Investment Articles

Knowing how to invest is more important today than ever before. With Social Security and company pensions questionable at best, Americans need to learn to invest for their own future financial security. Here are some pointers and major mistakes to avoid if you don’t feel real comfortable as an investor.

Learning how to invest is really not much different than learning how to play any other game. First, you need a general understanding of the objective and the rules. Second, focus on the basic aspects of the game. Then, concentrate on avoiding major mistakes while you hone your skills and develope a winning strategy.

Your objective as an investor should be to earn higher than average investment returns over the long term with only a moderate level of risk. To do this you will need to manage a diversified investment portfolio that includes safe investments, bonds, and equities (stocks). It’s a major mistake to keep all of your money in the bank at low interest rates because at that rate of return you won’t stay ahead of inflation after paying income taxes. Totally trusting a financial planner or going it alone without any investment help can also be expensive mistakes for the average investor.

So, the question is how to invest with a diversified portfolio and investment help you can afford and trust. The answer is to invest in mutual funds: money market funds for safety and interest, bond funds to earn higher interest income, and equity or stock funds for higher potential returns and long term growth. Mutual funds are designed for folks with little more than a grasp of investment basics. They select the individual investment securities for their investors as a group and professionally manage a portfolio based on the fund’s stated financial objectives.

By investing across the board in all three basic mutual fund types you can achieve balance while keeping risk at a moderate level. For example, losses in stock funds can be offset in part by the relative safety and interest income from money market and bond funds. As a general rule of thumb, all but the oldest of investors need some money in stocks to boost profits and stay ahead of inflation and taxes. How much of your total portfolio you allocate to stock funds vs. money market and bond funds will depend on your age and risk tolerance.

If you’re not real comfortable with how to invest but know that you need to anyway, start investing in mutual funds. If you invest equal amounts in all three of the basic fund types you can get started with only a moderate level of risk while avoiding major costly mistakes. Then take your game and investment strategy to a higher level by doing some homework with the assistance of a good investing guide.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

Determining how to invest your money is an important decision. You need to consider how much money you have available to invest, how involved you want to be in managing the investment on a daily basis, what risk level you can take, and the time period or average term of your investment.

Long-Term Solution: Common Stocks

For long-term investments, the stock market has proven to give the best return. Share prices should theoretically reflect the fair market value, so as long as you have the capital available to put together a large enough portfolio, you should see a steady growth in your net worth over time. Share value will increase as the company grows, which in the case of well-established companies, is generally fast enough to keep up with or beat inflation. The biggest problem people have with investing money this way is that they carry too much risk by holding shares in only a few companies. If any one of these businesses goes under or even just has a bad year, your capital is going to take a big hit.

Low-Risk Investing: Mutual Funds

To lower this risk, even if you don’t have $100,000 earmarked for investing, you can buy into a mutual fund. In this manner, the capital of 1000s of investors is pooled together and managed in the stock market by business professionals. Here you get the benefit of diversified investment without the need for a large start-up fund. The downside to mutual funds is that they are managed as a business, and some of the profit is skimmed off the top to pay salaries, overhead, and brokerage fees. It is important that you read the fine print before investing in a mutual fund so that you understand just how much these costs will eat into your profit. You may find that your bank or credit union offers an index fund, which is similar to a mutual fund, but structured so that more of the profit is directed to the investors rather than the management team.

Alternatives to Investing in the Stock Market

1. Bonds

Bonds are a more predictable investing alternative to the stock market. When you buy a bond, you are essentially loaning the issuer money, which they agree to pay back at a fixed interest rate. Most bonds are backed by the government, and are a reliable way to invest money that you don’t need access to for 5 or more years. Note that government-issued bonds may continue to accrue interest even after reaching maturity, so depending on the interest rates being offered by banks and other lenders, you may choose to hold on to the bonds even longer.

2. Precious Metals

If you lack confidence in the dollar or other global currency, you may consider investing in precious metals like gold, silver, and platinum. The value of these metals is not as susceptible to inflation as paper money, so you can enjoy some piece of mind when you have metal saved away. All you have to do to start investing is go to a dealer to buy bullion that you keep locked up at home or in a safety deposit box. You can monitor the price of gold or other metals just as you would stocks, and then return to the dealer to sell your holdings as desired.

For information about finding and comparing the best online Stock Brokers, visit http://www.yourbrokerguide.com.

If you’ve been bitten by the coin bug you will no doubt understand the title question and in some cases be truly asking yourself, “Am I a coin collector or investor – or do I have a bit of both flowing through my veins?” Well I write at risk of adding to the confusion, but feel compelled to answer the question…

Is it simply a case of collectors amassing a general theme of coins (that they enjoy for whatever reason) to “pass on” to the Grandkids and Investors simply buying for future profit? I think not. OK, say you are looking for a diversified Investment away from the usual stock market or gold buys. If you are astute you may well have seen how the coin and banknote market has done very well over recent years and continues to show strong growth. You research quality dealers, receive their pitch and decide upon a coin / set that will appreciate further. You lock it away and throw away the key until it comes time to sell – sometime before you die! The coin may as well be a Da Vinci Painting for all you care because you’re not into paintings either! That is Coin Investment.

Sway slightly away from the above model and you become tainted with the title of “Collector”. Take the Investor’s example above, same scenario except you either take an interest in the origins of the coin or you get a peek at it and are instantly taken by the notion that something so insignificantly beautiful or rare is in your possession. You want to learn more or heaven forbid make a purchase along the same theme – your investment has just become a collection!

Then there’s the proletariat masses of coin collectors who should not be taken lightly. They can quickly take a recently released coin and give it eternal fame or suffering! These people adore a Penny regardless of it’s rarity or condition. They are the have to haves of the coin world. I just have to have every penny from the war years or every space themed release from around the globe. They often purchase up and over investment prices with a view to never letting go. I give you the Life-long Collectors! Their Grandkids may well become the recipients of an eccentric fortune.

Very interesting is the relationship between the two. Collectors drive the profit for Investors. Collectors give a coin fame, Investors swoop in as agents ready to sign them up. Which one are you?

Learn more at http://www.dollarmule.com.au

A safe investment can be defined as an investment that yields good returns in a low risk. Almost everyone invests money to secure themselves financially through investments such as real estate property, stocks and bonds.

Before you invest your money, you must understand thoroughly the intricacies of making an investment. Here are the three main factors that determine the difference between a safe and an un-safe investment:

Diversified portfolio: A diversified portfolio is at lesser risk than an un-diversified one, because your investments are spread out. So, even if one market is not doing well, your other investment may still make you money. A diversified investment portfolio works by acting as a shock absorber when the market falls. You must not keep all your eggs in one basket if you want to invest safely your money.

Risk: The amount of risk you take while making an investment is dubbed as your risk appetite. It is said that higher the risk, greater are your chances of getting a higher return.

Time span: This refers to the duration of time for which you make an investment. The safety of your investment is dependent upon several variables such as fluctuation of the market, liabilities and more. You must keep in mind your personal needs for making the investment. You can have a short, medium or long-term investment depending on the above-mentioned factors.

Most investors use below given formula to calculate how to make a safe investment:

100 – Age of the investor

For instance, if the age of the investor is 40, he should invest 60% (100-40) of his total investment amount in equities and the rest 40% in government securities.

All investment options carry certain inherent risk factors. Thus, a study of all investment options is crucial to safely invest your hard earned money.

Financial tools

Deposits: Deposits are a safe investment option, but they offer very small returns. Deposits include government bonds and fixed deposits.

Mutual Growth: In a mutual fund, professional people manage your money. The risk is low as your investment is diversified.

Bonds: Buying a bond is similar to lending money to an organization. You earn interest on that amount.

Equities: An equity is a long-term safe investment option that offers considerably higher returns than other safe investment options.

Non-financial tools

Gold: When the stock markets go down, the price of gold goes up.

Real Estate: The real estate market is a profitable, but unpredictable investment option.

You can also consult an analyst or a wealth manager to help you make a safe investment. Thus, weighing all the pros and cons of investing in specific sector.

There are many more aspects on building a safe investment, and managing it throughout market fluctuations and differing scenarios, both global and personal (aging, marital status, number of kids), and for that you will need to spend some additional time in educating yourself and making sure you take the right decisions.

http://safe-investment.info – The Safe Investment Experts

During these trying financial times most people are re-evaluating how and where they decide to invest their money. However, for many it is too late as they have already lost years and years of gains on their investments. The advisors that will make it through this mess unscathed are the ones that will learn to adapt to the current conditions and understand that their clients are sick and tired of losing money.

Many advisors are still spouting buzz words like asset allocation and diversification, while trying to make you feel all warm and cozy about putting your money at risk. Understand that diversifying your investments it not at all a bad idea, one just needs to understand that diversification doesn’t always equal great returns.

Think about this: you’ve got all your extra cashflow in your diversified investments that is giving you a pretty decent 7% return. What you don’t think about is the car payment (3% of which is interest), the 10% interest on your credit card payment. So, in reality, your 7% gain is cancelled out by the interest you are paying to other people.

Now imagine if you eliminated your debt and could pay the interest on your car payment to yourself. All the sudden you’ve gone from putting your money at risk and hoping for a decent 7% return to being on the risk free road to creating more wealth than you ever could with mutual funds or diversified stock portfolios.

A shift in the market requires a shift in thinking. How many people do you know that were planning on retiring this year but have to go back to work because their retirement funds suffered huge losses? Why worry about postponing retirement, when you can do what the wealthy have been doing for years…become your own bank!

Nick Drzayich
Eagle Capital Management
http://www.eaglecapitalmanagement.com
208-484-3120

Wealth can mean different things for many people, and the word can be applied in many contexts. For an investor, wealth becomes an objective – a primary financial goal. To accumulate capital in their portfolio and to invest and grow the amount of expendable income, becomes a priority when managing investments. The measure of someone’s wealth extends to the total assets owned and can include real estate, funds, liquid assets, as well as other forms of investments.

How a person measures or calculates their wealth is important, and a method should be developed. It will directly affect their approach to investing, and the financial strategies used. How a person manages risk when investing is also an important factor, even more so than the returns.

There are many strategies to manage risk. Risk will be different for every investor, as will the amount of risk that an investor will be able to tolerate. For an aggressive investor, the willingness to accept high risk is different from a very conservative investor.

Individual risk is related to an investor’s personal wealth – the amount of money that he or she can afford to lose and for how long. It is also related to how much that particular investor needs to earn and within what time frame.

Managing individual risk depends on how much money can be invested, at a comfortable pace for the investor. It also takes into consideration how much time the investor has, for example as in the case of retirement. Factors such as the number of years until retirement and the rate at which the investment grows, will determine the type of investment and risk taken.

Market risk is another factor to consider when managing risk. This is the typical risk associated within a specific market. For examples, stocks dive and real state bubbles. The ability of an investor to survive these conditions in the market, should determine how they approach it with their portfolio – if they enter it at all.

Money should be invested in a variety of areas to assist in avoiding losses. To manage market risk, investors should consider staying within markets that they are familiar with. Investors who understand risk, the markets, and their expectations in time, are able to develop a well diversified investment portfolio.

Risk can be managed by building a cushion to minimize it, or by ignoring it. The most valuable way you can manage your investment risk is by educating yourself on what you are intending to become involved in. Knowledge is power, and power is money.

Looking for more risk management strategies and tips? Visit us at Global Mutual Funds – Australia’s pre-eminent provider of global investment product alternatives and solutions. Find out what you need to know about equities, options trading, and how exchange traded funds can help build your long term wealth.

With all of the investment opportunities that exist in the world today, it can sometimes be difficult to choose which specific ones you want to invest your money into. It seems like all too often that the “hot stocks” of the day end up becoming little more than a flash in the pan, and the stocks that no one really wants to invest in end up growing suddenly in value while people lament that they should have invested in it while they had the chance. If you’ve ever found yourself wondering how you can sort through these seemingly random fluctuations in order to find the best stocks for your investments, then this article is for you.

Below you’ll find ideas on how you can do a little research and hopefully turn that little bit of research into a large profit from the stock investments that you find.

Find Investments that You Trust

One of the best ways to choose the right stock is to do your research and find out as much as you can about the brands that you trust. Many trusted companies that have been in business for years tend to have fairly secure stock shares, and investments in these companies usually provide added security and stability to a well-maintained and diversified investment portfolio.

While it’s important to keep periodic watch over your investments so that some of your more trusted stocks don’t suddenly drop in value, many trusted companies and international retailers find their stock to have a much lower maintenance level than up-and-coming companies who may be affected by unexpected scandals or financial problems.

Search for Recent News

Another good way to find investments that are timely and likely to be profitable is to take the time to read over news stories that might influence the value of the stocks of the company involved. By staying up-to-date on the news and how it relates to major companies that you might be considering investing your money into, you can learn to anticipate increases and decreases in the value of the shares of those companies’ stocks. This can become especially useful if you learn about major scandals early on and are able to sell off shares before their price drops, or if you hear about new advancements that certain companies are making and are able to purchase shares before the price begins to skyrocket.

Keep an Eye Out for New Technologies

Just as you should watch the news for major events that can influence stock prices, you should also keep an eye on news from the technology sector and fields such as biochemistry and health care. New advancements in any of these fields can cause stock prices for the companies that made the advancements to start to climb quickly. By learning about new technologies before they become well known you can potentially get the jump on some rather important investment opportunities. Not every new technology will mean a major increase in stock value, but for every one that does there is a good chance on making serious profits from your initial investments.

Invest for the Long Term

In most cases, it’s also important to try and learn from your research whether or not an investment will do well as a long-term investment. While some short-term investments can be fine (and can net large profits if you choose the right times to buy and sell), long-term investments can add security and stability to your financial plans that short-term investments can’t.

Paul Parker writes finance and loan articles for the UK Loans Only website at http://www.ukloansonly.co.uk

When you buy a bond, you are actually loaning your money to the organization that issued the bond. That is why bonds are often called “debt instruments.” The principal (the “face value” of the bond) is repaid on the maturity date. In the meantime, you are paid a set amount of interest, usually every six months. This interest is called the “coupon” or “coupon rate.” It’s called that because bonds used to come with little coupons attached that you would cut off and send in twice a year to receive the interest payment. Nowadays, the coupon rate is nothing more than the annual interest rate.

When deciding which types of bonds to invest in, it’s important to know all you can about each. Among the types of bonds you can choose from are:

Treasury Bonds

Treasury bonds, also known as “T-bonds” for short, are issued by the United States government and are considered to be the safest of the three bonds. The only risk is if they are sold prior to maturity (but this holds true for all bonds). Super-safety comes at a cost, though, and in the case of treasury bonds that means lower returns than other bonds.

Interest is paid on treasury bonds twice a year, and can be purchased in maturities ranging up to 30 years. All T-bonds bonds are issued in face values of $1,000 with different purchase minimums with each type of security. It is impossible to redeem a treasury bond before maturity, and interest payments stop as soon as the bonds mature.

Corporate

Corporate bonds are issued by companies in order to raise capital. While they can be very safe investments when issued by strong, established companies, the reverse is true for companies that are not rock solid. Unlike treasury bonds, corporate bonds have what is known as a “call provision”, which allows the bond holder to get their principle investment back before maturity.

Most corporate bonds have fixed interest rates, and some, called “zero coupons” are sold at a significant discount in exchange for the bondholder agreeing to wait until maturity to receive interest payments.

Because determining which companies are strong and which aren’t can be very tricky, there are companies who evaluate the fiscal integrity of various corporations to determine their bond-worthiness. Moody’s Investors Services and Standard and Poor are two examples of such rating companies.

Municipal

Municipal bonds are issued by state, county, or city governments for the purpose of financing government sponsored functions (I.E., building a highway or a school), or for other “non governmental” purposes, such as raising money for low income housing or student loans.

Municipal bonds, like T-bonds, pay interest twice a year. These investments can be very safe, but do carry risks as well. Moody’s and Standard & Poor rate municipal bonds based on their credit quality, so when investing in them, it’s a very good idea to use these ratings as a guideline.

Municipal bonds are subject to significant market risk if sold before maturity.

Maintaining a Diversified Portfolio

Many personal financial advisors recommend that investors maintain a diversified investment portfolio consisting of bonds, stocks and cash in varying percentages, depending upon individual circumstances and objectives. Because bonds typically have a predictable stream of payments and repayment of principal, many people invest in them to preserve and increase their capital or to receive dependable interest income. Whatever the purpose-saving for your children’s college education or a new home, increasing retirement income or any of a number of other financial goals-investing in bonds can help you achieve your objectives.

Assessing Risk

All investments offer a balance between risk and potential return. The risk is the chance that you will lose some or all the money you invest. The return is the money you stand to make on the investment.

The balance between risk and return varies by the type of investment, the entity that issues it, the state of the economy and the cycle of the securities markets. As a general rule, to earn the higher returns, you have to take greater risk. Conversely, the least risky investments also have the lowest returns.

The bond market is no exception to this rule. Bonds in general are considered less risky than stocks for several reasons:

• Bonds carry the promise of their issuer to return the face value of the security to the holder at maturity; stocks have no such promise from their issuer.
• Most bonds pay investors a fixed rate of interest income that is also backed by a promise from the issuer. Stocks sometimes pay dividends, but their issuer has no obligation to make these payments to shareholders.
• Historically the bond market has been less vulnerable to price swings or volatility than the stock market.

The average returns from bond investments have also been historically lower, if more stable, than average stock market returns.

Investor Public Relations
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