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Archive for January, 2009

Investing Mistakes to Avoid

January 29th, 2009 at 06:51 am

Along the way, you may make a few investing mistakes, however there are big mistakes that you absolutely must avoid if you are to be a successful investor. For instance, the biggest investing mistake that you could ever make is to not invest at all, or to put off investing until later. Make your money work for you – even if all you can spare is $20 a week to invest!

While not investing at all or putting off investing until later are big mistakes, investing before you are in the financial position to do so is another big mistake. Get your current financial situation in order first, and then start investing. Get your credit cleaned up, pay off high interest loans and credit cards, and put at least three months of living expenses in savings. Once this is done, you are ready to start letting your money work for you.

Don’t invest to get rich quick. That is the riskiest type of investing that there is, and you will more than likely lose. If it was easy, everyone would be doing it! Instead, invest for the long term, and have the patience to weather the storms and allow your money to grow. Only invest for the short term when you know you will need the money in a short amount of time, and then stick with safe investments, such as certificates of deposit.

Don’t put all of your eggs into one basket. Scatter it around various types of investments for the best returns. Also, don’t move your money around too much. Let it ride. Pick your investment products carefully, invest your money, and allow it to grow – don’t panic if the stock drops a few dollars. If the stock is a stable stock, it will go back up.

A common mistake that a lot of people make is thinking that their investments in collectibles will really pay off. Again, if this were true, everyone would do it. Don’t count on your Coke collection or your book collection to pay for your retirement years! Count on investments made with cold hard cash instead.

Share Trading Basics

January 28th, 2009 at 02:41 am

If you’ve never had much to do with share trading, you might be surprised to find that you cannot buy and sell shares yourself. To have any kind of investment portfolio you must rely on the services of a stock broker to buy and sell your shares.

There are two main types of stockbrokers. One will buy and sell whatever shares whenever you tell him. He is referred to as a non-advisory stockbroker. While the lower fees charged may seem attractive, there is no surety that your investments will be good ones - unless you have done your research and know which companies are the likeliest to perform well.

There are two ways to contact your non-advisory stock broker and that is via the telephone and via the Internet. Of the two, the Internet is the cheapest as you simply go to the website provided and type in all the details of your stock broking wishes. They are then put into the loop and the stock broker carries out your wishes. For a telephone service you pay a little more, but are able to contact the stockbroker and tell him personally what you want to do with your share trading.

The other type of stockbroker is called a full service stockbroker. He will advise you on what is a good or a bad investment, and then trade as you tell him to. An advisory stockbroker does charge higher fees, but his advice is for the most part well worth considering.

There are also two main types of investing. One is to purchase certain shares and keep them over several years until their value has increased, or simply keep them to enjoy the dividend each year. The other is to buy and sell quickly - hopefully for a profit. The latter choice is the riskier, as no one can adequately predict whether the value of specific shares will go up on down at any given time. While it is possible to make good money doing this - if you are lucky - it is also possible to make losses very easily.

All investing has risk, but diversifying widely and taking notice of a professional stockbroker’s advice will help to mitigate it to some extent. It takes time to learn all the ins and outs of share trading, so while you venture on your journey, be sure to heed the advice of others who’ve gone before you.

Easy To Understand Stock Broking Advice

January 20th, 2009 at 12:02 am

Once you decide to start stock broking - buying stocks, shares and bonds or other investments, you will probably need to get stock broking advice from a professional stock broker, who can tell you what and how much of each to buy. Many people have lost money by investing in shares, so you need to be careful. Those shares that are considered high-risk will give you a higher return, but of course you may also lose money if the stock market crashes.

If you are not comfortable with a high level of risk, then choose those managed funds that are considered low risk or safe, and even though your returns will be lower, the risk of losing all your money is much smaller. When choosing a managed fund, look carefully at the product disclosure statements. You may find that due to the fee involved you would get just as good a return on your money by having it in an e-saver account where there is a good rate of interest and no fees at all.

If you do decide to go ahead and invest in stocks and shares, you have the choice of a managed fund, where a team of professional stockbrokers do all the work for you. Naturally, you must pay them to do this, but if you choose a fund with low fees, it won’t be too much of a slug. Even if you decide to do the buying and selling yourself, you will still need a stock-broker to follow your instructions as to what to buy and sell and when.

A stockbroker has been trained to invest in the share market and must be registered to do so. You may have a stockbroker who gives you the benefit of his experience and tells you what you should buy or sell, then does it for you. Many times he will do this work without letting you know, because there may not be time. Of course, he will have consulted you about your general wishes and needs beforehand, then work to the best of his ability to fulfill them. For instance, if you tell him to only buy low-risk shares, then he will certainly confine his activities to those.

Or you could have a stock broker who advises you what to do, then leaves it up to you to do it. This can be done online or by phone. This option is the less expensive of the two, since you are doing most of the work. Buying and selling online or by phone is using technology to cut costs. One thing is for sure, once you start into stock broking, you life will never be boring.

Golden Rules of Investing

January 19th, 2009 at 04:50 am

Since the whole idea of investing is to make money, it is important to take the time to get the most bang for your investment dollar possible. While you can simply leave it all to the professionals, knowing what they are up to will give you more peace of mind. And if you do your own investing, then regularly checking your investment portfolio can only be considered wise.

Following the golden rules of investing will help to enhance your return and minimise fees and losses. Read on for some wise advice about investment portfolios from the professionals.

1. Firstly, if you have business interests, you should certainly keep them separate from your personal investment portfolio. Then if something nasty should happen to your business, you can’t be sued for the clothes on your back, as it were. You might think your business is rock solid, but accidents such as fires can happen - and then, you may pass the business on to the younger generation who may not be as wise as you are. So protect your investments by keeping them separate.

2. Hold your investment portfolio outside your name. Many lenders require a personal guarantee that means you can be sued for your personal assets if you should default on the loan. So for standard asset protection, put them in another name.

3. Thinking ahead will help stave off any problems. Burying your head in the sand will not solve anything and it only makes matter worse. Saving money outside of your personal name and your business name makes good sense, even if your business appears rocks solid at the moment.

4. Now that superannuation laws have been changed, it’s up to you to make the most of them. Adding significant contributions to your super while it is still allowed will certainly increase your investment returns. And the new law means that your superannuation is protected from creditors in the event of bankruptcy.

5. Use of a discretionary trust is a good way to protect assets in case of bankruptcy, but also gives excellent tax benefits. This is done by splitting income and capital gains with adults who have a lower tax rate than your own.

6. Forming a company may not be the best way to protect assets or gain tax benefits. Appreciating assets from investments should not be held in a company because they are not eligible for the CGT discount of 50%. However, companies do have some good points if care is exercised.

Basics to Building Wealth

January 19th, 2009 at 04:23 am

Everyone dreams of being wealthy enough to do whatever they want; own lots of possessions, live in a fantastic house and travel overseas in style and luxury. But to do this, building wealth must be worked at. It’s not as hard as it might seem, though. Most people who have a job are paid a good wage in comparison to years ago. The trouble now is that we expect our quality of life to reflect that good wage, so we end up spending most of it instead of adopting a save and invest approach.

No one can build wealth if they go out and spend every cent they make. Building wealth means you must firstly make money, then you must save it - and lastly, you need to put your savings to work for you so that they will make even more money. Many people chase that get-rich-quick dream that they’ve heard about. It becomes like a tantalizing carrot held in front of a donkey’s nose. And those who chase it are donkeys - asses in fact, to spend all their money chasing the pot of gold at the end of the rainbow.

Real wealth creation takes time and money - and patience to build. Firstly you need to put your focus on making more money. It might be possible for you to get another part-time job as well as the one you have. Or perhaps with a bit of effort in the study department, you could get another rung up the ladder and be paid more.

If this is the case, you would be well advised to continue living as you’ve done in the past and invest all that extra money, at least for a few years. Don’t make the mistake of upgrading to a more expensive home or buying a new car. These things will not bring in money; they take it away. Another trap is to repay yourself for all that hard work by spending more money on leisure activities such as expensive holidays or eating out more often. Sure, a little reward might be in order, but don’t make a habit of it.

Once you’ve started to make more money, make sure you save it into the best investment possible. That means it should be earning the highest interest possible, in the safest way possible. An e-saver account could be one of the best solutions. They offer high interest with no or low fees. If you are an impulse spender, then put it into a term deposit so you cannot spend it. Once you see the interest piling up, it will motivate you to keep on saving.

The third step in building wealth is to invest in stocks and shares, but never put all your money at risk. You might be happy to have a high risk - high return investment, but don’t do it with all your money. Keep some safely stashed away in a really safe form of investment. Soon you’ll begin to see that compounding interest is what really builds wealth.