Monthly Archives: April 2017

Learn the Top Mistakes Investors Do

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For the fearful hearts keeping your money in cash and in the banks might be their idea of growing their wealth, but for the brave soul, investing in the stock market is their idea of wealth accumulation.

Fear would not take you anywhere. There might be unfortunate events that are uncontrollable, yet as it is always being said, increasing your knowledge and understanding about the stock market can help lessen the occurrences of unwanted incidents. Here are some of the top mistakes that investors tend to do and how you can avoid them.

 

  1. Not selling at the right moment

It is of utmost importance to know when to sell. This is the most difficult as an investor. You might be caught between selling winning investments too early and keeping losing investments with the hopes that they will soon recover. Thus, making you fear selling of stocks. To avoid such mistake, you have to establish an exit strategy and be alert if the market turns bearish.

It has been seen from history that during bear market stage even profitable companies can be severely affected. If you own a stock in a specific bearish sector, you should consider selling. No company would be safe from the growl of the bear. It is important to comply with the sale as to avoid losing money.

 

  1. Not applying objectivity

The opposite of objectivity as you know it is the quality of being subjective or being influenced by personal factors such as your feelings, tastes or opinions.

That is, being emotionally attached to your stocks might lead you to incurring losses in the end. As what experts say, only love a stock when it is making you money, and if it does not anymore generate anything for you, it is time to cut it off.

Also, it is a must to always base your decisions on reliable information rather than deciding based on emotions alone. It will produce remarkable results in the long run. Trading also using a proven methodology will prevent you from trading on emotion.

 

  1. Not taking into consideration earnings report

When you purchase a stock, you have to make it a point to be updated with the company at whatever form and cost. For publicly traded companies, they are required to announce their earnings report for four times annually. As an investor, you have to pay close attention to such events and use the following to your advantage.

Remember that it is already a bad sign when a stock fails to meet earnings expectations again and again.

 

  1. Not giving thought to high and excess fees

 

Fees are a form of spending that does not add any value to your investments. Actually, it detracts the long-term performance of your portfolio. You have to acknowledge that high fees cut your returns. Most of the time, investors tend to overlook this issue that fees can massively drag your portfolio.

 

Conclusion

Indeed, learning from the mistakes of others is one good way to avoid committing those mistakes yourself. The stock market is a complex system, you have to put in the time and effort to better prepare yourself. Always keep in mind that you have to avoid losses and take profits at whatever cost.

 

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Taking Charge of Your Money in Your 60s

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Delaying retirement is not a common instance nowadays. Studies reveal that the average retirement age by Americans is age 62. A lot of people are retiring at age 65 or older since they find themselves not adequately prepared.

A number of retirees would solely depend on social security. If you are in your 50’s or 60’s and you feel that you aren’t yet ready for retirement, here’s how you can better prepare for the future. Ensure that you will have the funds you will need to enjoy a good life.

 

How do you picture yourself after retirement?

People have different concepts when it comes to retirement. There are people who wanted to spend the rest of their lives traveling, others wanted to ensure their children’s future, others would still want to work part-time to keep with the expenses, and a number would still be haunted by debts even after retirement.

Each person’s financial situation is unique. There is no one-size fits all retirement plan. If you are a firm believer of the saying, “it’s never too late,” then it is really never late for you. Especially when it is about retirement planning, do not let hopes abandon you.

 

What if you haven’t saved enough for retirement?

Most 60-year olds do not have enough money for retirement. This point in your life, you should take an honest perspective regarding money and retirement. Financially speaking, where are you compared to your peers? If you are lagging behind your peers, it is not the right time to get discouraged. Do not get stuck on that comparison – you just do what you can with the remaining time.

 

Why do you need to preserve your capital?

Individuals retiring soon should focus themselves on capital preservation. Capital preservation means putting your hard-earned money in conservative investments and keeping a practical lifestyle. Your retirement savings must last longer – such as living on less but with sufficient money to live with and not worrying about the years to come.

You must choose the best investment strategy where you can meet your needs and goals. You might want to divert your money to income-producing yet conservative type of investments.

 

Where should you start after a period of contemplation?

You might not be able to do it on your own. When talking about retirement, there are a number of factors that one needs to consider. This is where the role of a financial advisor enters the picture. A financial advisor can help you assess your risk tolerance, time horizon, investment knowledge and understanding, targets and how interest rates can affect you.

Advisors can help you increase your income-producing investments to get you ready by the time of your retirement. Aside from that, advisors can help you choose the right kind of investments depending on your goals.

You should also take into consideration that inflation, increases in property taxes, other maintenance fees, and rental fees can undermine your money. Hence, you can consider Exchange-Traded Funds (ETFs) as they are a low-cost alternative compared to mutual funds and other managed investments. In fact, they can offer higher returns as well.

 

Conclusion

You should not let it happen that you don’t have enough money to cover your after retirement expenses. Be open as early as now and reach out to those who can professionally help you.

 

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Discover the Blade Runner Trading Method

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The Currency Market is regarded as one of the largest financial markets due to massive trading volume per day. Such type of market is open to all types of traders all over the world since trading deals can be done through an OTC (over-the-counter) network.

In this type of market, participants are free to buy, sell, exchange and take a chance on currencies. It has unique attributes and properties wherein investors become attracted to it since it can open opportunities for optimizing profits. Yet, it takes to know and apply an effective strategy to be able to reach your financial objectives in this market. In this article you can learn one of the most advisable currency exchange trading strategies recommended by experts.

The Need for an Effective Strategy

Not all created strategies apply to all existing markets. There are particular strategies that do better than the others. An individual trader must be able to discern a strategy that suits him and help him outlive the currency market.

It is true that markets have their own characteristics. Its major characteristics are as follows – it is highly liquid, it is open 24 hours per day except during weekends, and has the highest forms of leverage that both traders and investors can utilize.

Simply maintaining discipline when doing trading is important, yet it does not guarantee success. Hence, employing an effective strategy is vital – one that is tested and you can count on while you maintain the needed discipline in the field.

Picking the Right Strategy

When talking about currency exchange strategies, deciding on a specific trading method to carry out your trading plan is a must. Trading strategies help you determine advantageous entry signals that you can make the most of.

Considering the Bladerunner Trading Method

If you are looking for a strategy that works across all time frames and currency pairs, the Bladerunner is considered to be exceptionally good. Experts say that it is by some means considered as one of the best and easiest trading strategies.

This strategy depends on pure Price Action to be able to locate entries, which means that a trader tries to identify price action patterns. When using this one, candlesticks, pivot points, round numbers, support and resistance levels are brought into play.

It uses the 20-day EMA (Exponential Moving Average; a reference point for price action). The strategy is termed as Bladerunner for the reason that the 20 EMA represents a knife dividing a price. The bladerunner trader depends on the charts and then compares the real price action to be able to adjust their trades correspondingly. It simply means that when the current price action is beyond the EMA, chances are, it will drop soon and vice versa.

The crucial entry factor for this strategy is when there has been a break out of price from the consolidation or range before making a move, which means that the price must be trending. Moreover, monitoring news and announcements is really helpful. The most important thing to consider is to always trade with the current trend’s direction. You can simply know this by identifying the current price’s EMA or polarity indicator.

Conclusion

Considering a number of factors in the currency markets, an investor must remember that market volatility is inevitable. One sure way to surpass market turbulence is to be equipped with the necessary knowledge you need when doing trading with your choice of assets or securities. Having an adequate knowledge is necessary for you to predict the succeeding price movement – and be on the advantageous side.

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A Must Know: Computing Your ROI

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One of the many essentials when investing is determining whether it’s all worth it by asking yourself the greatest question, “How much money did I make?” There are investors that do not do this basic stuff, maybe because they simply do not know how to or they do not know its importance.

In this article you both can uncover the importance knowing the basics of ROI as well as being able to compute it.

 

What is ROI?

This is a known metric or performance measure to gauge a certain investment’s profitability. ROI can help you sort out investments that are profitable and make a comparison with your other investments, too. It is just easy to compute and interpret, thus, you can apply it to a wide array of personal investments. It can aid you in making wiser decisions and moves.

 

Why knowing ROI is important?

ROI is important in knowing the efficiency on your investments. It aims to measure the amount of return in comparison with the investment’s cost. An investor cannot really assess his investments (i.e. stock, bond, rental property, collectible, option, etc.) without calculating for this one. It can give a concrete signal to any investor about the viability or practicality of a specific investment.

 

How to compute ROI?

When calculating ROI, the return of a particular investment is divided by the cost of the investment. The formula goes like this:

ROI = [(Gain from investment – Cost of investment)  / Cost of investment] x 100

Where, the gain of investment represents the proceeds acquired from the sale of the investment.

Or

ROI = (Net profit / Cost of investment) * 100

The results can either give you a plus or a minus. A plus (a.k.a. positive result) means profit while a minus (a.k.a. negative result) indicates a loss.

 

What affects ROI?

With the given formula, there is one factor that does not appear in the calculation that can greatly affect ROI. Truly, it is a performance measure that has a simple calculation. Investors should know that TIME is one major factor that must be considered. An investment might indicate a 1,000% ROI and another one reflects a 50% ROI. By merely looking at the figures, the investment with a 1,000% ROI is alluring; however, one must be able to consider the influence of time. What if the first investment takes 25 years to flourish whereas the second one just needs a month to pay off? Hence, time periods must be strongly considered, too.

 

Conclusion

ROI is a powerful and useful tool to assess your investments. It does not mean that an ROI gives you a positive result and you can stay complacent. It can still falter in the future. Expected ROI are not useful since there is no data to back it up.

 

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Dividends: Knowing How They Work and Their Value

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There are investors who undervalue or neglect the importance of dividends when it comes to stock market investing. A lot of investors tend to view these as little bonuses correlated with buying stocks.

In this article, you can uncover both the importance of dividends and how they work to help investors.

 

What are dividends?

A dividend is a form of payment distributed by a company to its shareholders. It can be in the form of cash payments, shares of stock or even other properties. It is being decided by the company’s board of directors.

In simple terms, dividends are shares of an investor out of the total earnings of a company. It is one way for investors to gain profit via stock ownership.

 

How are dividends distributed?

Companies that usually issues dividends can choose from a wide array of methods in distributing such to its stockholders such as:

  • Stable Dividend Policy

 

This follows steady dividend payouts unmindful of the present corporate earnings.

 

  • Target Payout Ratio

 

This means that there is a certain measure on the size of the dividends of a company. This is usually determined through a stable dividend policy. In here, the goal of the company is to pay a specified percentage out of its earnings.

 

  • Constant Payout Ratio

 

With constant payout ratio, a company chooses a specific percentage out of its yearly earnings as dividends. Thus, dividends vary accordingly, based on earnings.

  • Residual Dividend Model

 

In this model, a certain company’s dividends are centered on its total earnings minus the funds required by the company to finance and run its equity portion of its capital budget. The remaining profits are the ones being paid out to shareholders.

 

What are the usual companies that issue dividends?

Actually, larger and established companies are the ones capable of issuing regular dividends to their shareholders. They would like to be of support as their shareholders increases their wealth. However, the same cannot apply to startup companies and those belonging to the technology or biotechnology sectors since their profits are being reinvested to carry on growth and expansion.

Looking from history and records, the following sectors and industries have been known to have the highest dividend distributed to shareholders:

  • Basic materials
  • Oil and gas
  • Banks and financial
  • Healthcare and pharmaceuticals
  • Utilities
  • REITS

 

How can dividends be advantageous?

 

There are several countries where investors belonging to the high marginal tax brackets invest on dividend-paying stocks to take advantage of a more favorable tax rate.

Dividends can also be a sign of a company’s health status. If a certain company normally gives dividend payouts, and is now on the verge of reducing or eliminating such, it can be a good indicator to investors that such company might be in trouble. Another one, too, is when the dividend rate becomes high suddenly; it can be a great signal that the company is performing positively in the market.

 

Dividend-paying stocks also have the ability to stand-out in a bear market. Hence, investors can have somewhat a good protection if they chose to invest in dividend-paying companies.

Moreover, dividends help conserve the purchasing power of capital for investors. There are usually annual income returns that can beat the effect of inflation.

 

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Is Inflation Something to be Dreaded About?

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Inflation is indeed an extremely debated topic in economics. There are different points of view stating that inflation is just a phenomenon that drags the economy down – making everything harder and riskier.

Inflation is usually described as the sustained rise in prices of goods and services in a certain country. Its triggering point is – the value of money falls. If the prices of things keep on increasing and is making everything more difficult, then, is inflation something to be really dreaded about?

Or does it bring its own benefits, too?

 

Inflation is actually good for the economy

In cases that the economy is not running fully due to deflation (i.e. rise in unemployment and unused resources), inflation can help turn the tables. When the economy has been stuck in a period of recession, a higher rate of inflation can help it recover, thus, boosting its economic growth.

Moreover, when the prices of goods and services are falling (deflation), people are becoming unwilling to spend their money since they are thinking that prices can get cheaper sooner or later, hence, it leads them to delay purchases. If this happens, it can have an adverse domino effect to demand, then affecting production, distressing employment rate which may further lead to layoffs, and worst, a weakening and failing economy.

On the other hand, inflation boosts consumption. If you know that items are more likely to rise by 2-3% in a year, then you can be urged to purchase it now since buying it after some time can most likely increase its price.

 

Inflation essentially increases wages

If the price of goods and services continue to increase in the market, employers find it easier to adjust and increase wages. In turn, employee productivity increases since there is an increase in the workers’ morale. Rise in wages can be attributed to inflation.

 

Inflation in fact aids debtors

Inflation is a great help to people with current debts and are repaying their loans. With inflation peaking, wages of people can increase fast as well. To put it simply, loan payments become less valuable since it is taking a smaller portion of a person’s income. Quite the reverse of deflation or falling of prices – it actually intensifies the value of loans.

 

A good example is the United States, which is known as the leading debtor in the world, inflation helps reduce the impact of its massive debt.

 

Inflation is favorable if it is 2-3% a year

Economists argue that a little does of inflation is vital to promote economic growth and to stabilize the economy. The considered healthy rate of inflation is 2-3% per year. As examined in this article, inflation can still be considered positive since it can result to wage growth. It can also lead to profitability of businesses due to a continued flow in their capital.

 

Inflation is a constructive phenomenon as long as the factors being considered such as employment, business growth, and wage concerns are moving up altogether in unison.

 

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Earnings Release Week

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This week will be a busy week up ahead for the market community, a lot will be put in the spotlight but the one thing that will stand out is the geopolitical turmoil the US created after the strikes it made in Syria last week.

Financial Institutions and Banks

This will be the first of the big weeks in the financial market, and for this week, all the highlights are focused on the top financial institutions and banks. The scheduled reports for this week, this Thursday, are from prominent banks and financial institutions JPMorgan Chase & Co, Wells Fargo & Co, and Citigroup Inc.

The banks have been on a rollercoaster of a ride from the past months under the new Trump administration. Some other factors that may have triggered the fiscal stimulus hopes for the financial institutions are; deregulations talks and the Fed’s decision to be sterner and hiking the interest rate for a couple of times this week.

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Inflation off The Bat

There will also a big debacle for Friday because of the exclusive inflation data that will be unveiled; the data include whole March’s progress. With the Fed’s recent hikes and its latest meeting last Wednesday hinted that if the inflation data continue to roll, the central bank may and will increase another three or four interest hikes this year.

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G-7 Meets in Italy

The G-7 is a group of countries that consists of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. These countries have started a 2-day summit meeting today in Italy after the alarming attack the US made against Syria, investors and the market community continues to keep track on what would happen in the growing geopolitical crisis.

Then entirety of the 2-day meeting is expected to be disclosed at a press conference dated this coming Tuesday Eastern Time.

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