Learn about trading by using online tools and resources offered by investment sites and online stock brokers.
I stopped at a fuel station the other day for a non-petroleum based transaction. The only items on my list were a cold beverage and a couple of lottery tickets but all of the convenient store designated parking spaces were occupied so I pulled up alongside pump number one. I grabbed my drink and asked the attendant for a mega millions quick pick.
“No gas?” He asked with raised eyebrows, his head tilted towards my vehicle.
“Not today,” I replied sheepishly, “I’ve already got half a tank… maybe tomorrow.”
The clerk seemed satisfied, but I was a bit unnerved by my witless remark and conspicuous parking job so I added, “I’m betting gas prices will be coming down since summer’s almost over.”
I don’t know if he was amused by my comment, but he smiled and shook his head slowly. He told me that gas prices would most likely be rising and that the trend would continue indefinitely. With an impending energy crisis and our nation’s unpopular dependence on foreign oil, speculation on such a commodity could be a very risky but very lucrative venture. As I drove away I couldn’t help but glance down at my gas gauge and wonder why my portfolio was performing so poorly. Despite my seasonal insights, I had made the poor decision to go short on oil.
[click to continue…]
So what would you rather invest in — mutual funds or individual stocks? I’ve tried both and from my experience, using mutual funds has been far more fruitful for me than individual stocks have been. Why? It boils down to a few reasons:
- I’m a lousy stock picker.
- I don’t have time to follow and track my investments actively.
- I can potentially become an emotional investor if I handle my investments too actively.
Knowing my limitations, I’ve decided to opt for my core portfolio to be in mutual funds, while dedicating only a small percentage of my investments to individual stocks and other alternative investments.
Why Invest In Mutual Funds Rather Than Individual Stocks?
When you’re new to the stock market, I believe that it’s best to start with mutual funds to get your feet wet and to make sure that you’re able to manage your risks well. You’ll have to shop around for a good mutual fund, request a prospectus from each company you look into and review each fund’s holdings.
The average investor will gravitate towards buying mutual funds because they want representation in the stock market while making sure that they are diversified as well. Equity mutual funds make for great and easy investments since their fund managers are responsible for choosing the baskets of stocks that comprise the funds. They take away the guesswork for you. All you have to do now is to review what’s in each fund and find those funds that are in line with your investment goals. For instance, are you interested in U.S. index funds, foreign equity funds, small company stock funds or bond funds?
[click to continue…]
Time for some interesting reads from around the personal finance and investing blog community.
Wise Bread has a great classic piece on investing called 5 Basic Investing Tips For Any Market. I agree that majority of investors should think of the long term when investing. Leave the day trading and market timing to the experts.
Gather Little By Little reminds us about the Anniversary of Lehman Brothers’ Failure. Can you believe it’s been a year since the stock market went off kilter to cause some of the biggest and most respected financial institutions to crash and burn?
One Mint offers us a great Real Estate ETF list. If you’re looking to put money into real estate investments, these ETFs may be just the ticket.
Len Penzo suggests that we can use a HELOC as an alternative to refinancing. He offers a case study that shows you how it can work!
I was able to participate in a few carnivals as well, which I quite enjoyed. I appreciate the opportunity to be part of these events, and I thank the carnival hosts for accepting my submissions this week:
Here’s why you want to go beyond building a diversified stock portfolio and why you should invest in good mutual funds.
Are you a prudent investor? If you are, then you’re bound to practice good asset allocation. This means that you have worked to create and develop an investment portfolio that’s diversified and well balanced, such that your funds are allocated across various asset classes. This is what many investors do in order to control risk when they invest.
Let’s Review Asset Allocation
Asset allocation is a strategy that an investor performs in order to distribute their investments out among the different types of investment classes such as bonds, stocks or cash. Some popular asset classes that most investors end up investing in are the following:
- Bonds
- Cash
- Foreign Currency
- Collectibles
-
Commodities
- Precious Metals
- Real Estate
- Stocks
The practice of diversifying your long term funds among all these investment categories does a lot to control the risk of loss. The reason for this is because the investment performance (or rates of return) of these asset classes are not well correlated: when one category is performing poorly, another may be doing well, thereby balancing out the total returns and performance of your overall portfolio.
[click to continue…]
Looking to day trade? If you are, then there are some things that you need to keep in mind before you get started. That way you can make the most out of your day trading activities as much as possible, if you choose to take that route. Some things to keep in mind include being realistic about your goals, knowing the basics of stocks, and having the right mindset without emotion getting in your way.
Want To Day Trade? 6 Tips Before You Start Trading
1. Be realistic.
When you’re realistic about something, you keep yourself grounded and level headed. If the outcome exceeds your expectations, then great. Isn’t it much better to be surprised when an investment turns out better than what you expect, rather than to be horribly disappointed when you’re unable to meet unrealistic goals?
In other words, know that when you invest today, you won’t automatically become rich tomorrow. Trading and investing are not get rich quickly schemes — they involve training, experience, education and practice. Good returns take time, so you’ll need to be patient.
[click to continue…]
When you diversify your portfolio, you are making your money work for you in the best way possible. When working with your portfolio, diversification achieves one important thing: risk management. By diversifying, you are able to spread the risk around within your investment portfolio across various asset classes.
Know Yourself and Invest For Your Goals
When you invest, have your financial goals in mind — are you investing for the short term or the long term? You should also know how well you can stomach risk and how comfortable you are about investing in certain equities and other assets. Also realize that you are probably not going to be the next Warren Buffet, but that you can earn a decent amount through your investments.
One thing to keep in mind is that you should not overextend yourself when investing. Don’t get too excited and then purchase a bunch of stocks simply because you “feel good” about them. Investing takes time, strategy, planning and research. You also need to keep an eye on your portfolio on a regular basis so that you can make informed decisions about the best times to buy and sell. If you have too many stocks to follow, then you may find yourself overwhelmed. And you may feel more overwhelmed when you notice that you are not making any money. Experiencing losses in the market may exacerbate your nervousness or frustration with investing and may cause you to make bad moves. Be careful that you don’t fall into this trap!
[click to continue…]
Welcome to our financial roundup! I have here a nice collection of interesting posts from around the blogosphere which I thought you may enjoy:
Darwin’s Finance: Wonder how stock options work? Well check out this article that gives us the basics on how to trade calls and puts.
Man vs Debt: Now this is a really unique post about the power of resourcefulness. What does being resourceful do for you? Plenty. It’s a trait that’s often necessary for helping you get an edge in life.
Wealth Pilgrim: This post discusses how you can solve a problem that you may never have thought you could by putting your mind to it and asking for help. At its core, this post is actually about toilet repair, but there are some lessons to be learned here, especially if you aren’t a DIY type of person.
Personal Finance By The Book: More on the subject of DIY (do it yourself) — you can save thousands by buying or selling a car on your own rather than by going through dealers.
I Joined These Finance Carnivals!
These were some of the money carnivals I joined this week, so if you’re in the mood for reading more about finance and investing, do check them out. They’ve got lots of informative and educational articles that will pique your interest.
Watching my 401K balance continue to drop makes me sick to my stomach such that I’ve begun to consider trying my hand at timing the market. I’ve always had a bit of gambler’s blood in me and wonder if I could conceivably learn how to trade successfully without losing my shirt. No doubt, there are benefits and many pitfalls with day trading and market timing when compared against long term investing, but the ultimate goal is the same: to make money. So I’d like to take this opportunity to investigate these investment strategies to see what will ultimately make sense for anyone who’d like to make money in the market. How should I approach the stock market?
Day Trading vs Long Term Investing: Exploring Investment Strategies
The volatile nature and quick liquidity of buying and selling on the same day is what excites and appeals to most day traders. The thought of a quick substantial increase (in paper profits) is very tempting and gets the blood surging. I have to admit, this is something I’ve been toying with for a while, and the more I hear about forex trading, the more I’m intrigued. But our losses can materialize as easily and quickly as our profits, and if we don’t have a complete understanding of the market and its conditions, we can lose everything in an instant. Expecting to make money on every trade is unrealistic and we must fully understand what we are doing.
While the emotional part of myself is interested in the possibility of learning how to trade stocks and foreign currency, my sane self knows that this is something I should not take lightly. That’s because I understand that long-term investing is what makes sense to most of us, and frankly, it’s what I think that average investors should ONLY think of doing. Especially those young enough to be able to really see the rewards of their initial investment.
[click to continue…]