Author: Editor

Alternative Investments Role in Diversified Investment
Investors should pay attention to several issues when adding alternatives to their investment strategy.

By Guy Avtalyon

Alternative investments, which have been used by large institutions and foundations for quite some time, have become more mainstream in the last years. They are more popular among individual investors. Also, there are more available products, which makes investing in alternatives possible for an increasing number of investors.

Alternative investments are a non-traditional approach to investing. They give the ability to invest in sectors and access to assets that traditional investments cannot provide. Investors should understand alternative investments as the potential to improve the overall risk-return ratio of your portfolio. Even a small allocation to alternatives may be reasonable and profitable now for more investors. Previously it wasn’t the case.

However, the non-traditional approach and structure of these investments bring with them unique risks of which investors must be aware of.

Alternative investments have a different approach

Alternative investments use a different approach to investing than do traditional equity or fixed-income investments.
This approach may require holding both long and short positions in securities. Also, it may require to hold private securities instead of publicly-traded investments. And there may be derivatives or hedging strategies as well. Also, investors that use alternatives have a goal to achieve a distinct level of total return. The other investors’ goal is the opposite, they usually pay more attention to relative performance versus an index.
Alternative investments have the potential to magnify the risk but also returns of an investment portfolio. They can possibly improve diversification and reduce risk. This approach is more flexible, investors have a chance to invest in a more extensive set of investments, so the possibility of enhancing returns is obvious.

Different risk

Alternative investments have risks different from traditional investments. They are less liquid, especially in periods of high pressure in the markets. Also, they are more complex and less transparent. These characteristics make it difficult for inexperienced investors to understand and they are more subject to investment manager failure.

The successful implementation of an alternative investment strategy relies largely on the investment manager’s experience and skill because of the wide range of investment opportunities.

Satellite asset classes as Alternative Investments

Satelite asset classes are very suitable for portfolio diversification. They cover everything that traditional investors and funds managers don’t even think about. They are more interested and specialized in asset classes such as real estate, commodities, any that can give high-yield fixed income. Satellites are non-traditional and have a low correlation with traditional assets. But their performances are driven by exposure which represents the similarity with traditional investments.

Types of Alternative Investments

We highlight several types of alternative investments but this list is more illustrative than exhaustive because new approaches are constantly being developed.

Private equity

Private equity is an investment strategy. Its goal is to take part in the growth of the private company. Hence, this strategy is long-term investments all in private securities generally and globally.
Private equity investment strategy covers illiquid asset classes with potentially greater long-term capital appreciation. The diversification doesn’t include public markets.
Only to higher-net-worth individuals use this strategy because it requires more investment experience, hence they are often accredited investor at high minimums and often has liquidity restrictions.

Hedge funds

The hedge funds are an alternative investment. They are designed to protect investment portfolios from market changes, so they will generate positive returns no matter if the markets are up or down.
They could protect the investment from market risk by adding alternative investments to the portfolios to decrease loss and protect capital.
The term “absolute return” is broadly used in connection with hedge funds. This explains how investment strategies are created to generate returns in any market condition. Actually, these funds are “hedging” the markets.

Managed Futures

An investment strategy that seeks to participate in trends in a large variety of global futures markets. Strategies include the use of the stock index, interest rate, currency, energy, and commodity futures. Many managed futures traders apply sophisticated software designed to invest in a disciplined, unemotional fashion, which often results in a lower correlation with traditional assets.

Alternative investments – mutual funds

These funds are not forced by traditional portfolio management systems. They have varying approaches, ranging from the absolute return, long/short equity, a broad mandate, or “go-anywhere” funds, and hedge fund-like strategies. Many of these funds also have a total return or an absolute return objective. They provide access to non-traditional investment. But they also provide investors daily liquidity at fair investment minimum.
Alternative investments can be useful tools to improve the risk-return of an investment portfolio. They can increase diversification and reduce volatility, given low correlations to more traditional investments.

Risks of Alternative Investments
- Higher fees. – Alternative investments can have higher fees. They may also charge additional management fees. While higher than traditional investments, these fees may or may not be excused when comparing returns net of fees.
- More complicated. – Alternative managers invest in a broad variety of investments, such as derivatives, and can use short selling. Understanding that can be difficult for many investors.
- Less transparent. – There can be limited to the underlying holdings of these investments. They use many tools that are not always the best choice for alternative investments. That makes a manager’s investment ability more difficult to assess. Also, some alternative investments are largely unregulated.
- Less liquid. – This is due to holding illiquid investments that can restrict the investor’s ability to offset money invested. For example, some hedge funds do not allow redemptions over the first year of investing. Most of them will allow annual or quarterly redemptions. Moreover, private equity may not allow redemptions for more than seven years. Here is also exposure to a notable lack of liquidity in some trading environments.
- Less tax-friendly. – Most alternative investment strategies aren’t focused on minimizing taxes.
- May disappoint in strong up markets. – They use short sellings to generate absolute returns. That may deter some investors.
- May not diversify risk in extreme down markets. – During the dislocation, the relationships of many different types of investments may increase notably. Investors hold that the more profits of alternatives is connected to the added risk.
Is this suitable for every investor?

Alternative investments can potentially magnify the overall risk-return of an investment portfolio. There are benefits but also risks in these non-traditional investment strategies. The most important is that investors have to be comfortable with alternatives when adding them to their investment strategy.
It is important also to discuss alternative investments with a respectable financial advisor. If you choose this strategy you’ll first need to determine how suitable it is in relation to your current investment approach.
5th October 2018
BANK OF CENTRAL BANKS WANTS TO STOP CREATION OF CRYPTO

3 min read

The rise of Bitcoin and the blockchain industry has been accompanied by criticism, just like any other emerging tech sector. Such criticism was heard during the dawn of the internet, and despite it, the internet is still alive and well today. Industry experts have offered different hot takes on the nature of cryptocurrency in general, calling it everything from a bubble to a Ponzi scheme.

The latest well-known figure to criticize the cryptocurrency industry, however, is Agustín Carstens, head of the Bank for International Settlements, also known as the central bank for all central banks.

According to Carstens in a recent interview, young people should stop trying to create money in the form of cryptocurrency.

The Bank for International Settlements’ opinion on cryptocurrency may not gain any traction within the community because things have been improving for cryptocurrency. Banks and large corporations have been warming up to blockchain, the underpinning technology of most cryptocurrencies.

Corporations like IBM have developed enterprise platforms and partnered with cryptocurrency platforms like Stellar to provide blockchain-based payment solutions. Several significant partnerships have also been made between cryptocurrency platforms and banks. Even with the fear of fraud and theft, banks realize that there is profit to be made from the industry and if their customers decide to trade, they may have no choice but to cooperate.

During the interview, Agustín Carstens was asked if cryptocurrencies can be described as money. He replied by explicitly stating that cryptocurrencies are not money, rather they are a type of asset that can be invested in. By Carstens’ description, these digital assets can’t assume the functionality of money in the economy due to the way they are created.

Mostly, cryptocurrencies are produced by a group of people who have either been appointed, elected or allowed to secure the network and receive new cryptocurrency in the form of block rewards. The most incentivized people in a cryptocurrency community are its miners. They make a profit when they create new assets and, in turn, deliver the needed security for the network.

Carstens has stated that this is a bad model for money and simply does not maximize its usefulness. Money is supposed to be a great store of value, means of payment and unit of account. However, so far, digital assets like cryptocurrency have proven to fail badly at all three things.

As for the hype surrounding the industry at the moment, mostly due to the peak prices achieved by major cryptocurrencies in 2017, Carstens believes that it is only happening as a result of the knowledge that a lot of money can be made on cryptocurrencies in a short period. He also called crypto assets a Ponzi scheme, bubble and environmental disaster due to the infrastructure needed to keep some of their networks running securely.

Carstens alluded to the fact that he is sure that cryptocurrency will not have a happy ending. He compared digital assets to the renowned National Bank electronic payment system of Switzerland saying that cryptocurrencies may never exhibit that level of efficiency and trust.

Central banks, on the other hand, have exhibited that level of trust, which is built on several years of efficient service, a level which Carstens is sure that digital asset networks will never achieve. This is why he believes that young people should be more focused on innovation and creative solutions to problems instead of trying to re-invent money.

This is not the first time that Carstens has openly criticized Bitcoin and the cryptocurrency industry. In fact, he gave a talk on the topic at the Goethe University in Germany in early 2018, stating that central banks must work hard to stop the rise of cryptocurrency. This would ensure that the technology does not meddle with the finance industry and affect the financial stability of various world economies.

He also spoke about the difficulties associated with working with Distributed Ledger Technologies (DLT) in central banks, including the lack of efficiency, the expensive costs, and the slow speeds. Prior to this, Mario Draghi, president of the European Central Bank, expressed his own opinion on cryptocurrencies calling them risky assets. He also stated that the European Central Bank is continuously working to identify threats and dangers that cryptocurrency may pose so that they are mitigated before any harm can be done.

In addition to this, Carstens based the enthusiasm within the cryptocurrency industry on speculative mania and their use for illegal transactions. According to the BIS head, authorities are getting closer to finding ways to control and prevent the risks associated with digital asset use, stating that it is alarming that several banks have come up with bitcoin ATM’s where BTC can easily be bought or sold, an easy alternative to a Bitcoin exchange.

As long as the most prominent use case for cryptocurrencies lies in illegal payments, central banks cannot merge the technology with that of the banking sector, to avoid financial disaster. This is similar to the opinion shared by the U.S. Secret Service concerning the provision of regulations for cryptocurrencies, especially those that provide anonymity to users. These coins are usually misused for illegal transactions and present issues when tracing such payments.

The BIS has taken this stance on the industry for a long time. In February 2018, they highlighted issues with the scalability model of cryptocurrencies, stating that those with more users and a more extensive network are more likely to break down before others. Again, the bank warned the public to avoid making any risky decisions concerning their investments within the space.

According to the BIS annual report, due to the fragility, lack of stability and lack of scalability, trust can easily disappear from the network and its capabilities. Such networks are also subject to regular congestion as they grow larger. One example is the Ethereum network congestion that occurred subsequent to the launch of Cryptokitties. Other issues addressed include transaction fees and limits.

FINAL THOUGHTS

Many have argued that banks make money and are taking a hypocritical stand by telling others not to. The warning by Carstens will most likely not be taken seriously in light of the continuous flood of investors into the cryptocurrency space. Despite the volatility within the industry, cryptocurrency has come to be recognized as a way to invest and make a lot of money. As a result, demand for digital assets has increased over time and will continue to lead to an increase in supply, not the opposite scenario that Carstens is proposing.

Despite the bold statements by Carstens, the cryptocurrency industry has seen improvement in the number of projects, investors and the amount of money raised through crowdfunding. Apart from the statements that tell young people to stop trying to make money, he raised some relevant points including the insecurity and expenses associated with running such networks. Another problem lies in the lack of stringent regulations within the industry to govern its many investment and trade practices.

Carstens continues to be outspoken about the Bank of International Settlements lack of support for cryptocurrency as a whole. Other experts in various financial and technological fields also continue to show mixed opinions on the subject.

However, the recurring themes are rooted in regulation, theft, illegal activities and profits. Hopefully, cryptocurrency will get to a middle ground that makes security provision for users, regulators, like central banks and even law enforcement, easier.

The original article was published https://www.markemlickprivateequity.com/

Risk Disclosure (read carefully!)

4th October 2018
What is Diversified Investment
2 min read

Nothing more represents the term diversified investment than proverb “Don’t put all your eggs in one basket.” Instead, invest in many baskets and hold a substantially diversified portfolio based on your long-term asset allocation strategy.

A diversified investment is exactly that.

A diversified investment represents a portfolio of various assets that earn the highest return for the smallest risk. This kind of portfolio has a mixture of stocks, fixed income, and commodities. These assets react differently to the same economic occasions and because of that, diversification works. With diversified funds, you can access financial markets while spreading your investments across several asset classes and geographic regions. In this way, you reduce the impact of market fluctuations while maintaining an attractive potential performance.

In a diversified portfolio, the assets don’t match each other. When one rises, the other falls. It drops down overall risk because some asset classes will benefit, no matter what the economy does. They equalize any losses of the other assets. There is also less risk because it’s difficult the entire portfolio would be destroyed by any single event. A diversified portfolio is the best protection against a financial crisis.

How does Diversification work?

Stocks do well when the economy grows. Investors want the highest returns, so they bid up to the price of stocks. They are willing to accept a greater risk because they are optimistic about the future.

Bonds do well when the economy slows.

Investors are more interested in protecting their holdings. They are willing to accept lower returns for that reduction of risk.

The prices of commodities vary with supply and demand. Commodities include wheat, oil, and gold. For example, wheat prices would rise if there is a drought that limits supply. Oil prices would fall if there is additional supply. As a result, commodities don’t follow the phases of the business cycle as closely as stocks and bonds.

Diversification typically has low correlations to, or do not move in lockstep with, more traditional asset classes. As such, their inclusion in an investment portfolio tends to result in lower overall volatility. Because they have a wider universe in which to invest (public and private) and do not have some of the same investment constraints (can short and hedge), alternative investments have the potential for higher long-term performance than traditional investments.

Investing in diversified funds can, therefore, be an effective tool to:
- Seek growth in your savings with a medium-term outlook and moderate risk
- Benefit from exposure to several markets (equity, bonds) that is adjusted to match current conditions in order to both take advantage of market rallies and cushion against the impact of declines
- Manage your portfolio simply with access to turnkey management: the manager adjusts the make-up of your portfolio over time.
Where can you execute the diversified portfolio?

A diversified portfolio should contain securities from the following six asset classes.

Stocks. Different sized companies should be included. Company size is measured by its market capitalization. Therefore, include small-cap, mid-cap, and large-cap in any portfolio.

Fixed income. The safest are savings bonds. These are guaranteed by the government. Municipal bonds are also very safe. You can also buy short-term bond funds and money market funds that invest in these safe securities. Corporate bonds provide a higher return with greater risk. The highest returns and risk come with junk bonds.

Foreign stocks. These include companies from both developed and emerging markets. You can achieve greater diversification if you invest overseas. International investments can generate a higher return because emerging markets countries are growing faster. But they are riskier investments because these countries have fewer central bank safeguards in place, can be susceptible to political changes, and are less transparent.

Foreign fixed income. These include both corporate and government issues. They provide protection from a currency decline. They are safer than foreign stocks.

Commodities. This includes natural resources such as gold, oil, and real estate. Gold should be a part of any diversified investment because it’s the best hedge against a stock market crash. Research shows that gold prices rise dramatically for 15 days after the crash. This is why people invest in gold. Gold can be a good defense against inflation. It is also not correlated to assets such as stocks and bonds.

Maybe you should include the equity in your home in your diversification strategy.

If your equity goes up, you can sell other real estate investments in your portfolio. You might also consider to sell your home, take some profits, and move into a smaller house.

Most investment advisors don’t count the equity in your home as a real estate investment. They assume you will live there to the end of the time. They saw it as a consumable product, so that encouraged many homeowners to loan against the equity in their homes to buy consumable goods. When housing prices declined, they owed more than the house was worth. Many people walked away from their homes while others declared bankruptcy.

Expected return

Investors often focus too much on the expected return of their portfolio. While the expected return is important, you must also consider the amount of risk that you need to assume in order to achieve that expected return – the higher the expected return, the more risk you must take on to achieve it. When planning your investment strategy, it is important to be truthful with yourself in evaluating how much risk you can manage, and how long you are able to stay on the course through the ups and downs of the market rhythm. With other words, you should determine how much short-term volatility you are willing to accept.

A little bit of history.

An academic named Harry Markowitz introduced the research on what he called modern portfolio theory that people were able to understand diversification in an objective, mathematical sense. This research was so innovative and Markowitz earned a trip to Sweden to pick up a Nobel Prize.

The bottom line

In Shakespeare’s play, “The Merchant of Venice,” written more than 400 years ago, the character Antonio demonstrates his understanding of the concept. He says: “I thank my fortune for it – my ventures are not in one bottom trusted, nor to one place, nor is my whole estate upon the fortune of this present year.” That is a diversified investment.

Risk Disclosure (read carefully!)
3rd October 2018
Who are the greatest stock traders of all time?

5 min read

Yes, we know. Lot of you would say Warren Buffet. Frankly, he isn’t even a stock trader, he’s a deal maker and a shark. Moving on.

What makes a trader ‘great’ in our eyes is intellect, knowledge, and experience, combined together to create a very real handle on the markets and the price movement therein. This means many years, and many, many trades.

Forget all stories about ‘great’ traders that hit it very big on one or two trades. Or about people that took advantage of a housing boom or tech bubble over the span of just a few years to make an absolute killing.

To us, this hints at a potential one-off situation, a case of good luck. Nothing more.

Anyone can hit it big on a single trade.

Often, this is even a result of taking too much risk, not understanding the basics of money management. Honestly, many traders are lauded as extraordinary, but a year or two later the opposite happened and they were back to square one.

You should differentiate a trader with a long track record with consistent returns from a trader with a small handful of trades yielding great riches.

We prefer, respect and seek to imitate are the individuals who have a significant track record, and consistency.

Trading on the exchange market is associated with big money, sometimes with fame and other pleasures of the modern world. However, we rarely have the opportunity to learn how to earn really big money in financial markets.

In our opinion, these are the greatest traders in the world, individuals who have all but proven definitively that they’re capable to play a real ‘edge’ in one of the most difficult games in the world.

Here is the list of the greatest stock traders of all time.

George Soros

Why as a first among all greatest stock traders?

Born in Hungary in 1930, he lived through the Nazi occupation of 1944–5, which resulted in the murder of over 500,000 Hungarian Jews. His own Jewish family survived by securing false identity papers, concealing their backgrounds, and helping others do the same. Soros later recalled that “instead of submitting to our fate, we resisted an evil force that was much stronger than we were, yet we prevailed. Not only did we survive, but we managed to help others.”

As the Communists consolidated power in Hungary after the war, Soros left Budapest in 1947 for London, working part-time as a railway porter and as a night-club waiter to support his studies at the London School of Economics. In 1956, he emigrated to the United States, entering the world of finance and investments, where he was to make his fortune.

Actually, Soros began his financial career at Singer and Friedlander in London at the age of 24. He graduated from the London School of Economics and after that became a legend of the financial industry. His most successful trade gave earned him a profit of $1 billion in a single day.

George Soros is the author of many books about investing and finances.

He actively works in the philanthropic area, he donated more than $7 billion for various organizations.

In 1970 he established the Soros Fund Management, which in the last few decades generated more than $40 billion in profits. Soros is currently one of the thirty wealthiest individuals in the world, as well as “the king of Forex trading”. To most of the financial trades, he is the biggest inspiration to follow. So, he is the ‘teacher’ to many traders. That’s why he is one of the greatest stock traders.

“My success in the financial markets has given me a greater degree of independence than most other people,” Soros once wrote. That independence has allowed him to forge his own path towards a world that’s more open, more just, and more equitable for all.

Andrew Krieger

This one of the greatest stock traders graduated from the famous Wharton Business School at the University of Pennsylvania, is a successful trader, known for his interest in New Zealand currency (NZD).

He left his position at Solomon Brothers and in 1986 joined Banker’s Trust. And immediately became a worthy employee, which rewarded him in higher capital limits ($700 million instead of standard $50 million!). His position allowed him to gain profit from the Black Monday crash in 1987. If you are old enough, you will never forget Black Monday.

On October 19th, 1987, the financial markets plummeted, with the Dow Jones falling almost 22%. Panic spread around the world, with most markets down by more than 20% by the end of October.

There was no reason for this.

In fact, the tumult in the markets became a self-fulfilling prophecy as investors ran for the doors. At the time of the crash, Andy Krieger was known as one of the most aggressive currency traders in the world.

He decided it was time to attack, and took a creative and unbelievably aggressive approach to take down the Kiwi dollar. He had access to huge leverage through currency options. With leverage as high as 400:1, he could bring unsustainable pressure to bear on New Zealand’s currency.

He created such a large short position that the Bank of New Zealand literally had no defense. After all, he claimed that his short position was so large that it was bigger than the entire New Zealand money supply. You have to have a strong nerve and complete confidence to do something like that. And Krieger had plenty of both and wot that bet.

After earning $300 million in selling the New Zealand currency, Andrew Krieger became famous in the trading field. In 1988 he started working for Soros Management Fund and later changed it to Northbridge Capital Management.

He is also known for his philanthropic work – after the tsunami in 2004, he donated $350,000 for the victims.

Stanley Druckenmiller

Stanley Freeman Druckenmiller was born on June 14, 1953, is another of the greatest stock traders. He is an American investor, hedge fund manager, and philanthropist. He is the former chairman and president of Duquesne Capital, which he founded in 1981. He closed the fund in August 2010 because he felt unable to deliver high returns to his clients. At the time of closing, Duquesne Capital had over $12 billion in assets.

From 1988 to 2000, he managed money for George Soros as the lead portfolio manager for Quantum Fund. He is reported to have made $260 million in 2008.

George Soros and Stanley Druckenmiller famously worked together on a trade to short the British pound in the 1990s, reaping a $1 billion. At the time, Druckenmiller ran Soros Quantum Fund and leveraged it by one and a half times to make the bet.

In one interview, a young Druckenmiller described Soros’ thinking when he made the enormous trade.

“If there’s one thing I’ve learned from him, it’s when you’re right and you know something, you really feel it, you can’t have enough,” Druckenmiller said. “And if I had to sum up his investing philosophy in one sentence, it’s that it’s not whether you’re right or wrong, you just have to have the maximum when you’re right, and that’s his unique and innate ability.”

Druckenmiller now runs the New York-based Duquesne Family Office.

He started there after closing his Duquesne Capital, which reportedly accumulated annual returns of 30%. Soros operates Soros Fund Management, with roughly $30 billion in family assets under management.

Bruce Kovner

Bruce Stanley Kovner was born in 1945. He is an American investor, hedge fund manager, and philanthropist. He is Chairman of CAM Capital, which he established in January 2012 to manage his investment, trading and business activities. From 1983 through 2011, Kovner was Founder and Chairman of Caxton Associates, LP, a diversified trading company
Kovner serves as Chairman of the Board of The Juilliard School and Vice Chairman of Lincoln Center for the Performing Arts. He also serves on the Boards of the Metropolitan Opera, and the American Enterprise Institute.

Kovner has reportedly attributed his money making success to “stupid governments”, implying that the policy mistakes of central banks and governments cause disequilibria in financial markets that can be exploited.

Kovner borrowed $3,000 on his MasterCard in early 1977 and began trading on his own. He made $1,000 on his first two trades copper and interest rate futures. Kovner says his earlier trading experience was the most memorable.

The first time he lost control of the trading process was in the soybean market. ‘’’It is seared into my memory. A shortage developed in soybeans, running his $4,000 position up to $45,000 in six weeks. In a moment of insanity, I discarded a hedge limiting losses if prices turned down, which they did. ’’In a panic, he liquidates his position, escaping with a loss of $23,000.’’

Yet he still had $22,000, five times what he started with. ‘’I had a huge gain but lost half before getting out? I lost half the profit in an hour. I closed out the trade and was physically sick for a week. In retrospect that was a very good thing, says Kovner. It helped me understand risk and create structures to control risk.”

A music lover!

He has best been known to treat friends to private performances at his New York City home by up-and-coming musicians, often from New York’s Juilliard School. Kovner grew up in the San Fernando Valley east of Los Angeles. When a bad case of writer’s block stymied his quest for a Harvard PhD., Kovner drove a cab to pay the rent, took harpsichord lessons at Juilliard and dabbled at a succession of pursuits while seeking this true calling. In 1976 he found it: currencies and futures speculating.

All the rest is the history of the greatest stock traders.

Jim Rogers

James Beeland Rogers Jr. was born on October 19, 1942. He is an American businessman, investor, traveler, financial commentator and author based in Singapore. Rogers is the Chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund and creator of the Rogers International Commodities Index (RICI).

Rogers does not consider himself a member of any school of economic thought but has acknowledged that his views best fit the label of the Austrian School of economics.

He started to invest in the 1960s with just $ 600. In the 1970s he joined forces with another legendary investor, George Soros. They founded the hedge fund named Quantum Fund. In the 1980s, Jim Rogers left the fund and began investing in his account.

Jim Rogers is a typical representative of long-term trading.

He is a living legend among traders. Usually, he keeps his positions for several years. But he is looking for shares that are likely to turn out better than the market. In the 1980s, he estimated well that stock markets would be on the rise in that decade.

Rogers invested in German shares. The German market seemed to him the most prospective because the German economy was booming, and the local stock market still did not move up, after the collapse which it experienced in 1962.
Rogers thinks patience is the most important thing in trading. Jim Rogers usually analyzes the market for important fundamental factors. Although he admits that sometimes he looks at charts, which often show panic of the crowd. He happens to do exactly the opposite when he sees a panicky downward movement or euphoric upward movement.

Jim Rogers’ strategy is not easy to describe in a few words. It’s just trading on common sense, as he says.

He is a frequent speaker at universities and guest on television programs on investing and business affairs and one of the greatest stock traders.

Paul Tudor Jones

He is a typical speculator and a legend on Wall Street. His assets are estimated at over 4.5 billion dollars.

In the 80s, he became famous for the documentary film “Trader”, in which he discovered the secrets of his methods used on the stock market.

Jones banned the film’s release, in which often he was nervous. But the film got into a wider group and you can find it without a problem on the Internet.

Paul Jones is a classic speculator who bases his decisions mostly on technical analysis. He works on the futures market. And he believes that to succeed you have to go a bit against the flow. Jones tries to buy in bottoms and sell at the tops, which is a bit opposite to the rest of the market participants.

He started as a broker on the New York Cotton Exchange.

So he can brag of earning a large commission in the first year of operation, which amounted to 1 million dollars. Later he worked as an independent trader on NYCE. hen in 1984 he founded a hedge fund, the Tudor Futures Fund. The fund started with assets worth $ 1.5 million. At the end of 1988, it was already over USD 300 million.

He achieved a three-digit rate of return for five years in a row. In October 1987, when the indices suffered a severe breakdown, Paul achieved a rate of return of 62%.

His method gives you the opportunity to purchase a given item at an attractive price, but it can also be very dangerous. Jones found out about it in 1979, when he worked as a trader on NYCE.

On the cotton market, prices fell to new minima and slightly rebounded. And Paul decided that this was the effect of activating stop-loss orders and open a large long position. The market after a shortstop continued to go down.

However, Jones increased his position, although he felt that he could make a mistake. He managed to close the position after a few days. And the loss incurred only on this transaction amounted to 60-70% of the total capital. Jones was so depressed about the situation that he almost gave up his membership in the NYCE. But, he did not give up.

Jones’s approach seems right to buy in holes and sell at the tops, not vice versa.

The most important matter in speculation is proper capital and risk management. Jones was convinced how important these elements were in a really painful way.

He showed a strong character when he decided to continue and it was a huge success.

Most of the financial traders are building their careers in silence, but there are a few that have become popular because of their great trades. But remember, their stories are full of hard work, dedication, and patience. They are people with the power of influence, whose moves had an impact on the whole industry.

What else we may conclude?

There is no only one, the best way to play in financial markets. Everyone has to find their own. However, regardless of which strategy we choose, we must have strict rules of conduct, which we stick to, which is the best in this profession. And maybe one day, become one of the greatest stock traders and deserve our names in the list the best of the best.

Risk Disclosure (read carefully!)

2nd October 2018
Discover Interesting Features of 2018’s Top 3 Cable TV Providers in the USA

2 min read

The cable industry is revolutionizing due to the evolving technological advancements and the sprouting demands of viewers to customize from their favorite show to their payment plan. It has become very tedious for service providers to maintain their reputation. Because of this, numerous digital cable providers have given a smorgasbord of choices to take into account. The internet gets overloaded with information regarding the different TV service providers.

Every one of these seems to commit to practical solutions, but not many of them make it a pleasant experience for the viewer. Several TV providers focus on great arrangements in their service, yet very few of them transform it into a pleasant journey. So, we have come up with the attributes that you should keep in mind before going for any of the mentioned suppliers. There are various digital television alternatives out there and most offer packages with some network access bundle. We’re looking at merely the digital television benefit alternatives as independent elements.

No matter how you see it, digital television suppliers experience the ill effects of poor client benefit surveys. Cable suppliers don’t make it simple to look at alternatives. They all offer a few bundles. However, the costs and channel determination aren’t steady among suppliers. For the convenience of the users, we are putting together a comparison of the top 3 cable TV providers in the USA such as Charter Spectrum, Comcast Xfinity, and Cox Communications.

1: Charter Spectrum

Charter Spectrum is a champion among the most surely understood cable TV providers in the USA. It offers more than 200 HD quality channels across 41 states of the United States. Spectrum Cable Company emerged in 2016 after Charter Communications acquired Bright House Networks and Time Warner Cable. Since then, it delivers cutting-edge digital facilities to millions of customers across the USA with ease and efficiency.

It offers a terrific blend of functionality and entertainment with exceptional cable TV, internet, and digital phone services. Charter cable TV provides the best experience of watching popular and premium sports, news, and family channels in HD such as CNN, BBC, HBO, ESPN, HGTV, STARZ, STARZ ENCORE, NFL Network, and a lot more. With the free DVR service, users can pause or record their favorite content and watch it later when they are free. However, if you forget to record your favorite show, you can still watch it with remarkable demand-driven choices. Charter On-Demand selections allow customers to watch thousands of movies and songs in 3D as well as enjoy the latest films and musical concerts.

Users can enjoy more than 170 channels in HD and live stream on the go by downloading Spectrum TV app in their cell phones, laptops, and tablets. One of the exciting features of Charter cable TV is its perfect pairing with the internet. Now, customers can download and watch tons of movies, play games online and enjoy live stream with the ideal coupling of cable TV and Charter internet. Spectrum delivers its cable TV service along with incredible features at highly cost-effective rates of $60 per month without any contract. In fact, in 2018, it secured the highest rank among other cable TV providers and received 63/100 in ACSI and Customer Satisfaction Reviews.

2: Comcast XFINITY

Comcast Xfinity is well-received among the users and provides cable TV facilities in more than thirty-nine states of the US. Unlike other cable TV providers, Xfinity delivers TV solutions without any requirement of bundling it with any other service like internet and phone service. Like Charter Spectrum, it provides outstanding news, sports, and entertainment networks in three exceptional packages like Starter, Preferred, and Premium. Customers can enjoy over 200 finest-quality channels using these packages like TNT, NAT GEO WILD, MGM, ESPNEWS, STARZ ENCORE, HGTV, etc. The price of Starter Package is less than the Charter TV Select; however, it does not provide essential features to the users such as On-Demand choices, Internet coupling, etc. In 2018, Comcast received 60/100 from ACSI and Customer Reviews Report and significantly enhance its trust on the customers.

3: Cox

Cox Communication is quite popular in the USA and provides its services to more than 6 million consumers. It offers its cable internet services in more than eighteen states across the USA. Cox is the only cable TV provider that allows customers to customize their TV using a vast technical library. Moreover, it offers users self-installation service at low rate i.e. $20, while the professional installation requires $75. With Comcast Contour TV package, users get access to more than 140 premium quality networks in HD such as sports, entertainment, educational, family and kids’ networks at $64.99/month.

If you desire to add your favorite channels in the list you can easily do that by paying the additional fee for each channel. Pay per View feature requires customers to pay $11-$16 per month for adding up networks in the preselected base. In 2018, it received 63/100 from ACSI and Customer Review Reports that indicates its significant customer satisfaction.

Final Verdict

In this article, we have evaluated the cable TV services of the nation’s largest cable TV providers. We have taken an in-depth assessment of various factors like pricing, number of channels, accessibility, and customer reviews. After a detailed analysis of these features, we have concluded that Charter Spectrum is currently the best cable TV provider in the USA.
Author of this article is Edward Robinson and the article was originally posted on cupertinotimes.com
Risk Disclosure (read carefully!)

2nd October 2018
Elon Musk made a deal with SEC: pay $20 million and quit as Tesla chairman

2 min read

Elon Musk agreed Saturday to quite as Tesla’s chairman of board and pay a $20 million fine in a deal to settle charges brought this week by the US Securities and Exchange Commission, alleging fraud and making “false and misleading statements” when he tweeted claims of having secured the funding for taking the company private at the share price inspired by marijuana culture.

This settlement requires court approval, and the main point of agreement is that Elon Musk will be allowed to stay as CEO but must leave his position as chairman of the board within 45 days. He is unable to be reelected for three years, according to court filings. Elon Musk accepted the deal with the SEC “without admitting or denying the allegations of the complaint,” according to a court document.

Who has to clean after Musk?

Also, Tesla agreed on Saturday to pay $20 million to settle claims it failed to clean up after Musk’s tweet. According to some sources, terms of this settlement are less favorable for Musk and Tesla than the SEC’s initial offer of a nominal fee and 2 years ban on acting as a chairman of the board.

“The $40 million in penalties will be distributed to harmed investors under a court-approved process,” the SEC said in a press release.

The company also agreed to nominate two new independent directors to its board. And establish a board committee to oversee Musk’s communications.

A Tesla’s spokesperson confirmed Musk will be permitted to remain a member of the board.

SEC Chairman Jay Clayton said in a statement that “the prompt resolution of this matter on the agreed terms is in the best interests of our markets and our investors, including the shareholders of Tesla.”

Following news that the SEC had filed the suit, Tesla’s market share dropped by about $7 billion to $45.2 billion by Friday. But the agreement which allowed for Musk to remain CEO may have prevented even more disastrous consequences.

Ivan Feinseth of Tigress Financial Partners described the agreement as a “slap on the wrist” for Musk. He added that “the fact that he can remain CEO is very important for the company.”

This announcement from the SEC came two days after the agency filed a lawsuit against Musk, contending he defrauded investors. The decision is based on tweets Musk sent on August 7. In that tweet, he claimed that he has had secured fundings to take Tesla private at $420 a share. That has caused the company’s stock to soar. He had not secured the funding and knowingly made false statements, alleges the SEC.

The lawsuit asked for banning Musk from serving as an officer or director of any publicly traded company.
But Elon Musk told Tesla’s staff, to “ignore the distractions”, and hinted at being profitable.

He also called the SEC’s suit “unjustified.”

He assured staff that the company was close to “proving naysayers wrong.”

With Sunday being the end of the quarter, Musk said that Tesla must go “all out” on production. In order to “achieve a victory beyond all expectations.”

Last few weeks problems culminated for Tesla, and now the company is expected to report third-quarter production numbers this week.

The Electrek reported that Tesla has already broken its record ahead of the third quarter’s close. They wanted to suggest it would exceed production projection of 50,000-55,000 of Model 3. Tesla has already met an ambitious benchmark for its Model 3. After setting a new quarterly production record in the second quarter.

UPDATE 23th May 2019: Tesla’s stock hit a new 52-week low

The investors on Monday will also review Tesla’s settlement with the SEC.

Once again, this agreement is not official; a court must approve it. Reports from Reuters on Friday marked that Musk “could settle with the SEC but was ready for a court fight.”

That means the situation did turn out differently.

The question is whether Musk’s companions on the board decide to bring in a really strong chair. The one who will stand up to Mus

Jay Dubow, a partner at Pepper Hamilton and a veteran of the SEC’s enforcement division, says it is “unusual” that the SEC gave agreement to let Musk stay on as chief executive but exit the chairman role.

Dubow said:

“The CEO is certainly more involved than the chairman in day-to-day operations.” SEC may have determined that removing Musk as CEO would cause more harm to Tesla’s share price, and thus harm investors.

“I have always taken action in the best interests of truth, transparency, and investors,” Musk said. “Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

It’s still unclear whether or not the Department of Justice will file criminal charges against Musk.

Tesla confirmed earlier this month that the Department of Justice was investigating whether Musk’s comments about taking his company private constituted criminal activity.

No matter what the outcome of the DoJ inquiry be, Elon Musk, for now, will stay on as Tesla’s CEO and its public face which equally causes controversies and reassures investors in the bright future of the business.

Risk Disclosure (read carefully!)

1st October 2018
Select Mutual Funds By Using Relevant Criteria

Examine fees and exit loads, read the offer document, analyze portfolio and holdings but here is a lot more.

By Guy Avtalyon

When starting to make the investment decision it’s important to know what criteria to use to know how to select the right mutual funds. If you don’t know anything regarding mutual funds and you are interested to invest in mutual funds, you are always confused about where to begin.

That’s the beauty of investing in mutual funds! You do not need to be an expert or even a finance freak to start investing in mutual funds.

One of the most frequent questions is how to select the right mutual funds to invest in.

Who manages mutual funds?

Mutual funds are managed by professional managers.

But not all funds are equally well. There are many funds that are not able to beat the index. That’s why it’s really important for you to select the right mutual funds that will fulfill your investment goals.

Most beginners just look at past performance while researching the best mutual funds to invest. But there are two equally important factors to be checked before selecting any fund: The objective of the fund matches your investment goals and what are the different risks associated with the fund.

Mutual fund investing is a long-term ratio. It’s different from the direct investment in stocks, where people can change the stocks fast, mutual funds are a long time task. Most people hold their funds for over 8 even over 10 years. Hence, it’s important that you choose the right fund and avoid ones that might result in you to lose both time and money.

How to select the right mutual funds?

I’ll show you, step by step.

Read the offer document: One of the most voluminous documents, also known as the prospectus. The first and the biggest step while choosing a mutual fund is to read the offer document. From the top to the bottom.

There you can find all the important details like the fund’s objective, scheme type, past performance, details about the asset management company, classes of the underlying assets, etc. It’s not difficult to understand these documents.

Match the goal of the fund with your own. Every mutual fund has a specific aim. And based on that aim, they decide different factors like asset allocation (equity to bond weight), risks, dividend payouts, tax benefits, theme/sector focus, etc.
You have to read the offer document of the fund in order to identify whether the fund aims to meet your investment needs. If their aims are not pertinent to you, it might not be the right option to invest in those funds.

Examine fees and exit loads. The mutual funds will charge a fee for their services and to meet different expenses. This expense ratio can be 2-2.5%. Some mutual funds may charge you a fee upfront when you invest (entry load), or a deferred sales charge when you sell your shares (exit load). As a value investor, you should stay away from mutual funds with high fees and loads to avoid unnecessary costs.

What criteria to use to know how to select a mutual fund?

Examine the past performance of the fund. The past performance of a fund isn’t a guarantee of how well it will perform in the future. But it will give you an approximate idea about the returns and expectations. You should compare the funds’ past performance to the benchmark because it will give you a better idea of its actual performance. Stay focused on long-term performance (3 years or greater) and compare it with its competitors and index.

What else can you do?

Analyze portfolio and holdings. This may be a little tricky for new investors. The main question is how will you understand whether the holdings are good or bad? The key point is to make sure that the fund is investing in the type of securities in which you are interested. Analyzing the portfolio will give you a good idea if the fund is the right fit for you or not. There is also another trouble while analyzing the portfolio and holding. The portfolio can be changed from time to time. The manager may choose to buy or sell securities because the managers are independent. And if you are not regularly reviewing the fund, the current allocation might be a little different from the time when you invested in the fund. That’s why you should always review your fund every six months after purchasing to confirm that fund achieves your goals.

Check your fund manager. The fund manager is the one who makes all the major buy/sell choices on your behalf. That’s why you have to find out more about the fund manager. Find how long this fund manager is handling the fund. Check if the fund manager has other funds for managing. If the other funds are also doing alike good, then it is a good sign. But if just one fund is performing well, while the other funds are struggling, then it might be a problem.

Check the credentials of the fund house. You do not want to get involved with a troublesome fund house which might bring you problems.

The procedure to select the right mutual funds to invest requires a careful study of the fund. To whom you can trust? Better make your own decisions based on examinations.

And a very important note: Do not rush with investing. There are hundreds of mutual funds in the market. Take your time to analyze them and find out the one that best suits your goals.

Happy Investing!

1st October 2018
Investing In Crypto – How To Prepare For It?

2 min read

According to the study conducted by London-based investment firm IW Capital, reveals that only five percent of British crypto investors realize a profit. But only 38% of the general population has any understanding of cryptocurrency or the underlying technology.

The data reveals that, fundamentally, Brits do not have enough information or knowledge on the topic of investing in crypto. In fact, many have no knowledge about the subject whatsoever.

Despite a widespread dearth of knowledge surrounding this particular asset class, disconcertingly facts appeared. One in 20 Brits – nearly 3 million – have invested in cryptocurrency without fully understanding it. Only 5 percent have taken advice from a financial adviser when investing in cryptocurrencies.

Crypto is unpredictable

As promising as crypto can be, however, it’s also been labeled one of the riskiest investments of 2018.

It simply crypto seems to be unpredictable.

We will show you how to be prepared for investing in crypto on the example of bitcoin, the most popular and largest one.

Some believe bitcoin was a bubble that has burst and is now fading away slowly, and others think it’s going to run to new highs.

Yes, bitcoin is risky, but it is still a popular investment option.

Should you be considering this risk these are some of the things you can do to prepare.

If you try to figure out what exactly influences bitcoin’s price for years now, the answers are not immediately obvious.
Bitcoin is global, decentralized, and unbound by sweeping restrictions. It can develop in different ways in different places. That said, some factors that influence the price have become clearer over time, and government regulations are at the top of the list.

Government rulings that affect the trade of bitcoin can by extension affect the price immediately. Imagine that all governments suddenly made it illegal to deal in cryptocurrency (some already did it). This would in a minute remove a massive market, reducing demand for a short time.

Everyone should follow regulatory news.

What is unclear about investing in crypto for the majority

Those who learn why it’s useful, and where its value comes from, can be a little bit puzzled by exchanges. There are a lot of them out there. They handle bitcoin transactions in different ways, with different fees, different acceptable payment methods. And varying selections of additional cryptocurrencies that can be handled. That’s why investing in crypto can be unclear for the majority.

However, it’s still worth keeping an eye on. Because changes in exchanges can also impact the price simply by making bitcoin more accessible. Or, in some cases, by increasing visibility for competitors.

For example, the positive effect would be if a major new exchange emerged for bitcoin, or an existing service started facilitating bitcoin purchases. But the negative effect could come about if an existing exchange. With a broad user base announced that it would begin supporting a cheaper alternative to bitcoin.

The more bitcoin is accepted as payment, the more demand there will be for it.

Last year has been bitcoin’s emergence as a widely trusted payment method for online casinos. They do a great deal of business internationally.

Many platforms started looking for more secure and anonymous ways of accepting money, and bitcoin-only casinos started to emerge. A major shift like this can give millions of people a new incentive to use bitcoin. You should keep an eye out for these types of stories.

Crypto volatility

Although crypto might offer more volatility than most, the crypto market landscape shares fundamental characteristics with other investment markets.

For example, the figures of losses are not wildly different from Forex, where new traders would often be better off flipping a coin or the stock market, where, according to science, 95% of all traders fail.

Amateur trading and investing have led to countless tales of monetary losses. Most derive from the human capacity to make decisions based on emotions. Rather than research or tried-and-tested methods.

In both, the trading and investment worlds, this story plays out time and time again, making the profitable trader a statistical anomaly. And leading the average individual investor to underperform the market index by 1.5 percent.

So, where the problem is? In lack of education.

What can you do?

You need to make sure that you’re in the right financial situation before you start investing in any asset or commodity.
If you’re in a position where you’re still paying off any debts your money would be better invested in a savings account rather than in cryptocurrencies.

However, if you have substantial savings account on hand, you may find yourself in a much better position to be able to invest in this volatile, but forever exciting, commodity.

But, before you ever place down the first cash sum, you must understand what cryptocurrencies are, how they work and how their market typically behaves. You have to understand what Blockchain is, how it works and, where possible. And how some country’s sudden ban or adoption of any cryptocurrency can affect the entire market.

And practice.

There are plenty of platforms and brokers who will offer you a free practice account, without risking any of your own money. This way, you can get a much better feel for what you will be doing with your own funds.

More about how to pick a good platform you may find here.

An unfortunate fact of the industry is that cryptocurrencies are volatile. Prices for any cryptocurrency can rise and fall at incredibly fast rates. Provide a monetary shock absorber to ensure you don’t land in financial trouble.

But whatever you do, be prepared for potential disappointment if the market begins to crash. On that way, trading and investing in cryptocurrencies will be much easier to handle.

With the right platform, with the understanding of just what to expect from cryptocurrencies and a good personal financial situation, you can try your hand at investing in cryptocurrencies with limited risk.

Risk Disclosure (read carefully!)

29th September 2018
MONZO, REVOLUT AND OTHER CHALLENGER BANKS ARE SHAKING UP THE INDUSTRY

Digital technology has transformed the established ways of doing business across industries – and banking is no exception. New start ups are challenging traditional service providers with a more personalised and innovative service. Traditional banks have been slow to adapt but they haven’t – yet – lost too much of their business.

Challenger banks like Starling, Monzo, Revolut, Atom and Tandem are all digital banks without high street branches. They are more flexible, quicker to adapt to user needs, more user friendly and more personal than traditional banks. Their biggest advantage is that they have started fresh with a digital offering and the use of the latest technology available. Traditional banks, meanwhile, are typically slower to respond to market demands and keep up-to-date with technological developments.
In contrast, challenger banks are able to incorporate new products much more quickly and with less friction through their platform business model, which can easily connect customers with new products developed by third parties. This greatly increases customer choice.

For instance, the account opening procedure is a lot easier and quicker with challenger banks, often only involving taking a picture of your ID and a video of yourself. Plus, they offer novel features such as making recommendations based on your transaction data for saving money, making payments to nearby friends via bluetooth, or even blocking gambling transactions from customer accounts.

They can also be better at security and preventing fraudulent behaviour thanks to their more intelligent analytic capabilities. Monzo, for example, recently noticed a data breach of the ticketing platform Ticketmaster and took action to replace all cards that had used Ticketmaster, without waiting to receive customer requests.

The trend of these new providers has been accelerated by recent regulatory changes in the UK (Open banking) and across Europe (PSD2). Taking effect in early 2018, these reforms force banks to share their customers’ data with third parties that can provide financial services if their customers request this. The change aims to boost competition and also challenges the powerful position of the traditional banks in the market by forcing them to share customers with new players.

What most challenger banks have in common is their ability to offer lower fees to their customers due to their lean set up and lower cost structure. Challenger banks (and fintech start ups in general) capitalise on the perception that they are looking after the customers’ best interests, rather than doing what is best or most profitable for themselves (at least not in the short term).

But this benefit to the customer makes it difficult to make profits. This is the norm for most UK challenger banks, as their focus is on accelerated growth and winning over new customers, while trying to work out their business model and how they will turn profits in the long term. Revolut marked itself out as an exception when it reported breaking even in December 2017.

TRUST ISSUES

Part of the issue is that, although challenger banks bring obvious benefits to users, we do not see a large number of customers leaving their traditional banks for these new players. While challenger banks increase their customer base and market presence, the number of customers using these banks as their main bank and having their payroll registered to them is low.

The main reason for this is trust. Trust is of paramount importance when it comes to where customers put their money, and here established banks seem to have the upper hand. The common view is that even though the customers do not trust traditional banks for giving them the best deals, they trust these banks for keeping their money safe.

The system failures that new players might face can also cause hesitation among potential customers and make gaining their trust more difficult. For instance, some app-only banks ran into problems recently due to issues with one of their technology suppliers, resulting in some reduced services. This suggests there’s promise, but also challenges.

The overall picture we see so far in our research into challenger banks is that people stick with their traditional banks for keeping their savings and salaries and prefer making frequent, small payments into their challenger bank accounts to use in their daily lives.

The pessimists say that the challengers will not necessarily win out. Although they are growing their users every day, they will not be able to grow beyond a certain size and will need to be acquired by established players. On the other hand, stats show that millennials are much more willing to switch financial providers in order to get better, more customized services.

Plus, despite the uncertainty around the future of challenger banks, there are hints – including new regulations and tech firms getting into financial services – that show there will be no return to banking as we have known it.

Read more HERE

This article was originally posted on https://www.markemlickprivateequity.com/

28th September 2018
What is Mutual Fund Investment?

Can mutual funds give you better returns, are they safer investment choice, what are types of mutual funds? Read all here.

By Guy Avtalyon

A mutual fund is a company that puts together money from many people and invests it in stocks, bonds, or other assets. The investment portfolio of a mutual fund is a combination of stocks, bonds, and other assets. When an investor acquires shares of the fund becomes the owner of the part of these holdings.

Mutual funds investment can give you a better return in a much safer way

The performance of mutual funds depends mainly on the fund manager who manages the fund on your behalf. Making the decision based on knowledge, picking a well-performing fund manager is utterly important to your success. For all of that, you should need some basic information on mutual fund investment.

OK, you own the mutual funds comprising a collection of stocks and bonds. That is your upper hand.

Why? First of all, it allows you to buy in with notably less money than it would take to purchase the same portfolio of stocks/bonds on your own. Second, you spread the risks out there among a group of investors if something goes wrong.

How the mutual fund portfolio is structured

It isn’t one single stock or bond of one sector alone. Therefore you can reduce your risks of losing your money to a greater extent. Always keep in mind that you may be the worst loser in the stock market due to a periodical deep cut in share prices. True is, there is no full-proof method or strategy that is completely safe and without risks. That’s the fact. But, mutual funds have lower risks than many other investment options. This makes them suitable for novices, traders who lack proper knowledge and skills in the investment market.

Mutual funds often have much better rates of return than the average savings account at the local bank.

Besides that, you may have minimum risks in this type of investment compared to other more risky ventures.

Even more, if you have some idea of which sectors are performing well, you are at an advantageous position of choosing a good sectoral fund. But be cautious, you should select a well-rated company. Diversification is the key to a healthy portfolio and mutual funds will help you get a diversified portfolio.

This is one of the safest ways to invest your money in the long term if you are young enough and in no hurry for retirement because the most mutual funds do not have the high payoffs that many investors seek to include for their retirement planning.

What are the main types of mutual funds?

Essentially, there are three types of mutual funds with some variations on each:

Money market mutual funds are an open-ended mutual fund. These types of funds invest in short-term debt securities. This is regarded as safe as bank deposits yet providing a higher yield. These funds are great for long-term investors. This slow and stable access to investing is better than leaving your money in an interest-paying savings account.

Equity funds that may provide slow growth over time with some income along the way.

Fixed income funds are created to provide a current income. This is great for those who have retired or for investors who are extremely conservative.

Besides this, you need to have certain basic knowledge about diversifying your portfolio of rated mutual funds. That can give you an attractive return with the highest safety. In a roar bull market, investing in Diversified Equity Fund is the best option (60% of the total fund), then comes Balanced Fund (20%), followed by Midcap Fund (10%), Small-cap Fund (5%) and Liquid Fund (5%). If you’re a conservative trader, you may opt-in Debt Fund. But if you’re optimistic, you can go for index funds as a systematic investment plan. Index Fund can deliver you a very profitable return in a bull market. Why? Because index fund includes highly rated performing stocks with diversified sectors and reliable.

One of the benefits of investing in a mutual fund is that offers professional investment management and potential diversification

Ways to earn money by investing in a mutual fund:

Dividend Payments. A fund earns income from dividends on stock or interest on bonds. The fund pays the shareholders almost all the income, lower for expenses.

Capital Gains Distributions. The price of the securities in a fund may grow. By selling a security that has increased in price, the fund has a capital gain. At the end of the year, the fund shares the capital gains, lessen by any capital losses, to investors.

Increased NAV. When the market value of a fund’s portfolio rises, the value of the fund and its shares increases also. If the NAV is higher the value of shareholders’ investments will be higher too. NAV is calculated by adding up the current value of all the stocks, bonds, and other securities, including cash, in its portfolio. Then, subtract the manager’s salary and other expenses, and then divide that result by the fund’s total number of shares.

All funds carry some level of risk. It is possible to lose some or all of the money you invest. The reason is obvious, the mutual fund holds securities that can decrease in value. Dividends or interest payments are also changing along with changes in market conditions.

A fund’s past performance is not important because past performance does not predict future returns. But past performance will never tell anything about the future performances but can tell you how volatile or stable a fund has been in the past. If you find a fund had more volatility, that is a sign that there are higher investment risks.

Every mutual fund must file a prospectus and regular shareholder reports, that’s by the law. Read the prospectus and the shareholder reports before you invest. Also, the investment portfolios of mutual funds are managed by investment advisers. You should always check that the investment adviser is registered before investing.

28th September 2018