Category: Stocks for Beginners

Stocks for Beginners is a category where young and beginner investors and traders can find many useful examples of how to start investing. For example, when is the right time to buy stocks, or how much money they need to start investing.

Traders-Paradise wants to show to the visitors that stock investing isn’t necessarily expensive. If you’re a beginner, for example only $100 is good for a start. That is very well explained in our posts in category Stocks for Beginners.

Even how to start investing and how long should you hold on penny stocks.
Investing is interpreted as the act of allocating money or capital to an attempt to obtain an extra income or profit. As savings, investing is money for the future. You invest with the hope your money will grow.

Investing in the stock market is the most popular way for beginners to get investment knowledge. In this category, beginners can find how to start, what app to use, all about robo advisors, etc. Also, Stocks for Beginners category will tell you everything the Traders-Paradise’s team knows about companies good for the beginners.

Everything about how to start that journey, how to pick the stock, what criteria to use, what are the best strategies for beginners.

We’ll explain to you, our readers, what are the best stocks to buy for beginners. Also, how to make your first steps in the stock market. You’ll know what is best to invest in.

“Traders-Paradise” Team wishes you happy and fruitful investing!

Time To Buy Stocks Is Right Now!

The advantage of buying stocks right now is that you can get more for your money. If you are young, the more you do with your money now, the more it will be able to grow throughout your lifetime.

By Guy Avtalyon

Yes, this is time to buy stocks. That would be a short answer but here is why this is a time to buy stocks.

Stock prices are changing violently because of the economic slowdown caused by a new coronavirus outbreak. So, the volatility makes it especially challenging to answer this question because it may vary on a daily basis. Maybe the most critical part of any investment decision is the stock valuation on which we base our decisions, should we buy or sell the stock. Moreover, that can tell us a lot about other investors’ feelings toward some particular stock. So, you need an explanation of our observation that this is time to buy stocks.

Here are some real examples but we have to go back in the old days.

The historical overview

It was the year 1974.

In the period of 1973-1974 bear market ultimately bottomed. It marked a 43% decline for the Dow Jones in a time frame of two years or even less. This bear market ended December 6, 1974, when the Dow Jones hit 577.60. The large sell-off caused a lot of damage to the U.S. market and it took approximately 20 years to entirely recover. But, at the same time, every investor who had guts to buy stocks then, had great returns later.

The second occasion was in 1982.

The Bear Market of 1982. The market had been falling for almost one year and two months, actually exactly 451 days. In just one day, it was February 22, the S&P 500 Index was down for almost 21%. Inflation in the US was at 13.58% but also, it was a rough year for the rest of the world. But some investors were smart and made their life-time investment by buying stocks.

The next was the stock market crash of 1987.

This market crash originally came from the US but had a great impact on the global economy. In October that year, DJIA fell by 22,6%. It was a well-known Black Monday. Until then, Dow Jones never had such a drop in one day. And as in previous cases, some investors made smart choices, and bought stocks rather than sell them and it was a very profitable decision for them.

Horrible 2008/09

The most recent event, before 2020, happened in 2008 and 2009. This bear market actually lasted from October 9, 2007, to March 9, 2009.

The S&P 500 Index lost about 50% of its value, and the DJIA fell 777.68 points in intraday trading. It was the largest drop point fall until this year’s market crash. Also, some were smarter than others and they bought the stocks instead of selling them. In other words, during the market’s crashes during history, the most successful investors were buying.

What do these events have in common?

They were all connected to some kind of crisis. And each market situation was characterized by capitulation.

The stock market capitulation means giving up. It is the point when investors are giving up on attempting to recover lost gains caused by falling stock prices. For example, a stock you own has dropped by 20%. You have two alternatives: to wait it out with hope the stock starts to appreciate again, and the other solution is to compensate for your loss by selling the stock. When most of the investors choose to wait it out, the stock price will probably continue almost stable. But if most of the investors choose to give up on the stock, the stock price will decrease further and sharply. When this event is relevant to the entire market, it is a market capitulation.

What else is in common for these market crashes? The most profitable investors were buying stocks. It looks like selling wasn’t the right option for them.

So, we can easily conclude that time to buy stocks is right now. This is an amazing chance to buy stocks because they are cheap now.

When is the right time to buy stocks?

The truth is that almost all investors are scared. The possibility of losing all capital is enormous and some of them are starting to get out of the market. Everyday volatility, stock prices changes in milliseconds, have a great influence on investors’ emotions.

The markets’ crashes, we mentioned above, weren’t quite severe as this one is. This bear market marked a 20% drop from the recent market highs. So, despite the fact that this drop is so sharp, it could be a good time to buy stocks.

Yes, we know that investing in this time may sound strange and nonsense for someone. But, at the same time, if you are seeking long-term investment it could be the best time. For example, you can buy some blue-chips at a very favorable price. Such are, for instance, Walt Disney, or Coca-Cola. Just follow the KIS rule and look at the most prominent. These companies and similar survived through previous market crashes and came out stronger providing great returns.

You can create real wealth in stocks now. Just don’t watch from the sideline. React and do it now.

Is this time good to buy stocks?

Stop dreaming and guessing. Listen to good advice only. Have an investing plan.
Start investing with an edge, that will give you an advantage over other investors. Buy the stocks that were the best players last year.

Watch what the world’s billionaires do, the path they made. Allow them to show you what stock to buy. They are strong enough to fight for their investments, but at the same time, they will increase the value of yours.

It isn’t time yet to estimate the accurate impact the coronavirus pandemic will have on the companies. The results will differ by company. Some will manage better than others, but that’s how things go. What we can do is to find the company built to last. Take a look at their revenues for the past several years or at least for the last one. Some did great. So buy its stock at a discount.

You have to know that this pandemic will have influence over the next several years. Just don’t panic. This is not the time for that. This is a time to buy stocks if you have some extra money that you’ll not need in the coming years. Just invest it in brands. This lesson came from history.

Investing is more available than ever. That means you don’t have to rely on some difficult strategy to start earning money. You can buy options, you have help from free trading platforms, apps to create an investment plan that matches your goals, and risk tolerance. You are investing for the long haul. Ignore the panic and understand why it is the right time to buy stocks. Set clear goals, and recognize your limits. Keep in mind, investing in stocks is one of the easiest ways to put your money to work.

12th April 2020
ROI or Return On Investment – The Efficiency Of Investment

ROI is a useful method to compare different investment opportunities, but it has limits

ROI or Return on Investment estimates the gain or loss created on an investment related to the amount of money invested. Investors use ROI to compare the performance of different investments or to compare a company’s profitabilities. In essence, the Return on Investment measures the gain or loss of some investment relative to the capital invested.

The main goal of investing is profit, so it’s essential to seek investments that give the biggest potential return. ROI or Return on investment is the ratio of profitability that measures how big return will be on some investment relative to the costs. Commonly, you can see ROI as a percentage. This measure is very important when you want to evaluate an investment.

Also, ROI is a valuable tool when you want to compare several investment opportunities.

For example, you have some dilemma in which company to invest in because you saw several interesting options. And it seems that all of them are good. What are you going to do? Of course, you are going to estimate the efficiency of each company particularly to reveal which one is able to generate more profits.

How to calculate ROI or Return on Investment?

To calculate ROI just divide the net return on investment by the cost of investment and multiply the result by 100 since ROI is expressed in percentages.

The formula looks like this:

ROI = (Net Return / Cost of Investment) x 100

For example, you invested $10.000 in some stock a year ago. Now you sold it for $15.000. Let’s calculate the return on your investment.

$15.000 – $10.000 = $5.000
Your net return is $5.000. Let’s go further by following the formula.

ROI = ($5.000/$10.000) x 100 = 50%
And you find ROI on your investment is 50%. The calculation is quite simple.
To calculate ROI you can use this formula too:

ROI = ((Final Value of Investment – Initial Value of Investment)/Cost of Investment)) x 100%

Calculate ROI for different investments

The basic ROI formula reveals how much an investment generated overall. But, if you want to compare ROI from several investments, you will need to take into consideration the amount of time needed for some investment do give you return.

For example, let’s say you want to compare the ROI from two separate investments. Let’s do this using our previous example. The capital invested is $10.000. One year later you sold the shares for $15.000 and gained $5.000, so the ROI is 50%.

But two years prior to this purchasing you bought some stake of shares of the other company and you invested, let’s say, the same amount of $10.000. After 3 years of holding it, you sold these shares for $16.000.

Let’s calculate the ROI for this investment.

($6.000 / $10.000) x 100% = 60%

ROI is 60%. Great!

Wait for a moment. It just seems that this second investment yielded a higher ROI. You had to hold this investment 3 years to generate a return of 60%. In other words, time matters.

The first investment generated 50% after one year, the second returned more but after 3 years. It generated 60% which means the annual return of just 20%. When you compare these two investments and their annual yields it’s clear that you made a better investment decision in the first example. To put this simply, even if you have a better overall return on some investment think about the amount of time you needed to reach it. The annual ROI is what will tell you about how good your investment is. Do it for each investment in your portfolio and you’ll figure out the winners.

The other methods to calculate the return

There are more precise methods to calculate return on investment. ROI isn’t the only one and has its limits.

To be honest, calculating ROI is an excellent way to compare investment chances. But one of the limitations of ROI is the lack of risk estimation. ROI formula doesn’t factor it into consideration. The risk estimation is very important particularly when you need to calculate actual returns. ROI is good to show you a potential return on your investment. But will it tell you how much you can lose? Not necessarily.

You must know that higher returns are in tight connection with more risk. The Higher returns, the more risk involved. This is particularly true for stocks. They have higher returns than bonds, for example, but at the same time, they are riskier.

Almost the same is for companies. When the company has a lower credit rating, it will offer a higher interest rate on bonds to balance the investors’ risk.

For example, you purchased the bonds from a company described above. It offered you much higher returns on its bonds and you might think it is a better opportunity than some company with good credit rating. And you made a calculation and saw ROI of, let’s say, 60% after one year. So, let’s see why it wasn’t a smart decision. What will you do if that company fails to pay interest rates? Well, you’ll end up literally without any returns.

Can you see where the point is? ROI is great but it measures only the potential return on investment, not actual. For proper decision, you will need a Real Rate of Return that takes into account inflation, taxes, and other factors. Also, the Net Present Value (NPV) is more suitable for investors like to estimate returns in the far future.

This metric is helpful

As most important, it is a simple metric, and easy to calculate and understand. You cannot misunderstand it. Moreover, it is a general measure of profitability applied everywhere all over the world. When you see that some investment has an ROI of 30% that is the same in the US or Europe or Africa. Thanks to its simplicity ROI is good enough for estimation the efficiency of a single investment or to compare the returns from several different investments.

What is a good ROI?

Investment returns must beat inflation, taxes, and fees because no one would like to hold an average investment. We all need excellent investments. That’s the whole wisdom, to earn a higher rate of return on investments.

A good ROI depends on the investment. The truth is that you have to keep expectations rational. For example, if you are expecting to gain 20% from blue-chips over the next 10 years, we have to say your expectations are pretty much unrealistic. It isn’t going to happen. Whoever promises you that, plays on your inexperience. For instance, the stock market’s average annual return is about 10%, for more aggressive investors it was about 15% per year. And it was almost the same for the last 100 years. Take it or leave it. Whoever promises you a moon is lying or trying to fraud you.

Bottom line

ROI or Return on Investment calculation isn’t an accurate metric but it is a good way to reach the approximate figures. You can always expect some deviation or error in ROI calculation.
ROI is rated as the single most significant measure of the efficiency of an investment. A better ROI means that investment has satisfying results. When you want to compare the ROI of different investments it is important to compare the companies from the same or similar sectors.
This metric is very connected to what happened in the recent past. You have to follow a simple rule of thumb: the lower the recent returns, the higher the future returns. And vice versa.

20th February 2020
O2Micro International Limited – Penny Stock To Buy

O2Micro International Limited increased the Q4 2019 revenue forecast to be at a $17 million range.
This stock is a good short-term opportunity

By Guy Avtalyon

O2Micro International Limited is a penny stock and recently the company announced great revenue for the third quarter. The revenue was up by about 12%. Moreover, several days ago the company raised revenue forecast for Q4. And investors noticed it. Yes, the price of shares dropped on Friday, December 6 for 1.36% and the current price is at a bit more than $1.73.

But what makes us think it is a good stock to be watched in December?

According to Reuters, O2Micro International Limited develops, produces and sells components for power management. They are supplying producers of computers, the communication industry, automotive. O2Micro International Limited produces integrated circuits for LCDs and for LED, desktop and notebook monitors, digital cameras, electric bikes, LEVs (low emission vehicles) apps, smartphones, GPS, etc.

O2Micro International Limited financial highlights for the third quarter

O2Micro International Limited reported Q3 revenue of $16.0 million. It was up 12.3% but lower 4.7% from the same quarter last year. The gross margin in the last reported quarter was 51.4%. It is higher from 50.1% in the second quarter and by 50.5% higher than in the third quarter of last year. The company kept the gross margin in the targeted range.

O2Micro International Limited reported that over the third quarter it recorded total GAAP operating expenses of $9.4 million. For the second quarter, it was $9.7 million. In its Q3 report, we could see the GAAP loss of $200,000, while in the Q2 it was $2.8 million.

GAAP net loss per fully diluted ADS was $0.01 in Q3 this year, in Q2 it was $0.11 and for the third quarter last year, it was $0.13.

The future of OIIM stock price

In our opinion, O2Micro International Limited stock isn’t a good long-term investment. It is still a high-risk long-term investment. But if you prefer short-term investing, not longer than 3 months, this could be a good choice. Traders Paradise sees this stock at the lowest price at $1.90 in the next 14 days. But be prepared for several jumps and falls during that time. Our data shows that this stock was in the uptrend in the past 12 months and this will continue over the next 3 months since the stock is in rising tendency.

Actually, the stock is in the middle of a strong and wide uptrend. In the short term, it isn’t bad since it could rise around 29% in the next 3 months and hit the price between $1.90 and $2.40 at the end of that period.

Bottom line

On December, 2 O2Micro International Limited (NASDAQ: OIIM) increased the Q4 2019 revenue forecast to be in the mid to high $17 million range. That is for one million more than the company reported in its Q3.

Does it mean that the management has some trump card to show in the coming months? We believe the answer is yes.

Don’t miss this: Investing In Penny Stocks Can Be A Highly Profitable Strategy

There is a buy signal coming from the relation between short and long moving average. If the stock price breaks down somewhere between $1.70 and $1.50, which are the support levels, the sell signal will be issued. Well, some negative signal is already issued. On December, 4 a sales signal came from a pivot top point. That means further falls until a new bottom pivot has been found. Traders should know that the volume of this stock fell by 4 590 with the dropping stock price. Technically speaking, it is good. But the risk may come from the low liquidity.

The stock has several short-term signals and a good trend. That’s why we think that there is a buying opportunity for the short-term.

9th December 2019
How Long to Hold Penny Stocks?

by G. Gligorijevic

Trading penny stocks is one of the most hazardous investments in the market. They are extremely cheap, and this makes them volatile.

Do you want to make money with these cheap stocks? Well, you have to know the basics. And one of the basics is to know how long to hold penny stocks. Like with many other assets in the market, you have to know when is the right time to buy penny stocks and when it is to sell.

But why the penny stocks are so special?

As a difference from most blue-chip stocks, penny stocks ordinarily don’t match cyclical trends in the market. It may be more challenging to recognize how long to hold penny stocks. In reality, penny stocks will follow the general market trends in the sector they belong to.

If a positive event happens, most stocks in the given sector will follow the trend.

When we are talking about penny stocks, as you can guess, a minimum change in price will cause a great gain in percentages. To understand this, take a look at this company’s stock chart.

BroadVision, Inc. is an international software vendor of self-service web apps for business social software, automated commerce, business portals, etc.

The stock price of BVSN was yesterday $2.84 which is $0.16 up or +5.97% from the previous trading day.

But here is the tricky part. Penny stocks, no matter which company you are looking at, will always hit the peak. But what is following after the peak is what matters. Apps are booming nowadays. And typically for the penny stocks is that when the whole sector is rising most sector stocks will jump. When it comes to high-tech penny stocks, the volatility joined with positive feelings has produced some serious breakouts. What happens after those breakouts is more important. The stocks may collapse or to consolidate.

The consolidation can be difficult

The stock will surely pull back but to a level lower than the peak and almost every time, that new level will be above previous highs.
What you as an investor or trader has to do is watch the indicators. Pay attention to indicators that display overbought or oversold. Use the RSI indicator. Yes, it is a simple tool but can help you to determine what to do with your penny stocks.
Never expect from penny stocks to give you a huge gain by holding them for a long time. Holding them too long is an extremely risky strategy. It is always better to set small goals. For example, 20-25% profit. Also, you can use some other stock-trading indicators or combine them. But you have to know that indicators will not show you everything.

Some traders don’t even use them, they believe they have a good hunch.
When it gets to buying penny stocks or selling them it is all up to you. Of course, there are plenty of tools you can use to be surer if it is time to buy or sell. But even they are not sure-fire. This is particularly true when it comes to how long to hold penny stocks. The problem with the period of holding penny stocks is that despite all indicators and your confidence some bad news like the company’s annual report may ruin everything. So, watch your penny stocks carefully, and when you see they are rising, and indicators show they could rise more, don’t wait too long. Take profit. That is what matters at the end of the day.

You can hold penny stocks 5 minutes or 5 months but never more than 6 months. That’s the answer.

10th October 2019
European ETFs: Invest in the World’s Biggest Regional Economy

by Guy Avtalyon

European ETFs give a large diversification in mutual funds and with a bit of the fee. If you buy one security as a foreign investor you will have exposure to a lot of firms in the EU. Why Europe is interesting for investors? First of all, some of the biggest companies are located in Europe. So, it is a great opportunity for foreign investors to invest in EU ETFs. The European Union factors about 20% of the world GDP, therefore it looks like one of the most valuable investment targets in the world.

Benefits of Investing in European ETFs

Europe is one of the best-shielded business areas around the globe. To be honest, there are still some risks after the crisis in 2009. The companies in Eastern Europe have better growth potential than Western Europe. Anyway, having EU ETFs in your investment portfolio is a great choice and I’ll try to explain why that is.

First of all, in Europe are some of the most successful companies. For example, a lot of US investors are very interested in them. Moreover, Europe is consists of several areas. That makes European ETFs very good for diversifying a stock portfolio without the risk which developing markets may give. The added quality is that the EU is honestly low-risk. Just compare it with Asia, for example.

Many investors are now attempting to enter the European Union market through mergers and acquisitions. Also, by investing in its main businesses. The EU is, in fact, welcoming foreign investment.

Here is full information that will help investors about investing in European Union.

Risks of investing

Of course, there are some risks involved.

The main risk is that the members of the EU are very connected and dependent on each other. At first glance, nothing is bad with that but if a crisis occurs it will spillover among them, and business in the union may fall down like a house of cards. As I mentioned above, Wester Europe economies have slower growth and they may seem less attractive for investing. Especially for investors who want more risky investments.

Where to find: Top European ETFs

MSCI European ETF (NYSE: VGK)

Vanguard is available in Europe. Its European funds are based in Ireland. Vanguard allows non-residents to buy their ETFs/funds through a broker. So you can not directly do it through them. Vanguard’s ETF is a good option but it involves currency exchange. You can simply open an account with any broker with access to the NYSE ARCA. That is the stock exchange where Vanguard ETFs trade. The rest is simple, buy it just like with any other international stock.

iShares MSCI United Kingdom ETF (EWU)

A lot of investors favor “tracker” funds. They allow you low-cost investments. But not all tracker funds are low cost. Moreover, the fund charge is not all you pay, you will have to pay the broker or fund platform too. The good news is that as your portfolio grows the broker will charge you less on a sliding scale.

SPDR DJ Euro STOXX 50 ETF (NYSE: FEZ)

FEZ includes the 50 biggest EU companies but the large-caps from countries that don’t use the euro, including the UK, Switzerland, and Sweden, are not included. But, FEZ’s portfolio includes companies from France and Germany. As a difference from other EU funds, it does not hedge euro exposure.

European ETFs provide the most comfortable approach to get exposure to European markets and the easiest access to invest in Europe. In comparison to buying foreign stocks directly, it is for sure.

Further, European ETFs are an excellent method to diversify your stock portfolio with low-risk investments. To be honest, I have to say that European ETFs will not suit every investor. Risk seeking investors wouldn’t like them, or for younger investors, European markets are not volatile enough. Yes, there is pretty much a lack of excitement.

26th September 2019
Mutual Funds in India Are Popular

Why Investing in mutual funds in India is very popular and developing at amazing speed? Here is the answer.

By Guy Avtalyon

Investing in mutual funds in India is developing at an extraordinary speed. The AAUM (average assets under management) increased during the past 10 years more than 4,5 times. According to data from the beginning of this year, it was Rs. 23.16 trillion. Just compare it with Rs. 5.09 trillion in 2009. The investors have the opportunity to invest in 44 AMFI with more than 2,500 mutual fund schemes. AMFIs are associations of Mutual Funds in India.

That is quite a large number. Occasions like this may be difficult for investors when it comes to picking the right fund.

What are characteristics of mutual funds in India

A mutual fund is an investment tool supplied by money from different investors. The collected money is invested in an assortment of different asset classes. That can be equity, gold, foreign securities, etc. What is the secret of this popularity of mutual funds in India?

Mutual funds can bring numerous benefits to investors. First of all, it isn’t necessary to invest a large amount of money since you can build a diversified portfolio with just Rs. 500. That is a great benefit for Indian investors.

Another characteristic that gives mutual funds a favored choice amongst investors is the expert management of funds. Hence, investors may be pretty sure that their investments are safe. That’s the general characteristic of mutual funds. In India, the mutual funds are under SEBI and AMFI regulations which give additional security.

Which mutual funds are popular in India?

We already said that mutual funds in India are under SEBI regulations so they are grouped into three categories: Equity Funds, Debt Funds, and Hybrid Funds.

Equity Funds

This kind of mutual fund invests a minimum of 65% of its assets in equity and equity-related instruments. Equity funds may give comparatively high returns. The point is that their basic investment is in stocks of companies that are sensitive to fluctuations in the stock market and the economy. Hence, equity funds are a bit riskier.

SEBI recognizes 11 types of equity funds. One of the most popular is the ELSS – Equity Linked Savings Scheme. Its investments are almost 80% in equity and it is unique because ELSS is qualified for a tax deduction of up to Rs. 1.5 lakh. The lock-in period for this type of mutual fund in India is three years.

Debt Funds

A debt fund invests a bulk, but less than 65%, of its assets in debt and money market securities. There is a lower risk for investments than in the equities. Debt funds in India yield returns which higher than returns given by fixed return investments. According to SEBI categorization, there are 16 types of debt funds in India. The most popular type of debt fund is a liquid fund. The big companies use them to store their extra cash for a short time, usually up to 91 days. Because of the shorter maturity period, liquid funds are the lowest risk investments. The advantage of these funds is that they are giving returns higher than savings accounts and almost equal as fixed deposits while but more liquid than a fixed deposit.

Hybrid Funds

A hybrid fund invests in two or more asset classes including equities. It can be debt, gold, abroad securities, money market instruments, etc. But usually, a hybrid fund invests in two asset classes: equity and debt. The mixture of equity and debt allows a hybrid fund to provide returns comparable with those provided by equity funds but promising proportionately lower risk levels like debt funds. According to SEBI categorization, we can recognize 7 types of hybrid funds.

The most well-liked type is the Dynamic Asset Allocation Fund. It can invest between zero to 100% of its assets in equities or debts. This type of fund trades equities and profiting during overvalued equity market conditions. A Dynamic Asset Allocation Fund reduces its debt vulnerability during the undervalued markets and increases its debt holdings when is a bull run.

Money Market Funds

Some investors trade stocks in the stock market, the others invest in the money market. The government, banks, or companies regularly issue money market securities, for example, bonds, dated securities, and certificates of deposits are some of them. The fund invests your money and pays you proper dividends in return. In short-term investing, for instance, no longer than 13 months, the risk is lower.

The benefits of investing in India

You can start investing with just Rs. 500 and there is no maximum limit to your investment. Also, you will get professional management of your investment. Funds corporations will charge you some fee for that service. It is a so-called expense ratio and it can vary from 0,5% to 1,5%, but due to the SEBI regulation, it will never be more than 2,5%.

Moreover, you may gain higher returns since mutual funds allow long term returns in a range from 7% and 15% or more for investments for more than 5 years. It is clear that these returns are higher than the inflation rate and that is the reason why they are so popular.

Diversification is another reason. Mutual funds permit investors to access to a broad and diversified investment portfolio. That provides a balance between risk and return which is extremely important for every investor. And as we said in the beginning, investing in mutual funds in India is developing at an extraordinary speed due to the various possibilities for investors and lower investment risk.

17th September 2019
Leonardo DiCaprio As Environmentally Responsible Investor

Celebrities like to be connected to famous brands but only a few are investors. This is one of them.

By Gorica Gligorijevic

Leonardo DiCaprio became an investor and advisor to an environmentally responsible financial business this spring.

The Aspiration company seeks to provide users with a socially responsible option to conventional banks.

“Each year, $100 billion worth of pipelines, drilling, and other fossil fuel-extraction projects are funded with money deposited at traditional banks,” DiCaprio said in a comment. “To bring about long-term solutions for our planet, we need alternatives that empower everyday consumers to take action against climate change,” added the famous actor.

This investment is the latest in a series of environmental aims for the actor. DiCaprio also signed on to advise a climate technology fund, a venture capital firm Princeville Capital. DiCaprio already has experience as an advisor, he helps to the same profiled start-up Bluon Energy.

Leonardo DiCaprio’s investment portfolio is wide-ranging.

He supports businesses from virtual reality ventures to organic drinks companies. Moreover, he founded the Leonardo DiCaprio Foundation, an organization committed to the stability and “wellbeing of all Earth’s inhabitants.”

Leonardo DiCaprio Investor

Mobli

In 2011, DiCaprio managed a $4m funding round in Mobli. It is a company founded by Israeli businesspeople and Moshe and Oded Hogeg. It is a website for sharing photos and videos providing users to interact with visual data. Di Caprio was very excited about this investment.

“I’m very excited to be a part of Mobli,” he said.

Unfortunately, Mobli bankrupted in 2016. The race against rivals Vine and Instagram were lost.

Cue

Only three years later, DiCaprio contributed to a $7.5m funding round in start-up Cue.

In an effort to develop a home health monitoring system, the company develops a variety of technologies with that purpose. One of the most important products is wireless diagnostic equipment that enables users to monitor their own health.

Runa

DiCaprio invested in organic beverage firm Runa.

The company uses guayusa (gwhy-you-sa), a leaf that is found practically only in the Amazonian forests in Ecuador to produce tea and energy drinks. That was a support to the 3,000 families that grow it and the Runa company hired them all.

“Sustainable farming practices are key to helping ensure a brighter future for so many local people,” stated DiCaprio.

MindMaze

MindMaze is a Switzerland-based high-tech start-up. We found on their website:

“MindMaze builds intuitive human-machine interfaces through its breakthrough neuro-inspired computing platform. Our innovations at the intersection of neuroscience, mixed reality, and artificial intelligence are poised to transform multiple industries.”

This product can be very helpful in the movie industry, and that was DiCaprio’s opinion too:

“I am excited about the possibilities of MindMaze’s technology, especially for its potential to be a driving force in media and entertainment in the years to come.”

He invested in this company in 2017.

Casper

In the same year, he took part in a $55m funding round for this online mattress company. Thanks to his engagement along with Tobey Maguire, 50 Cent, and Adam Levine, the company surpass $500m in value that year.

Casper is founded in 2013 in New York-based. They are selling mattresses, pillows, and sheets online.

Diamond Foundry

Two years before Casper, DiCaprio invested in the Diamond Foundry.

The company creates diamonds by using plasma reactors and eliminates human labor, which is usually connected to this process.

After he invested, DiCaprio posted on his Facebook profile: “I’m proud to invest in Diamond Foundry – a company that is reducing the human and environmental toll of the diamond industry – by sustainably culturing diamonds without the destructive use of mining.”

Kingo

Last year, in 2018, DiCaprio invested in a solar power company Kingo based in Guatemala.

The company installs solar capacity in rural regions. In that way produced energy costs less per hour than the people would have to pay for a single candle.

Kingo is currently powering 60,000 homes and every month has a new 7,000 users.

As we can see Leonardo DiCaprio investor is focused on environmentally responsible businesses. This famous actor, born in 1974 in Los Angeles is known for his roles in Tarantino’s Once Upon A Time in Hollywood today, or previous Catch Me If You Can, The Wolf of Wall Street, Blood Diamond, The Great Gatsby, Gangs of New York, and many others, is a socially responsible investor. Respect!

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2nd September 2019
Passive Investing is a Good Choice

Passive investing is the way to force your money to work for you.

By Guy Avtalyon

Passive investing has become a significant part of the market. Finally! The low-cost index funds or exchange-traded funds are popular. However, there are still a lot of investors who are trying to achieve an excellent return through active investing. The question is why they are doing that when passive investing provides a better alternative.

What is passive investing?

It is investing your assets in funds that mimic a market. The main task of fund managers is to purchase the security in the precise proportion of a particular index to copy it. It is a passive investment. Sometimes you will hear the term “indexed investing.” It is the same.

Let’s consider a bit more the act of active and passive investing strategies. Three years ago, the S&P500 had a total return of 9.54%. What did every passive investor make? Precisely 9.54%. On the other hand, an active investor gained 12,5%, but the other made just a 1,9%, or some made losses of -27%.

How is that possible?

The passive portion returned 9.54% and the total market returned 9.54%. But returns before the cost is not what should be counted. You should count what you actually earn. And what is that? The returns after cost and after-tax.

So, where is the catch?

Passive management is cheaper than active. Active management is more costly. If you know that the cost of managing an index fund is between 0,15% and 0,50% rely on the market replicates, you will find that an active investing will have a minimum of 1% higher costs than passive investing.

That 1% is 100 basis points and may not sound a lot.

But let’s consider the following situation.

Let’s say you put your money in the bank account instead of buying stocks because you don’t want to pay that 1% of costs. You are short immediately 5-6%. Your wealth is worthless. Actually, if you invest that amount in stocks there is a chance to gain more. With putting money in the bank account you will lose 15-16% of your net profit from potential investments in the stock market. In only one year. Over time this difference could considerably decrease your wealth. It will surely lower your standard when retirement.

The costs of active investing are not only fees. The activity by nature adds more costs. The active trades create capital gains more often than passive investing. So, why wouldn’t you avoid them entirely? It is simple math. If you want active investing you would pay more. Just take into account the taxes and costs.

So, we have to say, index funds and passive investing can be a better option than actively managed funds.

Passive investing in index funds has changed the investment world.

In 1975, Jack Bogle, the father of passive investing, introduced the index fund. His radical idea showed the financial sector regularly cheated the individual investor with the unknown and opposed fees.

This doesn’t mean that everyone should be indexed. Of course not. Active managers’ choices hold prices closer to values. That allows indexing to operate. Index investing means to leverage their trade without paying the costs. The majority of investors decide to index part of their money, some do it with all of them. But the others want to explore the less-priced securities.

Let’s consult the statistic, in 2017, the percentage of securities owned by passive fund portfolios was about 5% of the total in the global market. The biggest part it took in the US where it was 15 %.

When it comes to investing, you can choose between active and passive investing.

Picking the right is crucial to your investing profit. If you make a mistake, you can end up with money loss. With the right one, you are the winner and you can make a big success in the stock market.

How to find the right passive investing opportunity?

Passive management requires buying investments that track an underlying index or making asset allocation and holding to it for the long term.

One form of passive investing is the mutual fund investment because the mutual fund’s purpose is to return what the S&P 500 returns every year. The advantages of passive investing are numerous.

Passive funds don’t require you to make trades and adjust holdings daily. The management fees are much cheaper, which is a benefit in the long run. You will always get the same percentage as the market returns. Good or bad, but the same.

Passive investing is easy. You just have to pick some investments and that’s all. There is no need to monitor the market every second and make changes or to try to catch price swings. But passive investing is not for investors who want to beat the market. Yes, you can do it from time to time, but all the time. So, probably, if you are not a professional you will make big losses.

Passive investing is more than set up your portfolio and don’t touch it anymore. You have to monitor your portfolio and make corrections as the market moves. You have to rebalance.

Say the stocks increase in price, bonds are falling. If you have a 60% stock and 40% bond in your portfolio, this price movement requires an adjustment to 70% stock and30% bond in the portfolio. In case you never make these changes in your portfolio you will take on too much or too little risk. You will not achieve your targets. So, some monitoring has to be done. In the first place, you have to think about your money. The money is not just a piece of paper. Having money means that you are free and safe.

You have to force your money to work for you. Passive investing is for sure a good way.

22nd July 2019
Investing in Bonds – How to Start

Bonds as an investment are not free of risks. For many investors, the bonds market is still mysterious.

By Guy Avtalyon

Investing in bonds isn’t as easy as you might think. Anyway, read this post to its end and things will be more clear.

If you are OK with the lower return but with considerably fewer risk sounds as a good investment for you, it’s time to invest in bonds. Reducing risk is essentially what bonds will provide you.

Bonds are securities. They are very similar to loans. They are issued by governments or companies. And you can buy them. Governments and companies issued them because they want to fund some new projects, to continue the realization of plans, or some other reasons can be on the scene.

The issuer gives periodic interest payments and compensates for the full investment at the end of a prearranged time frame. The bond ends “maturity” when the investor can expect the principal will be returned, plus all accumulated interest.

How to start investing in bonds?

It is not so simple

You can’t simply purchase bonds and hope you have a low-risk investment. Bonds are complex instruments in comparison with stocks. There are some risks involved. For example, the bond can be less worth after some time if the interest rate rises. If the interest rate rises continuously until the maturity of the bond, the value of your bonds will be lower even worthless in some extreme situations. That is the interest-rate risk.

There is no bond protected from interest-rate risk. So it is likely to get a lot of risk with bonds. And it is not the case with low-grade bonds issued by the company with financial problems. The risk of investing in bonds may appear with high-grade bonds too because of interest-rate changes.

Bonds are assumed to be the firm and low-risk part of your portfolio, but the bond investing is still full of traps.

Let’s find them!

Are bonds risky?

Bonds Market is still enigmatic.

It’s hard to recognize are you aiming at a good price. Let’s say you want to buy individual bonds. You have to be sure you are not overpaying. If you buy stocks, your broker will charge a commission.

But when you buy bonds, instead of a commission, you will pay an unrevealed margin on the cost of the bond.

What is most important when investing in bonds?

You have to reveal is the closing price you are paying for your bonds matches the price which other investors are giving for the same security. But even institutional investors with lots of money have the same problem: to identify pricing data. The reason is simple. Almost all bonds are traded over-the-counter not on some exchange.

Bonds are rarely traded. Individual investors will hold bonds until they mature. So prices based on recent sales usually don’t even exist. They are changed or invisible.

High liquid Treasury bonds and notes are some other stories. Their prices are broadly announced. But this kind of market is the exemption to the rule.

The issue price of a bond

It depends on the relation between the interest rate that your bond pays and the market interest rate on the same date.

You have to determine the interest paid by the bond. For instance, a bond pays a 5% interest rate per year. That means on an amount of $1,000, the interest payment is $50.

How to find the present value of the bond? Say the bond matures in five years, its present value factor is 0.74726, as taken from a table for the present value of 1 due in n periods, and based on the market interest rate of 6%.

The present value of the bond is, therefore, $747.26.

Now, calculate the present value of interest payments. The present value of an average annuity of 1 at 6% for five years is 4.212.

When you multiply this factor by the annual interest payment of $50, you will come to a present value of $210.62 for the interest payments.

Now, calculate the bond price. The result should be $957.88. That is the amount of the present value of the bond repayment at its maturity in five years, and the present value of the associated with future interest payments.

You see, the price of the bond is lower than its face value. So we can say that the interest rate on the bond is below the market rate. Investors are therefore offering its price below. In order to reach an effective interest rate that equals the market rate.

Hence, if the result of this computation a higher price than the face value of the bond, then the interest rate on the bond would be more expensive than the market rate.

So, we can easily conclude, as interest rates rise, current bond prices normally fall. But these modifications do not change all bonds fairly. It is a matter of duration. Duration regulates how a bond’s price will change in interest rates. Interest rates also affect the duration. The higher the interest rate, the lower the duration.

18th July 2019
The stock market trading for beginners – It Shouldn’t Fright You

If you’re afraid to start trading stocks, here are some sure ways on how to do that

By Guy Avtalyon

The stock market trading for beginners can appear somewhat terrifying. Trust me, I know that.

Before you begin to trade stocks you need to know the costs. Invest the money you can cover if failed. The tricky part of the stock markets is that you can’t expect any guarantee you will get big returns.

But there is a big advantage when trading stocks. It gives you an opportunity to preserve your savings in circumstances of rising inflation. If you work smart and catch the experienced traders’ performances, you may have the chance to hit big returns.

How to start trading stocks?

As first, you have to pick a broker. That broker must be licensed and regulated. This matter is crucial for all stock market trading beginners.

The chosen broker will provide you access to its trading platform. For instance, you would like to join the stock market. You have to know better what are you dealing with. If you want to become friendly with the platform you prefer, the general advice is: begin with small sums of money.

You are a fresh participant in the arena of online stock market trading.

You have to read the financial news. That is helpful when it comes to which stock to buy. News is very important for stock market trading for beginners. Also, you can participate in a number of forums. There you can find some advice.

Truly, you can get a lot of helpful free data in public places for stock market trading for beginners. And study a business you prefer before you stock market trading.

The reasons to start the stock market trading

Say, you got some stock. And the time goes by as always. Assume that after several months the price of the stock goes up. So, you may trade your stock, sell them, and earn a profit. Of course, you can wait longer. If you were smart enough and done well research you picked a worthy company and your stock will rise more.

The stock market trading for beginners is full of chances. But here we come to the importance of news. The value of your stock depends on a large variety of circumstances. As you are a beginner in the stock market trading, you have to know that socioeconomic impacts, geopolitical topics, inflation, and so many others may have an influence on the value of your stock.

You have to know that all the time, all of them, are acting cooperatively. Sometimes they are operating in reverse courses, but they are working. And all of them may have influenced the price of the stock. That is necessary to know for stock market trading for beginners.

But possibly the highest influence on stock prices create the people. If there is a crowd that assumes the price is going up, the price will go up. It will take some time to learn how to trade stock but it worth your effort.

Stock trading strategies for beginners

When you start a stock trading and you are beginners one central question appears. Which trading strategies for beginners to implement?

This question isn’t without purpose.

Some stock trading strategies are very complicated. You should not implement those as the best stock trading strategies for beginners. As a beginner, you should rise with simple strategies. With something smooth and comfortable. This rule fits every novice. It is very important to understand how markets work, so it is highly recommended to follow the trends.

Following the trend is an excellent strategy for stock trading for beginners. Just set it and open the position in the course of the trends. There are various ways created to identify when a trend begins and finishes. An easy stock trading strategy for beginners has simple rules. Follow trends and you can gain large profits. But there are also some disadvantages. Actually, large trends develop rarely.

This strategy can generate losing trades. “The trend is your friend, UNTIL THE END,” said some very smart and experienced once. The end is when the trend sinks.

It is very important for stock trading strategies for beginners to be executed with risk management. Find more about stock trading and investing in stocks with a little money HERE

Don’t waste your money!

28th May 2019