Tag: bonds

All bonds trading / investing related articles are found here. Educative, informative and written clearly.

How To Choose An Asset To Invest In
You don’t need to be an excellent asset picker to build your wealth. Just avoid get-rich-quickly schemes.

By Guy Avtalyon

How to choose an asset? Don’t pick only one, or form the same asset class, mix them.

The main asset classes are:
1. a) Shares/stocks (also known as equities).
2. b) Bonds (also known as fixed-interest stocks or debt).
3. c) Property.
4. d) Commodities.
5. e) Cash and cash equivalents.
What are the best assets to invest in?

(the return criteria is based off trying to generate $10,000 a year in passive income)
1) Certificates of Deposit (CDs).
2) Fixed Income / Bonds.
3) Physical Real Estate.
4) Peer-to-Peer Lending (P2P)
5) Dividend Investing.
6) Private Equity Investing.
7) Creating Your Own Products.
8) Real Estate Crowdsourcing.

Decide which asset to invest among these

Let’s say like this, investing is about laying out money today expecting to get more money back in the future. This is best achieved by acquiring productive assets. Productive assets are investments that internally throw off surplus money from some sort of activity. To be clear, if you buy a painting, it isn’t a productive asset. After 200 years you’ll still own the painting, which may or may not be worth more or less money. But, if you buy an apartment building you’ll not only have the building but all of the cash it produced from rent over that century.

How to choose an asset suitable for you?

First of all, never invest all your money into one asset. You should mix them. The right asset mix should help balance risk with your expected rate of return on your investments, fit your tolerance for risk, let you get your money when you need it, help provide the growth you need to reach your goals, and change as your needs and goals change over time. When you know all of these you’ll know how to choose an asset to invest in.
- Shares (also known as equities) – Shares are bought through a stockbroker. The easiest way to buy or sell shares is through an online broker. Some execution-only is maybe the best choice. Execution-only indicates the broker will take your order and execute it without giving you any advice. Many execution-only brokers provide lots of information and research about shares but this does not include advice. So, if you want to use some service like this one you’ll have to take full responsibility for your investment. If you do need advice you’ll have to find a stockbroker offering either an advisory or discretionary service. With a discretionary service, you authorize the broker to buy and sell shares on your behalf, but you’ll have to pre-arrange the limits. If you choose an advisory service, the broker will need your permission before taking any action regarding your trade.
- Bonds (also known as fixed-interest stocks). These represent a form of IOU issued by governments and companies when they want to borrow money from investors. They pay a fixed level of interest, with higher-risk borrowers paying more in interest than lower-risk borrowers.
- Property. The property has a good record in providing a financial return that beats inflation, no matter residential or commercial it is. As an investor, you can buy shares in property development or real estate investment companies. Also, you can buy real ‘bricks and mortar’. Funds generally focus on commercial property, but some buy into the residential property as well.
- Commodities. You can find a huge variety of commodities traded on global markets: oil and gas; precious metals such as gold and silver; industrial metals such as copper and iron; and ‘soft’ agricultural commodities such as wheat, rice, and soya. It is almost the same as shares and bonds. Commodity prices can rise and fall in answer to supply and demand
- Cash. It may be a bit strange that cash is considered to be an asset class because the whole reason for investing in the first place is to grow your money faster than if it was left in the bank. But you must have in your mind that cash provides a useful benchmark for all the investment. Finally, investments that don’t beat cash have failed. Cash also provides a safe shelter for funds when markets are bumpy or overvalued. For example, some funds trade in currencies to increase their returns from cash in periods the interest rates are low.
  Being a skillful asset picker isn’t actually necessary to grow your capital. Many people get in trouble particularly when they think of investing as a way to get rich quickly.
Your path to success as an investor or trader is not likely to hinge on whatever hot stock your friend thinks you should buy ASAP. Your success depends more on how smart a portfolio you put together, as well as how you progressively modify or rebalance it over time. And also, knowing how to choose an asset that will generate you nice returns.

Well, how do you invest intelligently, if slowly? You have to respect some basic principles.

Why do you want to start investing?

The main argument for putting your money in anything is to avoid losing your wealth during inflation. In your checking account, cash will still be there in 40 years, if you don’t touch any of it. But you won’t be able to buy anything.

Other crucial reasons might include growing substantial enough savings for retirement and earn enough cash for buying a home. For those kinds of goals, you might want assets with higher returns and therefore you’ll have to take on higher risk.

Also, the very important question is when should you begin investing?

You might already know, but you need to be investing in old age. If you start investing in your early ages you will have many advantages as an investor. Just to name a two: you have more time for your money to grow and more time for market downturns to correct themselves.

How to choose an asset?

Each type of productive asset has its own characteristics and pros and cons. Here is a quick rundown of some of the potential investments you might make as you start your journey:

Business Equity – If you own equity in a business, you are qualified to a share of the profit or losses caused by a company’s activity. Whether you are acquiring a small business completely or buying shares through the purchase of stock on the stock market. Business equity has historically been the most rewarding asset class for investors. It is wise to observe that a good business is a gift that keeps on giving.

Fixed Income Securities – When you buy fixed-income security, you are really lending money to the bond issuer in exchange for interest income. There are billions of ways you can do it, from buying certificates of deposit and money markets to corporate bonds, tax-free municipal bonds, etc.

Real Estate – This is maybe the oldest and most easily understood asset class that you as investors may think about. There are several ways to make money investing in real estate but it typically comes with developing a property and selling it for a profit or owning something and letting others use it in exchange for rent.

Intangible Property and Rights – When it is done properly you can create things out of the air that goes on to print money for you. Adorable! Intangible property includes everything from trademarks and patents to music royalties and copyrights.

Farmland or Other Commodity-Producing Goods – It often involves real estate. Investments in commodity-producing activities are fundamentally different in that you are either producing or extracting something from the ground or nature for what you hope is a profit. For instance, if oil is discovered on your land, you can extract it and earn money from the sales. If you grow wheat, you can sell it and earn cash under any weather. But the risks are remarkable: hail, flood, drought can and have caused folks to go bankrupt by investing in this asset class. But also it can make big rewards.

That is exactly how to choose an asset to invest in.
26th September 2018
How to Find Dividend Yields on Stocks’ List?

By Guy Avtalyon

The dividend yields are metric. For every single investor, the most important question is ‘How much money can I make’. At least, the reason to buy a stock or bond or ETF is to make money. It is important to understand what people mean when they talk about yield, return, and types of both. Investors have several ways to measure the money they expect to get, Depending on their investment strategies, investors have several ways to measure the money they expect to get. Managing risk is important.

What produces the dividend yields?

Yield is the earnings you can make with an investment in a period of time. It’s the cash you get from making the loan. For example, you loan a friend $1,000 for a year. And your friend agrees to pay you back that $1,000 in twelve months, as well as $10 a month. For that loan, you’ll get back the principal as well as an extra $120.

That means you’ll end up with 12% more money at the end of the year than you started with. This is easy to understand with loans and it’s similar to bonds, where the bond rate and payout periods determine what kind of money you get back and how often you’re paid.

Do bonds give yields?

But bonds are a little bit more complicated than loans because you can buy them from other investors. But the yield falls as the price rises because the yield depends on both the interest rate and the price you paid.

Let’s say someone else bought the loan to your friend for $1100 and the 12% interest rate stayed the same, they’d only get $20 for the year, or 1.82% interest. That’s a different yield from 12%, don’t you think.

What determines the yields?

The yield depends on both the interest rate and the price you paid. If you want a higher yield, you either need to earn more money from your investment every month or pay a lower price for the investment.

Hence, there are different types of yield you can measure. But, you must know how stocks produce yield, for this to make sense.

Do stocks give yields?

Stocks don’t pay interest, but stocks may pay dividends. The dividend yield is easy to compare to other investments if you know what you paid for a stock. The problem is you can’t measure what everyone else paid for it. There are more possible to see the current yield of a stock, which divides the annual dividend payout with the current price of the stock.

How to find dividend yields?

If you want a regular cash income from your stock portfolio, you’ll have to understand dividend yield. The dividend yield is a pivotal metric that enables investors to analyze stocks. According to stock capability to generate dividends traders are trading them at many higher prices. To define dividend yield, you’ll need to know the total of a stock’s dividend payments per year and the current stock price.
To calculate dividend yield you’ll have to add all the dividends paid per common share over the last year. Further, divide this amount by the current price. Then, multiply this result by 100 to discover the yield.

For example, if the stock trades at $10 per share, the dividend yield is $0.70 divided by $10 and times 100, which is 7%.
That would mean that for every $100 you invest in this stock, you receive income of $7 per year. Compare dividend yields of different stocks, and you’ll find the best investment choice.

What is the difference between dividend yields and returns?

But, not all stocks pay dividends. You might earn a great return that never pays you a penny. But it is possible you’ll get money from selling a share for more than you paid for it. The same goes for bonds.

Slowly, that combination of the profit you made from the sale plus any dividends you’ve received makes up your total return. Exactly as with yield, the price you paid is the most important factor in your return.

But notice that there is one more essential difference between yield and return.

The yield looks to the future.

What can you earn in a year, what dividends will you receive, what interest payments will you get? These are predictable, depending on the risk of the investment of course.

Return looks to the past.

It includes interest or dividend payments, but it also depends on the price at which you sold your investment.

What to maximize yield or return?

The real goal of understanding yield and return is to compare how similar investments meet your investing goals. Any investment that returns money to you, produce regular income. If you can live from the incomes of your investments, that can be a great modus operandi.

But if you want to build real wealth and you have enough for a long-term investment, total return is more important. But never ignore yield because it can be a great way to make better your returns. Pay attention to yield but look for good returns from share price realization as well.

Whatever, being careful about the price you pay for investment will help you improve your yields and total returns.

17th September 2018
Stock Market Is Going To Crash? Where Could You Put Your Money?

Do you believe that the market will crash or you know? There is a big difference between what you believe and what you know.

2 min read

Market crash or market not crash. If you truly believe the market is going to crash, there are a lot of sorts of places where you can put your money.

You could buy gold or real estate or you could take an aggressive approach. And try to capitalize on stocks’ by loading up on investments designed to rise when the market falls or you could move it all into cash.
But be honest.

Do you really believe in such a scenario? Market, crash!

There is a big difference between what you believe and what you know. Do you know that the market crash is close? When? Tomorrow? Next week?

On the other hand, I can understand that someone can recognize market crash in this uproaring and uncertain times.

We all remember, OK most of us, March 2009 and market crash.

Everyone was extremely agitated about the falls in the stock market. And people were feared that the stock market might continue falling. Many people wanted to sell the holdings in his investment portfolio, move the proceeds to cash and sit out the market turbulence.

And you know that emotions have an important influence on investor behavior and how do they make decisions.

This can often lead to investors failing to capture the returns that are there for the taking. And as a result, suffering poor financial outcomes and according to some research, we are twice as sensitive to financial losses as we are to making gains.

But is it so today?

Is this the same situation? Will the market crash? Or it may not be. Think about it.

The ones who like to predict disasters pointed to any numbers of reasons why they believe the market is headed to a crash.

You have the choice to pick. From the growth-slowdown scare in China that sent stock prices down 12% in the summer of 2015; Brexit and the election of Donald Trump. Anything is supposed to be catalysts for a market rout. Obviously, some prediction of the market’s downfall is going to turn out to be right. But after the turnaround began in March 2009, it’s not as if investors knew the bear had run its course.

While we believe we know where stocks are headed, we actually don’t.

The same goes for market pros who may speculate and prognosticate (sometimes even provide valuable insights into what’s driving the market).

But they don’t really know what the financial markets are going to do in the near term. They don’t know will the market crash.

I don’t think it makes sense to shift your money around in an attempt to outguess the markets, whether that means going to cash to avoid a setback or moving to an investment you think will thrive while the market drop.
That doesn’t mean you should sit back and do nothing.

You can do the following things:

The most important thing you want to confirm is your asset allocation or the percentage of your holdings that are invested in stocks.

That will determine how your portfolio holds up if the market takes a major dive.

Take this time to go over your holdings and tally up how much you have in stocks and how much in bonds and you’ll see how your portfolio is divided up between stocks, bonds, and cash.

Second, figure out where your asset allocation should be.

I’m sure you want a blend of stocks and bonds that will generate high enough returns so you can reach your financial goals but at the same time isn’t so risky that you’ll sell stocks in a panic during a major stock rout.

Think back about how you handled past downturns or how you reacted when stocks began to dip and dive. You want to come as close as you can to a blend of stocks and bonds that you’ll be okay holding in a variety of market conditions. And then make all necessary adjustments.

Then you feel you’ve got a portfolio that will provide sufficient gains during rising markets and enough protection during routes.

You’ll be able to hang on until the eventual recovery, regardless of what’s going on in the market. The idea is to make sure your portfolio doesn’t become too aggressive during market upswings. Or too conservative when stocks take a hit.

Making dramatic changes such as fleeing to cash or switching to different investments altogether, may be challenging at times when every news story or TV show you see seems to suggest that the market is on the edge of Armageddon.

But you don’t want to let fear and emotions dictate your investing strategy and lead you to make impulsive decisions.

Can I guarantee that this approach can provide you with the best results during the long – term? Of course not.
This is just another ”what would be if it were” scenario.

Risk Disclosure (read carefully!)

13th July 2018