Stock Market lap

Simple Things You Could Do To Make Money In The Stock Market

TIP! Damaged stocks are good, but damaged companies are not. A temporary downturn in a company’s stock value is the perfect time to get in at a great price, but be sure that the drop is, in fact, temporary.

The stock market can be exciting for all investors. The methods for investing will vary, depending on what your goals are and what your risk tolerance is. Regardless of the investment method you choose, a fundamental understanding of the stock market is essential. Here are some investing tips that will help you do just that.

TIP! Before you invest or entrust any money at all with an investment broker, make sure you take advantage of the free resources that are available to you to clarify their reputation. If you take the time to do some research, you will be less likely to become a victim of investment fraud.

Sound portfolios can generate returns in the area of 8 percent, while terrific ones may bring 15 or 20 percent. There are other options that can even go beyond that amount. However, picking a highly profitable portfolio is difficult and it will take a lot of knowledge and dedication.

TIP! Don’t be fearful to step out of the market. You are doing yourself a favor by giving up trading when you are experiencing difficulties in life that do not allow you to devote the necessary time to investment.

Before purchasing any type of stock, it is vital that you lay out your goals. For instance, you could be aiming to earn income with a very low amount of risk, or you could be aiming to increase the size of your portfolio. Many different goals call for different strategies, so identifying your goal is the first step towards a successful purchase.

TIP! Diversification of a stock market portfolio means more than just choosing stocks from many different sectors. Furthermore, you do not need to work every consideration into every trade in order to craft a sound investment strategy.

Opening a Roth IRA is a wise investment decision for anyone living within United States. Most citizens qualify if they are working or middle-class income earners. This type of investment has so many benefits and tax breaks that even if there is a medium level return, it can generate a large yield.

TIP! Make investments in areas you understand. Great investors, such as Peter Lynch and Warren Buffet, made their fortunes by investing in industries that they understood.

Know the limits of your knowledge and skills and stay within them. It is unwise to venture into purchasing stocks in industries that you do not know much about, or into companies you are not familiar with. Although you may be able to predict the future of any company, you won’t always understand companies that make oil rigs. Rely on the guidance of a professional financial adviser when it comes to stocks in industries you do not know.

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Growth Stocks

TIP! Do not allow your money to stay invested in a stock that is not making you any money. A stock which doesn’t move won’t ever make you a profit.

An excellent suggestion is discovering stocks that have slightly above average growth rates, but not extremely high. They tend to have more reasonable prices for their value compared to high-growth stocks. High-growth stocks are typically in hot demand, which pushes prices up even higher and they ultimately have trouble meeting the inflated demands of money-hungry investors.

TIP! Don’t fret over the daily ups and downs of your stock. There is always volatility in the market, and becoming concerned about short-term movement will not do you any good.

Learn as much as you can about accounting and financial management. You don’t need to get a degree to have a good understanding of the basic principles. These principals will help you to understand the stock market scoring system, and therefore, make wise decisions about your purchases and sales. Warren Buffet says that education is crucial to success and every man deserves a voice.

TIP! Keep a watchful eye on a stock’s trade volume. The trading volume reflects the amount of trading that the specific stock is currently involved in.

You will not find overnight success in stocks. It might take some time before a certain company’s stock begins to show some success, and quite a few people think they won’t make any money, so they give up too soon. Patience is a virtue you need when investing.

TIP! Stay open to the fluctuations of a stock’s price. The more a stock costs compared to its earnings, the more it will have to appreciate to give you a decent return.

A significant proportion of investors lean towards stable sectors during recessions and trade conservatively. During these times you should pay attention to new companies that are producing products for the future. Keep your portfolio diverse by backing companies that are are designing or promoting new technologies.

TIP! Keeping it simple applies to most things in life, and the stock market is no exception. Reduce your risk by keeping all investment activities, including examining data points, predicting and trading, extremely simple.

Before investing real money in the stock market, practice by playing a game. It doesn’t take much to practice. All you need to do is choose a stock, and jot down it’s current price and what your reasoning was for buying it. Then you want to follow the stocks performance over time. This lets you know how your strategy would work without any risk at all.

TIP! If you are using stock analysis to consider new investments, one of the first areas you need to consider in your analysis is the PE ratio, along with the total projected return on the stock. The price/earnings ratio should be no more than twice the value of the projected return.

Start with blue-chip and well-known companies. In a lot of cases, investing in large companies is relatively safe and helps you build a solid portfolio. You can start selecting stocks from smaller companies after you are familiar with the market and ready to branch out. Small companies have a larger growth potential, but also have a large risk for loss.

TIP! Buying stocks with which you are familiar is a good way to start investing. If you know of a stock which has previously experienced success or you know an industry really well, you should purchase some shares of this stock.

Many times you can look at the obscure investments for a great investing strategy. This involves searching for stocks that others avoid. You need to sniff out the potential of stocks in under valued companies. Companies that everyone wants sell for a premium. So, there is little upside to these. If you find small companies with positive earnings, you can identify a rose in the concrete.

TIP! You may be able to invest in the stock market through a retirement plan, such as a 401k. Though you can’t access your funds until you’ve retired, you will save on taxes by using a retirement account.

As you begin to invest into various stocks remember that cardinal rule when it comes to investing: Do not invest more than you can afford to lose. This almost goes without saying for high-risk investments. Even when dealing in long term, safe investments you need to be aware there is a possibility of a significant loss. Keep money needed to pay bills in a brick-and-mortar bank rather than the stock market.

TIP! Before you buy any stock, do your research. People are often too quick to decide that a new company is a good investment after reading about it’s existence.

Monitor the stock market before you actually enter it. Before investing, try studying the market for a while. In general, watching the market for three years is the recommended time before making your initial investment. Doing so helps you to understand how to make money on the market.

TIP! Contrary to the strategy of many, greed for higher and higher returns can turn a stock market profit into a loss. Being too greedy can result in your missing an opportunity to sell and ultimately losing money.

Do not invest a lot of money in stock of the company who employs you. While purchasing company stock might be prideful, there is a lot of risk involved. If your employer makes bad management decisions, both your investment and your paycheck will be in danger. However, if you can get discounted shares and work for a good company, this might be an opportunity worth considering.

TIP! Do not follow any unsolicited advice on investments. Your broker or financial adviser offer solicited advice, and that’s worth taking.

To maximize your chances for investing success, write out a detailed investing plan with specific stock strategies. Your plan should outline strategies which dictate when the right time to buy stocks is and when the right time to sell them. It must also include a clearly defined budget for your securities. This way you will know that you are spending only the money you have allotted for investing and choosing wisely with your intellect and not your heart.

TIP! Don’t let your emotions control your trading decisions and don’t obsess over trading decisions. If you have the urge to continue to watch a dropping stock, resist it.

The stock market certainly can be exciting, regardless of whether you plan to turn investing into a full time career or a part time hobby. To make it as rewarding as possible, you should follow the advice that was given to you in this article. It will help no matter what your investment preference is – stocks, mutual funds, or stock options.

Being aware of all of the details of more trading advice for the stock market today can be difficult. The article you’ve read should have provided you a nice amount of knowledge. Once you’ve absorbed this information, keep reading other articles to expand your information.

Financial Advisor

The Risks Your Financial Advisor May Not See

You may recall The Flying Wallendas. They were a danger-craved circus act. Best known for performing high wire acts without a safety net, the group was founded by Karl Wallenda in 1922.

A 73 year old Karl Wallenda tried walking along a wire rope strung between two high rise Puerto Rican buildings in 1978. Nearing the second half of his walk, a swell of wind sent Karl falling to certain death 120 feet below. Karl Wallenda tempted fate one too many times.

This parable is similar to the problematic situations shared among today’s market investors. The last 30 years have had a few scares, but more often than not, rolling the dice has produced riches for these market gamblers. It’s clear that investors and financial advisors have become complacent. Too many are walking a financial tightrope without a safety net because it’s the only way they know. They are grossly unprepared for anything but good weather.

The economic climate determines the market’s cyclical movement. Stagnation, inflation, strong growth, and deflation shape the direction of every type of investment. The economic weather forecast can be modified over time, but the last big wave of change happened long ago, making future movements much tougher to predict.

Financial Advice

What Are The Possible Forecasts?

Deflation

Many discussions about inflation center on concerns over the Federal Reserve ordering more money into circulation. Yet, that cause and effect situation is not guaranteed. Rather, deflation in the 1930s United States was a direct result of increased money production.

Increased quantitative easing from the Fed creates a counter reaction, where the rate of spending, or velocity, decreases considerably. Uncertainty about the future has restrained the desire to spend.

What investment groups work best when deflation occurs?

Interest rates are likely to fall. This means long-term, high quality bonds, such as Treasury bonds, should perform well. Overall, goverment bonds with longevity have a good chance to yield high returns through a deflationary period. 

Inflation

Rest assured the Federal Reserve hopes a boost in money supply leads to inflation.In fact, they have an official inflation target of 2%. Creating inflation may be simple and logical on the surface, but there’s some danger that inflation will shoot up higher than intended.

Inflation alters how people spend their money, which somewhat dampens the enthusiasm of heightened spending The target is not productive investment, but protection of wealth and lifestyle. The future’s volatility slaps a label of “risky” onto startup businesses and new products that would otherwise attract investors.

What investment groups work best when inflation occurs?

When prices rise, money is likely to flow to investments viewed as a store of value or physical assets that have practical use. Gold, real estate, and commodities are some examples.

Goldilocks

The Goldilocks premise counts on the economy’s ability to stroll across that high wire safely. There are a few variations of this possibility. 

First, there could be a revolutionary breakthrough on the horizon (along the lines of the automobile or computer) that creates strong economic growth. Goldilocks could be in the cards, but it’s not worth an all-in bet.

Miraculous industry expansion isn’t the only path to a Goldilocks situation: world banks (including the Federal Reserve) would have to print money in the right amount at the right time. This would give governments enough time to enact economic reforms to remedy its instability.

What investment groups work best when Goldilocks occurs?

Stocks. Stocks are a regularly solid investment in a Goldilocks situation, and for good reason. You’re in a solid position for Goldilocks if your current investments follow this strategy. If you aren’t convinced Goldilocks will be the ultimate outcome, you are walking that high wire into the wind without a safety net.

Stagnation

Stagnation occurs when the economy remains static in its current state. We may see inflation, growth, and deflation at times, but overall, the economy would not experience sustainable improvement over a long period of time.

What investments deserve attention during a Stagnation period?

Income producing investments should work well. When price appreciation is slow, income-driven investments help keep a stream of cash flowing in until growth becomes sustainable. A pro-active approach to trading also helps turn a profit in unsteady markets. 

So Which One Will It Be?

Intellect and education can take you far, but it can’t help anyone guarantee the future. Even Ben Bernanke, who gets his information before anyone else and controls the printing press, can only resort to educated guesses.

Guessing isn’t inherently bad, as long as you comprehend the situation you’re predicting. Sadly, numerous investors lack that information, and leave that up to a financial advisor that thinks they have the answers.

There is a silver lining: guessing is not required for success. You just need to think about diversification differently than the past. Diversification among stocks and the situations above becomes vital.

There are dark clouds approaching. Whether it comes our way remains to be seen. In any event, make sure you understand how your investment strategy is likely to perform under any scenario. Without adequate preparation, the coming storm could sink your investment ship.

Stock Market

An easy way to invest in the Stock Market

Before you start let me clarify that I do not intend to give individual advice but general information. The easiest way to invest in the stock market is, in my opinion, through a mutual fund, that is, a diversified portfolio of shares, a company registered in open versions that sell shares to the public at a price of supply and when the investor redeems request, the value of net supply. In simpler words, mutual funds meet many people‘s money and invest it in stocks, bonds and other investment vehicles. The value of the shares of a mutual fund is related to the value of all the shares it owns in a given time. The price can go up and down and therefore can win but also lose money, especially when investing in the short term.

There are many types of mutual funds. Some could be classified as index mutual funds because they mimic the portfolio of the major indexes such as the SP 500 or the stock market as a whole. The advantage of these mutual funds is that they often charge lower administrative costs of managing and spread risk among many stocks. There are also mutual funds that are actively managed, meaning that its administrators decide which stocks to buy, how to buy, when to sell, buy and in what sectors. Also fall in this category of mutual funds specializing in areas such as technology, financial institutions, oil, international stocks, and so on. In general, the higher the specialization of the fund and the lower the number of shares held, the greater the risk. It is important to mention that there are mutual funds that are called “load” and make it a charge, which can reach 5% or more when buying the shares. Imagine has begun to invest and you’re losing some of their money. F or this, I would avoid mutual funds and seek “no load”.

Stock Market Phone

In my opinion, one way less risky and less costly to invest in the stock market is through mutual funds indexed to diversify risk from hundreds of actions that mimic the overall market. You can buy funds directly from the issuing companies or through investment brokers. Visit several companies, consider whether you feel comfortable, if you offer valuable information or are simply trying to “sell”.

Some people may invest $ 50 a month; another may invest $ 200 or more. By investing every month in highly diversified funds with low administrative costs, avoid the risk of investing all the money when the stock price is inflated, distribute the risk among many stocks and to pay administrative costs low, you get more money for investment. Many people, who invested in shares of technology companies when they rose at inflated prices, lost a lot of money when the price paused dramatically. However, anyone who has been buying shares every month in mutual funds diversified among stocks, bonds and cash, and has held other investments, real estate and personal business for example, will probably not suffered so much from the vagaries of the economy.

Before investing is important to visit a licensed financial adviser can help you determine your goals, analyze your financial situation and make a plan to invest in a diversified portfolio. There are people who at one time should not invest in stocks. For example, if someone has credit card debt paying high interest rates which should pay those debts before investing. If the interest you pay is for example 18%, and the expected performance of a mutual fund is 8%, would pay the debt best business to invest in the fund. Similarly, who has been retired and need all the income to pay your expenses may not be investing in the stock. In general, who need to use the money before 10 years may not be investing in the stock because recent experience has shown there may be dramatic fluctuations. Hence those who are nearing retirement or who need the money in the next 10 years should take a conservative approach when it comes to investing in stocks. Conservative can mean investing a small percentage of the capital.

For all the above, consult a financial adviser would be a financial institution.


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The term mutual fund is fairly self-explanatory, as it suggests a collection of funds from more than one person, which is then invested in stocks and bonds. Therefore, instead of the unit investors, many investors invest their wealth each other. However, the advantage of a very mutual fund can be …

Investing

Investors in the stock market myths

Today if you show a person and asked him “What do you do?” ‘I am investor. .- Automatically invest in stock your brain processes information and the first thing is that you think ahead to Gordon Gekko or Warren Buffett, a person much smarter than you and probably millions.

Some time ago we discussed some myths of the bag, as the myth of the people who were ruined by investing in the stock market, which we explained that if it did, it did not follow some simple tips to invest in the stock market or made serious errors investor.

Today we talk about some myths in the stock market investor, because sometimes confuse some terms that are often far removed from reality.

1. A stock investor is a person with a lot of money.

To invest in the stock market need only saved some money that you will not need the coming years. It is true that there is no minimum amount to invest in stock, but if you put only 100 € will probably lose money since the cost will eat the commission. With € 1.000 to 2.000 can start investing in the stock market perfectly.

However, it is clear that the more capital you have, the more money you can invest and therefore receive higher profits.

Investors

2. A stock investor is a person with many studies.

I’ve always wondered what career to study and learn invests in stock market mastery. At this point I want to be totally accurate so that nobody can say “throw people adrift.”

I have always separated the intelligence of a college degree, because one thing leads you to the other. A doctor is not smarter than a vehicle mechanic, although some people insist on saying yes. If we put both of them a test, the doctor would respond better to the question “How many muscles of the human body,” but the mechanic would respond better to other questions based on the motor world. One thing is for intelligence and other knowledge in any subject.

We will not deny that at the time of investing in a career full of knowledge in finance is not going to help you, but I will not say that such knowledge can not buy on your own and end up learning concepts that a university has never heard

I know investors who have held more than 30 years and when they speak with a financial expert, the terms as derivatives, futures, warrants or they sound like Chinese ETF. We will not say they do not know what they are, but do not quite understand and therefore do not take risks. For example, I do not understand the currency market, so when you can not swim, you better not go near the pools.

One thing is to invest in stock market and understand all the other innovative investment vehicles, which some of these are investment products that helped produce the crisis we now live.

3. Investor is being constantly investing.

Perhaps we have been engraved image of the films that show us some brokers who spend 24 hours a day “purchase! Sold!!!”

As a general rule that stock investors earned more money are those that less buying and selling orders release. You got the real example of several traders who threw 315 orders a year and have had far less profitable than others with 15 orders.

I would not say that the bag is a game where the more you play, the more you lose, since it is clear that I do not think any games of chance, but when you exceed chance in buying and selling orders you tend to lose as you yourself are using the bag as a game and every day are not good to play.

On the other hand can be a stock investor and have no value in the portfolio. Not necessarily have to have money invested, as in specific times, it’s best to clean your positions so that may occur while we assess the appropriate time and company to enter.

There are investors who invest a February 12th and until December 24 give no other orders. Anyone can be an investor, although it is clear that in the bag there are many types of investors, large, small sharks and conservatives.

In short: No studies are needed, but you need to have a minimal understanding of the factors that drive the bag. Some people get the message in 5 months, others take years and some never stop learning. The bag is not a game of chance, but bad luck could come to be present and could not do anything about it.

And finally, when I talk to investors or people who advise when investing in stock market, usually found with two types of people.

That tells you that under a particular method will make you a millionaire and it’s very easy to do.
Anyone who tells you it is very complicated and you will start losing money.
Neither is right, though neither is 100% wrong. Nor is it as difficult as some paint it or you’ll get rich if you have not already had a large sum of capital. Remember that before getting rich, three factors are labor saving and investment, and you can not move to the third or fourth stage without going through the above. The only secrets to get rich

Then there is the investor who every month get a 40% return on the stock. In this tell him to take a walk to get some air.

medical-conditions

What is Dividend Investing?

In your reading this article then congratulations are properly in order.  You’ve worked really hard, saved your money and reached the point where you want to invest your money.  You might even know a little about dividend investing but you still have questions.

What exactly is dividend investing?

How is a dividend growth investing different from every other investment strategy?

Well this article is great introduction to dividend investing and shows you the power dividend through patient long term investing.

You’ve probably all heard the expression “buy low and sell high”. Well if you ask me that puts a lot of pressure on most everyday investors.  How do I know the know the difference between a cheap stock and bad stock?  If I’m lucky enough to buy a stock that rises when should I sell my position?  Not only does investing take a lot of knowledge and luck but it also takes a huge amount of time and effort.  On the other hand, a dividend investing strategy can be explained as “buy and wait for the checks to roll in”.  That’s right, once I buy a stock I’m expecting to hold it for at least 5 years and most of my stocks I NEVER plan on selling.

Wait a minute how can you make any money if you never sell the stock?  I’m more interested in the constant and hopefully growing stream of money that I will receive from the dividend stream of the stock.

As most people who have ever invested in the stock market know stock prices fluctuate.  Sometimes they will even fluctuate wildly.  In a exceptional year even a blue chip stock that is an industry leader can easily swing 50 or more percent.  This volatility has the potential to generate massive wealth to the stockholders provided they are able to time the ebb and flow of the market.  However the trouble with this approach is that it puts all of the burden of generate wealth onto the investor.

dividend-cut-decrease

Unlike most investing strategies, dividend growth investing is looking at stocks over the VERY  long term. Let’s take Fortis Inc. as an example.  I’m using Fortis as an example not because it is an incredible stock.  In fact in most ways Fortis is a very boring stock.  The company is primarily a utility holding company.  There is nothing very interesting about paying your electrical bill every month.  You won’t get rich over night owning this stock but don’t be too quick to ignore the company either.  Fortis operates  electrical utilities in five different Canadian provinces along three different Caribbean countries.   The reason Fortis is such an interesting company is that they have a long history of paying their shareholders cash dividends as well as increasing that dividend year after year.  Let’s take a look at the dividend history:

As you can see from the chart above in Fortis has raised their dividend every year since 1973.  In 1987 the price on Fortis stock closed at $4.75 but the company also paid out a cash dividend of $0.313 or 6.5%.  This constant and long term growing income stream is what dividend growth investors are looking in a company.

Over the long term history has shown that stocks can counted on for about an 8% annual return.  That being said on any given stock there will be year’s the stock performance will be much higher then average 8% return and there will be years that the stock’s performance will be much worse.  The beautiful thing about the dividend stream is that unless the company cuts its dividend (a clear sign that the company is not healthy) the stock holder can count on the dividend income regardless of the stock performance.

Let’s take a look at the 5 year stock chart for Fortis compared to the S&P 500.

As you can see from the above graph that the Fortis stock price did very well over the last 5 years.  However, more importantly you can see that there were fairly significant fluctuation in the Fortis stock price over the last 5 years.  The beautiful thing about thing about dividend growth investing, and the difference between all other forms of investing in that the dividend investor isn’t too concerned about the stock price because over a long enough time frame it is expected that most stocks will return close to the expected 8% annual return.  However in addition to the stock gains the investors gets to sit bad and collect dividends while he waits. For  our Fortis example that means an additional $5.14 that he collected since 2007 which works out to approximately 18% of the price that he paid for that stock in 2007.

Hopefully, this article helped demonstrate why dividend investing can be such a powerful tool.  I’d love to hear your comments; Why do you invest in dividend producing stocks?

Tim-Robberts

When To Sell Dividend Stocks

Dividend investing is no different than investing in regular stocks when it comes down to the moment of selling your stocks. Once you know when to buy a dividend stock , you should also know when it is the right time to sell it. Your decision of selling your dividend stocks should never be based on fear or economic concerns but on solid and rational arguments. Here are quick indicators telling you when to sell your dividend stocks:

Sell Your Dividend Stock Upon A Dividend Cut

We already discuss the effect on a stock of a dividend cut. When it occurs, the stock value drops as it is an alarm signal. Dividend cuts indicate that the company has looked at all the possible options and they finally resign to cut their dividend payout in order to face their internal financial needs. It can be a result of bad management, a catastrophe (think of the BP case in 2010) or a sales slowdown.

In any case, you don’t want to be part of this boat. Your goal while holding dividend stocks is to earn dividend income. If this income becomes at risk, you should sell your dividend stock and move forward. You will definitely incur a capital loss (or at least selling at lower price) but you are better off selling right away and start hunting another solid dividend payer. For example, if you would have kept your financial stocks after the 2008, you would only start to earn dividend payout again in 2011 (small payouts for some banks). On the other side, there were astonish dividend investing opportunities back in 2009 – 2010 and you could be making 4-5% dividend yield with very solid companies.

healthcare-costs

So, bottom line; dividend cut = sell your dividend stock!

Sell Your Dividend Stock Before It’s Too Late

Sometimes, you don’t have to wait until there is a dividend cut to sell your stock. If you quarterly at your holding, you will be able to follow the key dividend ratios and sell upon weaker performance. Consider the present quarter result as long as what is coming up next for the company. If they show weaker dividend and financial ratios and there are no short term reasons to explain this, you are better off selling your dividend stock and go back to your investing model.

Sell  Your Dividend Stock To Cash Your Profit

In some case, you will be quite lucky in your stock picking. If you happen to buy one a rock star, you might want to sell when you are making an important investment return. When stocks are going up too quickly, it is usually because of speculation or because it has become the “flavour of the month”. A dividend investor should not be looking for the homerun and should prefer a more stable portfolio. Selling your winners to buy other dividend payers is always a good move. A good indicator to sell your dividend stock in this situation would be to look at the P/E ratio. When it goes up higher than usual, there are some speculation involve. Sell you dividend stock and enjoy your investment return.

Sell Your Dividend Stock if You Love it Too Much

We often see investors falling in love with one of their stocks. They love the company, the way it’s managed or the product they are offering. However, lovers don’t make good match when it comes down to make money. If you love one of your dividend stock too much, you might want to consider selling it before your emotional attachment becomes too important. When it happens, dividend investors keep their stocks forever and choose to ignore selling alarms such as dividend cut or weaker financial ratios.

Final Advice: Sell Your Stock Right Away but don’t be in a Hurry to Buy Another Dividend Stock

If you have a good reason to sell your dividend stock, don’t hesitate and press the “sell” button as fast as possible. However, don’t be too trigger happy when it comes down to buy another stocks. It’s not a big deal if you are sitting on a few thousand for a couple of weeks or months in your investing account. You are better off moving the proceed of your sale in a money market fund and wait carefully for the next dividend buying opportunity.

invest-dividend

When To Buy Dividend Stocks

We have been receiving several requests from readers to help them determine when it is the right time to buy a dividend stock. First off, there are no easy ways to know when to buy dividend stocks or not. However, there are some key points to look at. Those key ratios and indicators will guide you to find the perfect moment when to buy dividend stocks.

When to Buy Dividend Stocks According To Dividend Ratios

Personally, I think that it is always the right time to buy dividend stocks… as long as the fundamentals are there. There are some key dividend ratios you must observe before buying a dividend stock.

A) Dividend yield and dividend payout

When I use a dividend stock screener, I always look for dividend yields over 3%. While I may be doing exceptions and buy lower paying dividend stocks, my main goal is to cover more than the inflation (for more info, read dividend vs inflation). Therefore, I consider a right timing to buy a dividend stock when the dividend raise to 3% or the stock value temporarily drops enough to show the dividend yield I am looking for.

B) Dividend Growth

Dividend raises are very important in a dividend portfolio. Since the purpose of dividend investing is to hold your stocks during several years; you want to make sure that your holdings will generate more money in the future. The 2 important ratios for dividend growth is the 1 year dividend growth and the 5 years dividend growth. The first one will tell you about the current situation of the company (if they are able to raise their dividend currently). The latter will tell you if they can maintain a steady dividend growth over time. I like dividend stocks showing a dividend growth over 5% (yearly and over 5 years). This tells me that there are solid dividend payers and that it is the time to buy this dividend stock.

single_payer

C) Dividend Payout Ratio

The dividend payout ratio must be lower than 75%. If you are looking at dividend stocks with a higher dividend payout ratio, you are looking at a stock that might encounter problem increasing their dividend payout over the long run. When you are looking at the right timing to buy a dividend stock, look at their recent dividend raise announcement and how was the dividend payout ratio. If they recently raise their dividend payout without impacting too much their payout ratio, this is the right time to buy this dividend stock.

When to Buy Dividend Stocks According To Other Financial Ratios

A) Price / Earning Ratio (P/E)

The P/E ratio is one of the most common financial ratios. It should be a must to be included in any stock analysis. The historical S&P 500 P/E ratio is around 15. Therefore, if you find a solid dividend payer showing a P/E ratio below 15, you may have found the right time to buy this dividend stock.

B) Revenue Growth

Dividend payouts are all about how much money is left in the company after taxes. Therefore, if you want another indicator of long term dividend growth, you should look at revenue growth. If the total sales are climbing on a steady basis, chances are that the dividend payout will increase accordingly. Steady revenue growth (1yr vs 5 years) is a good indicator as to when to buy a dividend stock.

C) Return on Equity (ROE)

The return equity gives you how much the money invested in this company is creating wealth. Having sales growth is good, but growing its profit and increasing the company value is much better. A ROE over 5% is suitable (and over 10% is even better!).

Is there a perfect timing to buy a dividend stock?

I just gave you a few indicators as to when buying a dividend stock. Those numbers are relatively easy to find using free investing websites. However, if your dividend stock meets those requirements, does this mean it’s the right time to buy it?

Since the goal of dividend investing is to select solid dividend payers which will increase their dividend payouts in the future; I’d say yes. However, it is important to look at what is the recent news around the company you are looking for and what are the potential opportunities and dangers.

For example, if you look at a pharmaceutical stock, it is important to look at their patent expiring dates (which equals to a decline in sales for a specific medicine) and what their pipeline look like (how many medicine are currently being researched). This is will also tell you a lot about when to buy this dividend stock.

Where to start looking at for any dividend stocks

Some Thoughts on Investing

Been thinking about investing? Are you ready to dip your toes in the waters, and finally give this stuff a shot? I’m glad you’re reading, because investing is not easy, but it can be and is enjoyable if you know approach it responsibly. The market can be a scary place, but a lot of the fears and preconceptions you might hold are unfounded once you really take time to understand it. Every investor and trader has to face the fear of beginning at some point, but the awesome part about it is that you’ll only be new once. After that, it’s only uphill.

So if this describes you in any capacity, then I hope that this post can serve to both inform AND warn you of both myths and false expectations of potential investors, respectively. While we all would love to see double digit returns every year on our brokerage statements, it simply isn’t plausible, as you’ll soon see. It is very important to keep a sober attitude about investing, without getting carried away in the grips of an opportunity that “can’t be missed,” but somehow seems to come again every few months. A lot of the tips and advice out there can be misleading, so I’ll attempt to provide backup for any general statements that I can, both in this article as well as on this site in general. I don’t want to be seen as just another person spouting off an opinion, but rather as someone who can help guide your investment process and help you make your own decisions. [As a side note: that is what I really think is the responsibility of a financial adviser, but I understand that not everyone has time or chooses to make time to understand investing as much as I do.]

That said, the four things I would tell new investors to keep in mind are as follows:

  1. The average return per year of stock market indices is 7-8% a year
  2. You will lose money, and it will take a while to succeed
  3. There are opportunities everywhere you look (but don’t rush it!)
  4. If nothing else, mutual funds are a great place to start if you don’t have time (no excuses not to be investing right now!)

What do I mean by each of these? Let’s take a look at them individually.

1. The average return per year of stock market indices is 7-8% a year

This first thought should be reason enough to get curious about investing. Especially when compared with simply saving money in the bank or in a certificate of deposit (CD), the returns available to investors simply blows other opportunities away. An 8% annual return will double your money in a little over 9 years. This is pretty cool stuff. Moreover, the great thing is that investing is totally scalable. What I mean by this is that it requires the same amount of effort to invest $100 into the markets as it does to invest $1,000,000. And in the same manner, an 8% return is exponentially larger on a per-dollar basis in a bigger investment pool.

I used the data from http://www.moneychimp.com/features/market_cagr.htm to find the compound annual growth rate of the S&P 500, including reinvesting dividends (which is something regular investors would do most of the time). The compound annual growth rate takes into account risk (in the form of the returns’ standard deviation) over time as well, because all markets fluctuate day-to-day.

To contrast the returns of the stock market, consider the interest you’d make by simply putting money in a savings account. A quick search on Google produced the following results:

Wow, 1.30% a year! That’s some serious money. If you invested $1,000 of your hard earned money on January 1, 2011, by the end of 2011, you would have made a whopping $13!

In case you can’t tell, I think that is totally pitiful. The S&P 500 in 2009 returned 23.66%. That would have produced a gain of $236 over the course of the year. As you can see, using a savings account as a long term money-making strategy is not really an option. When you adjust for inflation, a savings account at 1.30% per year would, most of the time, make you worse off! Your money is worth less when you take it out than when you put it in. A table of inflation data from the past ten years shows average rates to be between 2-4%. In short: if your money is compounding at a rate less than inflation, you are losing money.

InflationStats Ready to Invest? Some thoughts to keep in mind.

However, I am not in any way saying that investments in the stock market make money every year. Most people are familiar with the idea of risk—after all, weren’t we supposed to have learnt at least that from the most recent financial crisis? Sure, OK Brett, I know all investments involve risk. In general, the only reason investors can expect returns on their money is because they take on the risk of loss. That is the core tenet of risk and reward.

Well, that being said, an investment in the stock market still might not be appropriate for all investors. A two-second overview of asset allocation (another area of investing) is that the older you get, the equities (fancy name for stocks) should make up a smaller percentage of your portfolio, and fixed income (fancy name for bonds) should make up a larger percent. Every financial adviser you’ll ever talk to will have a rule of thumb for the right percentages of each, but it’s best not to get tied up in the details. Just realize that in order to expect a return over time, you have to risk the chance of loss by investing in equities.

2. You will lose money, and it will take a while to succeed

The second thought picks up where the first left off, but it’s important enough to stand alone as well: you will lose money. It’s guaranteed. Over your lifetime, the markets will not always gain exactly 8% a year; some years they might gain 30%, other years, they might lose 50%. There is no easy way to predict it. If you invest in only a few individual companies, the chances are even greater for loss, since one might have a bad year while the rest of the market does well. But, the one truth that cuts through everything is that you will lose money. Every professional investor has lost money at some point in their career.

However, the good thing about losing money is that it teaches you. For one, it teaches you about risk management. Knowing when to sell a stock is an incredible difficult skill and one that I’ll cover at the end of this series. However, experiencing losses will encourage you to put controls in place (like stop loss orders, which I’ll also cover in the future) so that you can automatically get out of a position if it drops below a certain level. Another thing it teaches you is to be unemotional about investments. Too often when someone starts investing, he gets upset when his portfolio is worth less than what he put in, and understandably so. But, to be successful, you need to remove emotion from the equation and look at a company from an intrinsic value point of view: put another way, if you know how much you think a company is worth, you are more patient and willing to put up with temporary losses. [side note: I covered eliminating emotion as one of the top ten rules of value investing]

3. There are opportunities everywhere you look (but don’t rush it!)

The third thought is that there truly are opportunities everywhere you look. While this site right now is limited mainly to covering equity investing, there are thousands of different ways to invest in public markets, and you really can make a directional bet on any view you have of anything. Even if you looked just at equities, there are more than 19,000 publicly traded companies in the US (see http://www.crmz.com/Directory/CountryUS.htm). Trying to analyze that many companies is enough to keep any investor busy for a few lifetimes. But not everyone wants to just invest in stocks. If you want to branch out, there are many, many different asset classes out there. The bond and fixed income markets are monstrous by themselves, but then there are derivative securities, which account for a growing segment of the market too. Options and futures contracts are considered derivatives since their intrinsic value derives from a multitude of factors, one being the underlying company or index they are based on.

If you were more of an economist and had views on how the country is going to perform relative to other countries around the world in the coming year, you could buy foreign currency contracts. In fact, the forex (foreign exchange) market is the largest by far with respect to daily trading volume; stocks pale in comparison. Even beyond forex, you could buy interest rate swaps, or foreign stocks, bonds, and derivatives, and literally anything you could ever possibly want to bet on. The markets (and companies who create financial products) have endless ideas of things you might want to invest it, so they will continue to produce them!

That is what is so amazing about the markets–there are hundreds of thousands of opportunities available to you, and all you need to do is look. That being said, if you are just starting out, I would stick with stocks for now. You can always be open to new opportunities, but in some cases the learning curve is a bit steeper, and all other investments require the same if not more research and due diligence than stocks, so it’s best to keep it simple for now.

4. If nothing else mutual funds and ETFs are a great place to start

The final thought, and perhaps the best starting point for a new investor, would be to consider an index mutual fund. An index fund is simply a fund that holds a basket of stocks seeking to mirror a stock market index, such as the S&P 500 or the Russell 3000. By investing in one, you can essentially mimic the performance of the index without actually having to buy all the companies in it. They are great for opening low-maintenance opportunities up to investors, but they still should be approached with the requisite due diligence. I started out investing only in index funds, and even today I still hold part of my portfolio in them. I use Vanguard for mine, because they have some of the lowest costs in the industry, and you can buy and sell shares of index funds for free (provided you don’t buy and sell too frequently).

Without getting too deep into the rationale for tax considerations of mutual funds, one thing to keep in mind is that unlike regular stocks where you incur taxes only when you sell a position for a profit, you can be taxed on mutual funds even when you don’t touch the investment at all over the course of the year. As a result, you can lose a bit of your investment over time due to taxes—this is bad for us as we saw previously how wonderful compound interest is.

Fortunately, there are such things as exchange-traded funds (ETFs), which can solve this tax problem for us. ETFs can include many different asset classes, but they are similar to mutual funds in that you can buy them to get exposure to indices such as the S&P500. However, with ETFs, you only really incur taxes when you sell them, similar to stocks. Another similarity is that you can trade ETFs intraday, whereas mutual funds are only required to credit your account for the closing price of the shares no matter at what point during the day you placed a sell order.

That said, there are advantages and disadvantages to both, but for now, mutual funds are simple and easy to get started with. If you have a little bit of money to invest, Vanguard is a great option to get an account with. Most Vanguard funds require a minimum initial investment to buy into a fund, but in some cases the amount is as low as $500. If that is too much for now, then stick with an ETF, as you can buy as small an amount as you want (and you can buy them from an account with any brokerage). If you just want exposure to the market, three S&P500 ETFs are: ticker symbols SPY, IVV, and VOO. The latter is Vanguard’s ETF.

All that being said, I really don’t see any reason why not to get started with investing. Sure, it involves risk, but if you are in your 20s or 30s, and have a little bit of money to spare, then starting small and learning the basics of investing can be a really fulfilling process. You will lose money at some point during the process, but the sooner you learn these lessons, the better off you’ll be! If you have a long time horizon (5-10+ years), then there really is no reason to wait. Just go for it. You’ll be glad you did.

Disclosure: I don’t hold positions in any of the ETFs mentioned: SPY, IVV, or VOO, although positions may change at any time.

Investment

How To Avoid Investment Silly Mistakes?

Smart people sometimes make silly mistakes when they investing. Part of the reason for this, I suppose, is that most people do not have time to learn what they need to know to make good decisions. Another reason is that many times when you make a silly mistake, another person, a seller of investment, for example, makes money. Fortunately, you can save lots of money and a lot of headaches by not making bad investment decisions.

Do not forget to diversify

The stock market average return is 10 percent or more, but to win the 10 percent he needs to possess a wide range of populations. In other words, it must diversify.

Anyone who thinks about this for more than a few minutes you realize it’s true, but it’s amazing how many people do not diversify. For example, some people have huge chunks of the shares of your employer, but little else. Or have a handful of stocks in the same sector.

To make money in the stock market, it takes about 15 to 20 stocks in a variety of industries. (Not only have these figures represented the number of 15 to 20 from a statistical calculation that many upper division and graduate account finance textbooks.) With less than 10 to 20 stocks, the portfolio return is very likely that are somewhat higher or lower than the average stock market. Of course, it does not matter if the portfolio return is greater than the average bag, but be careful if you do the return on your portfolio is lower than the average stock market.

By the way, to be fair I must say that some very bright people disagree with me in this business of holding 15 to 20 stocks. For example, Peter Lynch, the scandalous success of the former manager of Fidelity Magellan mutual fund, suggests that individual investors have 4 to 6 people understand well.

His feeling that shares in his books is that following this strategy, an individual investor can beat the market averages. Mr. Lynch knows more about picking stocks than I ever, but with respect, however, agree with him for two reasons. First, I think Peter Lynch is one of those geniuses modest underestimate their intellectual ability. I wonder if it underestimates the powerful analytical capabilities it provides to collect their livestock. Secondly, I believe that most individual investors lack the accounting expertise to accurately make use of quarterly and annual financial statements those companies in the ways suggested by Mr. Lynch.

Patience

The stock market and other stock markets bounce around on a daily, weekly, and even years, but the general trend for long periods of time has always been up. Since the Second World War, worse, or the return has been -26.5 percent. The worst round of ten years in recent history was 1.2 percent. Those numbers are pretty scary, but things look much better if you look long term. The worst of 25 years of return was 7.9 percent.

It is important for investors to be patient. There will be many years bad. Many times, an evil, or is followed by another, or bad. But eventually, the good guys? You outnumber the bad. To offset the bad guy? You too. Investor’s patient in the market is both good and bad?  You almost always better than people who try to follow every fad or purchase the year you spent a hot stock.

Invest regularly

You may already know about the average investment in dollars. Instead of buying a number of shares at regular intervals, you buy a dollar amount such as $ 100. If the stock price is $ 10, buy ten shares. If the stock price is $ 20, you buy five shares. If the stock price is $ 5, you buy twenty shares.

Average dollar investment offers two advantages. The biggest is that regular investment in both good markets and bad markets. If you purchase $ 100 deposit at the beginning of each month, for example, do not stop buying shares when the market is down and every financial journalist in the world are working to fan the flames of fear.

The other advantage of the average investment in dollars is to buy more shares when the price is low and fewer shares when the price is high. As a result, do not be swayed by a wave of optimism and end up buying most of the public when the market or the stock is up. Similarly, we also do not get scared away and stop buying a stock in the market or the stock is down.

One of the easiest ways to implement a dollar to the average investment program, to participate in something like an employer-sponsored, 401 (k) or defer compensation plan. With these plans, which effectively invest money every time you withheld from your paychecks.

To invest in dollars of the average working with different populations, it is necessary to average dollar each population. In other words, if you are buying shares of IBM, have to buy a dollar amount of IBM stock every month, every quarter or whatever.

Do not ignore investment costs

Investment expenses can add up quickly. Small as differences in expense ratios, expensive investment newsletter subscriptions, online financial services (including Quicken Quotes!), And income taxes can subtract hundreds of thousands of dollars of their net worth during a life investment.

To show what I mean, here are a couple of quick examples. Say you are saving $ 7000 for a? Or 401 (k) in a couple of mutual funds that track the Standard.


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save-invest

Investment for Beginners

Wanting, waiting and wanting more money is something we all do and at some point in our lives and what can happen, a win in the lottery to an inheritance, the salary increase or gift the next question is always: what to do ? ? Will spend, spend – holidays, cars – or should save, save, save? Angel or devil? Your heart or your head? However, it has to be a difficult choice – you can spend and still have enough to maintain a lifestyle without worry – of course as long as you remember two golden rules of the master himself, Warren Buffet: an article is ‘capital preservation’, the article two ‘never forget a rule’ apply if you decide to handle your financial affairs or you hire a professional.

So, what are the basic rules of investment and how they work? The first thing you should understand and, in particular in terms of risk. ? What does this mean? This means being honest with yourself and see how much money own risk. Your values and beliefs about these are established at an early age, mainly through their parents and the people closest to you. If your eyesight is at high risk of losing 100 pounds in an investment decision, then I suggest you have a very low risk threshold. Alternatively, if you are happy to invest £ 250,000 in a new business and can sleep easily, the risk threshold is high. Both points of view of course, must be measured against his wealth. You can set your own ‘risk profile’ for anyone to complete free online personality as found in www.similarminds.com. If you decide to use a professional adviser is the first thing he or she will try to establish. In short, try to understand the limits of your comfort zone that the money is concerned, as well as long-term financial goals and objectives. Many financial markets are extremely volatile and prices can move significantly in the day. The U.S. market, for example, is much more volatile than the market in the UK. For example, a share in the FTSE 100 can move up to 10p a day a U.S. market share equivalent can move a dollar or more (60p) – i.e. 6 times per day.

You have taken the test and experts talk about the following? What will be the key to his success? Diversification or, more simply, that the dissemination of all is the key, because that is what the success of the kids, or? Ace and increasingly do. It is simple common sense – do not put all your eggs in one basket, as it is asking for trouble. If you had to invest £ 100000, you can put 15% in stock, 10% of the premium bonds, 25% bonds, and other property. Most millionaires are risk averse, are limited to better manage their risks for the preservation of capital, diversifying the risk of disseminating, and using sound money management techniques. Perhaps this is why we are millionaires! Dragons Den Look carefully and see how they are. Once you have established your risk profile, and agreed that in order to increase the value of what it will be necessary for trade and investment, as investment markets or should I choose? Property, pensions, stocks, bonds, mutual funds, options, derivatives, precious metals, currencies, the list is endless. It all sounds very complicated and intimidating. In fact, there has to be. There is no reason to feel threatened or intimidated by asking simple questions because everything can be explained very easily and in a non-paternalistic. Remember it’s your money and these are her dreams, never, ever invest in anything that makes you feel comfortable with or understand. If you can not explain with clarity and simplicity and it keeps you awake at night, should not be in it!


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7 Steps to start investing
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Identify Your Profile
Traditionally it has established three investor profiles based on the values on which the money is spent. However, there are many profiles as investors, since each one is a perfect combination, which can only be known study each particular case. The investment policy you choose will depend on many factors. …

Types of Financial Markets to invest our savings
We will now give a summary of the 5 types of financial markets where a person can invest because they are sometimes confused some terms and we are not able to differentiate some concepts, which, it never hurts to know. I’ll put them in order from less profitable to more …