Tag Archives: Stock Market

3 Reasons to Become an Unusual Investor

When we think about investments the usual suspects pop into our minds. We think of the stock market. We think of bank accounts of all kinds, not to mention any tax free options we can get our hands on.

We probably don’t think about wine, art and rare coins. And yet all these items can net you a tidy profit – if you know what you’re looking for and you are prepared to go look for it.

If you need some inspiration, here are three reasons why you might want to consider becoming an unusual investor.

1: it opens up plenty more investment opportunities

If you stick to financial investments such as stocks and bonds you’ll be limited to those specific areas. Once you open your mind to the idea of investing in other areas you will also open up the possibility of reaping rewards in these different areas.

Not all investment opportunities will suit everyone, but it is definitely worth looking into. If you have a passion for fine wine, why not invest in a few rarer bottles to benefit from in a financial sense?

2: if you invest in objects you can do so as a hobby

Few people will see investing as a hobby. However, when you start looking into unusual and quirky investments they can become just that. This is why it is usually better to pick an area you have some interest in. If you love a particular type of art, look for the possibilities to make money in that area. If you love wine, figure out how to start investing in older bottles. If you have a passion for rare coinage, start looking for sources of old coins that could make you a nice profit in years to come.

3: there is the potential to make huge gains on your investments

We’ve all heard of the people who spend a couple dollars on an unwanted picture at a sale, only to find later that it’s worth a couple million instead. These stories aren’t uncommon but they shouldn’t be viewed as par for the course either.

However there is still the possibility to make impressive gains on any unusual investment you make, whatever area it’s in. Knowledge is power here and the more you know and understand about your choice of investments the easier it will be to search for and find the items you want to invest in.

Clearly these types of investments are not your typical investments. You won’t get them from a bank. You’ve got to put in the legwork to find items to invest in and to research the particular items that are worth buying. For example many people buy brand new toys in pristine boxes and put them away with the hope they will appreciate in value in years to come. With knowledge and experience you stand a better chance of getting it right and reaping the rewards from your unusual investments. It’s certainly worth a try, don’t you think?

Starting From Zero: Investing for Newbies

If you’ve just left school or university, and you’re about to embark on your first full time position, congratulations are in order. This is a big time in your life – not just in terms of your career but in terms of your finances too. If you’ve attended college or university already you may have some student debts to pay off in the future, which makes it all the more important to focus on moving ahead with strong financial habits that will support you in the future.

Managing a larger income for the first time

Your first full time job won’t net you a huge income, but it is likely to be a lot more than you have ever received in the past. This opens the door to temptation, and the desire to spend it all as fast as you receive it. Don’t do this if you can help it.

Instead, take the time to sit down and focus on all the plans and goals you have for the future. Even if you have nothing in particular in mind at this stage, it still makes sense to start some good savings habits right from the start.

For example, make sure you figure out your outgoings each month and subtract them from the money you’ll earn. Even if all you do is get the best instant access savings account on the market today and put your money in there, you’ll be allowing it to build up while you decide what else you can do with it.

Is it too early to invest for your retirement?

It’s never too early for that. You don’t have to make it your first priority but it should be near the top of your list of financial things to do. The more you save and the earlier you do it, the more financially sound your retirement will be.

Take your time to make the decisions that will affect your future

You may start finding out more about the stock market and other investment opportunities that will come up. There is no need to focus on getting involved in these to begin with if it doesn’t suit you. Perhaps the most important thing at this stage is to learn more about various investments so you can figure out which ones will suit you best. No two people ever live the exact same lives, so you don’t need to follow the lives lived by others in order to find the results you want.

Whatever your initial monthly earnings are from your full time job, they will seem huge. However you will have deductions from your gross income before you get to see any of it, so you’ll have less to spend and invest anyway. This is one of the reasons why it makes sense to get things right from the very beginning. Learn about investing and saving now and you’ll be glad you took the time to do so. It will repay you long into the future.

Investing Isn’t What It Used to Be

The Internet is certainly a disruptive force – it has change the way we communicate, it has change the way we do business, and guess what – it has changed the way we invest. A lot of people focus on the fact that we’re more connected than ever, that it’s easier than ever to listen and find music, books and movies but the truth is, the business world probably had the most to gain from this particular technology.

The buying and selling of products has reached a whole new level, and all sorts of methods that have made communication easier raised the stakes for local businesses to change the way they think about investments. “I believe in capitalism” said Ken Fisher, Fisher Investments, and with the Internet era, the investment world has seen the best of capitalism.

One interesting fact, an interview from 1992 in Money Magazine was focusing on how brokers were able to gain as much as %2.5 for each trade they did. That was an incredible gain, especially if we’re discussing about large shares. Trading itself is partially what it used to be – meaning that essentially it involves the same series of actions, but then again, the Internet managed to change the edge on that as well.

For example, trade information can easily be sent over secured internet connections. And then we touch the subject of high-frequency traders which in time, has gained a lot of controversy by bringing a feeling of instability to the stock market. By making the stock market more volatile, investing and trading has become a harder trick to pull – as investors would call it.

There’s also a good side of high frequency trading – reducing bid-ask spreads created a spread down to pennies – which is far different from the way it used to be in the past. Now, let’s go a bit through the benefits of the changes generated by the Internet in the investment world.

1.) Transparency – Since the Internet is a way of visualizing data from all over the world, one can easily imagine that investors anywhere can now analyze information and generate their own ideas in regards to price securities – and that obviously brings a lovely change for most. Full-service brokers used to charge their own prices for these types of services before the Internet era, because their customers just didn’t know better. Nowadays, with a little know-how and a little Internet, one can figure it out on their own.

2.) Disintermediation – One can imagine that this is a direct consequence of transparency. It’s not about the broker company’s way anymore – it’s about the investor’s way. Period. And with a complete lack of intermediates, the rate of success can be higher for professional investors. So let’s take the middle-man out of the picture for a change.

Should You Use the Internet to Explore Investment Ideas?

It’s amazing how quickly the internet has become such an integral part of our lives. Most of us are easily old enough to remember clearly a time when the internet didn’t exist and there was no such thing as email, let alone online shopping.

Of course many of us use the internet for research and exploration purposes just as much as we use it for other reasons. However not all internet sources are reliable. If you are using the internet to explore various investment ideas, it is important to ensure you verify your sources and only go to those you know you can trust.

Here are some tips on how to make sure you don’t go astray when you do your research in this way.

Start with well known sources

There are plenty of reliable sources you can use as a starting point. Websites belonging to banks and other financial organizations will provide you with lots of facts. Just remember they will usually only present the information as it pertains to their own business. For instance they’re not going to present their own investments as anything other than the best ones on the market. They’re certainly not going to mention the competition!

Bear this in mind as you explore the vast array of information the internet has to offer.

Use blogs as another source of information and opinions

Blogs tend to focus more on opinions than regular web articles do. They are often written in first person from a single viewpoint, so they can provide further insight into a particular investment opportunity.

However you should make sure you seek out opinions from both sides of the fence. For example you might come across a blog written by someone who has made a lot of money on the stock market. They would understandably be enthusiastic about the possibilities the stock market offers to those who are willing to dip their toes into this area. However they may not make any mention of the potential downside of this area.

To this end you need to find a blogger who is perhaps against the stock market or hasn’t had a lot of success with it. This way you can find both sides of the equation and evaluate them both in your own time.

Bottom line – you must come to your own conclusions when doing research online

Finding investment advice online is much the same as deciding whether or not to buy a book. You read about the book, you read a selection of positive and negative reviews, you think about them and then make the decision on whether to get it or not. Also, make sure that you have money to invest. Don’t add to your debt by taking a payday loan online just because you learnt about a stock thats a sure thing.

Of course choosing a book isn’t as important as choosing investment advice. However you may still go to the same place to get the information you need to make that decision – namely the internet. So by all means enjoy researching investment topics online, but just make sure you edit and censor the information you receive before acting on it in any way.

Penny Stocks Could Cost You a Pretty Penny

Okay so the title is designed to catch your eye. But if you are thinking about investing in penny stocks it is worth realizing you could lose a lot of money in doing so.

This is not meant as a scare story, merely as a way of reminding you that investing in penny shares doesn’t make them any less volatile or safe than regular shares. Indeed, they are generally even more volatile, which is the reason why they are available so cheaply anyway.

Think about the value of a company before you invest

Let’s say Company A has shares valued at one cent each. Company B has shares valued at $6.78 each. Clearly there is a lot more value in the shares of Company B than those of Company A. This is because penny shares are made available by those companies who show promise for the future. They are created largely to generate funds to put back into the company so it can expand and develop.

Of course we all know lots of companies and businesses fail in their early days. So your task is to invest in penny shares released by companies that have the biggest potential for a great future. Lots of people wish they’d invested in IBM or Microsoft when their shares first came out. They’d be worth a lot of money by now. And when you think about the idea behind penny shares it is easy to see how such an investment can seem extremely tempting.

The reality behind penny stocks and shares

Let’s take a look at the reality of the situation now. The truth is penny shares are affordable for many people looking at getting into the stock market. But they are the riskiest shares of all. You may be able to afford more shares from Company A than you ever could from Company B, but that doesn’t mean it is a wise investment.

The bottom line here is to consider how much you can afford to invest – and also to lose. There is a bigger chance of penny shares nosediving in value and becoming worthless than there is of shares in any other company doing the same thing. There are exceptions of course, which is why you should never invest in any types of stocks or shares unless you know what you are doing and what to expect.

Many people say you should only invest money you wouldn’t miss when it comes to penny shares. There is a lot of truth in this. You should never really invest in it to gain a particular amount of money in return. It is far more speculative than other shares, which is why they are not for everybody.

This doesn’t mean you should avoid them at all costs of course. It just means you should be aware of the pros and cons and of what you are investing in. The more you understand about penny shares, the better your chances are of getting it right.

Why real estate is a good investment

By Betsy Fallwell

“It takes money to make money” – it’s one of the oldest sayings in the book, but is it true? When it comes to property investment, the answer is a resounding yes.

With the stock market still suffering triple-digit gains and losses on a routine basis, investing in the market is volatile; for some investors, it’s still too risky. But if you’re eager to invest in something with the possibility of an immediate return, property investment could be the right path for you.

The Right Time to Buy

Today we’re experiencing the perfect confluence of factors that make property investment a wise choice: nearly historic-low interest rates and property values that are only now beginning to dig out of the basement, where they’ve been residing ever since the housing crisis descended on the market.

This gives you the opportunity to make money from property investment on two fronts. First, not only can you expect to see the value of your property rise over the coming years, expanding your equity in the property with no effort on your part, but second, you’ll be able to collect rent on your properties from day one.

Uncle Sam Wants You (to Invest in Property)

The federal government makes it beneficial to invest in property, too. Those benefits come in the form of tax breaks. While homeowners have to pay out of pocket for building maintenance, homeowners’ association dues, and property insurance premiums without any breaks from the government, landlords aren’t subject to the same tax regulations. When you’re a landlord, you can write off all of these expenses – and many more, including the cost of utilities and advertising your rental space – and reduce your overall tax burden.

Diversify, Diversify, Diversify

What’s the first rule of real estate? Location! What’s the first rule of investing? Diversify! Combine the two, and you’ve got the first rule of property investment: diversity your holdings with a variety of locations. Similar to the saying, “Don’t put all your eggs in one basket,” don’t make the mistake of putting all your investment properties in one location. Look for a variety of home styles – whether they be apartment buildings, duplexes, or single-family homes – in a wide range of neighborhoods. This will give you properties with a wide range of monthly rental fees, which will open you up to a wide range of potential tenants.

How Much Could You Make?

The first step to making money in property investment is finding the right property. Work with a real estate agent to find quality properties in your area; consider foreclosures and short sales, which can reduce the up-front cost of purchasing a building and maximize your budget for any necessary renovations.

Once you’ve found the right property, you’ll have to secure financing. If you’re purchasing a multi-family property, you’ll have to apply for commercial financing as opposed to residential. This type of financing often requires larger amounts of capital up front, as well as higher interest rates over the life of the loan. After you buy your investment property, you may have to fix it up to bring it up to code or to make it appeal to renters.

At this point, you can begin to figure out a price for your property. Look at comparison properties in your area to see what similar apartments or houses rent for. The better a deal you get on the purchase price and the more wisely you spend money during any repairs or renovations, the wide the profit margin on your investment.

Why Do Stock Share Prices Change?

Even if you don’t yet know too much about the stock market, you’ll probably be aware that prices change on a regular basis. But why is this? Why can the price of one share be at one level on one day, and an entirely different level the next? Let’s find out more, so you know what to expect if and when you start buying or selling shares.

Supply and demand

This natural law means the price of something – anything, not just shares – is likely to go up the fewer items are available (supply). However it also relies on how many people want that item (demand).

Let’s say there are 100 shares at $10 each. If less than 100 people want them, the price might drop or stay the same. If more than 100 people want them, the price will rise. If there are 1000 shares at $50 each and less than 1000 people want them, the price would stay static or drop. More than 1000 buyers would lead to a price rise. So you see the amount of shares available and their initial price do not matter. It is the law of supply and demand that matters.

Profit warnings

Sometimes businesses will issue profit warnings if they are having a tough period of trading. These will usually lead to a drop in the share price, as the business could be in trouble. The shares will not therefore be as valuable as they would be if a business issues a good report on its earnings, pointing towards a better and more profitable future in turn.

The influence of outer forces

This might sound like something in a sci-fi drama, but in reality it’s nothing of the sort. Every business is affected by all manner of external forces. This could be anything from a rise in interest rates to a recession. If a business starts experiencing problems owing to an external force such as this, you can be sure the share prices will be affected accordingly.

Of course if a business bucks the trend and still brings in good profits despite such issues from outside, its share prices will typically rise and improve. This will be in contrast to other businesses that may be struggling.

The actions of a large shareholder

While some shareholders have relatively small amounts of shares, others have lots. These are the big shareholders that represent companies of various kinds, such as insurance brokers. If one of these shareholders should sell their shares – for whatever reason – it can spark panic among the rest. Why are they selling such a large amount of shares? Even if the company isn’t in trouble, this type of action can send the prices into freefall.

So you can see there are lots of reasons why the prices can change. The more you understand this before buying or selling shares, the easier it will be to understand the movements of the stock market. It also adds to your knowledge, and that can only be a good thing.

What Kind of Average Returns Can You Expect on Mutual Funds?

If you’re thinking about investing in mutual funds it makes sense you’d want to look into the potential returns you could expect first. Diving in with no knowledge of what to expect is a great route to disaster.

So what can you expect? Here are some points to remember.

Remember the word ‘average’ means just that

You must understand this. An average mutual fund return is gauged over a period of time. This means one year might bring a return of 10% (this is over the entire mutual fund market, rather than one in particular). It also means another year might bring an average return of just 2% or even less. It all depends on the market conditions and how well or badly the stock market is doing.

The word ‘average’ covers the entire market. So while one mutual fund might be doing really well and achieving, say, 20% compared to that 10% average example above, another mutual fund might only clear 5%.

So do average returns really mean anything at all?

They do – but you have to know in what context they are applied to. You could be looking at the market as a whole or the mutual funds created by a particular company, like Standard and Poor for example. The trick is always to set your boundaries before you start looking into averages. They are only useful up to a certain point.

What factors can affect the average returns achievable?

This is a good question to ask. Clearly a company that is good at managing its mutual funds will produce a better than average return than a company that isn’t historically as good at managing theirs. This is despite the fact they are both trading in exactly the same marketplace at exactly the same period in time.

Another factor to consider is the fees you will be charged annually to be part of a particular fund. There could be two funds with the same average return when compared to the market as a whole, but if one company has higher fees than the other, the lower fee mutual fund will perform better overall.

Does it help to gauge average returns?

Providing you know what you are looking for and you ensure two or more funds are compared on a level playing field, averages can indeed be useful. You obviously want to earn as good a return as you can from your chosen fund. A spot of research can go a long way towards helping you do this.

The more specific you can be the better. History can only show you how the market has performed over a specific period of time. Don’t just look at the past year or two for a particular fund – go back further to get a better average.

Holding mutual funds for a longer period of time is the best way to ensure you can get the best average return available, no matter which fund you invest in.

What are Fidelity Mutual Funds?

Most Americans are familiar with the name Fidelity. It is the name of a private corporation offering a range of financial services. More than sixty years old, the corporation is known for providing North Americans with a huge range of products of all kinds, particularly mutual funds.

Fidelity mutual funds are investments offered specifically by this corporation. Since Fidelity is one of the biggest organizations of its kind in the world, it should not come as a surprise to learn it offers a wide selection of mutual funds. Indeed there are several hundred of them: each designed to appeal to a particular type of investor.

How can you find out more about Fidelity mutual funds?

The best place to go is their website. They have a dedicated section on mutual funds that provides you with all the information you will need. This includes funds that have four and five stars, as well as news and analysis on all the latest developments in their funds market.

The best word of advice to give here is to take your time exploring the website and finding out more about Fidelity as well. This will provide you with a good background to the corporation so you are able to find out as much as you can in advance of investing any money in a mutual fund.

How can you choose the best fund for your own needs from Fidelity?

Once you are on the main page for the mutual fund section of their website, you’ll see a link for Fidelity mutual funds. When you click on this the section will expand to provide you with several options. One of these is to browse their funds, and you can do this in a number of different ways.

For example you can look through the range of funds that are available. These include stock funds, bond funds, international funds and money market funds. You’ll find the majority – nearly half – are tied up with the stock market, while a quarter are bond funds.

You can also use a sliding scale that lets you gauge the balance you want to achieve, i.e. conservative growth or aggressive growth, plus other options in between. Alternatively simply search the portfolio from Fidelity by name. This is ideal if you have heard of a particular fund and you want to find it more quickly.

Is Fidelity the best place to go to when searching for a mutual fund to invest in?

There are other mutual fund providers you could go to, of course. Furthermore it is always advisable to research the market so you can find the best possible range of mutual funds on the market today.

10 Tips to Succeed With Mutual Funds

Investing in a mutual fund is one of the easiest things you can do if you want to get more involved in the financial markets. They enable you to invest in a range of ways that wouldn’t be possible any other way.

Here are some tips to ensure you reap the rewards from your own mutual fund investments.

  1. Are the returns consistently good?

This is very important to find out. Some mutual funds do not perform as well as others. Always look into past history to see whether there is a good or bad pattern there to consider.

  1. What are the fund managers like?

If they are not well known or do not have a good track record, steer clear and find some who do. If you cannot research their history, ask why.

  1. Stick with no load funds.

These will provide you with more in the way of profits and you’ll pay fewer charges too. There are other options but this is the best one.

  1. Learn more about the stock market.

Don’t dive in without finding out more about how the stock market works first. The more knowledge you have, the easier it is to pick a good fund.

  1. Know whether you want to opt for passive or active funds.

Passive funds tend to be safer than active ones, so you should think about whether you want to strive for a potentially bigger return, or whether you’re happier being safe.

  1. Know which strategy the fund managers will adopt.

Find out how they decide how to manage the mutual fund. This could have a large bearing on whether or not you want to join that particular fund.

  1. Buy into an established fund.

Never opt to get involved in a mutual fund that has only just got started. Look for an established one instead – it will have a history that may help to predict its future.

  1. Consider what else you are investing in.

What other financial vehicles have you invested in, or want to invest in soon? Will a mutual fund fit into your overall plan?

  1. Think about your appetite for risk.

Some people naturally gravitate towards risk, while others shy away from it at every opportunity. How much risk would you be happy with? Choose a fund which appeals to your sense of risk.

  1.  Think about growth or value funds.

Different mutual funds offer different things. For instance value funds can offer a better outcome than growth funds, which are more likely to backfire and lose money. Nothing is certain of course, but you should know the difference between the two.

So you see there are lots of things to consider if you are thinking about investing in mutual funds. The more you know and understand in advance, the easier it is to ensure you are going to invest in the right mutual fund for your needs and goals. Go back through those ten steps again to see how they assist you.

Are You a Knowledgeable Investor?

How much do you know about investing? Many people stick with what they know, rather than trying to expand their knowledge in any way. For instance they might stick with plain savings accounts instead of looking into the potential returns offered by investments in the stock market. They will limit their outlook depending on what they already know, instead of trying to learn more about the potential opportunities available to them.

The question here is obvious – how knowledgeable are you and do you make any effort to expand the knowledge you already have? It’s a bit like going to your local bakery and assuming it bakes the best rolls in town, simply because you don’t have anything else to compare it to. If you started looking a little further afield you might discover a bakery two streets away that bakes the most amazing rolls – far better than your local bakery produces. Wouldn’t you start going there instead to get a better return for your efforts?

It’s all about expanding your field of vision. If you don’t see stocks and shares, you won’t consider investing in them. The same holds true of tax free options and any other investment you may care to think about.

The good news is you don’t automatically have to opt for a new investment you find out about as a result of your exploration. However it will enable you to learn more and take a more educated approach to your investments. You may be missing out on the best investment for your needs, simply because you don’t even know it is there.

You might feel put off by the word ‘educated’. This makes it sound as if the process of learning more about investments is going to be dull and boring, like taking lessons at school. But it doesn’t have to be this way. You can learn as much or as little as you like. If you don’t have any interest in penny stocks, don’t learn about them. If you find you like the idea of investing in long term bonds, start exploring the nature of these bonds so you know what to expect. You’ll soon see you can drift towards those areas of investing that appeal to you, and which might turn out to be profitable for you to sink some money into.

Being a knowledgeable investor isn’t about learning everything there is to know about investing. It’s about letting your interests take you in specific directions. It’s about learning how you can best invest whatever funds you have available in the right areas for you. It’s about developing your own knowledge in the directions that make sense to you. It’s not about following in the footsteps of others or doing certain things because you think that’s what you should do.

So if you feel like you want to develop your investment knowledge, let your own ideas and thoughts lead the way. You might be surprised as to where they take you.

Understanding the Different Stock Indexes

Stock indexes can be confusing at times. There are different types, but before we delve into that, it’s important to have a rudimentary understanding of what exactly stocks indexes are. Every day, millions of investors all over the world are buying and selling hundreds of thousands of stocks.

With so many stocks flying around, things get confusing mighty quickly. That’s why many different tracking companies – or “stock indexes” have popped up over the years. Their job is to track how certain segments of the stock market (or entire stock markets themselves) are doing in their day-to-day trading activities.

Different stock indexes keep tabs on different kinds of companies. Some stock indexes focus their tracking activities on solely large-cap companies, while others keep their sights on just the small-cap variety. Still others track the stock market as a whole. For instance, one very broad stock index in the United States is the Standard & Poor 500 (S&P 500). This index tracks the broadest range of businesses – in fact, it covers 500 of the largest companies in the US today.

Big Stock Indexes

Big stock indexes are the most common variety of stock trackers out there today. Arguably the most well-known of these types of stock indexes is the Dow Jones Industrial Average. This index tracks the ups and downs of thirty of the most highly influential businesses in the United States today. Some examples of these big players tracked by the Dow Jones include General Motors, General Electric, and Wal-Mart. The Dow Jones places precedence on the most expensive stocks out there, however, so a big stock index like this one is actually considered a “price-weighted index.”

This generally means that the index rises and falls depending on the fluctuations of these thirty companies as a whole. Some analysts think that this does not provide an accurate representation of the world’s economy; they don’t think that it paints a real picture of the rises and falls of every company out there.

Market Value-Weighted Stock Indexes

The previously-mentioned S&P 500 is different from a price-weighted index. It’s called a “market value-weighted index,” which means that the S&P 500 measures and tracks the combined value of stocks that all the companies in the index sell to investors. Basically, this means that stocks sold big the largest companies and with the largest market shares will have greater weight within the stock index.

It makes sense for larger companies to have more weight within a market-value weighted index, but this type of index does have its downfalls. For example, sometimes when a bubble develops that artificially inflates one segment of the economy, such as the bubble created by tech stocks in the 1990s, it can cause a ripple effect when it bursts that negatively impacts the rest of the stocks in the index and devalues the stock index as a whole.

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