Tag: stocks

All stocks related articles are found here. Educative, informative and written clearly.

Buying Stock Without a Broker – Ways to Do

Is it possible to buy stocks without a broker? Why shouldn’t be? Here is how to do that.

By Guy Avtalyon

Buying stock without a broker offers some advantages and disadvantages. Young investors are worried about investing in the stock market.

The financial crisis of 2008 strongly disturbed our formative professional years. We can still feel its specter lingers a decade later. Only 33% of millennials own stock, according to a 2016 Bankrate survey.

The other survey, a 2015 Harvard University survey found that just 14 percent of millennials trust Wall Street.

As any good stockbroker or experienced investor can tell you, you can find bad brokers more often than the good one.

Being “bad brokers” means those who put their own interests above that of their clients. We have a list of bad reputation brokers here on Traders Paradise’s wall of shame.

So, we must consider how to buy stock without a broker.

However, that worst brokers do this in a perfectly legal way, by causing desire and weaknesses to their clients’.

How do they do that?

Here are three main practices that bad stockbrokers practice. They claim to their clients that aiming for stability rather than growth. Wrong!

Usually, they force clients to obtain an income from two different sources, typically in an illicit way. Also, some of them are emphasizing low-risk, low-return, high-fee structured products in client accounts.

That’s why many new investors ask how to buy stock without a broker.

Because of the lack of confidence in brokers, many millennials don’t have the startup cash to fund an IRA or a brokerage account. That typically requires either automatic monthly payments or a minimum investment of around $1,000-2,500, plus commission fees of around $4-7 for every trade.

For those people who want to go down this path to business ownership, one option can be to check out direct investment plans.

But it is with varying degrees of success. Of course, there is no requirement that you have to work with a broker to invest in stocks or particularly equity funds.

Buying stock without a broker offers some advantages and disadvantages.

You will need to measure them based on your personal situation. But our goal is to provide you a good handle on how to invest without a broker.

But it’s up to you to make a decision about whether such an approach is appropriate for you. You have to know your unique circumstances and preferences. Because there is no unique solution for everyone.

Let’s say, you had a broker but you noticed that your broker sometimes uses unfamiliar words and phrases to describe investment concepts. Some of this stockbroker jargon is simply a shorthand that brokers use amongst themselves. They use them to refer to familiar situations without having to go into any detail on the underlying concept.

Your head is going to explode hearing every time some strange words that cause suspicions.

But investing can be simpler if you buy stock without a broker. Just by investing in shares through a company’s direct stock purchase plan.

The first and easiest way to buy stocks without a broker

It is when companies, often blue chips, fund a special type of program. It is called a DSPP or Direct Stock Purchase Plan.

The main goal of these plans originally was designed as a way for businesses to let smaller investors buy ownership directly from the company. In the beginning, they were working through a transfer agent or plan administrator. They still do the same. Most plans allow investors to buy stock without a broker if they agree to either have an amount taken out of their checking or savings account every month for six months. Often $50 is the acceptable minimum. The other way is to make a one-time purchase, which will cost you $250 or $500.

These plans are surely not as comfortable as getting a broker. You can’t just buy and sell a variety of company stocks at any time, for instance. Plus, you won’t have a diverse portfolio if you only own stock from a few companies. Moreover, with some plans, you won’t even escape fees. So, you have to be careful about what you sign up for.

This means trades without commission

But we have to say, direct stock plans are a good way to experiment with the stock market without putting too much money into the game.

Ordinarily, the plan administrators use your cash to buy shares of the company. It can be on the open market or freshly issued from the business itself, on predetermined dates. The average cost of the purchases is weighed out.

Also, they can use some other methodology to equalize the cost among investors. And the direct stock purchase plan statement arrives quarterly. All with a listing of the number of shares you own and dividends you receive.

Some direct stock purchase plans trades without commission. Others charge small fees. Usually $1 or $2 plus a few cents per share, for each purchase. A larger fee, about $15 and a few cents more per share, for a sale. This is a lot lower than what you have to pay at a full-service broker.

Buy stock without a broker by taking advantage of the dividend reinvestment program

In this way, you can add additional shares to your holdings.

This means to enroll in a stock’s dividend reinvestment program or DRIP. DRIPs provide you to take cash dividends, paid out by the company you partially own. And you may plow them back into buying more shares, charging either nominal fees or nothing at all. It depends upon the individual plan.

Have this on your mind. For a typical stock, that’s a lot of transactions over 25 or 50 years on which you aren’t paying commissions. The typical stock may pay out a dividend four times per year. So, count! DRIPs usually come with cash investment options that resemble direct stock purchase plans.

This opportunity means you can regularly have money withdrawn from your account, or send in one-time payments whenever you like.

A lot of long-term investors have become skilled at building wealth through these types of accounts. Buying stock without a broker for years, even decades is a very nice way. You must be heard stories about some housekeeper who left behind $5 million opulence.

They did it just on the way we said above.

You can buy stock without a broker by obtaining a single share through a specialized gifting service

Unfortunately, the financial industry’s decision is to move away from paper stock certificates. And this has become a bit shaky.

But, up until recently, you could use companies that allowed you to buy a single share of stock to get your name on a corporate shareholder list.

Hundreds of companies offer these plans, but each has its own rules for eligibility. It’s normal to be careful about investing in stocks. But some estimates that the average millennial would lose about $3.3 million in retirement savings by avoiding investing completely. Direct stock plans are an easy way to learn the basics and establish a portfolio.

All without spending money, time, and nerves on brokers. Anyway, buying a stock without a broker may be a clever move for investors.

Learn how to trade in the financial academy.

23rd January 2019
The best stocks to invest during the inflation

Investing in stocks can be the best move during inflation. What are the best stocks for such an environment?

By Guy Avtalyon

So, stock markets aren’t going away anytime soon. But let see how stocks act in the period of inflation. They remain a driving economic force in every country in the world. Analysts aren’t quite sure what the future holds for the stock market.

We will likely see stock markets continue to merge over the coming years. Some have even thought that we’ll see a single global stock market. This appears to be unlikely. Frankly, stocks are not good short-term protection against rapidly increasing inflation, but bonds are worse. But for long-term investors, stocks can be an excellent hedge against rising prices.

Inflation has been creeping up on the world economy. It isn’t the first time. During the history, we had so many inflations.

Inflation tracks the rise in the price of goods and services, which in turn shrinks the money’s purchasing power. When inflation rises, people can buy fewer goods, input prices go up, and revenues and profits go down. The result is, the economy slows down.

But the good news is that you can make money on the market by investing in stocks. Earnings come even in times of inflation.

How?

Well, the truth is that too much money chasing too few goods is one classic definition of inflation. Many studies have looked at the impact of inflation on stock returns. Most studies conclude that inflation can positively or negatively impact stocks. That depends on the investor’s ability to hedge. Also, it depends on the government’s monetary policy.

The most important is knowing how to invest in that environment.

Should you be concerned about inflation and your investments? If you have a substantial portion of your portfolio in fixed income securities, the answer is a definite yes.

Inflation erodes your purchasing power, and retirees on fixed incomes suffer when they can buy less each passing year. This is why financial advisers caution even retirees to keep some percentage of their assets in the stock market as a hedge against inflation.

The consumers will not hold cash because their value over time decreases with inflation. For investors, this can cause confusion.

High inflation can be good, as it can stimulate some job growth.

What can you do in periods of inflation? You can stay invested and not pay attention to the short-term fluctuations. Sometimes this can be hard.

One common misconception about a buy-and-hold strategy is that holding a stock for 20 years is what will make you money. Long-term investing still requires homework because markets are driven by corporate fundamentals. If you find a company with a strong balance sheet and consistent earnings, the short-term fluctuations won’t affect the long-term value of the company.

In fact, periods of volatility could be a great time to buy if you believe a company is good for the long-term.

Companies that raise their prices in line with inflation tend to fare better than others when the cost of living is increasing.

Energy companies, for example, may perform well in an inflationary environment as they can raise their prices in line with inflation. Infrastructure companies such as those responsible for toll roads, or hospitals, may also do well. They often have long-term government contracts in place with payments linked to inflation, which encourages private-sector investment.

Generally speaking, cash would be the worst asset class to hold in a high inflationary environment. However, stocks would be a better choice. This is because a company’s revenue and earnings should grow at the same time as inflation. Companies usually pass rising costs to the consumer to maintain their profit margin.

The concern of rising inflation has recently surfaced as strong employment numbers have caused fears of wage growth. In January, the average hourly pay, for example, in the US jumped 2.9 percent in a year. This is the largest jump in 8 years.

Companies may increase the prices for goods and services in order to pay for these increased salaries. This element is causing concern for investors. Higher salaries for some can bring a higher cost of living.

So, what can you do, where to invest, which stock to buy in the period of inflations?

Oil Stocks

There is a positive connection between the price of oil and inflation. The consumer price index helps measure inflation in the economy by tracking a basket of goods and services by households. Energy costs in households are part of the consumer price index. When the oil prices increase, it directly affects the energy costs spent by consumers. This leads to an increase in the CPI index and then inflation. Oil stocks always do well in high inflation environments.

Utilities

Utilities are defensive stocks. People will need utilities even in a high inflation environment. When operating costs rise for energy companies, in the final instance the consumers will pay them.

So, the companies will maintain their profit margin. Consumers will have no choice. They have to pay for the newly inflated cost if they want to receive electricity, for example. Demand in utility companies will still be strong even in high inflation periods.

Healthcare as best stocks

Healthcare is also a defensive stock. They are considered safer investments as people will always need healthcare. Even when consumer budgets are poor. During the inflationary period, investors will sell out high-risk stocks. They will prefer to buy into low-risk stocks because these are considered safer. People will always need medicine and medical treatment. They will give priority in spending on healthcare as opposed to less crucial goods and services.

Gold Stocks

When investors notice high inflation in the economy they want to turn to safe-haven investments such as gold stocks.

Gold traditionally is an investment held during the economic instability. High inflation causes investors to want to safeguard their investments by buying gold stocks.

Of course, holding cash in bank accounts is a bad idea in a high inflation environment. Because the purchasing power of cash is eroded by inflation.

Basic goods/consumer staples

For instance, companies with higher energy costs from increased transportation costs or higher operating costs will pass these costs to the consumer. Good and services will become more expensive. Consumers will become more selectable when purchasing goods and services because they have less buying power. But, basic goods or consumer staples will still be in demand in a high inflation environment. Even if the costs increase, people will still buy bread and milk. Even if such companies increase the price of their goods, consumers will need to buy it. Consumers will not buy non-essential goods and services such as a new car or furniture. They will only spend what is necessary. That kind of company is a good opportunity.

During the period of inflation never invest in discretionary stocks.

Material Stocks

Basic materials companies are involved in the exploration, development, and processing of raw materials. Hence, many times target specific resources, such as gold, silver, and crude oil. This sector also includes companies that run refineries and plants to develop refined materials. The dividend yields within this sector are above average in comparison to the wider market.

If you’re looking to invest in dividend-paying basic materials stocks, you may also be interested in dividend-paying basic materials exchange-traded funds (ETFs). These funds offer a diversified dividend payment based on a basket of basic materials stock holdings.

What we want to show is that there is no solution to inflation, but there’s the reason for hope. And for profits and returns of course.

You might find these interesting too:

>>> Cryptocurrencies a Powerful Tool Against Hyperinflation?

>>> Are we in an overpriced market?

>>> How to improve risk management in trading?

>>> How to trade stocks during recession

>>> How to Find a Stock Worth Trading?

14th January 2019
Best-Paid Job In 2019!
3 min read

The best-paid job is so close to you, close to the new year, so think about them.

Ways to make money online are numerous. Our goal is to present you as many profitable deals as possible.

We want to help you find the best-paid job for you. And it is your goal too. To find the best-paid job that suits you more than any other.

You may not become rich, but certainly, this way of working will provide you additional and not small income.

But this is one of the best-paid jobs from home.

And know what, those of us who have worked from home for years wouldn’t dream of going back to a corporate office. Ever. At any point!

It won’t always be easy, and you have to work very hard, you will make mistakes and failures along all that path.

But be honest, the internet has opened up so many possibilities to people regardless of age, location, or background to build a sustainable, online business or side project that can make extra money online every single month.

So, let’s start. What can you do from your home and earn decent money?

1. Trade or invest from home is one of best-paid job

Trade from home is a totally online job.

And it can provide you a quite nice income. Or to be one of the best-paid jobs.

Once upon a time, people relied on the services of a stockbroker, who would make buy and sell orders on the customer’s behalf.

Today, individuals are able to execute buy and sell orders themselves in a fraction of a second using computerized trading services.

But, reading online articles doesn’t make you qualified to trade from home.

Reading the classics of investment literature could be helpful. But the best way is to set aside six months to practice trading with real-world data before investing your money.

You can use some demo account and practice.

Before deciding to buy or sell any stock, you should carefully research the company, its leadership, and its competition.

Make intelligent decisions about what you can afford to invest. Consider investing a portion of your money in an electronically traded index fund, which holds many stocks.

To that end, we present our top three stocks to buy for the long-term:

Buying marijuana stocks can be a best-paid job

The trade becomes more fundamental than gambling. There lies the opportunity and it can become one of the best-paid jobs in 2019. The concept is viable. Moreover, the use of pot will increase because of the legalization trend propagates. The millions of more potential users will access it.

It would be wise to take small positions. Don’t just lay the bet on one perfect entry point. Also, there are no guarantees when investing in stocks.

It’s important to consider the size and never bet more than you can afford to lose.

When looking at potential marijuana stocks to buy, it’s important for investors to remember that there are many ways of trading a concept. Also, not one method is perfect.

Here are three marijuana stocks to buy in 2019:
- Canopy Growth (CGC)
The first reason, the Constellation Brands invested $4 billion in it. So, you can be comfortable joining them in their bet on CGC stock.

If you are going to risk money on this market, you would like to do it in the one that has a strong balance sheet.

It sounds like CGC has good plans to open up more markets to follow the legal path expansion. Constellation made a multibillion-dollar bet on Canopy Growth because it thinks cannabis is a “once-a-century disruptive market transition” and that Canopy Growth is the best marijuana supplier in the world.

Constellation believes the total addressable global market could top $230 billion within the next 15 years. So, projects that Canopy could realistically claim up to 40% of the Canadian market and between 5% and 15% of the market in the rest of the world, including the United States.
- KushCo (OTC: KSHB)
KushCo is a dynamic sales platform. It provides unique products and services for both businesses and consumers in the cannabis industry.

It regularly services more than 5,000 legally operated medical and adult-use dispensaries, growers, and producers across North America, South America, and Europe.

An ancillary play, they have the opportunity of supplying both the legal and black market with their packaging products.

We believe KushCo to be the best additional play in the current market. They have a strong management team. Also, solid execution track record, and servicing the market. We really think their stocks are good investments.
- Innovative Industrial Properties
Stocks of REITs can be attractive for marijuana investors in comparison with pure-play marijuana stocks because REITs spread their risk across multiple leaseholders.

Even if one or two fail, it’s not catastrophic to the whole investment. Innovative Industrial Properties currently owns nine properties, all of which are either greenhouses or indoor facilities used for cultivating marijuana.

2. Launch and grow a startup

Launching a startup can be a very exciting experience and best-paid job.

The first mistake is that founders tend to over zeal their efforts to monetize their products and services. Instead to build a strong base from which the startup can turn into a realistic company.

To avoid mistakes make your list of knowledge areas/special skills on the one side and passions on the other. Then try to connect each of them.

Your knowledge and skills should hybridize with your genuine passion. It means that you have a passion for some job to work and, at the same time, you have knowledge or skills which job requires.

The truth is that you need to love what you do and be damn good at it as well.

Startup founders face a lot of factors and barriers that can stay in the way of success.

Testing your business expectations should be done without investing too much time and money. When you found a winning product, double the original bid on it and focus on the winner.

That’s the whole truth and wisdom!

This world is content obsessed. And we are obsessed by trying to find the best-paid job. This one can be that one in the coming year.

3. A virtual assistant is a defenetely best-paid job

A virtual assistant is a contact made over the internet that assists in day-to-day tasks. Yes, like an assistant, only virtual! And this is one of the best-paid jobs.

These assistants don’t just help someone business run smoothly, they help their life run smoothly.

Whether it’s sending a thank you card to a friend or researching potential investors, a virtual assistant can do just about anything.

They take charge of not only the day-to-day business tasks but can even take hold of day-to-day personal tasks so you can keep focused on what’s at hand.

They can send flowers, thank you cards, or even just schedule an Uber or Lyft so you can go from one venture to the next without a single hiccup.

However, it is just about anything.

Setting up your own Virtual Assistant business may seem like hard work, but we have to tell you that it’s actually the easy part. Moreover, we think it can be the best-paid job.

Being a successful VA isn’t simply helping someone with their admin or supporting their business, it’s knowing how to manage and communicate with them.

If you want to be a VA because you think it’ll be an easy life and easy money then you’re in for a shock because the reality is very different. It’s a brilliant life once you’ve nailed it but there can be a steep learning curve at first.

Virtual assistants charge anywhere from $1 to $100 per hour. Sometimes even more.

But the sweet spot is generally between $15 and $30 per hour for executive assistant services and $40-$75 per hour for higher-level marketing or financial tasks. This definitely may be the best-paid job in 2019

Bottom line: We, here in Traders Paradise, found a lot of very interesting and profitable jobs for 2019. More about them you will read soon, in our new ebook. It’s up to you just to pick one of the best-paid.

Risk Disclosure (read carefully!)
27th December 2018
Cannabis VS Bitcoin Both Are the Two “Sexiest” Plays.

Cannabis stocks just like bitcoin stock can be hot investment choice these days

By Guy Avtalyon

If you have a dilemma in selecting the stocks, cannabis vs bitcoin, this exactly you have to read. Cannabis shares are a temporary hum. Wait! Didn’t they say exactly the same about Bitcoin?

Traditional Wall Street and media gatekeepers are late.

The fact is that Bitcoin lacks a time-tested business model and fundamental backing, and it pays no dividend. The other fact, marijuana is illegal in almost every country, putting the business model in jeopardy.

Pot stocks are more tangible speculative investments, traded and regulated on recognized stock exchanges, but still subject to a variety of market and regulatory risks. We know that advisors can caution their clients on the risks of investing in cannabis stocks, and the risks are there at current merits. It was the same in the case of Bitcoin.

Cannabis industry

But the cannabis industry may offer trace to the future of Bitcoin. Because despite their different paths, the crypto and cannabis are siblings. Why? Just spend a few minutes on Reddit pages committed to trading, Bitcoin, and cannabis and you will see similarities of the group. According to TD Ameritrade Inc., trading in pot stocks is superiorly done by millennial-aged males. The stats for crypto look almost the same.

We are witnessing an explosion of interest in cryptocurrencies, cannabis stocks, and ETFs. And particularly from millennials. What do younger clients need? They love technology. They want to be educated investors, that’s why they are in need of education. They’re younger in their investing and trading careers. But they know what they want. They want to trade 100 shares of stocks at the table in the restaurant using some bot. They don’t want to miss the boat.

Cannabis vs Bitcoin

If you’re a long-term investor type who’s not at all interested in trading, then you’re on the right track to becoming a wealthy investor over the long term. Sticking with such a reasonable investment strategy can be tough, however, especially if you constantly hear about how a friend of a friend of yours got rich overnight by investing in Bitcoin or Canopy Growth (TSX:WEED) (NYSE:CGC) stock.

You can ignore the hype, as it has nothing to do with you. It’s difficult to tell the difference between a bubble and an actual paradigm shift that could lead to massive riches over the near term.

Today, cannabis stocks and Bitcoin are the two “sexiest” plays.

While the word “bubble” has been thrown by some experts, other equally qualified, are on the other side and are thinking “opportunity of a lifetime.” Being on the right side isn’t a matter of how clever you are. You can find a lot of examples of how some very smart guy has fallen as a victim on the wrong side of the “sexy play” of his time.

When it comes to subjects like the rapidly emerging rising cannabis market or blockchain-based cryptocurrencies, it’s hard to know what you’re dealing with as an investor. Nobody really knows how much new entities will act in the public markets over a long period. Attempts to make comparisons to events that happened in the past can make some sense but can’t help a lot.

Neither cryptocurrencies nor cannabis are suitable for conservative investors. It is for visionaries, for those who can perceive the future and recognize the chances. Set a limit and stay within it.

There are many people in the crypto industry believing in a bright future. As well as there are supporters of the legalization of cannabis. Technology companies, for example, SinglePoint and POSaBIT, are working to create a payment method for dispensaries and consumers using bitcoin. Recently, some cryptos emerge specifically for cannabis transactions.
This isn’t the first time that stocks in a hot niche have risen. We all know what happened with bitcoin stock a year ago. The companies specializing in the crypto have had fantastic gains.

Some investors never look back at overhyped fields once they aren’t trending, but investors who invested hard-earned money into most popular stocks usually learn the harder way what results can be.

Currently, a limited number of marijuana stocks is accessible to most investors. We’ve seen some massive moves in marijuana stocks. Those gains stem from the fact that investors who want to invest in marijuana have limited options available to them.

Why cannabis vs bitcoin?

The same case we already saw with many Bitcoin stocks.

In 2017, the top-performing Bitcoin stocks have less liquidity than many others. They stood very low on that list. But it reversed. In 2018, bitcoin declined in its volatility.
Of course, speaking about cannabis stocks we can expect winners, but we can’t be sure where to expect. Maybe cannabis investors could learn something from the bitcoin incredible boost in the past. Perhaps the same could occur. Sometimes, success may occur in unexpected places. As an investor in cannabis stocks, just be ready to see the secondary effects. Try to recognize how they can influence the companies that are not always obviously related.

Investors want to get rich from cannabis stocks, but past investing crazes and experience with cryptos have often left people wishing they hadn’t fallen for the allure of these markets. You can avoid repeating those mistakes and improve your chances of being successful with your investments in the long run. Just get more knowledge, learn permanent, test, and measure everything twice.

21st 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
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
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
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
Should you trade Forex or stocks?

Choose the instrument to trader based on your strategies, goals, and risk tolerance.

By Guy Avtalyon

The dilemma should you trade Forex or stocks isn’t natural because one trader can trade both. And it could be a smart decision if we consider portfolio diversification. But when people ask this question know exactly what do they want to know.: What has more profits involved? Trading Forex or trading “simple” stocks? Or is it trading options?
Investors and traders have access to a growing number of trading instruments. From tried-and-true blue-chip stocks and industrial to the fast-paced futures and Forex (foreign exchange) markets.

In order to make the best choice, you have to recognize which of these markets are for you.

Forex versus stocks

The most important factor may be the trader’s or investor’s risk tolerance and trading style. As an example, buy-and-hold investors will prefer participating in the stock market. While short-term traders, including swing, day, and scalp trader may prefer markets where price volatility is more present.

For traditional buy-and-hold, “long-only” investors, stocks remain an obvious option for a lot of reasons. Stocks have a long-term history of positive returns. So investors receive income from dividends.

But when it comes to trading, forex trading has a number of advantages to offer. And you should think when deciding whether to trade forex or stocks.

Forex versus Blue Chips

The forex market is the global largest financial market. The forex market has very high liquidity, you can trade around-the-clock, the amount of leverage that is allowed to traders. All these characteristics attract traders to enter the Forex market and start trading.

On the other side are blue chips. Blue chips are stocks from well-established companies, famous brands. These stocks are able to provide profitability even during challenging economic conditions and have a history of paying dividends.

Blue chips are less volatile than many other investments. They are often used to provide steady growth potential to investors’ portfolios.

Differences and similarities of trading Forex and stocks

These similarities or differences could give the final idea to your decision of should you trade forex or stocks. Let’s examine them in detail.

Volatility – Some traders, especially short-term or day traders, favor volatility. It provides them to profit from quick price swings in the market.

The other traders are comfier with less volatile and less risky investments. That’s why short-term traders are attracted to the forex markets. While buy-and-hold investors prefer the security which blue chips provide.

Leverage – The forex market offers significantly higher leverage of up to 50:1, and in some parts of the world even higher. But it isn’t all good as it looks. While higher leverage provides the opportunity to build equity with a very small investment (you can open forex accounts with $100), leverage can just as easily destroy a trading account.

Trading Hours

Another consideration in choosing a should you trade forex or stocks is the time period that each of them is traded.

Trading sessions for stocks have a limitation. It is due to the exchange working hours. Generally 9:30 A.M. to 4 P.M. Eastern Standard Time (EST), Monday through Friday with the exception of market holidays.

The Forex market is active round-the-clock from 5 P.M. EST Sunday, through 5 P.M. EST Friday, opening in Sydney, then traveling around the world.

The flexibility to trade during U.S., Asian and European markets, with good liquidity virtually any time of day, is bonus plus to traders whose schedules would otherwise limit their trading activity.

Tax time

Various trading instruments are treated differently at tax time.

Short-term gains on futures contracts, for example, can be eligible for lower tax rates than short-term gains on stocks.

Furthermore, active traders may be qualified to choose the mark-to-market (MTM) status for IRS purposes. This allows deductions for trading-related expenses, such as platform fees or education.

It is strongly recommended that traders and investors ask the advice of a qualified accountant or some tax specialist. Especially since trading forex can make a complicated time to organize your taxes.

Should you trade forex

The internet and automated trading have opened doors to active traders and investors all over the globe. Anyone can participate since there is an expanding variety of markets.

To be able to make a very important decision about what should you trade stocks, forex, or futures you’ll have to understand your risk tolerance, to take into consideration account size, and convenience. If some active trader is not available during market hours to enter, exit, or properly manage trades, stocks are not the best option.

If some investor’s market strategy is to buy and hold for the long term, generating growth and earning dividends, stocks are a practical choice.

The instrument a trader or investor selects should be based on which is the best fit of strategies, goals, and risk tolerance.

25th September 2018
What is Growth Investing and How To Pick a Stock?
Here is how to recognize the best growth investment stocks and how to execute this investment strategy

By Guy Avtalyon

Growth investing is an investment strategy which investors use to find stocks with higher earnings growth prospects. It doesn’t matter how high their prices are. These stocks usually have low dividend yields. Also, they have higher volatility and limited downside protection. Moreover, they are highly sensitive to changes in interest rates. The companies with stocks that trade at high valuation levels usually have a high P/E ratio, high P/B, and P/S ratio.

Growth investing is focused on capital appreciation. Growth investors invest only in companies that have above-median growth. Even if the stock price looks expensive and metrics like price-to-earnings or price-to-book ratios, confirm that. The growth investing strategy is in contrast with value investing.

This investing strategy’s focus is on a company that has a track record of high or rising growth. For example, a company has a stock price that has rise year after year over 3 or 4 years. Such stock is a target of growth investors. But the timeline shouldn’t be so long. Even if a stock rise at price every week for 3 weeks in a row growth investors will be interested in that stock.

Growth investing doesn’t consider direct research or fundamentals only. Very often it may be a response to the market sentiment.

For example, if you drive BMW and your friends also drive a BMW car. And say, the stock has gone up every month for the last six months. Then you know that the overall market sentiment is good. And the sentiment of the consumers is also a good and valuable metric for growth investors.

So, you would buy BMW stock if you support the growth investing viewpoint.

Who are growth investors?

Some famous investors such as Warren Buffett have stated that there is no theoretical difference between the concepts of value and growth (“Growth and Value Investing are joined at the hip”).

That’s because the growth is always a component in the calculation of value. It is constituting a variable whose importance can range from a little too vast. And whose impact can be both negative as well as positive?

Buffet’s opinion in one sentence is: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”.

But the real father of growth investing is Thomas Rowe Price, Jr. who worked and promoted growth investing through his company T. Rowe Price. He founded this company in 1937 and today is a publicly-traded multinational investment firm.

How to execute a growth investment strategy?

The following businesses are suitable for growth investing:
- Emerging markets
- Recovery shares
- Blue chips
- Internet and technology stock
- Smaller companies
- Special Situations
What is the main issue with growth investing? It is the fear you are buying at the top of the growth curve. One way to avoid this is to look for long-term growth patterns.

Don’t look at growth surges that last one week, or one month or several months. If you really found a solid company, it should have a history of solid growth. And be able to demonstrate an upward trend in their share price over many years.

But, Most investors do not relly on growth investing alone. They look at other indicators that can support a pattern for future growth. Let’s take the BMW as an example again.

If they are bringing out new lines of the car, expanding to different countries then it is clear that BMW is targeting growth as a strategy for the company. So, you may own a good stock if you are using a growth investing strategy.
This strategy is most effective in the long run. It isn’t suitable for short-term investors for obvious reasons. Growth companies need time to grow.
Every investor should ask this question: Why is growth investing?
The possible answer could be because you want a long-term financial stability and wealth accumulation. And you’ll be right.

How to identify stocks for growth investing?

Growth investment involves picking essentially strong stocks. These stocks have a promising future compared to other stocks in their sector and will have an edge in terms of returns in the long-term. While choosing stock for growth investing, it is important to ensure some essential factors such as the revenue model, cash inflow, growth prospects with respect to the economy, the company’s executive board, market, competition, etc. Researching would let you know if a stock suits the growth investing strategy or not. It is easy to get an insight when you study the company’s balance sheets and reading up more about its history, endeavors, and goals from its website or some other sources. Before taking the final call on your growth investment, it is very important to ensure whether the asset fits the criteria of optimal returns.

Here are a few parameters that could be helpful in analyzing whether a stock is a growth stock or not:

Return on Equity: This means the profit-making potential of the company. It is calculated by dividing the net income of the company with the total equity of the shareholders.

Increase in Earning per Share (EPS): An increased EPS ensures better growth prospects. Hence, it is very important for you to analyze if the EPS is increasing or not over the observed time.

Projected Earnings: It gives an insight into the company’s expected growth and can act as a good indicator of growth investment.

What are the picks for growth investing?

Small-Cap Stocks: Companies that lie in the suit of small-cap are those that are in their initial growth stages. This makes them more promising in growth prospects, the affordability of the stocks is higher. This enables you to buy a bigger lot of their shares and make a decent investment.

Technology and Healthcare Stocks: These companies could be a good pick for growth investing. They are a kind of revolutionary innovations, which increases the scope of their growth prospects. The fact they are exceptionally well in the market because they target a wider audience, thus resulting in exponential growth. They stand by the characteristics of growth in the investment.

Speculative Investments: Even speculative stocks could bring in a fortune in terms of growth investing as they come at a higher risk. If you are choosing a speculative investment, make sure to practice caution and invest only your surplus funds with due diligence.

The great influence in shaping this investment style had Phil Fisher, whose 1958 book “Common Stocks and Uncommon Profits” is still today a reference for identifying growth companies and we highly recommend this book.
24th September 2018