Investing

Is An Index Fund A Good Investment?

Dec 10th, 2013
by Guest.
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For investors looking to diversify their portfolio, index funds are one of the most popular options. These funds track the performance of a particular market index – which can be as broad as the S&P 500, or as narrow as small-cap biotech companies. The basic advantage of an index fund is it allows investors to put their money into a particular sector, without having the risk of exposure to any one company. They are also relatively uncomplicated – the fund manager automatically adjusts the underlying investment portfolio to track the index, so individual investors can be relatively hands-off.

Is an index fund a good investment

 Another key advantage of an index fund is that the management fees associated with them are extremely low compared to a typical mutual fund. In many cases, the charges are 0.1% or lower, compared to an actively managed fund, where the fund manager can take a cut of 1.5% or even more. However, before you invest in an index fund, it pays to check how much it costs – there are some index funds out there that charge exorbitant fees, despite the fact that next to no effort goes into managing the fund.

Another thing that is important to understand is that index funds are not designed for trading indices – as in day trading. Buying and selling index funds through a brokerage typically involves a high commission – in fact, index funds want investors to hold a long-term position since their goal is to have a stable pot of money invested in the fund. If you do want to trade on a regular basis, then you may be better to invest in exchange-traded funds (ETFs). These behave in many ways like an index fund – but they are actively traded on stock exchanges and usually carry much lower commissions.

Any experienced investor will tell you that diversification is key to making sustainable profits – take a look at Scott Reiman SlideShare data. However, it is a mistake to assume that investing in a single index fund will provide the level of diversification that you need. All an index fund does is give you exposure to a particular market segment – it is no substitute for properly planning your asset allocation. To start with, individual indices in a single geographic market such as the United States perform differently – each one tracks the underlying dynamics of that market sector, be it large-cap firms on the Dow Jones, or small-cap energy stocks. Furthermore, there is typically no geographic component – if part of your strategy is to leverage growth in emerging economies, you’re not going to get this by tracking the S&P 500. Finally, true diversification involves investing in a number of asset classes – stocks, bonds, commodities, and so on. You do not get this level of diversification with a single index fund.

Is an index fund a good investment

 Overall, index funds are a good vehicle for novice investors who want to tap into market growth in a relatively low-risk fashion. They are also well suited for experienced investors who want to pursue a long-term investment strategy – provided that they diversify across funds and into other asset classes.

Getting Started With Asset Allocation: How To Allocate Your Assets?

Dec 7th, 2013
by Prakash Pandey.
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Are you planning to start a new investment? How do you invest your money? What are the best practices to maximize your profits and lower risks? Everyone would like to end up with a huge sum of money. But how do you guarantee good returns for all of your investments?

Asset Allocation is the answer.

As Warren Buffet said, “Do not put all your eggs in one basket.” Asset allocation is the protection, which ensures that you would end up with sufficient money should the investment choices go wrong in a particular sector. The investment market holds a single rule. The greater is the risk, the greater is the return. You need to balance your investments to ensure proper risk protection and handsome return for your savings.

Getting started with asset allocation: How to allocate your assets?

How to allocate your assets?

Top 6 Practices for Asset Allocation

  • Invest according to the time: Financial experts advise higher stock investments for young investors because of their ability to tolerate risks. If you are starting to invest at the age of 25, it is best to benefit from the stock market at an initial stage of your life.
  • Stock market equals risks as well as returns: Investors with a higher tolerance for volatile investments should put their maximum investments in stock market as compared to the investors with lower tolerance in the same age group.
  • Seek professional advice: Personal finances require some degree of knowledge about different financial products. It is best to choose a qualified financial advisor for smart asset allocation.
  • Study your stock and bond funds: Mutual funds offer a smart choice to invest without any expert knowledge of the market. However, it is helpful to find out the investment allocation of the mutual funds you are investing in. For young investors, it is best to choose mutual funds with majority of investments in the growth sector and minimum exposure to the debt funds. This principle applies with the bond investments too.
  • Set up your long-term goals: If you are planning to allocate your assets effectively, it is important to understand your long-term goals. It is not possible to think off all your expenses and requirements after 20 years. The best practice is to set up a financial goal that you would like to fulfill after 20 years or so. Find out the cost of your financial goals and prepare an asset allocation strategy accordingly.

Get started with investments: If you have not considered an asset allocation strategy until now, it is best to do it now. It is never too late to invest money and build an asset allocation strategy for your investments.

How To Allocate A Portfolio At 30

Dec 4th, 2013
by Sharon Rowe.
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If you are wondering how to allocate your portfolio so that you have the correct mix of products is vital. Knowing how it should look when you are in your 30’s is important because it will be different than your portfolio in your 20′s and it will make the move to your 40′s smoother. It is not going to tell you what you should be doing, because that will depend entirely on your own personal circumstances and how you have planned your portfolio. But what this article is aiming for is to give you the information on how to allocate your portfolio for your age. It is an overview of what a portfolio should look like when you are in your 30’s to help you with your money making goals.

 Allocate at 30

Risk

As with any investment you will need to consider the risk that you are placing on your stock and whether that the time is right to increase or decrease the risk that you are prepared to take.

The advice that surrounds age and risk is relatively simple, at the 30 you should be putting 30 percent of your investments in less risky options. These will have obvious pitfalls in that they will not be making the best returns for your money but you need to make the right decisions for you, but you have to consider what you would have to rebuild if you made a substantial loss from your more risky options. You would still need capital and if you protect a portion of this capital in less risky investments then you will have capital if the worse was to happen, this spreads the allocation of your portfolio across different areas.

Less risky options

It is important that you look at the broad spectrum of options that you have available for less risk options.

USA Government Bonds: These bonds are considered low risk options until you realise how close America was in defaulting on some of their bonds in October.

Gilts: These are bonds that are produced in the UK.

Corporate Bonds: These bonds are created by companies and you are looking for those companies that have the highest grading possible.

One way to tell if you are looking for less risky options, the lower the coupon the less the risk, whichever option that you chose for your low risk investments it is a good idea to do your homework first, make sure you know what the payments are going to be and the end date.

Not all bonds are transferable so before you jump into the first great deal that you see it is important that you are fully aware of the full terms of the bond from the issuing company or governing body.

70% remaining

With the remaining 70 % of your portfolio you will need to make some decisions as to the placement of the capital. You need to consider the areas that you would like to invest the money in, and then you need to look at the options available and where you can allocate your investment in that sector.

You might like to invest in the electronic companies or you might prefer the banking section, whatever you pick you need to allocate a percentage of your capital money to that area of investment. Only once you have found a number of different areas that you are going to invest in should you then start to whittle down a list of potential investments.

Options

You will be surprised as to the different options that are open to you and your capital. You might be restricted in certain areas of investment if the percentage of your capital is low but there are ways around this.

It is possible to be able to invest like some of the big companies with relatively low expenditure.

Some of the options that you have available include:

Bonds: There are many different bonds that are available on the market and they can vary in the risk factor. The higher the risk the better returns that you will make on your money.

ETF’s: These cost the same as a normal transaction, so there are no inflated fees. Where there is an index to track you can find ETF’s. The main aim is to track an index, and as there are many different indexes in the investing markets there are a number of different ETF’s too. With the fact that you will own shares in the companies, so will all the other people that have invested in the ETF with you, you will also have some voting rights with the shares that the ETF holds.

Stocks and shares: You can purchase the stocks and shares and you can do this through your broker account, most shares are traded on-line and you will need a place electronically with which to store your purchases.

Mutual Funds: These are run by managers and you will need to pay fees for this type of investment. The manager uses your money along with other people’s to buy a selection of different stocks and shares of different companies. Again you can chose the area and the mutual fund that you would like to invest in. The returns of the funds are available so you can judge the performance of the mutual fund. As you will be purchasing shares in this mutual fund you do have some voting rights on the shares that the mutual fund owns.

Long term

The idea behind keeping a larger proportion of your investments than you did when you are in your 20’s is due to the reduced amount of time that you will have until you reach retirement age. It is important that you are making money and if there is ever a time that you lose some of your capital you will be reassured that you still have an amount that is protected in less risky investing procedures.

The idea of investing is to grow your money over a period of time, the greater the length of time you have the more risky options are open to you. The shorter the time, the more of your money you will need to consider protecting, so that if you lose any money that you will not be completely broke and have no capital to start growing again.

What options are you choosing?

Are Annuities The Right Investment Option For You?

Nov 30th, 2013
by Prakash Pandey.
3 comments

According to Investopedia.com, Annuity is defined as:

“A financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years.”

Annuities are gaining importance as a source of income for retirees. Annuities offer multiple benefits including protection for your saved money, gain returns on your annuities, and receive a regular stream of income from your investment.

Are annuities the right investment option for you?

Are annuities the right investment option for you?

Are you planning to purchase annuities? If yes, it is important to be aware of the major benefits of annuities and right annuities for you. Most of the insurance companies offer flexible annuity schemes for investors.

Two major advantages of annuities:

  1. Tax benefits: Annuities offer a similar tax advantage as that of 401(k) and you do not need to pay taxes until the earnings are withdrawn. However, you might face a tax penalty is the money is withdrawn before 59 ½ years of age.
  2. Beneficiary passing: Every retirement product including 401(k) investments and IRA allow you to elect a beneficiary in the event of death. The same holds true for annuities and you can pass on the money to your beneficiaries easily.

What are the different types of annuities?

  • Fixed Annuities: In a fixed annuity, the investor pays a lump sum amount to the insurance company for a fixed time, and the insurance provider offers a particular rate of interest on your investment. You can get certificate of deposit from your insurance provider.
  • Variable Annuities: Experts often call variable annuities as mutual funds with the benefits of insurance. You can invest in different types of variable annuity funds such as growth funds (stocks), bonds or income funds, and balanced investment options. Variable annuities offer an additional death benefit that the investor would receive. Under this benefit, the investor cannot receive an amount less than the original investment made by the investor.
  • Immediate Annuities: Most of the investors are aware of immediate annuities. Under immediate annuities, you pay a lump sum amount of cash to the insurance company and receive monthly payments in return. You can choose the period of regular monthly payments, which may last for few years and up to your whole life. The monthly payments depend upon the amount you are paying to the insurance company.

Is annuity the right choice for you?

It solely depends upon your financial circumstances and personal choices. There is a significant difference in different types of annuities and it is important to compare them before purchase.

How to compare different annuities?

  • Fixed annuity: Compare surrender fees and rates
  • Variable annuity: Compare surrender fees and performance
  • Immediate annuity: Compare monthly income and flexibility

Choosing annuity is a difficult task and you should back your choices with proper research. It is best to avoid commission-based services because they often tend to push customers towards more profitable policies (Profitable for the Brokers!).

International Business Heat Map

Nov 24th, 2013
by Sharon Rowe.
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International Business Heatmap

International Business Heatmap

   http://www.internationalbusinessguide.org/heat-map/

7 Ways to Gain Regular Profit with Dividend Stocks

Nov 23rd, 2013
by Prakash Pandey.
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Stock market investing is full of unpredictable vicissitudes. Have you ever felt that excitement after a sudden rise or the anxiety after a sudden fall? What type of investor are you?

7 Ways to Gain Regular Profit with Dividend Stocks

Gain Maximum Profits with Dividend Stocks

Image Credit: moneycontrol.com

Do you enjoy the rollercoaster experience of short-term investment or settle down for the long haul? If you are long-term investor, stock price fluctuations will not affect your investment. Dividend stocks are directed towards long-term capital appreciation. If you invest in dividend stocks, it is time to get maximum benefits out of your investment.

How to gain regular profits with your Dividend stock investments?

  • Highest yields are not always the best: Most of the experienced fund managers prefer dividend stocks with future growth. Their focus is to invest in stocks with better growth potential such as technology, material, and energy funds. These stocks receive higher valuation as compared to high yielding stocks such as real estate investment funds and utilities.
  • Steady dividend growth is the key to capital appreciation: The best strategy for long-term capital appreciation is to invest in stocks with steady growth in dividend streams. Investors can gain handsome profits depending upon their initial purchase price of the stock. You should invest in such stocks for at least 10 years to receive significant benefits.
  • Keep an eye on rising rates: Every dividend stock investor should keep an eye over the rising interest rates. Dividend paying stocks require higher yields to remain competitive with the climbing bond yields. An increase in interest rate can even affect defensive sectors such as telecommunications and utilities.
  • Non-traditional stocks can offer excellent profits: The technology sector has emerged as one of the best payout stocks in the market. Leading tech giants including Intel, IBM, Microsoft, and Apple have been offering excellent dividends to their investors. With the end of the financial crisis, you can even consider stocks of financial institutions and banks for better return.
  • Dividend rebuilders are good for long-term investments: A lot of companies suffered major losses during the economic slowdown. Investing with companies that are rebuilding their payouts is an excellent strategy for long-term gains. One of the major rebuilding sectors includes the financial stocks, which are boosting their payouts at an impressive rate.
  • Choose overseas stocks from emerging markets: Emerging markets offer excellent dividends on various stocks as compared to their US counterparts. You might have to pay a dividend tax of up to 20 percent depending upon the taxes imposed on U.S. investors. Use a taxable account to recover the money paid in taxes under foreign tax credits.

Pay attention towards dividend fund strategies: It is important to study the investment strategy of your fund. Dividend-focused mutual funds use different strategies where some fund managers eye for high yield and others look for strong future growth in dividends. Choose fund that focuses on companies with a consecutive increase in the dividend payouts.

Understanding Binary Options Trading Is Now Easy

Nov 21st, 2013
by Guest.
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Binary options trading is growing more popular as more people come to understand what it is and how it simplifies options trading as a whole. It is often considered the most accessible form of option trading. Binary options trading was largely underutilized prior to 2008, when more websites began offering simplified binary options trading interfaces. Until that time, it was largely perceived as an exotic, situational measure. Thanks to these websites, however, it has come into vogue as an option for individuals that would otherwise never consider trading of any form, and more literature is becoming available for them day by day.

What is binary options trading?

Binary options trading is a version of option trading. Specifically, binary options trading creates a situation in which there will be a predetermined payoff for a particular market condition, or not. For instance, one of these common variations is “cash or nothing”. With a “cash or nothing” option, the option is purchased, and if it expires while still in the money, the owner receives the appropriate payout. With an “asset or nothing” option, the owner receives a security instead of a traditional payout. In any case, binary options trading always reduces the outcome to one of two states: it is ‘binary’.

Binary options have garnered popularity because they are somewhat easier to grasp and understand. There are only ever two possible outcomes. This means the risk is much easier to assess. It isn’t a matter of how much can be gained or lost, but what will be gained or lost related to a particular pre-defined condition.

How do I trade binary options?

Trading binary options is a matter of speculating whether a market will be higher or lower at the end of an expiry period. The basics are as follows.

One type of option is a “call” option. A call option allows one to buy something at a particular price. A “put” option allows one to sell something at a particular price. The price is pre-determined and fixed. Thus, if one owns a call option to buy something at a certain price, and the price for that item goes up, the owner of the call option can immediately profit. The reverse is true for put options. If one has a put option on something they own, and the price drops, they can still sell it at the initial price.

In the context of binary trading, the only difference is which way one looks for the market to go. If you are binary trading with a “put” option, you are hoping for the market to go up. If you are trading with a “call” option, you are hoping for the market to go down. This must occur sometime before the expiry date. The entirety of the purchase revolves around this.

Most primary brokers will provide advice about this process, as well. While it is possible for one to do their own signal research and “wing it” with purely self-driven education, a reliable broker will advise their client about how to learn the basics of binary options trading. Always look for a broker willing to educate.

How do I find a trustworthy broker?

Trustworthy brokers can be researched online. The most important elements to look for in a broker are their history and reputation. Untested brokers may or may not be reliable. Brokers that deserve bad reputations almost always earn them. Regulated brokers are those that adhere to certain industry standards, and you will want to pursue their services preferentially.
Conclusion

Binary options trading is by no means easy or risk-free. However, because the overall process is far less complex, it provides a lower barrier to entry while still having sufficient depth to reward a skilled trader. This makes it an ideal investment platform for individuals outside the financial industry.

What Is An ETF?

Nov 20th, 2013
by Sharon Rowe.
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If you have heard of this term and are unsure what it means in the investing world then you might be missing out on a great product and a great way to build a great portfolio. The term stands for Exchange Traded Fund; it is a group of assets that track an index and is similar to an index fund in that way but it is traded like a stocks and shares on the financial markets.

 CapitalVia Global Research Limited : 1st August Share Market Morning Updates

The prices of these items can change throughout the day as they are bought and sold in relatively quick time. If you owned index fund you would be able to know the net asset value daily but this is not the case with the exchange traded fund.

Buying and selling

What you will be buying if you opt for an ETF is a great mixture and this allows you to have the best parts of an index fund and trading on stocks and shares mixed into one fantastic little product. You also have the ability to short sell, this is selling of stocks or shares that you don’t actually own.

With the ETF’s you are able to purchase what you want and are not restricted in any way in having to purchase large amounts, the other benefit that you will notice with the ETF’s is the price, they are cheaper to purchase than a mutual fund and this can mean that you are able to buy more of the item for your money than you would have if you were looking at the mutual fund option. The price to buy and sell this item is the same as what you would pay if you were looking to purchase or sell a normal stock option.

Spider

One of the most well-known ETF is called the spider this one tracks the S & P 500 Index. The trade symbol is ‘spy’. This was one of the largest ETF’s in the world and it trade on the New York stock exchange.

What was first started in 1993 have now grown and developed into a very successful option that you should seriously consider. Each ETF”s  have their own unique trading symbol and the cost of each unit is reflected in the tracking of the index that it is following.

The concept behind the ETF is they have a fixed number of shares in the index that they are following, because they have shares in the companies it does mean that there are some voting rights but there will be different rules and regulations depending on the ETF that you purchase.

Portfolio

Having a balanced portfolio is important and this needs to be planned and managed to form the correct balance that meets your needs and represents the risk that you are comfortable with taking on the stock market.

There are some great benefits that you can get if you use ETF’s to build your portfolio.

  • The fees are lower than what you would need to pay if you were looking at purchasing a mutual fund. You pay the basic price of a transaction to purchase an ETF.
  • These are more easily bought and sold to create easy access to your funds and to make money in the short term if you are looking for something to fill a short term gap.
  • The combinations that you are able to purchase give your portfolio a unique touch and these combinations can be from an actively managed fund or a passively managed fund giving even more options.
  • You are investing directly into the spider and this gives greater flexibility and increases the chances of growing money.
  • It is a great way to limit cash on your portfolio; it means that if you have spare funds you have the ability to invest in a product that can be short term as well as a long term option.

This is a competitive market and with the ETF’s being so clear it can become difficult for other companies to make commission on the sale of these. This is why you tend not to have them recommended by some of the investors that are trying to make the most commission. The ETF’s are there for the investors and not the managers, they are a great tool that you can use in a variety of different ways.

Purchasing

It is possible to purchase these as you would by normal stock and to keep the costs down even more it is great to find the best deals possible, look out for the discount brokers; they don’t offer any advice they are there to secure your deal for you. Look for the investments that have minimal fees, this will allow you to invest more money in the stock rather than paying fees.

It gives the individual investor the opportunity to purchase items in the markets that are normally only available to the larger institutions.

Passive and active trading

These terms are used quite frequently and many new investors might feel that they are missing important factors if they are unable to get the correct information.

Passive trading is purchasing of an ETF and then holding on to that investment for a period of time. This type of purchasing is acceptable, and you should not feel pressured into the faster paced trading that is called active trading.

Active trading is more for the fast paced individuals that want to see how things are moving during the day and are able to buy and sell to try and make the most gains. With this style of trading you need to be covering the cost of the trades with the purchasing and subsequent selling of the ETF’s. This will increase the amount of money that you will need to be making but it is possible to win at this market.

But before you take the plunge make sure that you truly understand the area that you are looking into, do your homework first.

What ETF’s have you chosen?

The Golden Touch

Nov 17th, 2013
by Sharon Rowe.
2 comments

How to make $1000 everyday with Penny Stocks?

Nov 16th, 2013
by Prakash Pandey.
3 comments

According to Investopedia.com, Penny stock is:

“A stock that trades at a relatively low price and market capitalization, usually outside of the major market exchanges. These types of stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization and limited following and disclosure. They will often trade over the counter through the OTCBB and pink sheets.”

How to make $1000 everyday with Penny Stocks?

How to make $1000 everyday with Penny Stocks?

In general, any stock that trades under $5.00 falls under the category of penny stocks. Penny stocks are interesting to deal with and offer profitable opportunities. Many investors wish to invest in today’s biggest stocks when they could have purchased them for pennies. It has become extremely difficult to invest in leading companies such as Google ($1,000 +) because of the high share price. As a result, small investors are left with limited choices for investing their money.

Penny stocks offer a ray of hope to make a considerable profit out of their investment. Most of the new companies offer their shares at less than a dollar amount and these stocks are traded as penny stocks. Small investors can get started with these stocks with a considerably smaller amount. These stocks are traded over-the-counter and are comparatively lower risk investments.  SEC and similar US authorities monitor these transactions.

Why invest in penny stocks?

  • Penny stocks do not cost much: You can buy thousands of penny stock shares against one share of a leading company. Let us consider a technology company with an initial opening price of 10 cents. You can purchase 5,000 stocks for $500 and if the stock price rises up to $1.00, your investment would turn profitable by $5,000.
  • Quick Returns: With the help of proper research, you can trace out stocks that are about to burst high. Some recent examples have shown the prices to get double within 24 hours as compared to the stocks in NYSE.
  • Penny stocks are easy to buy: The trading procedure is somewhat similar to the regular stock market and you can buy/sell penny stocks online. You can use the services of a traditional broker or start your online account for the same.

How to prepare a penny stock investment strategy?

The idea is to look for new companies with a potential of growth in the upcoming months. You should consider some important factors before investing in any particular industry. Some of these factors are:

  • Select a company with strong company management: Penny stocks are traded for such a price because of the financial hardships of the company or because of the young age of the firm. It is best to choose a young company with a proven professional record in the industry.
  • Check product and service demand: It is best to choose companies whose products/services are in demand. A company with popular products is likely to make more profits in future.
  • Get to know the company: Share prices are always affected by important announcements and company news. If you are planning to make a quick profit, it is important to be aware of the latest action within the company.

Monitor the sector: Penny stocks are a part of a particular industry. It is important to monitor the trends of the industry and identify sectors with potential growth.

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