What are mutual funds? And why do they matter?

We regularly hear a chorus of voices encouraging us to buy mutual funds. And, perhaps you're asking, "What is a mutual fund?"

"A mutual fund is simply a way to participate in the stock market," says Dale Rathgeber, a mutual fund expert at OctoberStrategy.com, "These funds allow you pool your money, along with thousands of other people, and invest it in stocks or bonds.

"You, and the thousands of others who invest in the same fund, share the costs of research, diversification, and brokerage fees. This allows you to start investing with as little as a few dollars a month, while investing in stocks and bonds on your own would require much more.

Rathgeber adds, "Some commentators say mutual funds have democratized investing, because you no longer have to be wealthy to invest in the stock market. And that's important because almost all of us are living longer after we retire, and we need to invest in the stock market to build up our retirement funds. Over the past three decades, many mutual funds that invest primarily in the stock market have averaged a return of more than 10% a year.

"Of course there's some risk involved in buying mutual funds, but at the same time, failing to invest in the stock market exposes you to another kind of risk. More specifically, if you try to save for retirement using saving accounts, guaranteed investment certificates, or the like, then your savings will likely be eroded away by inflation. For example, if your savings earn two percent a year and inflation is also two percent a year, then you're just breaking even. And that's before taking into account taxes on your earnings if you have your savings outside a Register Retirement Savings Plan.

"The risk with mutual funds involves the ups and downs of the stock and bond markets, but those can be offset to a greater or lesser extent," says Rathgeber, "First, investing through mutual funds means you have professionals picking the stocks that go into the funds. Second, there's a wide variety of mutual funds available, and you can pick one that matches your needs. Or better yet, you can pick several. If done properly, this diversifies your holdings, and makes your investment less likely to suffer from wild swings in the stock market.

"Of course, if you're a number of years away from retirement, then you will have many years to recover if you suffer any losses. You can afford to take more risks with your funds, because the returns, what you earn, generally go up as the risk goes up," says Rathgeber.

"But no matter who you are, or what your investment needs, you should start by learning as much as you can about mutual funds. You can find advice in bookstores, libraries, and on the Internet. You can learn by attending seminars or by reading on your own. You can also talk to friends and financial advisors.

Rathgeber adds, "In the end, every investment choice involves tradeoffs, and the more you know, the better your choices, and the more likely your retirement will be financially secure."

Millionaires in the making - Buying UK Investment Property

Property has created more millionaires than any other business. As per surveys buying U.K investment property is a calculated gain not only now but for the next 10 years.

There's been a steep rise in buying U.K investment property. An avenue has opened up due to the interest rates and stock markets return being low. Many investors have come to the conclusion that their home is their highest performing asset. This has culminated in the inclination towards increasing investment in the U.K property market. .

RISK FACTOR IN BUYING U.K INVESTMENT PROPERTY

Investments and risk goes hand in hand. Buying U.K investment property in the worst situation can only lessen the value of the property slightly. This element of risk can be eliminated by critically analyzing the investment program. There are some good property dealers who can very well help with that.

IMPORTANCE OF DEPRECIATION RESEARCH IN U.K:

Depreciation is an important factor affecting the return from commercial real estates in U.K. A detailed study should be carried out to identify the impact of depreciation on both rental and capital values.

U.K AND INVESTMENT PROPERTY:

The U.K market is stable. Returns are expected to be good over the next 10 years and residential property looks set to increase year after year. Buying U.K investment property has turned out to be more lucrative than any other form of investments.

Firstly as there's only a limited amount of land in U.K and most of them are invested upon. Once it is sold the investors have nothing to do but to wait for it to rise in value.

Secondly, because property investment offers leverage on your money, leverage being you ability to magnify your return using somebody else's money most probably the bank's money. In the usual case you put nominal % of the full amount on your own and the bank lends the rest.

Buying U.K investment property has turned 66,000 people into millionaires.
About ten years ago only 3400 people owned houses which were worth more than a million pounds.

This figure has gone up by 20 folds through the last decade. This statistics self conclusive to prove the prospect of the buying property for investment in U.K .

Fixed Indexed Annuity: Bank CD Alternative

A fixed indexed annuity (FIA) is the product of choice for top selling annuity agents who are tired of seeing their clients lose money in low interest rate CDs. A fixed indexed annuity is a hybrid fixed product that is fast becoming the new "safe home" for billions of former CD, stock market and mutual fund dollars. And with good reason.

HOW IT WORKS

A FIA provides a safety net of usually 1-3% interest compounded annually. But this is just the minimum guarantee through the contract term. The upside earning potential is much higher.
As the name implies, the fixed indexed annuity is tied to an equity index such as the Standard & Poor's 500. The S&P 500 is the benchmark for U.S. equity markets, representing the general health of the overall stock market. As the market goes up your client's earnings go up because they participate in a percentage of the increase. But (and this very important) when the stock market comes back down again as it always does, your clients don't lose any money.

WHAT WAS THAT AGAIN?

This bears repeating. When the stock market goes up, earnings go up with it subject to a cap. But when the market comes back down again as it always does, the policy does not lose any money. Earnings are locked in at each annual anniversary index point. FIA owners earn 2 or 3 times the guaranteed interest rate when the stock market goes up, and when the stock market comes back down again they get to keep all profits. Upside earnings without the downside risk. How cool is that?

TAX DEFERRED GROWTH

What's more, your client's earnings grow tax deferred as long as they stay in the annuity. This means they earn even more money on the portion they don't have to send Uncle Sam. Unlike a CD, there is no Form 1099 to add to income tax returns each year. Why pay taxes on income you don't spend?
Seniors citizens are especially fond of Fixed Indexed Annuities since deferred interest is not counted as provisional income and can reduce or eliminate taxation of Social Security benefits. FIAs are also becoming the favorite funding vehicle in small business retirement plans like the 401(k) and SEP-IRA.

WHAT TO DO?

Whether you sell to retirees or future retirees, you owe it to yourself to learn why millions of people are moving billions (actually, trillions) of dollars into fixed indexed annuities. They're the sensible alternative that can make you very large commissions.

How To Successfully Get Started In The Stock Market

Most all of us have hear stories of someone who has made some money by investing in stock. So we all know that it can be done. You may have even heard someone say that it is easy, and anyone can do it. Now, you want to try your hand at it and are ready to put some money on the market - but don't know how to get started. This article will give you some ideas about where to begin.

Learn About The Market

The stock market involves many things and you will not learn all you need to know with one little article. Start doing some rather extensive reading of articles and books from the bookstore about investing. The stock market is not something you learn in an hour or two. Otherwise, you may find that you foolishly, and hastily, threw away a lot of money unnecessarily. You should not rush into, just because someone else you know is making their investment.

Research The Market

Being able to stay on top of the market and come out ahead means that you will have to do your homework in the first place. Look carefully into the company that you want to invest in so that you can make educated decisions. Understand some of the company's history, why they would be good to invest in, and find out where they are going, too. Learn a little about the financial status of the company, and how well their stocks have recently performed.

Learn what information you can find out about the stocks on the Internet, so you know how you can track your investments quickly, and understand any trends that are developing.

One of the best things you can do is to plan a strategy for you stock investments. If you treat your investments like your own investment company you should be able to make a profit. But also, like in any business, you may expect to lose some, too. By sticking with solid companies that are making great profits, you will find that you can have a part in their profit, as well.

Plan For The Long Haul

Investing in the stock market and making a profit is generally not something that happens overnight. It is a long haul investment and you will see a lot of fluctuation in the stock that you choose. Keep your money there through some of the think and thin of the company, but also know when it is time to trade in your stock, too. Don't let it go down to nothing and lose it all simply because you were afraid to move it.

Stay Informed About Your Stocks

The stock market information is readily available to anyone who wants to know what is going on. You should pay attention to your investments as you do your credit cards and your checking account. One of the worst things you can do is to ignore it thinking that it will take care of itself - it won't, and that is why you need to watch it regularly.

Creating Wealth In Stock Market

The 12 Rules of How to Avoid Losing and Start Making Money from the Stock Market

RULE 1: WHY DO YOU INVEST?

Make more money, this is the answer to most people.
If your reason is to make more money, then ask yourself these three questions:

1.Is your strategy making money?
2.Is your strategy safe?
3.How to increase the profit and minimize the risk?


RULE 2: HOW TO CREATE WEALTH IN STOCK MARKET WITH JUST $1,000

Let say we invest some lower price stocks with just $1,000 in the stock market, invest twice a year for short-to-medium term. If each time the return is double, you will make one million dollar cash within 5 years. If your starting capital is $20,000, after 3 years you will make one million dollar cash.

If you are using the same $1,000 capital, invest twice a year, but the return is only 50%, you will make one million dollar cash after 9 years.

So we can always start small. However, it is very important that we know how to select high profit and low risk stocks.


RULE 3: DON'T GET OBSESSED WITH STOCKS

Sitting and monitoring the market whole day long will not bring you profit. Instead, it increases pressure and misleads your judgment.


RULE 4: NEVER GAMBLE

95% of the people always buy at the highest price. They don't really know when to buy, just relying on news, rumors and tips. Only 5% of the people knows how to trade at the lowest price. That's why 95% are losing money, only the 5% are making money.
Investment Builds Wealth, Gambling Definitely Lose !


RULE 5: SAY GOODBYE TO NEWS

News used to be able to predict the market trend. But not anymore, it is difficult to judge which news could actually influence the market nowadays.


RULE 6: DO YOUR OWN ANALYSIS, FORGET ABOUT TIPS

Before investing, ask yourself these four questions:

1.How many people have already heard about the tips before you?
If many have heard about it before you, this news is already obsolete. The price is already high.

2.How long have the tips been spreading before it reaches you?
The next day?

3.Who told you?
Listed company director? Or friends?

4.Assuming that the tip is true, would you possibly know about it?
Normally insider news is not disclosed.


RULE 7: SELL YOUR STOCKS EVEN LOSING MONEY

It is easier to be said than done.

Sell at a loss is a difficult decision. Your heart will object, and your feeling will say "It is going to rebound, don't sell." Eventually price dropped further, causing a much tragic lost.


RULE 8: DON'T JUST FOCUS ON MAKING MONEY

How to protect your capital is much more important. Don't try to make 100% profit. It is already good enough to have a 60% profit margin.


RULE 9: HISTORY WILL NOT ALWAYS REPEAT

Everyone expects to make some money from the stock market before Christmas, New Year, annual budget announcement or election, but the stock market is not always bullish during these events. We can say history is not always repeated.
The best way is "Let the Market Lead us".


RULE 10: QUOTES FROM WARREN BUFFET

There are only two rules to make money in stock market:

The first rule: Never lose your money.
The second rule: Never forget the first rule.


RULE 11: TURN BAD STOCKS INTO GOOD STOCKS, DON'T JUST HOLD YOUR STOCKS

Don't hold your stock too long, there is a value when stocks are sold.

How long have you been holding your stocks until now?
Since Year 1993? 1997? Or Year 2000?

Why didn't you exercise your stocks? Long term investment strategy is not practical anymore. Even the blue chips also crash when the market collapses.

The best strategy is to sell the stocks that are not earning money, and reselect some good counters. Buy low, sell high for several times will earn you more than enough to compensate the lost.


RULE 12: WAKE UP FROM MISTAKES

Stop investing if you are not sure of when to buy or sell.

Without the knowledge of investment, you are bound to lose again. This is an age of information. Investors are using knowledge, techniques and strategies to make money. Without investment knowledge, how do you protect your money?

Building wealth through investing starts with securing your capital.

Home Equity Loan : Loansmagician

Real estate prices across the country have skyrocketed in the last five or six years. Low interest rates, combined with a lack of trust in the stock market has led to a tremendous inflow of capital into real estate. To put that in perspective, take into account the median household income, which is a little over 44,000,dollar and compare that with the national median home price of 216,000 dollar, a very high multiple. Of course, in many metropolitan areas ( http://www.ixs.net ) where a large fraction of the nation's population lives, the rise has been even more spectacular. San Francisco has seen the median home price rise from 395,000 dollar in 2000 to 713,000 dollar in early 2005

For those who did not get in at the right time, the situation is lamentable, many others, on the other hand, find themselves sitting on potential gold mines � in many cases they have witnessed the doubling, trebling or even quadrupling of their investments in a matter of a few years. Walking and sleeping on land that has appreciated under your eyes is a satisfying experience, and some people are quite happy to count their chickens without wanting to cash-in on their gains. Others, for whatever reasons want to enjoy their newfound wealth. Home equity loans offer an opportunity to do just that.

The fact that property prices have risen means that more Americans than ever before are eligible for home equity loans. Let me illustrate that by an example � say you bought a home for 300,000 dollar five years ago, putting down 20% (60,000 dollar) at that time. If you have a typical thirty-year fixed mortgage then you have not made a significant dent in the principal (in this case the loan principal is 240,000 dollar) in the first five years. Now suppose, quite realistically in many cases, that the house value has appreciated from 300,000 dollar five years ago to 500,000 dollar today. In this case your equity in the house would have jumped from 60,000 dollar (your down payment) to 260,000 dollar (down payment plus unrealized capital gains). You would be eligible to take a loan against that increased equity. Most institutions are willing to extend home equity credit for upwards of 50% of total equity in the home.

Now that we have established that a rising real estate market has produced many more potential candidates for home equity lines of credit, let us show why this is a financially savvy way of consolidating loans or of securing financing. Whether the reasons are personal, such as Ferrari you have been drooling over, or for your home business, home equity loans are usually the best first option for obtaining liquidity. First, home equity loans take advantage of tax breaks that the federal and state governments give all homeowners � all interest payments made to service the loan are tax exempt.

This advantage alone warrants serious consideration � a family in the 30% federal income tax bracket will stand to save a substantial amount on a typical home equity loan. The implications of the tax advantage are such that many people with no need for additional credit take out home equity loans and invest elsewhere just so they can take advantage of Uncle Sam's generous handout. Second, home mortgages are handled a little differently from other consumer loans because of two reasons. First, the loan is "secured" by a tangible asset (i.e. the house, comprising of the value of the land and the material with which the house is constructed) and second, there is a huge industry that deals exclusively with home mortgages and home loans, resulting in a fiercely competitive environment. To the consumer, this results in significantly lower interest rates on home loans.

So, let us recap the win-win situation for a home equity line of credit. Rising real estate prices have made more people eligible for bigger loans, in many cases significantly bigger loans than ever before. Relatively low interest rates, thanks to the Fed and a competitive home mortgage industry has kept the cost of borrowing low. And finally federal and state tax breaks on home loans further reduce the cost of borrowing.

If you are thinking of borrowing money and you are a homeowner, be sure to consider a home equity line of credit before pursuing alternative methods of financing.

For more information about Home Equity Loan visit http://www.loansmagician.com/home-loan.php

Why Invest In Residential Property?

There are many different forms of investment competing for your investment dollars. My favorite form of investment is residential property. Read on and find out why.

Median Priced Residential Property Is At The Low Risk End Of The Investment Scale.

The first aim of any investor should be to not lose money. Therefore an investment that has a good track record of steady capital growth with few drops in price and even fewer large drops would be attractive.

This is a very good description of median priced residential property in any medium to large city in the USA, Canada, Britain, Australia, New Zealand and many other countries.

If you plot a 20 year graph of such residential property and compare it to the price graph of the virtually any share over the same 20 years then you will clearly see that property represents a much lower risk than the stock market.

In fact you will find that virtually any bank will loan you a higher percentage of purchase price on median priced residential property than they will on the purchase price of their own shares. That says to me that the experts at the bank think that buying residential property is a better investment than owning a bank.

You Can Leverage Your Cash Investment To Return High Profits.

Leveraging returns is a strategy whereby you earn returns on a larger capital base that the amount of cash that you invest. Let's look at an example with residential property.

If you buy a residential property with a cash deposit of 20% of purchase price plus another cash amount of 5% of purchase price to cover purchase costs, then you have put in cash of 25% of the value of the property. If the property goes up in value by 10% in the first year that is a 40% return on your cash investment.

In reality you also collect rent and pay running costs and loan repayments. Once you factor all this in over a 20 year period with typical capital growth, interest rates and so on, you generally get an average annual return of 25% to 30% on the cash you outlay.

This is an extremely good return on cash especially when you consider that it is coming from a low risk investment. Normally to hope for anywhere near this rate of return you would need to go a long way up the risk ladder. This combination of low risk and high returns makes residential property very attractive.

You Can Leverage Your Increasing Equity.

There is a second form of leveraging that you can capitalize on with residential investment property. As your property goes up in value you can borrow against the equity that you are accumulating in the property. In this way you can buy a second investment property without having to put in any cash deposit. This can generally be achieved within the first 5 years.

This form of investing is known as portfolio building and further increases both your total dollar profit and your rate of return on cash outlaid.

Why I Like Investing In Residential Property

The combination of low risk with the ability to leverage returns on cash contributed and on equity growth makes residential property my favorite form of investing. Once you learn all the skills of property investing you will also discover that there are many additional ways that you can both lower risk and increase profits.

On top of all that it's also a lot of fun.

Mutual Funds: Low Risk yet High Return

Why do we invest money in a particular busines? It is a question that you should answer first before you start any kind of business. Succesful investors always remember to include every detail on their planning activities-- and they have answered every vital question that they should address first.

You invest money for profit. Thus, you need to consider investments that can give you a high return. You might consider gambling your capital in a stock market, where every cent can be doubled or tripled, depending on market conditions. Since stocks could be easily acquired and sold, it is one of the viable options that you may consider in choosing an investment portfolio.

However, a high return may also come with high risk. Do you remember the unwritten rule "high risk yet high return" and "low risk yet low return"? It is true that investing in the stock market may give you a huge profit, but expect your capital to be at a high risk. Unstable market conditions might cause you to lose all of your money.

If you do not like taking high risks, the stock market is not an ideal investment for you. You may look for an alternative that could give you the same return but with lower risk than investing in stocks. If you are under this category of investors, then you might consider investing in mutual funds.

Mutual funds are a good alternative for investors who do not want to take the risk when getting a huge profit. It is a "common fund" or amount of money pooled by a group of investors with a definite investment objective. Such pooled money would be managed by a fund manager, an individual who specializes in different types of investments, such as bonds and stocks. He would be the one responsible in managing and investing the pooled money in different securities.

In mutual funds, all profits and losses will be shared among the fund's shareholders. In other words, all profits as well as losses will be shared among the group according to the percentage of individual share in the fund. For instance, if you are a group of five investors, investing $20,000 each, making your mutual fund to be worth a hundred thousand dollars. All profits as well as losses would be distributed on a 20-percent basis, thus reducing all possible risks.

Aside from the low-risk feature of mutual funds, you need not to be an expert in stocks or other forms of securities. The fund manager would be the one to take care of it. In addition, you can diversify your capital and spread it to other types of investment. Diversification means spreading all of your money into several investments. In case one investment is down, there are other investments that you can concentrate with. Thus, you will not be losing all of your money in a single investment as well as maximizing your potential profit through other types of investments.

The mutual funds will automatically diverse your investment across bonds or other securities. Again, the fund manager would be the one to handle all transactions and determine if it is viable for you to invest on that particular security.

Form a pool of investors and combine all of your capital into a single mutual fund. Share the huge profits out of diversified investments as well as enjoy the reduced-risk feature that comes along with it.

Investing � Home Prices fall in majority of the biggest markets

If you have owned a home, or any piece of residential real estate including condos, and vacation homes than you are aware of the run up in prices that occurred for a five year period that ended more than a year ago. In terms of investing, owning a home for half a century has been a wonderful way to build wealth. It is one of the few investing methods where you could actually live in your investment, while it increased in value. Most investors are not aware that from World War II until last year, there was never a single year where home prices fell on a national level, until last year that is.

Homeowners have counted on a steady annual increase in the price of the house they were living in to create a wealth effect. For many, it was their only source of forced savings. It was also a participation in the American dream � owning your own home, and living in it.

Studies are now available which show that at the end of last year, a number of housing markets declined. Actually, 149 different markets experienced the decline. Hardest hit were the East and West Coast of the US, and the Northeast cities.

In you were in Florida at all last year, it was impossible not to see thousands of super cranes going about the process of building 20 to 50 story condominiums. The vast majority of these condos were bought on speculation with the buyer signing the contract never anticipating the need to close on the contract.

We have not seen a mass number of walkways yet. These are people that signed non-recourse agreements with the builder, and are in a position to walk away from the agreement without having to write a check. They will forfeit the deposit they put down however.

Florida may well be the state taking the biggest hit in real estate. Sarasota was down 18% by year-end, while Melbourne was experiencing a 17 % decline. We are talking about actual prices being down. On a national level prices were down 2.7%.

Many analysts haven't quite figured out what this means? Are motivated sellers holding onto residences longer in anticipation of getting their higher price later on? Are some sellers withdrawing their homes from the market, or perhaps not putting them on the market at all, awaiting prices firming up, perhaps later this year?

What about sales themselves?

In addition to prices being down, there are less actual sales taking place, which is leading to a larger inventory of unsold homes. Forty different states have reported a decline in the number of sales taking place. On a national level the number comes to a 10.1% decline in the actual number of homes being sold regardless of price. Three different localities have reported physical sales being down more than 30%. They include Nevada, Florida, and the District of Columbia. Virginia reported a 20% decline.

There were six states that reported an increase in the number of sales taking place � that's six out of fifty. They included Alaska, Arkansas, Illinois, Kentucky, Mississippi, and Texas. There was no impact on Utah where sales were flat.

What you really need to look at is the VACANCY rate. The vacancy rate is the number of homes on the market where nobody is living in them, and they are for sale. On a national level, this number always seems to hover around 2%. At year-end, the number went to 2.7%. This is a massive increase because 2.7% is the highest it has been to in 50 years, and that's only because they started figuring out the number 50 years ago.

You've got owners out there who are just waiting, and won't sell at a lower price than the price they want. This accounts for the increased vacancy rate. On top of that you have another issue. There does come a point where a seller may have to sell. He will take what he can get, even though it establishes a new lower base from which everything else can trade.

Once this base is established than other buyers and sellers see it. The seller reacts with alarm. The buyer reacts with glee, but trepidation also because the buyer doesn't know if prices are going lower still. This is how panic selling sets in, and no buyers. The buyers walk away, waiting for still lower prices

It's the same as the stock market, sellers once they have seen higher prices, don't want to sell at a lower price. Many prefer to wait, hoping, and it is hope that the price will come back. Only the forced seller will do the deal. It might be an estate, or divorce settlement, or a housing relocation that forces the actual sale. It doesn't matter, once that sale hits the marketplace for all to see, there is a new adjustment in the real estate market.

Where's the BIAS Now � UP or DOWN?

It is difficult to tell if the year-end numbers have wrenched out the secular excesses that have taken place in the real estate markets in the last five years while everything went crazy on the upside. There may be more to go. If you look at the stock market, most of the house builders bottomed out several months ago when they all made new multi-year lows. Since then, they have rallied nicely. If the real estate market has more to go on the downside, than these stocks will probably have to build double-bottoms before the decline is actually over.

If however, the vacancy rate picks up from here, and price declines have seen their bottom, than most of the damage is behind us. The economy overall and interest rate seem fine, so we don't expect damage coming from a decline in GDP this year. What seems to be happening is that we are looking at a wearing down of the excesses produced since the late 1990's in residential real estate in this country?

The geographical segments of the country that experienced the most increases in real estate prices are now the ones experiencing the declines. It's the same story, and the story never changes, only the areas of the country being affected changes. Our work shows that prices, and vacancy rates have a way to go yet on the downside. At the same time, we believe the housing stocks may decline, but the absolute bottoms established months ago will hold. We are already off those bottoms.

Goodbye and Good Luck

Richard Stoyeck
http://www.stocksatbottom.com

How to Avoid Investment Mistakes

Smart people sometimes make dumb mistakes when it comes to investing. Part of the reason for this, I guess, is that most people don't have the time to learn what they need to know to make good decisions. Another reason is that oftentimes when you make a dumb mistake, somebody else�an investment salesperson, for example�makes money. Fortunately, you can save yourself lots of money and a bunch of headaches by not making bad investment decisions.

Don't Forget to Diversify

The average stock market return is 10 percent or so, but to earn 10 percent you need to own a broad range of stocks. In other words, you need to diversify.

Everybody who thinks about this for more than a few minutes realizes that it is true, but it's amazing how many people don't diversify. For example, some people hold huge chunks of their employer's stock but little else. Or they own a handful of stocks in the same industry.

To make money on the stock market, you need around 15 to 20 stocks in a variety of industries. (I didn't just make up these figures; the 15 to 20 number comes from a statistical calculation that many upper-division and graduate finance textbooks explain.) With fewer than 10 to 20 stocks, your portfolio's returns will very likely be something greater or less than the stock market average. Of course, you don't care if your portfolio's return is greater than the stock market average, but you do care if your portfolio's return is less than the stock market average.

By the way, to be fair I should tell you that some very bright people disagree with me on this business of holding 15 to 20 stocks. For example, Peter Lynch, the outrageously successful former manager of the Fidelity Magellan mutual fund, suggests that individual investors hold 4 to 6 stocks that they understand well.

His feeling, which he shares in his books, is that by following this strategy, an individual investor can beat the stock market average. Mr. Lynch knows more about picking stocks than I ever will, but I nonetheless respectfully disagree with him for two reasons. First, I think that Peter Lynch is one of those modest geniuses who underestimate their intellectual prowess. I wonder if he underestimates the powerful analytical skills he brings to his stock picking. Second, I think that most individual investors lack the accounting knowledge to accurately make use of the quarterly and annual financial statements that publicly held companies provide in the ways that Mr. Lynch suggests.

Have Patience

The stock market and other securities markets bounce around on a daily, weekly, and even yearly basis, but the general trend over extended periods of time has always been up. Since World War II, the worst one-year return has been �26.5 percent. The worst ten-year return in recent history was 1.2 percent. Those numbers are pretty scary, but things look much better if you look longer term. The worst 25-year return was 7.9 percent annually.

It's important for investors to have patience. There will be many bad years. Many times, one bad year is followed by another bad year. But over time, the good years outnumber the bad. They compensate for the bad years too. Patient investors who stay in the market in both the good and bad years almost always do better than people who try to follow every fad or buy last year's hot stock.

Invest Regularly

You may already know about dollar-average investing. Instead of purchasing a set number of shares at regular intervals, you purchase a regular dollar amount, such as $100. If the share price is $10, you purchase ten shares. If the share price is $20, you purchase five shares. If the share price is $5, you purchase twenty shares.

Dollar-average investing offers two advantages. The biggest is that you regularly invest�in both good markets and bad markets. If you buy $100 of stock at the beginning of every month, for example, you don't stop buying stock when the market is way down and every financial journalist in the world is working to fan the fires of fear.

The other advantage of dollar-average investing is that you buy more shares when the price is low and fewer shares when the price is high. As a result, you don't get carried away on a tide of optimism and end up buying most of the stock when the market or the stock is up. In the same way, you also don't get scared away and stop buying a stock when the market or the stock is down.

One of the easiest ways to implement a dollar-average investing program is by participating in something like an employer-sponsored 401(k) plan or deferred compensation plan. With these plans, you effectively invest each time money is withheld from your paycheck.

To make dollar-average investing work with individual stocks, you need to dollar-average each stock. In other words, if you're buying stock in IBM, you need to buy a set dollar amount of IBM stock each month, each quarter, or whatever.

Don't Ignore Investment Expenses

Investment expenses can add up quickly. Small differences in expense ratios, costly investment newsletter subscriptions, online financial services (including Quicken Quotes!), and income taxes can easily subtract hundreds of thousands of dollars from your net worth over a lifetime of investing.

To show you what I mean, here are a couple of quick examples. Let's say that you're saving $7,000 per year of 401(k) money in a couple of mutual funds that track the Standard & Poor's 500 index. One fund charges a 0.25 percent annual expense ratio, and the other fund charges a 1 percent annual expense ratio. In 35 years, you'll have about $900,000 in the fund with the 0.25 percent expense ratio and about $750,000 in the fund with the 1 percent ratio.

Here's another example: Let's say that you don't spend $500 a year on a special investment newsletter, but you instead stick the money in a tax-deductible investment such as an IRA. Let's say you also stick your tax savings in the tax-deductible investment. After 35 years, you'll accumulate roughly $200,000.

Investment expenses can add up to really big numbers when you realize that you could have invested the money and earned interest and dividends for years.

Don't Get Greedy

I wish there was some risk-free way to earn 15 or 20 percent annually. I really, really do. But, alas, there isn't. The stock market's average return is somewhere between 9 and 10 percent, depending on how many decades you go back. The significantly more risky small company stocks have done slightly better. On average, they return annual profits of 12 to 13 percent. Fortunately, you can get rich earning 9 percent returns. You just need to take your time. But no risk-free investments consistently return annual profits significantly above the stock market's long-run averages.

I mention this for a simple reason: People make all sorts of foolish investment decisions when they get greedy and pursue returns that are out of line with the average annual returns of the stock market. If someone tells you that he has a sure-thing investment or investment strategy that pays, say, 15 percent, don't believe it. And, for Pete's sake, don't buy investments or investment advice from that person.

If someone really did have a sure-thing method of producing annual returns of, say, 18 percent, that person would soon be the richest person in the world. With solid year-in, year-out returns like that, the person could run a $20 billion investment fund and earn $500 million a year. The moral is: There is no such thing as a sure thing in investing.

Don't Get Fancy

For years now, I've made the better part of my living by analyzing complex investments. Nevertheless, I think that it makes most sense for investors to stick with simple investments: mutual funds, individual stocks, government and corporate bonds, and so on.

As a practical matter, it's very difficult for people who haven't been trained in financial analysis to analyze complex investments such as real estate partnership units, derivatives, and cash-value life insurance. You need to understand how to construct accurate cash-flow forecasts. You need to know how to calculate things like internal rates of return and net present values with the data from cash-flow forecasts. Financial analysis is nowhere near as complex as rocket science. Still, it's not something you can do without a degree in accounting or finance, a computer, and a spreadsheet program (like Microsoft Excel or Lotus 1-2-3).

The Mergers and Acquisition Wave Hits

There is a wave of mergers & acquisitions hitting Europe and other places. The Leveraged Buyout (LBO) and Mergers and Acquisitions (M & A) frenzy seem to be back with a vengeance. According to Reuters in Dec 2006, equity firms held more than $300 billion, with the prospect of firms being bought out and even going private. This is a big force driving up parts of the stock market, while others continue to collapse. Stocks go up because there is a rumor of a company being the target of an M & A, also known as a Leveraged Buyout (LBO). Private equity firms (that includes I believe, hedge funds) have a lot to spend, and they are doing deals all over the place. The Japanese Yen carry-trade may be winding down, but there is plenty of hot money still out there at relatively low interest rates. The monitoring organization Dealogic is listing over $600 billion in private equity deals for M & A, and a total of $3.6 trillion in M & A. This is up almost 100 percent over last year. So, there is a tremendous amount of speculation going on, with much fear from the U.S. Treasury Department's Paulson, and the Federal Reserve of this frenzy or bubble coming to a bad end.

What is astounding is that there are buyout rumors around $80 billion equity firms like Time Warner and Home Depot. Where all this money is coming from, and where it is going, is a complicated question. There is a whole class of low risk mutual funds who make a business of looking for public announcements of a deal, and then buying stock in the buyout targeted company. If the merger deals goes through, which it does in 90 percent of the cases, then the buyout price is higher than the stock price was before and a pretty good and sure profit is made.

This is one of the reason the whole issue of insider information involving private equity funds and hedge funds has become a hot topic in the US Congress. Lobbyists of hedge funds are constantly on Capitol Hill trying to get legislation passed favorable to their companies or buyout targets, and then can use this as insider information before a buyout deal goes public, that this legislation will pass. In other cases, the hedge fund has agents on the board of the targeted company for buyout, and gets insider information before launching the takeover attempt. It's illegal, but it's happening.

Importance of Real estate investing guide

Real Estate Investing is no longer the special past time of wealthy businessmen. In today's world real estate has become a common financial motion for people from all walks of life. This trend will likely to continue to perform will into the predictable future. This change is due to elimination and concentration on company pension plans. Personal investing guide has replaced these plans as the preferred way to plan for retirement.

Since virtually all of us have realized the importance of having a guide and adequate money upon reaching retirement age, many individuals have recognized that investing is also an excellent savings tool which can be used to reach a variety of goals, such as: education, home ownership, or travel abroad. The ultimate goal of the real estate investing guide is to present the basic real estate investing choices and principles in an uncomplicated and very easy to understand manner. It is our hope that this information will surely benefit individuals who are interested in getting real income out of their real estate investments.

The real estate investing guide gives free contact information about online stock brokerage services. The guide also explains different types of investing saving accounts, bonds, stocks and other mutual funds and provides information to help make decisions on each manner of real estate. Investing is not when you drop your money in a parking space in a bank. Rather investing is when you put money aside for year together.

The purpose of the Investing Guide to Stock Market Investments is to supply all the necessary information so that you can obtain new skills and educate more yourself in real estate investing field, in order to get proven profitable results from your investments in the stock market! The Investing Guide intends to not only provide advice on investments for beginners, but as well aims to offer you the fresh and best ideas for experienced investors. The Investing Guide further also offers a list of real estate investing terms and important phrases, which real estate investors would need to be well known with upon their embarkation into investments.

Tips And Techniques To Successful Investing

The main objective of any investment is to make money and gain from a profit. Experienced investors usually study market trends before investing. However, inexperienced investors depend on the advice from financial advisors and brokers to guide their investments. Money always grows with time in the stock markets. A successful and profitable investment involves a lot of patience and constant monitoring of market fluctuations. In order for an investment to be profitable, it is important to adopt flexibility and diversification of funds. Listed below are some important points-to-remember:

Flexibility: Investors need to be flexible with their investments. Investment strategies involve regular analysis and reviews of the financial market. Amateur investors should seek help from financial advisors on their investment portfolio. Long-term planning and asset allocation are very important to an investment portfolio. Mutual funds, variable annuities and variable universal life insurance or VUL products provide good ground for investment flexibility. Another type of investment is Survivorship Variable Universal Life Insurance or SVUL. SVUL covers two people in one life insurance policy. The benefit is payable after the death of the last surviving insured person. The investment portfolio should be designed to help diversify the investments.

Diversification: Diversification involves making different investments to gain from higher returns. This risk-management technique of investing helps to diversify the investments in stocks, bonds and cash. It does not waive off the risk of loss totally, but it definitely creates more avenues for profit. The investor can invest in a number of different companies, foreign securities and mutual funds. Even if one company declares a loss, the investor still has the other investments to fall back on. Diversification is a good method to counter the risk involved in the total loss of an investment.

Simple Approach: It is safe for amateur investors to follow simple guidelines for investing money. Immature investors should not invest in companies that they are not very sure about and haven't researched. A simple approach to investment is to stake money in recognized companies that offer high returns and show a consistent growth pattern. It pays to conduct a research on the company before making an investment.

Be Disciplined: Market trends fluctuate due to several reasons. An investor's judgment should not be based on momentary instability. It is not advisable to make a change in the adopted strategy mid way. However, regular analysis and timely reviews help to keep abreast with important information of the stock market.

Invest Smartly: Investors need to be well informed and alert all the time. Cautious long-term planning is as important as being patient. Investors ought to be methodical when following an investment strategy. It is equally important to understand and monitor the economics and trend of a company. The investor should be updated regularly on business, political and stock related news to learn the political implications that may affect the company in future.

Investments carry the element of risk and therefore investors are advised to investigate before investing. It helps to follow the general guidelines of investment and invest smartly.

How to Control Excess Volatility in Your Portfolio

Affluent investors (which are likely readers of this article) probably already understand that diversification can reduce risk. But what if you own 20 different stocks and then a bear market takes them all down? To help cushion your portfolio against that kind of risk you can diversify into different "asset classes" that may hold up in value when the stock market goes down.This kind of portfolio diversification is called "asset allocation" because it involves allocating different percentages of your portfolio into different types of asset classes. � Bonds, cash and real estate are all different types of asset classes that may be expected to offer some protection during a serious bear market.This is the traditional approach to designing a portfolio mix that will help to control excess volatility; and it involves setting unchanging, fixed allocations in the different asset types (such as 60% in stocks, 30% in bonds and 10% in cash). � Then there is a newer, more active style of portfolio management that involves adjusting the allocations for the different asset types as market conditions change. The active style is generally referred to as "dynamic asset allocation" or "tactical asset allocation". Traditional Asset Allocation -- Balancing Risk and RewardHow do you design a portfolio mix in the traditional way that will maximize returns yet not expose you to more risk than you can handle? That's the $64,000 question. Stocks are the "growth engine." So you want as much stock market exposure as you can handle in the form of mutual funds, index funds and diversified groupings of individual stocks. But you have to balance stocks' higher growth potential against the risk of a "destructive storm" because the stock market has historically taken dives of as much as 40%, 50% and even 90% during bear markets.� Since traditional asset allocation techniques are based upon a "buy and hold" approach, the trick is to decide what percentage of your portfolio should be in stocks so you get some of that growth engine working for you, but not so much that you can't weather a destructive storm if it were to hit.The right portfolio mix for you will be a reflection of very individual circumstances. The right mix should be consistent with your "risk tolerance". If you could not weather a short-term portfolio loss of more than 25%, then you may not want stocks to represent any more than about 50% of your portfolio (if you assume that the next destructive storm wouldn't be worse than a 40% to 50% drop in the market). In that event, a 50% loss in your stock market holdings would translate into a 25% hit to your overall portfolio (assuming the other half is invested in cash or money market funds).You Can Take More Risk When You are YoungThe conventional wisdom is that the younger you are, the more stock market risk you can take. The simple thinking behind this is that a younger person has many more years in which to recover from a "destructive storm" and reap the ultimate benefit of holding stocks in the long term. Clearly, a worker close to retirement could not easily recover from such a destruction of value because there isn't enough time. By the same token, retired people may have the lowest tolerance for stock market risk since they may be living on a fixed income and can't afford any loss of value.� However, young people just entering the work force may have good reasons to avoid taking much risk in the early years. Just like someone approaching retirement, young workers likely have several important, near-term objectives for using their savings: (1) buying a home, (2) paying back school loans and (3) starting a family. Too much portfolio risk could be counter-productive.At the other end of the age scale, retired people may need to introduce more stock market exposure into their portfolios to have some growth potential that can offset rising expenses during their increasingly longer lifetimes. The rising costs of medical care, combined with the general rate of inflation can do serious damage to a fixed income over 15, 20 or 30 years � and that's how long many retirees can expect to live.What to Watch Out ForDeciding upon the right portfolio mix for your particular situation is a delicate question and should involve careful consideration of a broad range of factors. There are a number of important caveats you should understand before entering into a traditional asset allocation exercise with a broker or financial planner.Bonds Go Down Too: Don't be mislead that bonds never go down. There is only one instance in which the value of a bond doesn't change � that is when you hold it to maturity and, like a Certificate of Deposit, it will return the original, face value of the bond. At any other time prior to maturity, the market value of a bond goes up or down in response to the changing level of interest rates. If you own a bond mutual fund, the market value of the fund changes daily with the movement of interest rates. A mutual fund holding long term bonds has the potential to lose as much as 10% to 20% in value during a period of steeply rising interest rates.Online Asset Allocation Tools are � well � "Canned": Many brokers and mutual fund companies include an online tool on their websites that you can use to generate recommended asset allocation percentages for your portfolio. These tools can be helpful as you consider the different factors in your situation and what impact each should have on your allocation decision. But many of these online tools are too simplified and may not be able to take into account certain critical factors in your own unique situation. Suffice it to say that these canned tools don't really substitute for an in-person interview with a good financial planner or advisor.Maximum Downside Risk Should be Considered: When you seek guidance on the right asset allocation mix for you, be aware that you can get wildly different answers from different advisors, and from different canned online tools. There are various reasons for this; but one main reason you can get very different answers from the experts is the kind of measure they use to define risk. Many advisors use statistical measures of "historical market volatility" that do not effectively take into account the maximum loss potential of a major "destructive storm". These advisors are more likely to recommend you put a much higher percentage of your portfolio into stocks. Before accepting such a recommendation, know that the stock market has lost between 40% and 50% of its value three times in the past 35 years, most recently earlier in this decade. And of course, the Great Depression was much, much worse.Needed: Years of PatienceIf you had invested in the stock market in 1964, you would have bought in just before one of those destructive storms rolled in. This storm was a monster and you would have waited 17 years before breaking even on your investment � actually about 27 years if you take the effects of inflation into account.The drawback of the traditional asset allocation technique is its reliance on a "buy and hold" philosophy. The method is based upon the belief that you can't successfully time the markets � that you just have to sit tight and collect your average historical return of about 7% per year on stocks over the long run. In fact, it can be the very long term. Studies show that in many previous years, going back 100 years, investors have had to wait 20 to 40 years to actually achieve that average long-term market return.Stepping Aside to Avoid the Destructive StormsThis painfully obvious problem with the traditional approach has fueled development of a more active investment style that seeks to avoid most of the ravages of destructive storms, when they arrive. The active approach can reduce the risk involved with holding stocks; and can allow the average investor to tolerate a higher percentage in their portfolio. So if the "traditional" allocation approach says you can only tolerate 40% in stocks, the "active" approach might allow you to tolerate up to 75% when the market is bullish. But it takes timing of the markets to be successful. While the timing success of market "gurus" has long been suspect, the reputation of market timing has grown steadily among sophisticated investors given the increasing reliability of computerized models that analyze a host of quantitative factors about the market. The point of these computer models is to identify longer-term market trends and invest in them until the trend falls apart. A strategy for actively changing the asset allocation of a portfolio can be driven by this kind of market timing analysis. For example, such a dynamic strategy would have had you heavily invested in stocks during most of the 1990's while the bull market was raging. Then it would have moved your portfolio out of stocks and into something else in 2000 after the market peaked and a new stock market downtrend became evident � thereby avoiding most of the damage suffered by the average buy and hold investor.Active portfolio management is now accessible to the average small investor because there are a growing number of individual investment advisors, market timing services and investment newsletters that employ these techniques with success. Some of these services can even be used to help you manage a 401k portfolio. Now you can weather the destructive storms by moving your portfolio out of their way and sitting happily on a dry dock or enjoying better weather in some other climate

Analyze Your Stocks And Double Your Profit

An investor buys a share of stock by resorting to various approaches that validate his investment by reaping rich profits. Before investing, however, it is necessary for a value investor to study the financials of a business, so that the stock he buys at the company's intrinsic value promises a greater return at its liquidation value (the value of a company if all its assets were sold). A typical investor would buy growth stocks that have an upward trend, and seem likely to keep growing for a long time. Whereas, a technical investor (also known as a Quant) makes decisions based upon the psychology of the market and related factors, which involve much higher risk but may prove to be more profitable, or, can conversely result in much greater losses. The fundamental analysis of any business can depend on various factors: efficient market theory, value and growth, growth at a reasonable price and the quality of the business.

1. Efficient market theory pertains to stocks being always correctly priced, as all the requisite information is available on the current price.
2. The stock market sets up the price.
3. Analysts decide upon the value of a company based on the potential for its growth.
4. Price and value may not be equal, due to certain irrationalities governing the market.

Value investors need to rely on certain stringent rules governing the nature of the stock which adhere to the following criteria:

1. Earnings: company earnings are profits after taxes and interests.
2. Earnings per share (EPS): the amount of recorded income (on per share basis) available to the company to pay dividends to stockholders, or to reinvest in itself.
3. Price/Earnings Ratios (P/E) ratio (having a justified upper limit): If the company's stock is trading at $80 and its EPS is $8 per share, it has a multiple, or P/E of 10. This means that investors could expect a 10% cash flow return:
$8/$80 = 1/10 = 1/(PE) = 0.10 = 10%
If it's making $4 per share, it has a multiple of 20 (20 times $4 equals $80). In this case, an investor might receive a 5% return (in the same conditions);
$4/$80 = 1/20 = 1/(P/E) = 0.05 = 5%
However, a low P/E is not an untainted value indicator.
4. Price/Sales Ratio (PSR): is the same as a P/E ratio, except that the stocks are divided by sales per share instead of earnings per share.
5. Debt Ratio: percentage of debt a company has relative to the shareholder equity.
6. Dividend yields above a certain absolute limit.
7. Book value ratio: comparison of the market price against the book value of the stock per share.
8. Market capitalization value: Complete total value of a company's outstanding shares (Market price per share � Total number of shares outstanding).
9. Equity Returns - ROE: Net income after taxes divided by owner's equity.
10. Beta: comparison of volatility of the stock to that of the market.
11. Institutional ownership: percentage of a firm's outstanding shares owned by certain institutions: insurance companies, mutual funds etc.

Learning to analyze one's stocks and thus reaping the desirable profit is in fact a continuous process, as no amount of market efficient theories can ever predict a flawless financial return system. Even though one invests judiciously by studying the market, the over-valuation or under-valuation of stocks can often be determined by market emotions.

How To Make A Well-Balanced Investment Portfolio

Getting a good investment portfolio is something that everyone needs who does any kind of investing. Having a good spread of investments is also a good idea, in the event that one area of investments takes a loss. Here are some tips about how to get an investment portfolio that is well balanced and should enable you to weather most storms.

By investing in only one area of the market, you are more apt to run into a larger loss if that part of the market does poorly during a given time period. On the other hand, if you diversify enough, other profitable areas can make up for poor growth in one area. This allows you to continue doing at least reasonably well in some areas - in other words - all is not lost.

Diversify Into More Than Type of Market

A balanced portfolio will not resort only to trading in various types of stocks, but should also include some items that are more financially sound, even though they may not yield such a high increase. To your stock trading, you need to include bonds, trust funds, and possibly even property. The principal, simply stated, is that you do not want to risk losing everything. Though the interest rates are not as good on the bonds, yet they are stable and will provide a good hedge against loss - even in a rather economically strapped time. Trust funds do even better with interest than bonds, they are much more stable than stock in general, but they also can have their bad days, too.

A general rule in investing in stock is that you should never invest more than you want or can afford to lose. The reason is obvious - you could lose it all. But by taking a percentage of your investments and dividing them up between these various investment instruments, you should be able to gain a much more stable portfolio, and still end up with some for retirement.

Market Transactions By Sectors

The market is generally made up of a number of sectors - each one consisting of several groups of industries, and each one with their own share of stability and instability. While one sector, such as telecommunications, may not be doing as well as it once was, other areas may really be thriving. Only by a constant watching of the market will you be able to discern these developments, and know which one is worth investing in. A safer way to pick stocks is to be careful what advice you receive (the best being those who have successfully traded for years), as well as the means used to determine which ones are "good investments."

Instead of just going out and buying the stock of a particular company, it is a real good idea to use stock options. These "tickets" (my word for a call option, or a put option) allow you to be ready to make stock purchases or sales, depending on what you want to do. They can save you a considerable amount of money and give you a window to see what may transpire with the company you are looking at. For instance, if you buy a "ticket," and it costs you $400, you have a window of opportunity that will give you a little time to make your transaction. It is not an actual commitment to do so - just a readiness. Instead of just going and buying that $5,000 worth of stock, and possibly losing thousands, by using this ticket method, you may only lose the cost of the ticket.

Learn the Options Available To You

When you want to create a really stable portfolio, it is a real good idea to make a strong effort to learn all you can about the various techniques of investing, understanding the stock market and mutual funds, as well as products that you can successfully invest in. You may even want to invest in foreign properties, such as in Costa Rica, or consider the FOREX (foreign exchange) market.

Set up Multiple Streams of Income

If you have ever invested in the stock market you are aware
of how important it is to diversify. After all, if you put
all of your eggs in one basket you may end up losing
everything in the end. The same holds true for anybody
that is interested in making money online. You will need
to set up multiple streams of income so that you have a
well diversified income.

If you are interested in making a lot of money on the
internet you will definitely better your chances if you
set up multiple streams of income. By having multiple
streams of income you will be ensured of getting money
every month from numerous different sources. Just like
in the stock market, diversifying your situation will allow
you to maximize your potential profits.

Another huge advantage of setting up multiple streams of
income is that you never have to worry too much about a
sudden change to your income. This holds true because if
one of your income streams takes a dip, you will still have
the rest of them to pick up the slack. But if you do not
have multiple streams of income and run into hard times,
you will be faced with having to take a huge cut to your
income. Multiple streams of income allow you to make up
for down times without any trouble at all, but also take
advantage of the times when all of your income streams are
performing particularly well.

Multiple streams of income is nothing more than having a
diverse portfolio that will allow you to make money from
more than one source. By having multiple streams of income
you are increasing your chances of making big money on the
internet, and decreasing your chances of losing a lot of
money at once. If you do not have multiple streams of
income set up you will want to get started as soon as possible.

Are you selling your stocks at the right time?

Limiting your losses and protecting your gains is the most important rule for every investor. Unfortunately, with the high volatility of today's stock markets, making an efficient decision on selling your investment is riskier and consumes more time than ever. Statistics show that most intuitive, individual investors lose this game sooner or later.

When it comes to the stock market, there is no place for emotions or intuition. Believing otherwise has led many amateur investors straight to bankruptcy. If you want to become a successful investor, you must exclude emotions from your trading, and spend some time on choosing a trading strategy that is right for you.

How would you limit the losses? It is all about selling at the right moment. A successful investor never puts emotions into trading, and sells as his sell strategy suggests. Ask yourself: what is my exit strategy? If you don't have a sell strategy, you don't have any trading strategy at all!

There are many trading strategies available, all having their pros and cons. Most require you to monitor your stocks very closely. If you don't have much time to spare to watch your investment, a strategy based on the Trailing Stop method may be right for you.

The Trailing Stop method has strong benefits over alternative trading strategies. A Trailing Stop limits your losses but not your gains, while not requiring you to constantly monitor the market to achieve best results.

It does not perform miracles, but uses proven, published mathematical methods to maximize your gains and minimize losses. Speaking broadly, the Trailing Stop method has to deal with just two things: the current stock price, and the stop selling price that represents the moment at which to sell your shares.

Without going much further into the complex mathematics, the Trailing Stop method raises your stop selling price when the stock goes up, but holds it when the stock goes down. If the stock falls enough to reach the stop selling price, a strategy based on the Trailing Stop method produces a recommendation to sell immediately. This strategy effectively limits your loss to a pre-defined percentage of your investment, while at the same time not limiting your potential profit.

A modified version of this strategy based on the Adaptive Trailing Stop takes an additional parameter into account. The Adaptive Trailing Stop method ties its selling recommendations to stock volatility, which represents how fast the particular stock can rise or fall. Volatility is arguably the most important factor when it comes to the decision to sell, as it is closely tied with the stock's risk factor. This method works best for modern stock markets, as today's stocks can start moving very fast.

Developing and following the right strategy can be a difficult and time-consuming process that does require certain skills in higher mathematics. If you don't have that much time to spare, try using a service that does all the monitoring and calculations for you, and gives you selling recommendations in plain English.

Sell@Market is a brand new service that uses the Adaptive Trailing Stop method as the sell strategy. It tracks and analyzes stock quotes daily on all major exchanges, including AMEX, NASDAQ, and NYSE, and re-evaluates the profit to risk ratio according to the chosen risk strategy. If a stock being monitored matches certain criteria, Sell@Market emails you a recommendation to sell.

There is nothing that even the best strategy can do to protect investments if an investor is not following its recommendations. Sell@Market helps you protect your investments by excluding emotions from trading. Just check your email daily and follow the system's recommendations to maximize your gains and minimize losses.

Always sell your stock just at the right time with Sell@Market! Try the service free of charge for 30 days. Sign up at: http://www.sellatmarket.com/signup

Show Me The Money

As the stock market was experiencing its biggest one day drop ever last week, and as many investors watched their portfolios shrivel, I realized two very important things. One, there's nothing sadder than a shriveling portfolio, and two, the stock market could crash like a circus fat lady falling over a lawn chair and it wouldn't affect me in the least. I own no stocks. All my money's tied up in bills. You know, electric bill, phone bill, Visa bill, etc.

I know, I know, I should be investing in long term growth stocks and no load mutual funds and high return commodity contracts. I should be planning for my financial future, saving for a rainy day, gathering nuts for the winter, yada, yada, yada.

The truth is, I gave up trying to save for retirement years ago when I realized it was a lost cause. I'm 37 years old. In order to have enough money to live comfortably by the time I'm 65 I would have to wisely invest $20,000 a year for the next 28 years. Now, I'm not about to divulge my salary (I don't need your pity), but if I had an extra twenty grand a year to invest I don't think I'd be sitting around worrying about retirement. I'd be having too much fun spending all that extra cash!

Maybe I'd take investing a little more seriously if I knew how the stock market really worked. As it is, I don't know my NASDAQ from a hole in the ground. All I know is what I see on the news. You have a crowd of angry men in a trading pit, shouting and cussing, pushing and shoving, gritting their teeth and elbowing each other in the ribs. This reminds me too much of the buffet line at Grandma's funeral. I'm not gonna trust these guys with my money.

I'm not too worried about living out my twilight years in poverty, though, because I do have a plan. There's an ancient Chinese proverb that goes, "Invest in your children and your returns will be many." A beautiful thought, huh. The moment I cracked open that takeout fortune cookie and found those words on the little slip of paper I knew I had struck gold.

Here's the Knox translation: Be nice to your kids when they're young and they'll take care of you when you're old. And don't worry, if being nice to them doesn't work, there's always guilt.

If you're a little hesitant about sponging off your kids, think about this. Statistics show that raising a child from birth to age 18 costs approximately $300,000! And that's just for funny haircuts and Air Jordans. I think a little payback is in order here, don't you?

If it makes you feel any better we'll put a time limit on it. Since we as parents are legally responsible for the little darlings until they are 18 years old, we'll use 18 as the benchmark. Using myself as an example, here's how it would work.
Let's say I retire at age 65. Upon retirement, my kids would become legally responsible for me. They have to clothe me, feed me, give me a nice place to live, pay for expensive piano lessons I'll never take, let me borrow the car whenever I want, and listen without comment when I play my music too loud.

Add 18 years to my 65 and that gets me to age 83. With the life expectancy of the average American, white male being 75, I'll be dead long before they can legally kick me out! A brilliant plan, really, except for the part where I die.

So let those with disposable income throw their money into the stock market. I'll be investing in disposable diapers.

Gotta keep those kids happy, you know. I'm counting on them.

Direct Line picks up on business.

Last Wednesday was a difficult day at the stock market. Behold a lesser mirror image of Wall Street market in the States; wrecking the bank shares, and feeding the speculation about upcoming inflation, the index of FTSE 100 stocks dramatically dropped by 160 points. The market in the States is suddenly dumbfound with realization that sub-prime lenders are far from being healthily well-off, to say the least. If New Century's potential bankruptcy is any indication of the times, it comes with no surprise that banks are feverishly reviewing their assets and are revising their terms and policies.
US sub-prime lenders are hit by highest wave of late payments and repossessions in the history of this service. It is a relief to know that for a number of reasons such crisis in unlikely to occur in the United Kingdom. The percentage of sub-prime mortgages compared to regular mortgages is smaller, property in Europe being an attraction for large number of foreign investors, different lending policies, and finally, British financial common sense, are the beneficial factors that will likely outweigh the threat of market instability. Ian Giles, director of marketing at Kensington Mortgages, for instance, comments that "By introducing a tiered approach to risk we are allowing those people who can afford to do so, borrow more, and helping more people to buy their own homes." In the light of the present situation, the words "those people who can afford to do so" acquire a new profound significance, and are the key.
Amidst the anxiety and the controversy surrounding the sensitive issue, fixed rate mortgages reign supreme. According to the Council of Mortgage Lenders, 85 % of first-time buyers select the fixed- rate option. Within last week eight major mortgage lenders, including such major players as Direct Line and Britannia, have reduced their fixed-rate offerings in a bid to ensure stability and to promote better budgeting.
Another product, suddenly big and bold on the top of a �must � have' list is financial insurance. No big surprise there either. The Royal Bank of Scotland Group's Direct Line Insurance is certainly blossoming. With RBS Global Banking & Markets being a leading banking partner to major corporate and financial institutions worldwide, Direct Line has financial support second to no other company in the UK. At the time when almost all mortgages come with mandatory insurance on all lending products, Direct Line provides its customers with a full range of insurance, debt financing and risk management, offering discounts on its insurance for those who take out their loan or mortgage. After receiving a recent blow, the banks aim to stay on top of the game. Not a single lender, not even Direct Line, offers Inflation Insurance. Shame, really.

What Are You Like At Asking For And Accepting Advice?

Whether or not you ask for advice and how you accept advice when it is given is a great predictor of your future. Those who are reluctant to ask for advice or are resistant when it is given are likely to have a poor future. The trick for success is to seek advice from those who are well qualified to give it.

When I say "well qualified" I don't mean that they have a piece of paper from some institution. I have had well credentialed financial planners attend my wealth creation course who were broke and knew nothing about the realities of how to become wealthy. There is a lot of difference between well credentialed and well qualified.

When I say "well qualified" I mean that they have the runs on the board. If you are taking financial advice from someone who has never been successful financially in their whole life then you are probably seeking counsel in the wrong place. Likewise if you are taking emotional advice from someone who is always stressed or worried or relationship advice from someone who has a history of short term or disastrous relationships then you would do better looking elsewhere.

But what if you're the type of person who never seeks advice at all, what does that tell us? Let's have a look at some interesting facts.

The people who need advice the most tend to have three characteristics in common with each other.

Firstly they are the last to recognize that they need advice. They go from one mistake to another without their life improving in any way year after year, yet they don't seem to realize that they could make could use of some well qualified advice.

These people are the victims of their own ego. They feel that they know everything that they need to know even though the facts are telling the world the exact opposite story. If you want to really succeed in life then you have to be willing to park your ego for long enough to admit that there are things you don't know.

The second characteristic that those in greatest need for advice share with each other is that even when they finally realize that they need advice they are the still the last to ask for it.

Again this is a sign of ego controlling the mind. They are afraid of appearing foolish by admitting that they don't know something. There is an old wise Chinese proverb that says "ask for help and you may appear foolish for a few minutes but if you don't ask for help you will be a fool for your whole life."

The third thing that these people have in common is that when they do get well qualified advice they are the least likely to appreciate it and will often argue against it.

I know a young man who fancies himself as an expert in stock market investing, even though he has no real life evidence to support the claim. Last week I asked him if he had read Buffettology, the book on the strategies that Warren Buffett uses in his investing. This young man told me that he thought Buffett's approach to investing was stupid and then he quoted a bunch of so called experts to back his opinion.

The facts are that Warren Buffett is the most successful investor in history. Starting from scratch and applying his particular investment strategies over a period of fifty years he has built a net worth of fifty two billion dollars solely from stock market investing and is the second richest man in the world at the time I am writing this article.

It is interesting that a person who is basically broke and wants to make a living on the stock market will argue against the strategies of the most successful stock market investor in history who has a fifty year track record of consistent excellence in results.

It is also interesting that there are so-called experts out there who are also willing to argue against a man who has made ten thousand times the money from stock market investing than those so-called experts could ever dream of making themselves.

It's again interesting that Warren Buffett himself, when he was a young man, was so willing to take well qualified advice that he offered to work full time for no salary just so he could work with the best investor of that era and learn what he knew.

What are you like at seeking and taking advice? Are you more like my young investor friend or are you more like Warren Buffett?

Chrysler: Could There Be A Takeover Without Sale?

As DaimlerChrysler AG's top management weighs the possibility of a sale of the Chrysler Group, a number of events weakened the latter's prospects. The first reason is the slump in performance. This is coupled with the refusal of United Auto Workers (UAW) union to give Chrysler the health care concessions it granted to the automaker's larger Detroit rivals.

For the first time, last Tuesday, Dieter Zetsche, DaimlerChrysler's CEO, alluded to other pressures bearing on the Germany-based automaker. "Top performance is the best protection against potential threats, and that applies for DaimlerChrysler as well," Zetsche said at the Geneva Motor Show. He is anxious of the risk of a possible takeover of the company.

Financial experts also expressed their accord with Zetsche's prediction. Experts said DaimlerChrysler could be a takeover target because its stock market valuation has been weighed down by Chrysler's uneven performance. In the past, the automaker was protected by the Deutsche Bank which is its largest shareholder. However, the bank has decreased its stake. Additionally, it wanted to drop its remaining 4.4 percent DaimlerChrysler holding.

"In today's world, a 50 billion euro ($65 billion) market cap doesn't protect you from those considerations. Zetsche added, "In the case that the current market capitalization of DaimlerChrysler doesn't represent the potential value of the group - and I'm convinced that this is the case - this of course triggers the interest of third parties to investigate if they're able to unlock hidden or undeveloped value."

"Potentially, they are a takeover target," said Juergen Pieper, an analyst at Metzler Bank which is based in Frankfurt. Pieper estimates DaimlerChrysler's assets are worth $30 billion more than its combined stock value. "If you split it up, you can generate value. Mercedes is one of the great brands of the world."

Zetsche earlier said that the first priority was to deliver on the restructuring plan which was announced last month. He reiterated that no option, including keeping Chrysler, had been ruled out. Other analysts who saw Zetsche in talks in London, New York and Boston said he would not discuss sale or spinoff plans with them. But they came away with the impression that DaimlerChrysler's preferred option would be the sale of Chrysler.

General Motors Corp., the largest automaker in the industry, was also reported having serious talks with Daimler regarding the potential of Chrysler to GM. Nonetheless, Zetsche would not confirm that sale talks were under way.

"I can confirm that nine months ago or more, some discussions between the Chrysler Group and GM - I think initiated by GM but this doesn't matter - took place to discuss some potential common interests in some segments. I think large SUVs were discussed. Beyond that, I can't confirm anything," said Zetsche, who ran Chrysler for nearly five years.

Apprehensions and predictions swiftly spread. Transmission is as quick as a window motor opening and closing car windows. On Monday, people familiar with the discussions said a team from Cerberus Capital Management met with Chrysler executives in Auburn Hills to discuss a possible bid for the company. The Blackstone Group, a big private equity firm, is also interested in purchasing Chrysler.

Zetsche said the management's decision to consider all options for Chrysler was not due to outside pressures. "The (DaimlerChrysler) AG management and the Chrysler management is not acting in reaction to pressure but in reaction to its own thinking and its own strategic process," he said. Zetsche stressed that the process did not take place only in Stuttgart and that Chrysler CEO Tom LaSorda was involved early on.

"A small, select group of the AG board, and definitely nobody of the supervisory board, took on this task to understand where we are, what the going-forward process should be, and ultimately deciding to look at further options as well," noted Zetsche.

The Theory Of Rational Expectations

John F. Muth of Indiana University coined the theory of rational expectations in the early sixties. He used the term to describe economic situations under which, the outcome depends on peoples' expectations. The theory greatly applies to the stock markets around the world, as, if investors expect the price of common stock of a particular company to come down they go on a selling spree and the result is obvious, and when they expect it to go up they buy heavily and hence, the prices spirally. To conclude the cornerstone of the theory, we can suggest that, people behave or take decisions in order to maximize the value of an outcome and they keep getting feedback from the transactions, as to what they expected and what they actually received.

In this way there expectations over a period of time tend to stabilize because of the result of the past outcomes. In other words, their expectations become rational.

The theory of rational expectations is often put into practice in many economic as well as finance models. One such execution of the model is related to The Efficient Markets Theory of Stock Prices, which states that there are three forms of the efficient-market hypothesis, namely, weak form, semi strong form, and strong form. Weak form which is also known as the Random-walk theory suggests that there is no purpose of examining the charts as the share pieces fully reflect the historical sequences. Semi-strong form on the other hand suggests that current market prices not only reflect the historical chart patterns, but also reflect all the publicly available knowledge, so this kind of information is almost always useless for the analysts and the investors.

The Stock Market - An Easy Way To Make Money?

While it comes to earning money, a lot of people get confused very easily. There seem to be so many distinct choices of investment from which to choose. And then add to this fact that a lot of these alternatives are puzzling to the average person.

You may not be able to fathom what interest rates are all about, or why the stock market operates like it does, and this may perhaps lead to inaction. If you really want to invest your money, you ought to find someone who knows what they are doing.

If you are interested in the stock market, they may possibly advise you what type of trading account you should get, and show you first-class stocks to get involved with that will make you money in the long run.

However, what may be good stocks for you to invest in may not be very good stocks for someone else. If you don't have plenty of money to invest, you certainly don't want to deposit your cash into high risk stocks.

Oftentimes, people think of swift, easy increases in their capital thanks to the stock market without being realistic. If you only have a little money to invest, you really should first locate some solid stocks to invest in that have a very good history of slow but steady growth. This is the sort of investment you will want to have for retirement or even paying for your children's college education.

If you have additional cash to invest, that is when you may begin investing in various higher risk stocks. You still want to have advice on which stocks to invest in, or you will end up making a lot of mistakes.

You will want to locate stocks to invest in that will offer slow growth, and you may perhaps want to use some of your cash to invest in further high risk stock for a more bountiful gain more speedily.

That way, you know you have something that will earn money in the long-term, as well as it additionally giving you a possibility to make a vast profit within a short amount of time.

Even though we all like to assume we may figure things out, when it comes to spotting first-class stocks to invest in, you may perhaps want to consult with a financial planner first.

You may want to employ someone to invest your money for you, and if you know very little concerning the stock market this is in all probability the way to go. They will already be aware of the best stocks to invest in that will be suitable for whatever financial condition you might be in. Simply ensure you use someone who is open to talking clearly and simply to you whenever you need information, and make sure they have a solid reputation behind them.

Make Money In The Stock Market With Biodiesel

Those of use who like to play in the stock market are always looking for new and exciting investment opportunities. Many people have their niche that they like to stick with for investment purposes, but here are others of us who will go for hot new opportunities and enjoy the fun of find them. If you like to try new opportunities or if you are looking for ways to diversify your portfolio you should take a look at biodiesel stock.

Listen, I know the stock market is an intimidating thing for those of you who are not familiar with it. We have all heard the miracle stories and the horror stories of people gaining and losing money so quickly it makes your head spin. It seems so out of control and your money is in the hands of people you do not know for them to do what they will, it can be scary. But a lot of people swear by fuel stocks, especially alternative fuel stocks. Of particular interest is biodiesel fuel.

Before you buy any biodiesel stock be sure to do due diligence and research potential companies that are offering stock. There are not that many so this should not be an overwhelming task for you. If you are working with a financial planner who has you in the stock market you should talk to them about biodiesel stock. On your own you can find companies and relevant information on the Internet. Go to their website and read it through, do not just browse. Review their annual reports and look for the trends have been in their biodiesel stock. This way you can see if the investors are making money.

If you are new to the stock market and decide to invest in biodiesel stock you should also invest in something else to diversify your money. That way if the alternative fuel market ebs and flows you will be secure in knowing that not everything you have is tied up in that one segment of the marketplace.

One thing is for sure and that is alternative fuels are here to stay. That is why I am such a strong proponent of investing in this type of stock. It is something the whole world is interested in because of the cost of oil. Biodiesel stock really will be a winner, in my opinion that is why I have already invested in that area.

The Three Enemies of Every Investor

Every investor, whether in stocks, options, futures, property, business or any other form of investment, has the same three enemies. These enemies have caused more investment loss than all other reasons put together. I will identify these enemies for you and give you some tips for defeating them.

The first enemy is fear.

Everyone needs a certain amount of fear in order to function effectively in the world. If you were totally without fear then you may be prone to taking crazy risks. However once fear gets beyond the healthy amount it can be devastating for the investor.

Fear of making a mistake has kept many a would be investor from entering into a sound opportunity. You can't win the game if you never enter the game.

Fear of taking a loss has caused many investors to stay in an investment long after wisdom would have told them to cut their losses and move on. This often leads to huge losses.

The best cure for this type of exaggerated fear is to embrace risk management. Study all you can about risk management and make risk assessment and risk management planning two habits so well practiced that they become part of your nature.

The second enemy is ignorance.

It always amazes me how many people are so keen to collect investment profit that they don't take the time to learn the skills of the game. If you don't know what you are doing then the market will soon chew you up and spit you out broke.

As an investor you need to develop a passion for learning everything you can about your field of investment and you need to develop the skills of tracking down and networking with others who know what you don't know.

The first skill to learn is how to know when you know and when you don't. If you think being aware of what you know and what you don't know is easy and obvious then look at almost any teenager. They know virtually nothing about life, yet they are so totally unaware of this simple fact, that they come to the conclusion that they know everything. Don't be a teenager when it comes to investing.

The third enemy is greed.

If you addressed a seminar room full of people and told them that you could put them into an investment that would give them a guaranteed return of 10% on their money each and every month and all they had to do was invest $100,000 then you would find a large number of those people running to the bank to mortgage their house so they could get you the $100,000.

Why are so many people so gullible? Why are conmen stealing people's money every day? Because of greed!

Greed drives people to look at the possible profit without assessing the probable risks.

Most investors have a degree of greed and it is a constant battle to keep this greed in check.

Professional stock market traders control greed by developing a set of trading rules and then also developing the self discipline to stick to them.

If you are a serious investor then it would be wise to step outside yourself and take a solid, realistic assessment of where you currently stand in relation to fear, ignorance and greed.

Online Trading India - Investment at Kotak Securities!

"The key to making money in stocks is not to get scared out of them"
- Peter Lynch

Looking to invest but don't know where and how? Wondering whether online trading would be a good and reliable way to invest? At Kotak Securities, we make online investing really easy for you - so you can trade from the comfort of your home or office, or even while you are on the move.

What can I invest in at Kotak Securities?

You can buy and sell Equity, invest in Mutual Funds, IPOs and Insurance - wherever and whenever you want to. Invest in the best stocks with Easy Equity. Know more. Save taxes and play safe with Easy Mutual Funds. Get risk cover and ensure a safe future with Easy Insurance. To learn more about the various investment options, we suggest you browse through the Kotak Securities Knowledge Centre.

How much money do I need to get started?

You can start trading with a nominal Rs.20,000.

How do I know which stock or mutual fund to invest in?

Once you choose to invest with Kotak Securities, we will recommend what you should invest in. Our in-house financial analysts at the Kotak Securities Research Centre are there to guide you in your investments.

Can I trade if I don't have immediate access to the Internet at some point?

You can trade with Kotak Securities on the phone. Just Call and Trade

Getting started as a beginner


Step 1: Start off with opening the Kotak Securities Gateway Account - ideal if you are just starting out in the equity markets. Know more about the Kotak Securities Gateway Account
Step 2: To open your account, simply download and print an application form, fill it in and post it along with the essential documents to the address as mentioned in the form.

Step 3: We will inform you as soon as your account is activated, and you can start trading instantly!

Need to know more?

You can call us and we will have our representative meet you and help you open the account and help you learn how to trade online.

You can also email us at gateway@kotaksecurities.com . Our representative will get in touch with you.

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