losses they are equally less likely to achieve soaring gains.

o ETFs are kind of a cross-breed between mutual funds and individual stocks. Like funds each ETF (Exchange Traded Fund) contains investments in many similar companies, but unlike a fund there is no active management involving switching stocks. ETFs have become extremely popular in recent years because they don’t have the fees and holding requirements of funds and can be traded at any time like stocks.

• Safety: balancing risk is a key component to diversifying your investments. You can do this by creating different groups you are willing to invest your money into, for example:

o High Dividend paying

o USA companies

o Foreign companies

o Bonds

o ‘Select’ type funds

o Industry sectors

o Asset strength

By investing in six to eight different groups or types of investments it is easy to achieve diversification and still have your portfolio easily manageable. The groups can be all ETFs, for example, or a mix of stocks, ETF and mutual fund groups. If you are using a mix of the three types of investments it is important that each one is unique; in other words don’t have a utility ETF and a utility fund.

With proper diversification you can maintain safety because it is rare that all types of investments will suffer a decline at the same time, and also have the opportunity for substantial gains.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana. View his software at: http://www.dynamicinvestorpro.com

Once you have an investment plan, a solid, proven winner for an investment plan; it is important, if not critical that you stick with it.

A good plan is just like preparing dinner:

• Figure out what you want
o Stocks, ETFs or funds
• Check the ingredients
o Which group of stocks or funds or ETFs
• Do some research for the best recipe
o Method of Analysis
o Back test to find the best strategies
• Prep time
o How much time do you have to develop your strategies
• Cooking time
o How much time and how often to manage your investments
o Minutes or hours a day or a week or even just monthly

Consistency in an investment plan doesn’t mean buy something until someone dies: you or the stock.

Consistency in an investment plan means developing a plan based on a recognized means of analysis like relative strength momentum or alpha with a variety of tested sell signals and perhaps even a signal for when it is time to take a pause and exit the markets entirely.

If you create a plan with half a dozen different groups and for each group you have two or three strategies you will achieve both diversification and a strong degree of safety.

Now you have an investment plan you can stick with. Why? Because:

• It is based on your personality
• It is formed with your time constraints in mind
• It is aimed directly at your own objectives
• It consists of stocks or ETFs or funds that you are willing to consider (yes you can add more groups whenever you want)
• It has strategies back tested for both buying and selling

It is important in creating your groups to settle on not just one but to have two or three trading/selling strategies for each group. Why?

Experience says that instead of going with just one strategy for each group, narrow your back testing down to two or three strategies. Switching from one strategy to another can be advisable because frequently one will perform better than the other depending upon the economic climate.

One strategy may be better in volatile markets while another, for example, may excel in stable markets. Thus by having a few strategies for each group you don’t have to self-guess what is best in today’s market; your strategies will tell you, plain and simple. And when they tell you what to do, it is a lot easier to stick with your plan and not be swayed by your emotions, the news or your neighbor.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana. View his software at: http://www.dynamicinvestorpro.com

Where should you put your investment money? There are three basic choices for growing your money or building your retirement fund: stocks, mutual funds and ETFs.

Your choice depends upon a number of factors based primarily upon your willingness to accept risk, the risk of losing, your time to manage your investments and, of course, your desire for growth, for profits.

How you choose to invest, where to place your money, doesn’t have to be exclusive to just one type or another; you can mix and match. Each of these four basic types has their own pluses and minuses:

• Stocks are the most well-known. Investing in stocks allows you to pick individual companies such as Ford (F) or Apple (APPL). In buying stocks you are banking on the growth and success of the individual company to prosper so that it’s shares increase in value and thus your account grows.
With the ‘right’ pick the potential for major profit is great. On the other hand, the potential for major loss is equally great should the company falter, the economy tanks or world events scare investors.

• Mutual Funds offer some protection from the traumatic roller coaster effects that can occur with individual stocks. Not totally, but somewhat. This is because funds are composed of many stocks based upon the nature or description of the fund. A ‘utility’ fund, for example, will consist of stocks from electric companies, natural gas companies and even telephone companies.

Because each fund is ‘managed’ the manager of the fund will buy and sell individual stocks to produce the best returns for the fund as a whole. And because the fund is invested in many stocks if one company’s stock dives the result is not as severe as it could be because the growth of others tends to balance out the overall value of the fund and in this respect, help to protect your money while still offering growth.

Buying and selling of mutual funds is governed by many more rules than either stocks or ETFs. For example most funds have required minimum holding periods which mean once purchased you cannot sell for 30 or 60 or 90 days, depending upon the fund, without paying a penalty.

• ETFs are similar to mutual funds but are not managed on a daily basis like funds. Because once an ETF is built with the various company stocks it tends to remain with those holdings. In this respect an investor buying ETFs is still diversify his holdings when he buys a ‘utility’ ETF.

An advantage of ETFs over mutual funds is that they trade like stocks. This means you can buy and sell at any time. There are no minimum ‘hold’ times, for example.

In terms of risk and greatest potential profits these three types of investments would rank:
1. Stocks
2. ETFs
3. Mutual Funds

In terms of time requirements, you can invest in any of the three regardless of whether you have lots of time or very little. However, if you have very little time, less than an hour a month, stocks would be more risky unless you are buying strictly for the long term.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana. View his software at: http://www.dynamicinvestorpro.com

So you’ve set up your online share dealing account, and understand all the associated risks and benefits of such a venture. If you’re looking into injecting a bit of added excitement into your online investment portfolio and investing in international equities looks very tempting indeed.

Trading in international equities may look like a glamorous option to leap into feet first, but there are a number of things that you will need to think about before deciding whether investing abroad is the right option for you.

Trading on the international stage, some key considerations.

1) Fluctuations in currency exchange rates may affect the value of returns or the capital value of your investment

2) Investment performance could be impacted by political and overall stability of the country, as well as local markets.

3) Your investment ventures are likely to be subject to the taxation rules of the country you are invested in.

If you think that investing on the international stage may be the right option for you the best place to start is by do some research of your own, in addition to any information provided to you by you online share dealing account provider. Information could prove invaluable especially if you are treading unfamiliar territory.

If you choose an execution only online share dealing account option you will retain sole responsibility for managing your investments. However, if you are unsure about the risks and potential of any investment venture you may want to speak to an independent investment advisor before proceeding.

Investing in international equities could bring the opportunity to invest on any one of up to 16 stock exchanges world-wide- so there is certainly a good scope for diversification potentially reducing overall risk to your investment portfolio. However, you should be aware that there is no guarantee that you will see a return on your investment or that you will get back all of what you put in. As with other investment options it is important that you consider all the risks involved, in order to ensure that your investment choices are well suited to your own circumstances and investment objectives.

Trading on a non-UK stock exchange can be complex for the novice. Nevertheless, trading in international equities does present the chance to diversify and add a little colour to your portfolio. Treated with due care and backed up with a good deal of research you may yet find the exciting opportunity that you were looking for.

About this Author
John T Hughes writes for Share Dealing Account, a leading online source of information on share dealing accounts in the UK.