Finance

Things to do before investing

Friends, family, and readers always ask me that question. What do I need to do to start investing?
The answers to this question will be a little unparallel.

The same way stocks grows in value and pay nice dividend is the same way a business can also go bankrupt or cease paying dividends. When I mentioned to look for business with value and business that has been around for century doesn’t always guarantee that you are 100% safe from volatility. Look what happen to GE. I believe you should approach the market with caution and be vigilant. Don’t put all your eggs in one basket. In investment the terms you need to know is “diversify”.

It’s important to informed yourself, I’m not talking about the daily news. The daily news can impact things also but that should be the least thing you need to worry about because the market have a funny way of responding to daily activities. Do research about the business you want to invest in. Your hard earnings should be investing in valueable assets.

You don’t have to do it alone if you don’t want to there is a lot of Investment manager out there. Most of them have that saying “we do better when you do better”. It’s a way of telling you that they want you to make money so in return they can make their own profit. If you are not comfortable doing that you can also pick stocks base on valueable research.

One other thing to keep in mind is that the younger you are more aggressive you might be while someone that’s over 50 will want to be very conservative.

The next step is you must have the money to invest. It’s unwise to invest money that you will soon need. When the time comes the market might not be favorable to sale in your portfolio.
So make sure you have some kind of emergency fund which can cover all your bills for about 90 days. Lesson one in the Investment industry is to never ever borrow money to invest because in this game there is never guarantee. Also keep in unlike the banks the money you Invest are not FDIC insured! So words to the wise, make your investments count and invest wisely.

Finance, saving

Investment terms and their definition

Just like in every profession there are terms and conditions that an individual have to understand prior to making a decision. Some terms might be easier to understand  while  others  might take longer. Before making any decisions mean you’ll need some sort of understanding before understanding the full benefits of them. If you just getting into investing it’s important for you to review, research, and ask alot of questions. While in the process you might find yourselves understanding some of the aspects of investing but not all of it and that is perfectly okay because the world wasn’t made in one day.

Start the process small and steady. Let’s start with my favorite, all my investments is base on Dividend. Dividend is a distribution by a corporation. When the company makes a profits or a surplus a proportion of that is divided with the shareholders. Owning shares in a corporation really makes you part owner of that business. When they do well you get rewarded some company will go the extra mile just like Costco did these year distribute extra money because of a surplus. Dividends can be paid once, as a special use of them, or they can be paid more regularly, such as monthly, quarterly, semi-annually, or annually.

Portfolio is a collection of financial Investments
It can be stocks, cash,bond commodity and real estate, Arts and ETF (extend traded funds).
If you are talking to people who are using that term your circle is good. I’m always curious to see what’s in other people portfolio.

Asset / allocation: An asset is a resource or property having a monetary/economic value possessed by an individual or entity, which is capable to generate some future economic benefit. No matter how aggressive you are it’s always good to diversify your portfolio holding by allocating them to do so you divide them by classes to limit risk because some asset perform opposite to each other. For example we have technologies, pharmaceuticals, consumer staples and utilities just to name a few.

Don’t ever think of your car as an asset
It’s a liability it devalue daily and cost to maintain.
Bear market: is a market that is falling. A bear market has a downward trend, and someone who believes the market is headed for a drop
Represent by a red color and a bear.

Bull market: a bull market is a condition of a financial market in which price are rising or expected to rise usually represent by the color green and a bull.

Capital gain (or loss): is the difference between what you bought an investment for and what you sell if for. If you buy 100 shares of a stock at $10 a share (spending $1,000) and sell your shares later for $25 a share ($2,500), you have a capital gain of $1,500. A loss occurs when you sell for less than you paid. So, if you sell this stock for $5 instead ($500), you have a capital loss of $500).

Blue chip: You might hear reporters and others refer to “blue-chip stocks.” Blue chips are companies that have a long history of good earnings, good balance sheets, and even regularly increasing dividends. These are solid companies that may not be exciting, but they are likely to provide reasonable returns over time.

Those are just a few of the market terminologies
No need to learn them by heart. You can just look them up whenever but they are very important.

What is risk tolerance?
Is your ability to psychologically endure the potential of losing money on an investment.
All investment carry some type of risk while some can be riskier.

What are the best stock a bigginner investor should buy? That question do not have a straight forward answer as not all investors have the same goals nor same risk tolerance.

How do I become a successful investor?
Start with a plan, diversify, stick with your plan regardless of volatility. Focus on generating after tax returns.

Finance

Limit Order

If you have been keeping up with me and blogs you will see In my previous article I talked about different types of Investments. This is a follow-up and I also will be answering some questions. Investing is a lot easier to manage than one thinks. With commitments and fancy technologies this days you can let AI (Artificial Intelligence) do all the hard push for you.

There are a few terms that you will probably only hear from people wearing suits on MSNBC or Bloomberg business. Your casual friends don’t use them. Well I’m here to tell that they are available to all us and there is a lot of advantage in them today I’m only going to shed light on limit orders which involves both buy and sell

According to investopidia: Limit Orders
A limit order is an order to buy or sell a stock for a specific price. For example, if you wanted to purchase shares of a $50 stock at $50 or less, you can set a limit order that won’t be filled unless the price you specified becomes available.

Similarly, you can set a limit order to sell a stock once a specific price is available. Imagine that you own stock worth $75 per share and you want to sell if the price gets to $80 per share. A limit order can be set at $80 that will only be filled at that price or better.

Now keep in mind they have the Pros and Cons.
A limit order offers the advantage of being assured the market entry or exit point is at least as good as the specified price. The key word here is certainty.

Disadvantages of Buy Limit Orders does not guarantee execution. Execution only occurs when the asset’s price trades down to the limit price and a sell order transacts with the buy limit order. The keys word here is not guarantee.

Yes you can start investing with as little as $100
And you don’t need to pay money to invest as of last year I believe Charles Schwab was the first to vanquished it. It’s always important to set up beneficiaries.To get away from negativity you don’t have to share your investments idea with people that are not in that circle.

People ask me that question consistently how do I know what and when to buy?
It’s simple I’m always in buying mood because I’m a dividend collector. But you can check within your brokerage for trending stocks and most movers from there you’ll see what others are doing.

I will answer 3 more questions next Friday
Until then invest with confidence and responsibly.