Showing posts with label Stocks. Show all posts
Showing posts with label Stocks. Show all posts

Saturday, March 27, 2021

How to Start Investing: And What to Invest in



Investing money is a very reliable way to build wealth over a period of time. However, the whole process can seem very daunting if you’re just getting started. 

The good news is that many wealthy investors too started with a level of skepticism, but they somehow got to learn the right steps to take, implemented them, and became successful. Today, you’re going to learn the basic steps you need to take to start investing, and what to invest in, so keep reading!

Determine how much you want to invest


Many investment options today allow people to invest low or high amounts of cash. Therefore, it makes sense to begin by deciding how much you’re willing to invest before choosing your methods. Of course, the amount of money you want to invest should be informed by your investment goal.

If you are looking to secure your retirement, for instance, you should generally aim to invest between 10% and 15% of your yearly income for retirement. Ideally, regardless of your goal, you have to consider your time horizon and the amount of cash you need, and then sort of work backward to break the amount into weekly or monthly investments.

Know your options


The most important part of investing is understanding every instrument available and the level of risk it carries. Some of the most popular investment options you’ll want to consider include the following:

Stocks. These are shares of ownership in a company, and you buy them for a share price. When the company profits, you too profit.

Bonds. These are loans you give to a government entity or a company. Before the organization pays you back, you get interest.

Index funds. These are investment vehicles that track market indexes. You can use them to balance your investment portfolio.

Mutual funds. These are collections of investments that allow you to buy a diverse assortment in a single transaction instead of picking individual bonds and stocks.




As a beginner, you should look to invest in these instruments because they are profitable and generally safe.

Pick a strategy


The next thing you should do is pick an investment strategy based on your saving goals. For instance, if you’re planning on securing your retirement, and your goal is more like two decades away, you can invest most of your money in stocks. If you don’t like the process of picking specific stocks, you can go for mutual funds or index funds.

If your goal is short-term, and you need the cash within a shorter time-frame, such as five years, you can consider Bank certificates of deposit (CDs) and short-term bond funds. 

If you’re more comfortable waiting to see your money and investing long term, then a DST 1031 property investment may be a good idea.

Alternatively, you can skip this step by opening an investment account through a qualified Robo-advisor. They’ll help you build your investment portfolio and look after it.

Understand your risk tolerance


As you may already know, not all investments are successful. Every investment comes with a certain level of risk, although it’s usually correlated with returns. Before you invest, you need to find a balance between maximizing the returns and getting a comfortable risk level.

For instance, if you are willing to lean more towards forfeiting high returns to reduce risk as much as possible, you can go with bonds. 



They are very low risk, and they yield relatively low returns of around 2-3%. On the other hand, you can go with stocks to enjoy the annual returns of about 10% per year, but be ready to incur higher risk.

As you can imagine, there is a huge difference in risk within the broad categories of bonds and stocks. For instance, Treasury bonds are very low-risk investments, and they usually have low-interest rates. 

That means that the reward is low. Conversely, a high-yield bond comes with a higher risk of default. Although it’s important to keep risk at the back of your mind, you shouldn’t get over-concerned about it, according to Forbes.

The best way to approach this is using a Robo-advisor to create an investment plan that suits your financial goals and risk tolerance.

If you’ve just decided to start investing, congratulations! You’ve already completed the first step. What you need to do now is follow the next steps above to get started.


Thursday, April 2, 2020

The Pros and Cons of Using IPOs



An IPO, or initial public offering, occurs when a company makes shares of their stocks available to the public. Essentially, it allows companies to trade some stake of ownership of the company to public stockholders. 

While this does mean that the owners of the company relinquish some control, it can open the door to exciting possibilities of growth and prosperity. There are plenty of advantages and disadvantages of a company deciding to go the route of using IPOs. Here are some examples below...

PROS OF IPOs


Opens Up Capital for Additional Ventures


Usually, when a company launches an IPO it means they are in a period of sustained success (or else there would be no incentive to sell). However, it also functions as a way for the company to launch into a more aggressive period of growth that can lead to long-termed stability. 


By selling off shares of the company, it creates a massive cash influx that can do a variety of things, whether that is launching new expansions of the business, purchasing new acquisitions, or paying off old debt that opens the company for future endeavors.

Opens Up Higher Potential for Talent


Another way that IPOs can help companies grow is by using the shares as a means of attracting higher talent to the business, both on an operational and executive level. A company undergoing an IPO can offer stock as an incentive to attract personnel that might normally be beyond their price range at the current moment. 




This helps companies punch higher than their weight class while they grow. This is appealing to potential employees because the payout when they sell their shares later might be far more valuable than the initial higher salary they would have received.

Allows for a Major Payoff for Owners


The money that is used to buy shares goes to two different places: back into the company or into the pockets of people who own the company. These owners might be managers, founders, high-level employees, or private investors who have equity in the company. 


While salaries and dividends have provided a financial benefit to the investors for years, the IPO is the major payday for many businesses. An owner of a company that is going public can make millions of dollars during an IPO.

CONS OF IPOs


IPOs Take Valuable Resources


Launching an IPO is a major stepping stone for a company, but it isn’t without its share of hard work. The IPO process takes a ton of time, during which the executives and high-level decision-makers of a company are highly involved. 


This takes away time that could be spent on other business ventures and building additional revenue. Third-party investment firms are also brought on during this time, to help undergo the complex IPO process. These companies cost valuable time and money, so there is a major initial cost of capital upfront to launch an IPO.

Potential Roadblocks with Owner Shares


If an owner wants to retain control by taking shares of their company for themselves, there may be potential roadblocks. Oftentimes, there are stipulations against this. And owners who do get shares of the company must sit on them for a long period of time since an owner selling shares of the company can have a negative impact on the value of the stock, which hurts other investors.

It’s also worth noting that even if an owner is still running the company after an IPO, their control isn’t always secure because they are answerable to a Board of Directors, who can fire them at any time. For all its benefits, it must be understood that there is a significant loss of control that comes with an IPO.



Tuesday, February 26, 2019

A Guide to Start Investing




Every wealth management advisor will start with one very basic principle: you need to save money--and the earlier, the better. We don’t think it’s necessary to convince you of the wisdom in that.

Here’s the problem: for most of us, investing is much harder than it sounds. There are already too many demands on our money: student loans, rent, car repairs, and groceries, just to name a few. Buying a new alternator before you go on that road trip is a much higher priority than saving up for retirement.

When you’re living on a shoestring budget, how can you invest without making major sacrifices in your life?

Well, here are some ways that you can start investing NOW - not when your car is paid off, not when you’ve finally gotten around to setting a budget, not when retirement gets close enough to scare you straight. You can put these principles into action without feeling like you’re living like a pauper.


Making Short-Term Investments


Sometimes we have expendable cash for a little while, but we’re anticipating big costs in the future, so locking away that cash into a long-term investment account feels crazy. However, there’s a better option than letting it sit in a savings account with a return of 1% or less: short-term investments! 


When it comes to short-term investments, it’s better to focus on low-risk options, since there’s not as much time for the investment to self-correct. However, even low-risk, low-return investments will do you a lot more good than a savings account. 




Talk to your investment broker about short-term investment options, or check out some easy online investment software or apps (like Acorn, Robinhood, and Betterment) that will let you play with short-term projects.

Setting Up Automatic Deposits to Investment Accounts



This is one of the most reliable and time-honored habits of smart investors. Automatic deposits into a retirement account will allow you to invest without feeling the pain of conscious deductions. If you invest before even counting that money as part of your monthly income, it doesn’t have the same pang. 

Use Extra Savings Techniques to Grow Your Investment


We all have a few things that happen throughout the year that just feel like bonus money. Any time you have that boost, consider turning it into investment, instead of an indulgence that will depreciate the moment you buy it.

  • Tax returns: We’re in a dangerous place when we start considering tax returns money that’s owed to us, because we never know precisely how much it will be. Consider depositing the whole amount as soon as you get it, or treat yourself to something you really want or need, but turn over any surplus to savings.
  • Yearly bonuses at work: If your company does yearly bonuses, think about it as a gift towards your retirement instead of fuel for yet another Holiday impulse-buy.
  • Rebates: Some are factored into the price of something we buy, but some rebates come as a surprise.
  • Sales: Did you just save 30 bucks on that jacket that you really wanted to buy? What a windfall! But most of us will forget about those savings, or spend them on something we don’t need because we look at it as free money. Put that free money to work instead.
  • Resolution savings: Have you ever gone without a certain treat for a certain amount of time, due to Lent, or a health resolution with a friend? When my grandmother wanted to quit smoking, I promised to give up chocolate to support her. Even more than the health bonus that this brought, I realized that I was saving up to $15 a month by cutting an unhealthy habit out of my life. It’s not much, but it does add up! We all need our indulgences, but the next time you make a health resolution, consider the savings in cash. It will keep you motivated because it’s a positive benefit that you can see right away. To keep from rewarding yourself by falling straight back into your favorite treat, put that money towards a rainy day instead.

Bonus: Educate Yourself, Over Time


As you can see, it’s fairly simple to start investing. All you need to do is put your best foot forward to start getting involved. The key, after that, is to continually get better and better at it. 

This comes with continuously educating yourself about what your accounts are doing, and what you can do in the future to improve your portfolio. With time, a clearer understanding of things like fund transfers, cryptocurrency, and common vs preferred stocks will feel like 2nd nature to you.

In Summary!


So, next time your dad guilts you about planning for retirement, or you read an article that makes you feel way behind in money matters, don’t beat yourself up about it. Just put these three methods to work and watch your savings accumulate without feeling the pain.



Sunday, January 28, 2018

How To Evaluate TD Ameritrade



When you are a day trader, one of the most important decisions you can make is to find the right online broker to use to make and execute your trades. There is no reason to just go with whatever one you start with or whatever your day trading mentors suggest. 

It pays to do you research and try to figure out the best online broker for your habits, your strategies and your trading style.

TD Ameritrade


TD Ameritrade could be that broker. The company has vast experience in the online trading space and could be just what you need in order to make real money as a day trader. 


The way that they organize the Thinkorswim platform for ease of use and the ability for users to customize their interface is vital to the platforms ability to attract users.

Day Traders


Day traders need to be able to react quickly and efficiently. Being able to customize your interface is a great way to make your broker work for you. Having hot keys in place that will help you make trades as soon as you can see the path is a great way to make sure that your broker makes you efficient as possible. 


Volatility is such an important way for day traders to make money in the market and being able to keep up with that vitality is essential to being a profitable trader.

Comissions On Trades


One strike against TD Ameritrade is the cost of the trades. Commissions on trades in TD Ameritrade can go from $6.99 to $9.99. Considering margins, the markup on those trades are not going to be good for your profits. 




Trade costs is just one of the factors that you need to understand when choosing a broker. The quality of the tools and the effectiveness of the research are two big items that need to be ticked off before you get to that level.

Thinkorswim Platform


The technical studies that TD Ameritrade can offer for its thinkorswim platform are some of the most numerous in the industry. That could be a real boon for day traders because of the way that those technical indicators can help inform trades. 


The real-time data available for TD Ameritrade users is robust as well. Another point for day trade users.

2 Trading Platforms


TD Ameritrade also has two seperate mobile apps for trading, one designed for casual investors and one designed for active traders. The range of options for mobile traders makes TD Ameritrade on of the most forward thinking companies in the space. 


Being able to trade on your phone gives traders great access to the market and allows traders to react quickly to breaking news and new information. Traders can even link the mobile app ro their desktop setup, so trading can be seamless and easy for those on the go.

Making the decision to go with a particular online broker can be hard for traders at first. But doing research and testing out the potential brokers is a fun and informative process.




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