Author: bworldofficial

Mutual Fund Investors’ Common Mistakes

Mutual Fund Investors’ Common Mistakes

Mutual Funds have taken its limelight over the past few years as a way of building and growing wealth. Over time, investors keep investing in various mutual fund schemes partly based on their own study and partly because of their peer or advisor suggestions. This shows that the beginning of online investment platforms eased mutual fund investing for the novice. This ease motivates many of the first-time investors to take a do-it-yourself method instead of depending on financial advisors for professional advice.

However, the lack of understanding about mutual funds and capital markets leads people to make mistakes in their investment decisions. The mistakes occur commonly but the knowledge of it is hardly shared leading to the repetition of the same mistakes. These mistakes may affect the most important part of the investment – the returns.

Hence, below are some common mistakes that mutual fund investors should avoid, so that they can start earning the returns they deserve.

  1. Disregarding the Expense Ratio

Like any other service, mutual funds come at cost because you will have your investments managed by professionals. If you are disregarding the expense ratio of a fund which is on the higher side, you are decreasing your returns. The high expense ratio of Equity Mutual Funds is 2.5% and Debt Fund is 2.25%. Low expense ratio is an indication of efficiency and good fund and higher expense ratio signals a more expensive fund.

  1. Underrating Volatility

Volatility is beneficial when the markets are rising, at the same time, it is fatal when the markets are falling. It is an aspect that has the ability to make an impact to your investments profoundly and that it should not be underrated. You might underrate volatility thinking that you can time the markets and gain back the funds when the markets are about to fall. This is a very deadly task and you might end up losing your money. So how are you going to measure volatility?

Volatility can be measured by Standard Deviation. Standard Deviation of fund measures the extent of volatility. This gives you an idea about the performance of funds in both bull and bear markets. Volatile funds may affect your investments, if you plan a short-term investment. However, the effect caused by volatility is condensed in a long time horizon and minor fluctuations do not make a difference. So, it is always recommended to go for funds which are stable in nature rather than volatile ones because it helps to make the most of the market state.

  1. Disregarding Debt Funds

Investors tend to overlook debt funds because they believe the returns are not as high as equity funds. However, debt funds are a very diverse category. There are different kinds of debt funds which could be used for various investment purposes. As an investor, you have to discover the diverse category of debt fund and allot your investment in both the classes for the best outcome. If you make commit the mistake of disregarding debt funds and focus only on equities, you may be uncovering your investment to a greater harm and missing out returns that non-equity components of investments offer.

Mutual fund investing mistakes can simultaneously affect your investment life. Now that you know some of them, it is time to let go of them and make only the investment practices that will help you gain the maximum profit.

HOW TO START TRADING WITH SMALL AMOUNT OF MONEY?

HOW TO START TRADING WITH SMALL AMOUNT OF MONEY?

To start investing, you don’t necessarily have to be the world’s richest person living. Many people refuse investing because they think they need to have a great amount of money, as in thousands of dollars, to begin investing. This is totally untrue. In fact you can invest in stocks regularly by saving loose change. Interestingly, you can start investing with an amount at hand as little as $50 per month.

There are several ways to begin investing with a small amount of money, with many online and application-based platforms making it faster and easier than ever. All you need to do is to begin somewhere. The moment you do, it will get convenient eventually.

The key to growing wealth is building good habits, like placing your money away monthly. If you let investing as part of your habit, you will be in a much more robust financial situation down on your way.

Below are some simple ways to start investing with a small amount of cash.

  1. Try the piggy bank method

Investing money and saving money are relatively connected. Basically, you have to save some cash up, for you to invest money. And you can actually do that in very small steps. If you are not used to saving money, you can begin by keeping at least $10 per week. Over the course of the year, it can get to over $500.

You may find piggy bank some silly method, but to tell you, it is often an important first move. Practice the habit of spending a little bit less than you earn and put your saving away in a safe place. Piggy bank’s electronic counterpart is an online savings account. You can withdraw money if you need  it.

  1. Place your money in mutual funds with low initial investment

Mutual funds are investment securities that lets you invest in a portfolio of stocks and bonds with a single transaction, making them the best for beginners.

But the problem is, many mutual fund companies require initial minimum investments ranging between $500 and $5,000. Those minimum amount might be out of your reach, especially if it is your first time to invest with a small amount of money at hand. However, some mutual fund firms will ignore the account minimums if you agree to automatic monthly investments ranging between $50 to $100.

An automatic investment agreement is actually convenient if you can do it through payroll savings. Just ask your human resources department how to set it up.

  1. Paying your debt

There are two reasons for suggesting to pay your debt: firstly, you should not be investing a small amount of money if you have an existing debt, especially debt that is unsecured; secondly, paying your debt is one of the perfect ways to lock in an above average and a definite rate of yield on your money. This is particularly true if the interest charge on your credit card balance is in double digits.

For instance, you have a balance in your credit card of $1,000 with an interest rate of 15.99% every year. By paying your credit card off, you will lock in a nearly 16% amount of return on your money. By surfing the balance to one of the many credit cards with 0% interest, you can make that card go away faster. Through this, each of your payment goes directly to the balance on the card and not to interest, however, this kind of offer may last a limited time so better pay your debt off quickly.

  1. Engage in your employer’s retirement plan

There is a way that you can start investing in an employer-sponsored retirement plan with amounts that are so small you would not even feel them. This is especially a good way, if you are currently experiencing tightening of budgets.

For instance, you plan to invest only 1% of your salary in the employer plan. What makes the investment easier is that the tax deduction that you would get for investing will make the contribution even smaller. The moment you engage to a 1% contribution, you can increase it steadily yearly. If you get a 2% increase in pay, it will effectively be dividing the increase between your retirement plan and your checking account. But, if your employer gives a matching contribution, the arrangement will get even better.

Investing despite the initial small amount of money can grow big rewards. Start with a small amount, afterwards increase as you get more used to the process.

Day Trading Strategies for Beginners

Day Trading Strategies for Beginners

Day trading is like starting a special career, there are a lot of things to put in mind, especially when you are new to it. Day trading is the process of buying and selling a financial instrument within a single trading day. It can also occur multiple times and in any marketplace, but most commonly in the foreign-exchange market, over the course of the day. It takes the benefits of small price moves, thus, making it a profitable game. However, like any other game, it can also be so risky for novice and for those who don’t follow a well-plotted method.

Day traders are normally refined and financially well-off. They use high amounts of leverage and short-term strategies in trading to capitalize on small price movements in highly-liquid stocks or currencies. They look to take advantage of volatility every trading day, and lessen overnight risk brought by events, such as a bad earnings surprise, that might occur after the markets are closed.

Now, let’s take a look at some of the strategies that can guide in the right path as you start your journey in day trading. Learn how to day trade like a pro.

  1. Make sure to prepare a target price before diving in

If you are planning to purchase a long position, think in advance how much return is acceptable, also a stop-loss level, if the trade turns against you. Afterwards, stick with your decisions.  This helps you to restrict your potential loss and keeps you from being greedy if price hits to an untenable level.

  1. Be enduring

It may appear ironic, successful day traders often don’t trade every day. They may be in the market, at their computer, but if they don’t notice opportunities that hit their criteria, they will not trade that day. That is far better than going against your own best decision out of an impatient desire to just do something.

  1. Be self-controlled

Remember that you have to prepare a trading plan and stick to it. If you are trading on your own, impulsive behavior can be your worst nemesis. Greed can affect you for too long and fear can cause you to give up too soon. Keep in mind that you don’t get rich in a single trade.

  1. Use situations where demand and supply are extremely imbalanced as your entry points

If the supply is close to exhaustion and there remains investors who are willing to buy, the price is more likely to go higher. However, if there are still spare supply and no willing buyers, the price will decline.

  1. Don’t be frightened to click the “order” button

Beginner traders often get paralyzed by analysis, because they get enfolded in looking at the candles on their screen and can’t move and decide immediately when opportunity suddenly knocks before them. If you are disciplined enough and you always work your plan, placing the order should be automatic. If ever you are wrong, your stops will get you out without major loss.

Day trading can be a difficult skill to master, it requires time, skill and discipline. The strategies mentioned above can guide you in developing profitable plans. With adequate practice and persistent performance assessment, you can greatly increase your chances of trading success.

How to Buy Stocks Online Without a Broker?

How to Buy Stocks Online Without a Broker?

You don’t need to have a broker to buy stocks, mainly if you don’t want any expert advice to guide you in choosing which stocks to buy or not, because brokers can sometimes cost extra money. It is true that the well-known way to buy and sell investments is by opening a brokerage account, but still, there are others who want to buy stock without a broker. If you want to go down this way to business ownership, you can do so, but with varying degrees of success – there is no condition that you have to work with a broker to invest in stocks mutual funds, particularly equity funds.

You have two choices if you like to buy stock without a broker: The first is to use a discount brokerage service online. The second is to buy stocks directly from the company.

However, direct investing offers some advantages and disadvantages, with which you will have to weigh things based on your personal condition. You will still need to decide whether such an approach is appropriate for you given your unique circumstances and preferences.

 BUY ONLINE WITHOUT A BROKER

  • Look for a discount brokerage that fits your needs.

Check the price of buying individual stocks directly and account minimums. Other companies provide discounted trades, if you maintain a high balance in your account. Oftentimes, there are hidden fees. When you differentiate companies, find the trading cost and search the section that reveals the fees.

  • Observe how hard it is to utilize the online broker’s software.

Other companies provide good buys in trading stocks, but sometimes it is quite hard to trade, unless you’re a technology-savvy. Some companies provide a spot to try their trading software. Use their demonstration model prior opening your account.

  • Open the account and send your check or money order.

Other companies provide automatic withdrawal from a checking account, but most it needs you to mail in a check to put money in the account. You are ready to trade once the money is in your account.

  • Choose the stock and number of shares you want to buy.

You also need to decide on the cost you wish to pay. You can pick a market price or limit your order. A limit order means you will only pay a specified amount for a stock. If the stock did not drop to that price, you will not be able to buy it. Click on “Buy” after you decide all or nothing. This option just means you do not want a partial buying or if  you can’t get the order, kill it.

DIRECT PURCHASE PLAN

  • Find companies that provide the right to buy stocks directly from their transfer agent, the company that handles their stock. Often, you will see the information on the company’s website under investor relations and DRR or DRIP programs.
  • Look for the resource area to find a list of companies that give DRIP plans. Once you find the company, simply find their site and their minimums. Sometimes, there is a minimum investment with lesser amounts if you add to the account.
  • Open an account with the company’s transfer agent. You can buy anytime or have automatic regular investments.
FACTORS TO CONSIDER IN CHOOSING AN ONLINE BROKER

FACTORS TO CONSIDER IN CHOOSING AN ONLINE BROKER

As an investor, one of the most critical decisions you will make is on how to pick or choose a broker. Choosing the right online brokerage boils down to your priorities. Some investors are prepared to pay higher trade commissions for a state-of-the-art platform. There are a lot of companies providing a brokerage service on the web, and some of them are just as good or better than traditional. But the real question is how to choose which online broker is best for you? Settling on the best choice for you means considering different factors, which may vary from broker to broker.

Below are some factors you would want to consider in choosing an online broker.

1. Markdown is not always a good deal

If you are a neophyte investor, you may consider starting out with a full-service broker. It’s often best to help the beginners to build confidence and knowledge  about the markets. And as you become a more refined investor, you can move on to investing more of your money on your own.

2. Accessibility is the key

You may try to look at the company’s website at different times throughout the day, especially during the hours of peak trading. Try to observe how fast their site loads and check some of the links to confirm that there are no technical issues or difficulties.

3. Alternative trading offers flexibility

You may check the firm’s other options that they offer for placing trades. Other alternatives may consist of touch-tone telephone trades, fax ordering, or doing it the low-tech way of talking to a broker over the phone. You should make sure to pay attention to these alternatives because they often differ from an online trade.

4. Broker’s background matters

You should do some essential research about the broker’s background before buying a stock. As much as possible, you should find out everything about your broker.

5. Price doesn’t mean everything

The price may be an indicative of the quality. You should not open an account with a broker simply because it gives the lowest commission price. Company’s advertised rates vary between zero and $40 per trade, with the average around $20. You may find that the advertised commission rate may not be applicable to the type of trade you want to do.

6. Minimum payments may not be minimal

You may check how much of an initial payment the firm requires for you to open an account. Be cautious of high minimum balances, some companies require as much as $10,000 to start. This might be okay for some investors, but not others.

 7. Product choices are essential

When picking a brokerage, a lot of people are probably thinking initially about buying stocks. You should remember that there are also many investment alternatives that are not specifically provided by every company. This includes CDs, municipal bonds, futures, options and even gold or silver certificates. Some brokerages also provide other financial services, such as checking accounts and credit cards.

Online broker can help you buy and sell stocks effortlessly. The essential tools for the trade are vital to every progressive venture and searching for success in the market starts with choosing the right broker.

Reasons Why You Should Start Investing Now

Reasons Why You Should Start Investing Now

Investing lets you put your hard-earned money into something that has the great ability to earn strong rates of return. So, if you want to start building your wealth, start investing your money.

Indeed, there exist some reasons why other people don’t invest which might be your reasons for not investing, too. The uncertainty of  the last recession might remain high. People tend to get intimidated by the idea of congested trading floors and blaring traders. Most of all, there is a general lack of knowledge about how to get your portfolio started. But investing in the stock market is normally quite easy. What else, it is basically a very sensible strategy to guard your financial future.

If you don’t invest, you could miss out some opportunities to increase your financial value. It is true that in investing, you also have the potential to lose your money, but if you invest intelligently, the potential to obtain money is higher than if never invest at all.

The good news is, it is never too late to start investing, and below are reasons why you should start now than later.

1. The stock market doesn’t differentiate people

Anyone can participate in investing. All you need is a measly cash to begin your investment portfolio, some stocks actually cost less than $20, and a basic knowledge of how the stock market really works. With those simple at hand, you could be on your way to effectively gaining profits and growing your investment in no time.

2. Your investment is composed to propagate

Compound interest is undoubtedly one of the most powerful wealth-producing process of all time. But in order for it to work its magic, you have to give it some time. For instance, if you invest $1000 at a 10% interest rate, after the first year you will have $1100. But next year’s interest will be on your original investment, plus the interest you acquired in the first year. So, instead of gaining another $100 in interest, you will now be earning $110. And each year, you have your money invested, the amount of interest you earn will grow also. Therefore, the sooner you start investing, the longer compound interest to grow.

3. Stocks can make you money regularly

Stocks can serve as a good source of regular income, in addition to long-term growth. Investors gain capital earnings from an increased stock’s price and some companies dispense dividends based on earnings to their investors at regular intervals. Otherwise, if you choose to invest in bonds, they will normally make you yearly interest.

4. No need to pick individual stocks

You can always invest in an index fund that traces the whole stock market. This kind of passive investing is far less dangerous than individual securities and doesn’t need any long research or interest in a business operation.

5. Choosing not to invest could be more risky

The simple fact of not investing is actually a financial harm itself. If you don’t invest, your money is not gaining any interest and your wealth is far from growing. In spite of the regular instabilities of the stock market, a strong portfolio has been proven to grow your original investment over time.

Investing can actually help you save for retirement, a new house, college tuition, starting a firm,and any other financial aims you might desire.

Investing is a very smart way of making your extra cash work for you. It actually doesn’t have to be so complex and unreachable system reserved only for high-profiled people. Through investing money wisely in different long-term stocks, all you have to do is sit back, relax and watch your investment cultivate.

BASIC RULES TO REMEMBER IN INVESTING

BASIC RULES TO REMEMBER IN INVESTING

Investing is like a game, it will require you to understand and master the rules to get into success. This is important especially for beginners in investing. For beginners, investing starts with an understanding that every price is determined by supply and demand.

Hence, we should understand that regardless of how young or old you are, learning the basics in anything is very important. Most people take lessons to master the process of doing a certain thing. Unfortunately, most people never learn the simple basics of investing before investing their hard-earned money.

The following rules are the basics which you have to remember about investing.

Basic rule #1. Understand the kind of income you are working for

Most people think is just to make money out of investing. They don’t come to think that there are different kinds of money to work for. There are three kinds of income, and they are as follows:

Ordinary earned income

            This is basically and generally the money you get from a job via a paycheck or payslip. It is the highest-taxed income, thus, the hardest to earn and build wealth  with.

Portfolio income

            This is derived from paper assets such as stocks, bonds and mutual funds.

Passive income

            This is derived from real estate, royalties and distributions. Compare to ordinary earned income, it is the lowest-taxed income, with many tax benefits, thus, it is the easiest to earn and build wealth with.

Basic rule #2. Transform ordinary income into passive one

Most people begin their life out by working for ordinary earned income as, of course, an employee. The way to establishing wealth, then begins with understanding or knowing that there are other types of income as resourcefully as possible.

Basic rule #3. The investor is the asset or liability

A lot of people think that investing is a dangerous thing. The reality, however, is that it is the investor who’s dangerous. Understand that the investor is the asset or liability. There are investors who lose money while others are making it. That is, in fact, a good investor love to run behind a dangerous investor because that is where the real investment bargains can be found.

Basic rule #4. Always get prepared

Most people try to anticipate what and when things will happen. But a real investor is always prepared for anything that can happen. If you are not prepared enough with everything around you, a great opportunity will pass you by. Always remember that it is now important to anticipate what will happen. Instead, focus on your own, on what you desire, to keep your eyes open to what is happening, most especially, to respond to every opportunity that passes you by. This can be done through continuously educating yourself and applying your knowledge.

Basic rule #5. Great deals attract money

One of the biggest concerns you might have as a beginner in investing is how would you raise money if you found a great deal. The thing goes with the previous rule. Be prepared, educate yourself and gain experience. With that, you can find a great deal, the money will find you or visa-versa, you will find the money.