1. Get rid of the junk
Any shares you bought but no longer want to keep? If they are showing a profit, you could consider selling them. Even if they are not going to give you a substantial profit, it is time to dump them and utilise the money elsewhere if you no longer believe in them.
Similarly with a dud fund; sell the units and deploy the money in a more fruitful investment.
2. Diversify
Don't just buy stocks in one sector. Make sure you are invested in stocks of various sectors.
Also, when you look at your total equity investments, don't just look at stocks. Look at equity funds as well.
To balance your equity investments, put a portion of your investments in fixed income instruments like the Public Provident Fund, post office deposits, bonds and National Savings Certificates.
If you have none of these or very little investment in these, consider a balanced fund or a debt fund.
3. Believe in your investment
Don't invest in shares based on a tip, no matter who gives it to you.
Tread cautiously. Invest in stocks you truly believe in. Look at the fundamentals. Analyse the company and ask yourself if you want to be part of it.
Are you happy with the way a particular fund manager manages his fund and the objective of the fund? If yes, consider investing in it.
4. Stick to your strategy
If you decided you only want 60% of all your investments in equity, don't over-exceed that limit because the stock market has been delivering great returns.
Stick to your allocation.
Saturday, February 14, 2009
DO's and dont's for stock market investments
What you must NOT do
1. Don't panic
The market is volatile. Accept that. It will keep fluctuating. Don't panic.
If the prices of your shares have plummeted, there is no reason to want to get rid of them in a hurry. Stay invested if nothing fundamental about your company has changed.
Ditto with your mutual fund. Does the Net Asset Value deep dipping and then rising slightly? Hold on. Don't sell unnecessarily.
2. Don't make huge investments
When the market dips, go ahead and buy some stocks. But don't invest huge amounts. Pick up the shares in stages.
Keep some money aside and zero in on a few companies you believe in.
When the market dips --buy them. When the market dips again, , you can pick up some more. Keep buying the shares periodically.
Everyone knows that they should buy when the market has reached its lowest and sell the shares when the market peaks. But the fact remains, no one can time the market.
It is impossible for an individual to state when the share price has reached rock bottom. Instead, buy shares over a period of time; this way, you will average your costs.
Pick a few stocks and invest in them gradually.
Ditto with a mutual fund. Invest small amounts gradually via a Systematic Investment Plan. Here, you invest a fixed amount every month into your fund and you get units allocated to you.
3. Don't chase performance
A stock does not become a good buy simply because its price has been rising phenomenally. Once investors start selling, the price will drop drastically.
Ditto with a mutual fund. Every fund will show a great return in the current bull run. That does not make it a good fund. Track the performance of the fund over a bull and bear market; only then make your choice.
4. Don't ignore expenses
When you buy and sell shares, you will have to pay a brokerage fee and a Securities Transaction Tax. This could nip into your profits specially if you are selling for small gains (where the price of stock has risen by a few rupees).
With mutual funds, if you have already paid an entry load, then you most probably won't have to pay an exit load. Entry loads and exit loads are fees levied on the Net Asset Value (price of a unit of a fund). Entry load is levied when you buy units and an exit load when you sell them.
If you sell your shares of equity funds within a year of buying, you end up paying a short-term capital gains tax of 10% on your profit. If you sell after a year, you pay no tax (long-term capital gains tax is nil).
1. Don't panic
The market is volatile. Accept that. It will keep fluctuating. Don't panic.
If the prices of your shares have plummeted, there is no reason to want to get rid of them in a hurry. Stay invested if nothing fundamental about your company has changed.
Ditto with your mutual fund. Does the Net Asset Value deep dipping and then rising slightly? Hold on. Don't sell unnecessarily.
2. Don't make huge investments
When the market dips, go ahead and buy some stocks. But don't invest huge amounts. Pick up the shares in stages.
Keep some money aside and zero in on a few companies you believe in.
When the market dips --buy them. When the market dips again, , you can pick up some more. Keep buying the shares periodically.
Everyone knows that they should buy when the market has reached its lowest and sell the shares when the market peaks. But the fact remains, no one can time the market.
It is impossible for an individual to state when the share price has reached rock bottom. Instead, buy shares over a period of time; this way, you will average your costs.
Pick a few stocks and invest in them gradually.
Ditto with a mutual fund. Invest small amounts gradually via a Systematic Investment Plan. Here, you invest a fixed amount every month into your fund and you get units allocated to you.
3. Don't chase performance
A stock does not become a good buy simply because its price has been rising phenomenally. Once investors start selling, the price will drop drastically.
Ditto with a mutual fund. Every fund will show a great return in the current bull run. That does not make it a good fund. Track the performance of the fund over a bull and bear market; only then make your choice.
4. Don't ignore expenses
When you buy and sell shares, you will have to pay a brokerage fee and a Securities Transaction Tax. This could nip into your profits specially if you are selling for small gains (where the price of stock has risen by a few rupees).
With mutual funds, if you have already paid an entry load, then you most probably won't have to pay an exit load. Entry loads and exit loads are fees levied on the Net Asset Value (price of a unit of a fund). Entry load is levied when you buy units and an exit load when you sell them.
If you sell your shares of equity funds within a year of buying, you end up paying a short-term capital gains tax of 10% on your profit. If you sell after a year, you pay no tax (long-term capital gains tax is nil).
Where do i get money to invest
Where Do I Find the Money to Invest?
The very first question will be asked by the most of the people is "Where do I get the money to invest?" There are ample of stock mutual funds that permit you to invest with comparatively little money. Use your next additional benefit at work, or your income tax refund, or put in some ultimately for extra cash. If you can’t arise with the money to start these portfolios, a lot of funds will allow you to hop the initial lump sum investment if you sign up for automatic monthly withdrawals from your checking account.
How Do I Select an Investment?
The first step is to make out what your goals are. Are you saving for a house? A college education? Retirement? The type of investment you select will depend on the amount of time available earlier than you need the money. Stocks are think long-term investments, so it is excellent to plan on holding stocks or stock MF’s for five years or longer. If you want the money sooner than this, you might decrease your return by cashing in when the stock’s value is down.
How Do I Resolve My Risk Tolerance?
After that, you have to know about your risk tolerance. If you don’t have faith on your bank to hold your savings, then you’re most likely not going to feel comfortable investing in unstable technology stocks. If you’re probable to keep up with the latest curve of growing corporations, you might be interested in trying a moderate risk in your investments. High risks can yield high rewards, but should typically not be your primary investment for clear reasons.
How Do I Select an Investment?
Now, the most experts suggested to spreading your money more than some different types of investments to decrease risk, for the reason that typically one type of investment does well when an additional doesn’t. For example, usually when returns on stocks and stock mutual funds are high, returns on bonds are low, or vice versa. By having money in both types of funds, you’re more probable to get a decent combined return if one category takes a downturn. Your asset allocation should be tailored to your risk tolerance and how long you’ll need to withdraw the money from your investments.For beginning investors, stock MF’s are more popular than stocks in individual companies. A carefully selected stock MF is not as much of risky as an individual stock because MF’s invest in many companies, therefore spreading out the risk. If one company does poorly, the fund as a whole might still have a superior return.
The very first question will be asked by the most of the people is "Where do I get the money to invest?" There are ample of stock mutual funds that permit you to invest with comparatively little money. Use your next additional benefit at work, or your income tax refund, or put in some ultimately for extra cash. If you can’t arise with the money to start these portfolios, a lot of funds will allow you to hop the initial lump sum investment if you sign up for automatic monthly withdrawals from your checking account.
How Do I Select an Investment?
The first step is to make out what your goals are. Are you saving for a house? A college education? Retirement? The type of investment you select will depend on the amount of time available earlier than you need the money. Stocks are think long-term investments, so it is excellent to plan on holding stocks or stock MF’s for five years or longer. If you want the money sooner than this, you might decrease your return by cashing in when the stock’s value is down.
How Do I Resolve My Risk Tolerance?
After that, you have to know about your risk tolerance. If you don’t have faith on your bank to hold your savings, then you’re most likely not going to feel comfortable investing in unstable technology stocks. If you’re probable to keep up with the latest curve of growing corporations, you might be interested in trying a moderate risk in your investments. High risks can yield high rewards, but should typically not be your primary investment for clear reasons.
How Do I Select an Investment?
Now, the most experts suggested to spreading your money more than some different types of investments to decrease risk, for the reason that typically one type of investment does well when an additional doesn’t. For example, usually when returns on stocks and stock mutual funds are high, returns on bonds are low, or vice versa. By having money in both types of funds, you’re more probable to get a decent combined return if one category takes a downturn. Your asset allocation should be tailored to your risk tolerance and how long you’ll need to withdraw the money from your investments.For beginning investors, stock MF’s are more popular than stocks in individual companies. A carefully selected stock MF is not as much of risky as an individual stock because MF’s invest in many companies, therefore spreading out the risk. If one company does poorly, the fund as a whole might still have a superior return.
What money management is
t starts with shielding your capital, comprehending profits and cutting losses. You can not invest without cash as the Cash is ruler and educating to administer your money is the most significant characteristic to investing in stocks. By appropriately turning the information in your support, the game is prevailed by lessening your risk possibility. To cut losses is the superlative indemnity to keeping your cash.
Emotions work as a fuel for the decisions of many investors followed by hope, fear and greed. To facilitate command on these emotions, appropriate money management dexterity must be widened through a defined set of rules. How will you come to know if an investment is working and moving in the right direction? If it shows a profit, you are correct, if it shows a loss, something is wrong and it may be time to protect your capital.
After a stock has declined from the initial purchase price then most investors develop the emotion of hope. They look forward to that it will return and make pledge to themselves that they will put up for sale at breakeven. If and at the time the stock returns to normal, investors no more live upon their promise and become avaricious and make their mind to keep hold of for a profit instead of selling. Usually, the stock will turn down and the investor will begin to assemble losses. Investors never admit that their verdict is wrong because they are full of pride therefore they decide to hold on and accumulate further losses.It is an occasion to confess that you perhaps wrong and sell before the loss is to boot to abrupt when a stock is purchased and starts to decline. If the stock recovers after you sell, you can again penetrate your arrangement. By making rules and reducing sentiment, investors can start choosing high quality stocks and buying them at their proper purchase points. This will lessen investor’s possibility and assist avoid you from using assurance.
Emotions work as a fuel for the decisions of many investors followed by hope, fear and greed. To facilitate command on these emotions, appropriate money management dexterity must be widened through a defined set of rules. How will you come to know if an investment is working and moving in the right direction? If it shows a profit, you are correct, if it shows a loss, something is wrong and it may be time to protect your capital.
After a stock has declined from the initial purchase price then most investors develop the emotion of hope. They look forward to that it will return and make pledge to themselves that they will put up for sale at breakeven. If and at the time the stock returns to normal, investors no more live upon their promise and become avaricious and make their mind to keep hold of for a profit instead of selling. Usually, the stock will turn down and the investor will begin to assemble losses. Investors never admit that their verdict is wrong because they are full of pride therefore they decide to hold on and accumulate further losses.It is an occasion to confess that you perhaps wrong and sell before the loss is to boot to abrupt when a stock is purchased and starts to decline. If the stock recovers after you sell, you can again penetrate your arrangement. By making rules and reducing sentiment, investors can start choosing high quality stocks and buying them at their proper purchase points. This will lessen investor’s possibility and assist avoid you from using assurance.
Home business and finance markets U.S.
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U.K. MARKET REPORT
FTSE 100 hit by banks to close 5 pct lower Wednesday, 14 Jan 2009 12:35pm EST
LONDON, Jan 14 (Reuters) - Britain's blue-chip shares tumbled 5 percent to their lowest close in over a month on Wednesday led by financials which were thumped on anxiety over their balance sheets. Full Article
EUROPEAN MARKET REPORT
Europe shares close lower; HSBC leads banks downWednesday, 14 Jan 2009 01:12pm EST
LONDON, Jan 14 (Reuters) - European shares closed lower on Wednesday, falling for the sixth consecutive session, with financials hammered as heavyweight HSBC slid on worries it will need to raise money to shore up its balance sheet. Full Article
TOKYO MARKET REPORT
Nikkei at 1-mth low on economy fears, machinery data
TOKYO, Jan 15 (Reuters) - Japan's Nikkei share average fell 4.7 percent and touched a one-month low on Thursday, battered by growing worries about a deeper global recession and a record fall in domestic machinery orders. Full Article
U.K. MARKET REPORT
FTSE 100 hit by banks to close 5 pct lower Wednesday, 14 Jan 2009 12:35pm EST
LONDON, Jan 14 (Reuters) - Britain's blue-chip shares tumbled 5 percent to their lowest close in over a month on Wednesday led by financials which were thumped on anxiety over their balance sheets. Full Article
EUROPEAN MARKET REPORT
Europe shares close lower; HSBC leads banks downWednesday, 14 Jan 2009 01:12pm EST
LONDON, Jan 14 (Reuters) - European shares closed lower on Wednesday, falling for the sixth consecutive session, with financials hammered as heavyweight HSBC slid on worries it will need to raise money to shore up its balance sheet. Full Article
TOKYO MARKET REPORT
Nikkei at 1-mth low on economy fears, machinery data
TOKYO, Jan 15 (Reuters) - Japan's Nikkei share average fell 4.7 percent and touched a one-month low on Thursday, battered by growing worries about a deeper global recession and a record fall in domestic machinery orders. Full Article
Trade on spreads as low as 1-2 pips,commission free
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Exclusive client-only events cover more in-depth trading techniques and strategies and include an interactive Q&A with our senior analysts and currency strategists.
As a FOREX.com client, you can also take advantage of our professional mentoring services. During your one-on-one consultations with a senior forex specialist, you can discuss the latest market research report, ask for a second opinion about your trading plan, or just bounce ideas around.
Retail forex or Swiss Financial Corp
In financial markets, the retail forex (retail currency trading or retail FX) market is a subset of the larger foreign exchange market. This "market has long been plagued by swindlers preying on the gullible," according to The New york Times. Whilst there may be a number of fully regulated, reputable international companies that provide a highly transparent and honest service, it's commonly thought that about 90% of all retail FX traders lose money.
It is now possible to trade cash FX, or forex (short for Foreign Exchange (FX)) or currencies around the clock with hundreds of foreign exchange brokers through trading platforms. The reason that the business is so profitable is because in many cases brokers are taking the opposite side of the trade, and therefore turning client capital directly into broker profit as the average account loses money. Some brokers provide an a matching service, charging a commission instead of taking the opposite site of the trade and "netting the spread", as it is referred to within the forex "industry".
Recently forex brokers have become increasingly regulated. Minimum capital requirements of US$20m now apply in the US, as well as stringent requirements now in Germany and the United Kingdom. Switzlerand now requires forex brokers to become a bank before conducting fx brokerage business from Switzerland.
Algorythmic or machine based formula trading has become increasingly popular in the FX market,with a number of popular packages allowing the customer to program his own studies.
The most traded of the "major" currencies is the pair known as the EUR/USD, due to its size, median volatility and relatively low "spread", referring to the difference between the bid and the ask price. This is usually measured in "pips", normally 1/100 of a full point.
According to the October 2008 issue of e-Forex Magazine, the retail FX market is seeing continued explosive growth despite and perhaps of losses in other markets like global equities in 2008.
It is now possible to trade cash FX, or forex (short for Foreign Exchange (FX)) or currencies around the clock with hundreds of foreign exchange brokers through trading platforms. The reason that the business is so profitable is because in many cases brokers are taking the opposite side of the trade, and therefore turning client capital directly into broker profit as the average account loses money. Some brokers provide an a matching service, charging a commission instead of taking the opposite site of the trade and "netting the spread", as it is referred to within the forex "industry".
Recently forex brokers have become increasingly regulated. Minimum capital requirements of US$20m now apply in the US, as well as stringent requirements now in Germany and the United Kingdom. Switzlerand now requires forex brokers to become a bank before conducting fx brokerage business from Switzerland.
Algorythmic or machine based formula trading has become increasingly popular in the FX market,with a number of popular packages allowing the customer to program his own studies.
The most traded of the "major" currencies is the pair known as the EUR/USD, due to its size, median volatility and relatively low "spread", referring to the difference between the bid and the ask price. This is usually measured in "pips", normally 1/100 of a full point.
According to the October 2008 issue of e-Forex Magazine, the retail FX market is seeing continued explosive growth despite and perhaps of losses in other markets like global equities in 2008.
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