A Six Figure Income is Within Your Reach

A Six Figure Income is Within Your Reach!By Roger Bourdon
There's no doubt that investment plays an important role in our life. Each one of us invests a part of our income in some form of investment option or other, whether it be a simple savings scheme, a pension plan or stocks and shares. When investing we have to look at our requirements for the short, medium and long term taking into account our attitude to risk and whether we are looking for growth or income from our investments.
The first step in investing is to decide on your financial goals. If you are seeking a steady source of income then look to bonds, government securities and debt mutual fund schemes whereas for growth consider equities and equity linked mutual fund schemes. But it's not as simple as that as your attitude to risk plays an important part. For example you need to be prepared to take greater risks in the case of equities purely because of the sheer nature and volatility of equity markets.
Regardless of your decision about risk and the investments you decide to make, the most important aspect of all is to build a diversified portfolio, in other words "don't put all your eggs in one basket". It is essential not to focus in one area or on one stock or indeed on in one market. There are so many to choose from. There are commodities, such as gold, silver and oil and then there are a myriad of markets, such as the UK, USA and Japan, but within each of these markets are a variety of options, such as investments in fledgling companies, emerging markets or global markets. In fact the options are endless.
Managing your finances without a Financial Adviser is not an impossible task if you have the basics of investments clear and are prepared to put in the time to look after your portfolio. However the number of products on the market runs into many, many hundreds and new ones are appearing regularly, so do you have the time to keep abreast of the market including your changing personal circumstances and requirements? I suggest few of us do which is why the services of a Financial Adviser are so important. Given their role and responsibilities it is hardly surprising that most of them earn six figure salaries, which is one reason many are now considering becoming Financial Advisers. Interestingly enough, there are fewer Financial Advisers in the UK than ever before even though demand for financial advice has never been higher.

Strategies For Selling Stocks

Strategies For Selling Stocks By Vijay Kumar Sharma
In share exchange, a good strategy is making the impossible, possible! In this trade, some make constant profits and others suffer losses on account of the application of correct or incorrect strategies respectively. The trading value of the share does not remain the same due to many factors that impact it. Share trading can not be categorized as the rocket science. Thousand of investors think about a particular share and all of them think simultaneously but differently.

Their combined thinking decides the mood of the market, as for a particular share. Apart from making the detailed research and analysis of the share that you propose to take into the fold of your portfolio, you need to evolve a strategy which is exclusively yours; that suits your working style; that revolves round then perimeters of investment that you have decided for yourself.

Selling the share that has good run is not the easiest of the decision to make. But from the point of view of the strategy that you have worked out, you may have to take such a decision.
You expect positive results from each share that you have included in your portfolio. You are making periodical reviews as for the performance of each share. Suddenly, you find the warning signal for a particular share. You find the regular slump over a period. This is the crucial period for you to decide to part the company with the share. Study carefully whether the fundamentals of the company have failed. Scrutinize three important areas-sales, debt and cash flow. If you see the stress here, something tangible needs to be done at your end. These negativities are too severe to be ignored. Keep aside your emotions and take a realistic view of the prospectus of the share. Do not expect that something dramatic will happen and the share price will shoot up. Examine the various details like an impartial judge, and take the decision to sell the share without further delay.

It is better to follow the set procedures. Set a stop loss limit for each share and also their upper limit that will trigger the automatic sale. Do not go on revising the upper limit, unless you have very strong reasons for doing the same.

One of the positive indicators for the health of a company is its ability to pay regular and reasonable dividends. Slashing in the rate of dividends or its elimination altogether even for one year must put you on enquiry immediately. The company report may say it in so many beautiful words to reassure the investors, but that is part of their public relations exercise. Dividend cuts are serious events in the history of the company, that the company has developed some intrinsic trouble. For every CEO dividend-cut is the most painful decision to make, because he knows that it will hurt each and every investor who has reposed trust on the administration of the company.
Remain thoughtful and watchful- what is happening in the market! Many investors are up to tricks that will fascinate the new investors, and if one accepts their guile, as part of the selling strategy, it is extending invitation to trouble. Ignore the rumors and do not rush. The hype will ebb, and the market will collapse and you will regret your actions. Never lose track of the fundamentals, when you make the decision to sell a share.

When a growth share stops growing, make it a point to review. When the growth of a share, is lesser than the average market standards, think of the next share.
Trade moderately, within the limitations of your strategy and the level of your investment. For every trade that you do, you are paying commission. Your broker may not encourage you to make more trades, but he can not stop you from doing trades. After all, his duty is to carry out your instructions. Avoid excessive trading.

In share trade, buying and selling are alternative beats of the same heart. Just as you have the buying plan for shares, have a selling plan as well. After all, you earn profits by selling as well as by buying!

Investment Basic

Investment Basic:

What does successful investing require By Tony Reed
Successful investing requires knowledge, time and commitment, discipline and patience, and the ability to develop an investment strategy that is compatible with your personality. KnowledgeEach individual must consider what he knows when planning an investment strategy. Recognizing your current level of knowledge, and how you will acquire the additional wisdom you need, are all-important factors.Time and commitmentHow much time are you willing to spend monitoring your portfolio? This is a critical question. An individual's investment plan should be based on his level of interest in ensuring personal financial success.

The more diversified a portfolio is, and the more complex your strategy, the more time you will need. To be successful, an investor mush map out a strategy that carefully matches his own personality and level of commitment.DisciplineAlthough many investors start with an approach that will work for them, the ability to maintain discipline eludes far too many people. This is caused by a variety of psychological issues, led by fear and greed, that tend to dominate predetermined financial strategies. During various stages of a stock market, different investment styles will work better than others. Sometimes a value approach will be in favor.

Other times a growth or momentum style to accommodate the market.PatienceThe last trait for successful investing is patience. Without it, your returns will be more limited. Warren Buffett reminds us that it takes nine months for a woman to deliver a baby. Investments usually take more time to work out than most people consider. Once you plan an investment strategy that complements your personality, managing a portfolio should be simple.

The challenge will be to follow the game plan and to remain disciplined.An investor who establishes varying time frames for holding different types of securities will be much less inclined to lose patience in well researched ideas. This type of analysis will also assist the investor from "holding too long," while watching his momentum idea fall out of favor and create large losses.

Understanding Fixed Income Securities: Expectations

Understanding Fixed Income Securities: Expectations

By Steve Selengut
I’ve come to the conclusion that the Stock Market is an easier medium for investors to understand (i.e., to form behavioral expectations about) than the Fixed Income Market. As unlikely as this sounds, experience proves it, irrefutably. Few investors grow to love volatility as I do, but most expect it in the Market Value of their equity positions. When dealing with Fixed Income Securities however, neither they nor their advisors are comfortable with any downward movement at all. Most won’t consider taking profits when prices increase, but will rush in to accept losses when prices fall.
Theoretically, Fixed Income Securities should be the ultimate Buy and Hold; their primary purpose is income generation, and return of principal is typically a contractual obligation. I like to add some seasoning to this bland diet, through profit taking whenever possible, but losses are almost never an acceptable, or necessary, menu item. Still, Wall Street pumps out products and Investment Experts rationalize strategies that cloud the simple rules governing the behavior of what should be an investor’s retirement blankie. I shake my head in disbelief, constantly. The investment gods have spoken: “The market price of Fixed Income Securities shall vary inversely with Interest Rates, both actual and anticipated… and it is good.”
It’s OK, it’s natural, it just doesn’t matter, I say to disbelieving audiences everywhere. You have to understand how these securities react to interest rate expectations and take advantage of it. There’s no need to hedge against it, or to cry about it. It’s simply the nature of things. This is the first of three successive articles I’ll be writing about Fixed Income Investing. If I don’t improve your comfort level with this effort, perhaps the next one will strike the proper chord.
There are several reasons why investors have invalid expectations about their Fixed Income investments: (1) They don’t experience this type of investing until retirement planning time and they view all securities with an eye on Market Value, as they have been programmed to do by Wall Street. (2) The combination of increasing age and inexperience creates an inordinate fear of loss that is prayed upon by commissioned sales persons of all shapes and sizes. (3) They have trouble distinguishing between the income generating purpose of Fixed Income Securities and the fact that they are negotiable instruments with a Market Value that is a function of current, as opposed to contractual, interest rates. (4) They have been brainwashed into believing that the Market Value of their portfolio, and not the income that it generates, is their primary weapon against inflation. [Really, Alice, if you held these securities in a safe deposit box instead of a brokerage account, and just received the income, the perception of loss, the fear, and the rush to make a change would simply disappear. Think about it.]
Every properly constructed portfolio will contain securities whose primary purpose is to generate income (fixed and/or variable), and every investor must understand some basic and “absolute” characteristics of Interest Rate Sensitive Securities. These securities include Corporate, Government, and Municipal Bonds, Preferred Stocks, many Closed End Funds, Unit Trusts, REITs, Royalty Trusts, Treasury Securities, etc. Most are legally binding contracts between the owner of the securities (you, or an Investment Company that you own a piece of) and an entity that promises to pay a Fixed Rate of Interest for the use of the money. They are primary debts of the issuer, and must be paid before all other obligations. They are negotiable, meaning that they can be bought and sold, at a price that varies with current interest rates. The longer the duration of the obligation, the more price fluctuation cycles will occur during the holding period. Typically, longer obligations also have higher interest rates. Two things are accomplished by buying shorter duration securities: you earn less interest and you pay your broker a commission more frequently.
Defaults in interest payments are extremely rare, particularly in Investment Grade Securities, and it is very likely that you will receive a predictable, constant, and gradually increasing flow of Income. (The income will increase gradually only if you manage your asset allocation properly by adding proportionately to your Fixed Income holdings.) So, if everything is going according to plan, all that you ever need to look at is the amount of income that your Fixed Income portfolio is generating… period. Dealing with variable income securities is slightly different, as Market Value will also vary with the nature of the income, and the economics of a particular industry. REITs, Royalty Trusts, Unit Trusts, and even CEFs (Closed End Funds) may have variable income levels and portfolio management requires an understanding of the risks involved. A Municipal Bond CEF, for example will have a much more dependable cash flow and considerably more price stability than an oil and gas Royalty Trust. Thus, diversification in the income-generating portion of the portfolio is even more important than in the growth portion… income pays the bills. Never lose sight of that fact and you will be able to go fishing more frequently in retirement.
The critical relationship between the two classes of securities in your portfolio, is this: The Market Value of your Equity Investments and that of your Fixed Income investments are totally, and completely unrelated. Each Market dances to it’s own beat. Stocks are like heavy metal or Rap…impossible to predict. Bonds are more like the classics and old time rock-and-roll…much more predictable. Thus, for the sake of portfolio smile maintenance, you must develop the ability to separate the two classes of securities, mentally, if not physically. For example, if your July 2005 Market Value fell, it was because of higher interest rates not lower stock prices. More recently, the combination of higher rates and a weaker Stock Market has been a Double Whammy for portfolio Market Values, and a double bonanza for investment opportunities. Just like at the Mall, lower securities prices are a good thing for buyers… and higher prices are a good thing for sellers. You need to act on these things with each cyclical change.
Here’s a simple way to deal with Fixed Income Market Values to avoid shocks and surprises. Just visualize the Scales of Justice, with or without the blindfold. On one side we have a number that represents the Current Market Value of your Fixed Income portfolio. On the other side, we have a small “i” for interest rates, and “up” or “down” arrows that represent interest rate directional expectations. If the world expects interest rates to rise, or even to stop going down, “up” arrows are added to “i” and the Market Value side moves lower… the current scenario. Absolutely nothing can (or should) be done about it. It has no impact at all on the contracts you hold or the interest that you will receive; neither the maturity value nor the cash flow is affected… but your broker just called with an idea.
The mechanics are also simple. These are negotiable securities that carry a fixed interest rate. Buyers are entitled to current rates, and the only way to provide them on an existing security is to sell it at a discount. Fortunately, one rarely has to sell. Over the past few years of falling interest rates, Fixed Income securities have risen in price and investors (should) have realized capital gains as a result…adding to portfolio income and Working Capital. Now, that trend has reversed itself and you have the opportunity to add to existing holdings, or to buy new securities, at lower prices and higher interest rates. This cycle will be repeated forever.
So, from a “let’s try to be happy with our investment portfolio because it’s financially healthier” standpoint, it is critical that you understand changes in Market Value, anticipate them, and appreciate the opportunities that they provide. Comparing your portfolio Market Value with some external and unrelated number accomplishes nothing. Actually, owning your fixed income securities in the most freely negotiable manner possible can put you in a unique position. You have no increased risk from a reduction in security prices, while you gain the ability to add to holdings at higher yields. It’s like magic, or is it justice. Both sides of the scales contain good news for the investor… as the investment gods intended.

How Not to Invest

How Not to Invest
By Biniam Teklehaimanot
I want to use this article to discuss about various investment mistakes I have made. I am hoping others will tell us their mistakes or other ideas to help all readers become better money managers / investors. The goal of my investments is to create wealth and in the process I made mistakes others can use as a learning tool.
I want to make sure readers understand my view of wealth. For me, wealth is funds needed to help support my family now and in the future, but most importantly it represents funds to be used for charitable donations. I limit donations to faith based organizations that best serve humanity while teaching the ways of GOD and our Lord Jesus Christ.
I will begin with the investment vehicles I utilize. I currently use my income to invest in Real Estate and Stocks / Options. Both of these are risky if timing is wrong.
Mistake number one is getting into real estate without enough research just because everyone is doing it. I purchased two identical rental properties plus a third which means three renter headaches. Instead of three, I should have put more money into one and tried the waters to see if it is something I am prepared to handle.
Mistake number two is stretching myself to invest and not set aside emergency cushion. When life forces me to sell one of the homes, I am not in a position to adjust the price to current market conditions since I do not have the cash to pay the bank in the event the sale price does not cover mortgage, commissions, and excise tax.
My third mistake is investing all the funds allocated to stocks and options without living enough cash for adjustments or protection. I have taken investment courses that gave me all the right knowledge but I was too aggressive and went outside the box in the wrong direction. The lesson here is do not try to hit home run every at bat but get on base as many times as possible.

Way do we need to Invest

Why do we need to invest

By Debra Lohrere
It is vitally important in this current day and age for all of us to begin taking control of our financial situation and start planning for our future, and the futures of our children.
We can no longer rely on the government to hand out an aged pension once we retire. We cannot take for granted that at the end of our working life we will be taken care of financially.
The world population is ageing, due to the baby boomer generation, and within 30 years there will be so many retired people, compared to the number of working age people, that it will be economically impossible for the government to afford to provide any reasonable source of monetary assistance for the elderly.
The government has realised this, and that is why they introduced the compulsory employer paid superannuation scheme and are even now beginning to give financial incentives to Self-Funded retirees.
Most of us have never sat down and even considered the ramifications of why the compulsory super was introduced and for many of us it is a matter of too little too late. Even for the young women in our society who have a full working life ahead of them, they still cannot rest assured of a comfortable retirement.
Why is this? It is because that unfortunately even with contributions at the current level of less than 10%, someone on an average wage who works continually for 30 years, is still going to find themselves trying to survive on an income equivalent to less than 20,000,00 per annum in todays dollars.
You will notice that I said continually working for 30 years. This is another reason why women are particularly disadvantaged. Firstly because they often have to take up to ten years leave from the workforce to raise children, secondly because women in general earn less than their male counterparts and thirdly because an enormous proportion of the women in Australia, for example, will never have received any superannuation contributions, prior to the compulsory superannuation being introduced, and will therefore not have had contributions made over their entire working life so far, giving them even less to fall back on by the time they retire.
Many women may previously not have thought of lack of superannuation contributions as being a problem, as their husbands may have been contributing to super since they first began work. Unfortunately though with the high number of divorces in this country, it is unwise to rely on the fact that your partners superannuation will be there for you in your retirement years and even if a large proportion is awarded in a settlement that it will be sufficient to sustain a comfortable retirement for any length of time.
All of these factors are why women now more than ever, need to begin taking action to build up a source of ongoing income, that will grow to such an extent, as to be able to provide a secure and happy future for themselves and their children.
It needs to be a source of income that is unrelated to physical workthat is an income that is generated from income producing assets and not from our personal efforts.
One of the best sources of creating this ongoing income stream is to begin building an investment property portfolio, also aptly paraphrased as bricks and mortar.
We need to start investing in income producing assets now, so that they will have time to grow and develop so that we will be financially independent for our retirement years.
The most important concept to grasp in relation to building wealth for retirement and for creating finances that can be directed toward charities, or helping out your family is that of Compound interest.
In mathematical terms 72 divided by Compound Interest Rate of Return = Years for Money to Double in Value.
Therefore if you have 1,000.00 invested at 10% interest, then the number of years that it will take for your money to double to 2,000.00 is 7.2. It will quadruple in 14.4 years and be worth 8 times as much in just over 21 years.
If your money is invested at 7% interest, then it will take approximately ten years to double in value. If it is invested at 5% it will double in just over fourteen years.
The two most important aspects of compounding are one: rate and two: time. The higher the rate and the longer the time something is left to compound, the greater the final result will be. This is why the sooner we start investing, the better.