 This day and age presents a large amount of opportunities to invest your money. But sometimes it's difficult to choose the best investments that are suitable for your situation. If you are interested in investing your money in stocks then this article may be of assistance to you. For a new investor in stock market the first thing is just not jump into the market...first you have to id study the market, the factors that affect the market, regularly read business news. check relaiable websites to know about the markets up and down, whih stocks are the best, portfolio of the company which offers its stocks..and so on. | |
| | Below you will find ideas on how a little research can take the stress out of stock investing and hopefully fetch large returns from your stock investment. Find Investments That You Trust The best way to choose the right stock is to research a stock company to find information that may or may not be desirable. Consider only companies, which have been trading in the public market for a long period of time. These companies often provide extra security and stability for a well maintained and branched out investment portfolio. Use the information you get from stock market quoting to determine if you think the particular company is a fit for you. Periodically keep yourself up to date on the companies your investing in, just because a company is stable now doesn't mean they'll be around several years from now. Search for Recent News A good way to find profitable investments is by reading news stories that may influence the value of a companies stock in which you are going to invest your money. By updating yourself about the stock market you can be in touch with top stories of public companies, which can keep you informed about what is going on in the market (company's stock value is going up or down). This can be especially useful if you get wind about major scandals or negative factors on time and are able to sell shares before the price drops. Alternatively this will also enable you to invest before an upcoming event that may cause a spike or upwards trend as well. |
Keep an Eye On New Technologies You should also read news about technological progress and fields like health care and biochemistry. New advancements in these fields can cause a sudden rise in stock prices, quickly earning you a nice profit. Learning about new and advanced technologies before they become well known, can potentially give you long term benefits and opportunities to engage your money in other investments. Don't expect each and every new technology to cause an increase in stock value, but there is a better chance for making good profits from initial investments. Invest for the Long Term It is important to know about long term investments. Usually long term investments give more benefits than many short term investments. Many short-term investments also do well (scheduling your purchase and sell ahead of time can also save you some heartaches); long-term investments will add stability and security to your portfolio. Find Yourself Some Good Help With not too much trouble you will find many other people investing like you are. Ask around, there's a good chance many of them use a stock recommendation service or a broker they're happy with. In this case they'll gladly recommend their services and if you're new this may be a smart way to get started - this should also help you to avoid stock broker fraud as well. Benefits and Disadvantages of Stocks Source:stockinvestment123.com Benefits of Stocks: Returns: Over time, stocks outperform bonds, CDs (and other cash investments), and real estate. Stocks on average return about 10% a year, whereas these other investments generally return at about 5-7%. Taxes: If you hold a stock for more than a year, your profits (when you choose to sell your stock) are taxed at long-term capital gains rate of 15% instead of your standard tax rate. Money you make from interest in a savings account or CD is taxed at your regular tax rate, which can be as high as 35%. Diversification: Unlike real estate, it is easy to diversify your stocks. In fact, you can buy whole indexes of stocks, such as the S&P 500 or Wilshire 5000, by investing in ETFs that track those indexes. When you buy real estate, your returns are largely the result of how popular that area becomes. If you buy a house in an area that goes downhill, you will lose a lot of money on that house. For stocks, you can own a stock that literally goes to zero, but it's not a big deal provided you invested in a wide variety of stocks. Disadvantages of Stocks: Risk: The stock market can vary wildly. If you invest in a stock, your investment can literally go to zero if that company goes out of business. However, if you are properly diversified, the risks associated with the stock market are not that bad. Over the long run, the stock market goes up. Nevertheless, the risks with stocks will always be higher than a guaranteed return with a CD or government treasury. History of Mutual Funds: The first "pooling of money" for investments was done in 1774. After the 1772-1773 financial crisis, a Dutch merchant Adriaan van Ketwich invited investors to come together to form an investment trust. The goal of the trust was to lower risks involved in investing by providing diversification to the small investors. The funds invested in various European countries such as Austria, Denmark and Spain. The investments were mainly in bonds and equity formed a small portion. The trust was names Eendragt Maakt Magt, which meant "Unity Creates Strength". The fund had many features that attracted investors: - It has an embedded lottery. - There was an assured 4% dividend, which was slightly less than the average rates prevalent at that time. Thus the interest income exceeded the required payouts and the difference was converted to a cash reserve. - The cash reserve was utilized to retire a few shares annually at 10% premium and hence the remaining shares earned a higher interest. Thus the cash reserve kept increasing over time – further accelerating share redemption. - The trust was to be dissolved at the end of 25 years and the capital was to be divided among the remaining investors. However a war with England led to many bonds defaulting. Due to the decrease in investment income, share redemption was suspended in 1782 and later the interest payments were lowered too. The fund was no longer attractive for investors and faded away. After evolving in Europe for a few years, the idea of mutual funds reached the US at the end if nineteenth century. In the year 1893, the first closed-end fund was formed. It was named the "The Boston Personal Property Trust." The Alexander Fund in Philadelphia was the first step towards open-end funds. It was established in 1907 and had new issues every six months. Investors were allowed to make redemptions. The first true open-end fund was the Massachusetts Investors' Trust of Boston. Formed in the year 1924, it went public in 1928. 1928 also saw the emergence of first balanced fund – The Wellington Fund that invested in both stocks and bonds. The concept of Index based funds was given by William Fouse and John McQuown of the Wells Fargo Bank in 1971. Based on their concept, John Bogle launched the first retail Index Fund in 1976. It was called the First Index Investment Trust. It is now known as the Vanguard 500 Index Fund. It crossed 100 billion dollars in assets in November 2000 and became the World's largest fund. Today mutual funds have come a long way. Nearly one in two households in the US invests in mutual funds. The popularity of mutual funds is also soaring in developing economies like India. They have become the preferred investment route for many investors, who value the unique combination of diversification, low costs and simplicity provided by the funds. | |