Out there are many ways where to invest your money. So why choose stocks? It's simple because socks are the best bet. Since its inception, the stock market has consistently delivered the best overall returns when compared with the returns of investments like real estate. Since the purpose of investing is to watch your money grow, the logical choice is to place your money where it has the best chance of doing that.
There are, however, several investing options that are attractive to investors like
# Bonds
# Cash
# Mutual funds
Let's compare all three of them with stocks
Stocks vs. Bonds
The big difference here is that you can make more money with stocks than bonds because in stock market there are no limit how large your investment may grow, no limit can likewise be placed on how small investment may shrink, that means if you want lower risk and more safety then bods will be your choice
In other words stocks have the potential to provide higher returns than bonds, however, bonds offer a higher degree of security for the principal amount invested
Bond vs. Cash
Cash, in financial terms, refers to any type of investment that is extremely liquid. A money market account, for example, is considered cash because the account holder can withdraw his or her money with relative ease, including drawing on the account with a personal check. Cash can also refer to the money in your checking and savings accounts or the money under your mattress.
The big problem with cash is that it makes no or very little profit. And in this case investing in stocks will almost definitely provide a higher return than allowing your money to remain in cash or investing it in a cash investment. However cash has a ddegree of liquidity not offered by stock.
Stocks vs Mutual Funds
Recently mutual funds have raised their popularity. In fact mutual funds are a good place for investment, but stocks are still better.
A mutual fund is a mass portfolio that has been collected by a mutual fund manager and is professionally managed for its owners or shareholders.
But this system has one black whole. Let's say that you want to invest your money in companies that are environment friendly, to find a mutual fund which is made from environment friendly companies is almost impossible due to diversification.
Stocks by default provide higher returns than mutual funds since management fees are not levied on stock owners. Mutual funds, however, offer a higher degree of diversification.
To make the list short
# Different investment options carry risks particular to them and may complicate comparison to stocks.
# Stocks provide the highest returns over cash investments but cash investments are most secure.
# Stocks historically provide higher returns than bonds but investment in bonds in more secure
# Stocks can provide higher returns than mutual funds but lack in their diversification
# As an investment's ability to produce higher gains grows, so, too, does the risk of loosing your money
Showing posts with label stocks. Show all posts
Showing posts with label stocks. Show all posts
Monday, April 20, 2009
Friday, April 17, 2009
Investing in stock market (part 2)
Let's continue our way trough the fears that is holding us back from investing in stock market. As I remember the last fear I mentioned was Fear that investing is for millionaires. Here is the next one.
Fear that stock market would crash
It is true that the stock market have crashed big time recently, but things like these happens periodically. For example when stock market crashed in 1929 people lost over $14 billion dollars. I admit it was horrible, but later in 1987 investors lost over $500 billion dollars. I'm not saying that you wont loose money, but there is one thing that people don't talk about and that is How much they earned before they lost some money? You cant escape from market crashes but there is one thing you can do. You can make a market crash work for you. Let me explain after every crash comes recovery and when that happens people who have bought shares in time when share price was very low will make big money and I mean BIG!
Your fear that market will collapse as it has done in the past is best dismissed by learning that the probability of another crash is infinitesimal and that the damage caused by previous crashes was not as bad as the public's perception of them.
Fear that investing in stocks are like gambling
Investing in stocks is not gambling. True, both do attempt to accurately predict future outcomes, but similarities end there. Here's example for you. Imagine you have $1000 dollars right now you don't need that money you would be happy that your money would earn you more money. Right now you have two options.
1st Option
You can go to casino and try to win more money using your $1000 dollars. Chance to win is very little. It is because you have no control over the outcome. No matter how hard you will try to analyze or try to find a way how to win you won't find it.
2nd Option
Investing in stocks works a little differently. First of all losing all your hard earned money in one hour is almost impossible. Second thing is that when you purchase a stock it represent a partnership between its issuing company an its investor. As a result of that you want the company succeed, the company wants to succeed. Where is the gamble?
The fear that investing in the stock market is reliant on chance is proved wrong as new investors learn that the processes and tools with which they pick stocks are not bases on random chance but on intelligent research and decision making.
Fear that it will take too much time
To be honest this depends on you. You can spend hours doing research on one company, or you can just ask your friends advice. Because you decide to purchase the stock for whatever reason you consider important. Research is never required.
The fear that managing your portfolio will consume too much time is dismissed when new investors discover that research is available but not necessary and that they control the amount of time they want to devote to research.
Therefore I have come to conclusion:
Like any commitment you make, investing will take up some time, but how much depends on your decision. The truth, however, is that by the time you have so many stocks that maintaining them is actually causing you time problems, you should be rich enough to afford to pay people to do that for you.
Small recap
# Financial terminology should not be intimidating
# The basics of the stock market are not complicated
# Investment options exist for people of any income level
# The market is a safe stable place to put your money
# The stock market is not a game of chance
# The time required to manage your investments is minimal
Thank you for reading I hope this information was helpful.
Regards
Archy
Fear that stock market would crash
It is true that the stock market have crashed big time recently, but things like these happens periodically. For example when stock market crashed in 1929 people lost over $14 billion dollars. I admit it was horrible, but later in 1987 investors lost over $500 billion dollars. I'm not saying that you wont loose money, but there is one thing that people don't talk about and that is How much they earned before they lost some money? You cant escape from market crashes but there is one thing you can do. You can make a market crash work for you. Let me explain after every crash comes recovery and when that happens people who have bought shares in time when share price was very low will make big money and I mean BIG!
Your fear that market will collapse as it has done in the past is best dismissed by learning that the probability of another crash is infinitesimal and that the damage caused by previous crashes was not as bad as the public's perception of them.
Fear that investing in stocks are like gambling
Investing in stocks is not gambling. True, both do attempt to accurately predict future outcomes, but similarities end there. Here's example for you. Imagine you have $1000 dollars right now you don't need that money you would be happy that your money would earn you more money. Right now you have two options.
1st Option
You can go to casino and try to win more money using your $1000 dollars. Chance to win is very little. It is because you have no control over the outcome. No matter how hard you will try to analyze or try to find a way how to win you won't find it.
2nd Option
Investing in stocks works a little differently. First of all losing all your hard earned money in one hour is almost impossible. Second thing is that when you purchase a stock it represent a partnership between its issuing company an its investor. As a result of that you want the company succeed, the company wants to succeed. Where is the gamble?
The fear that investing in the stock market is reliant on chance is proved wrong as new investors learn that the processes and tools with which they pick stocks are not bases on random chance but on intelligent research and decision making.
Fear that it will take too much time
To be honest this depends on you. You can spend hours doing research on one company, or you can just ask your friends advice. Because you decide to purchase the stock for whatever reason you consider important. Research is never required.
The fear that managing your portfolio will consume too much time is dismissed when new investors discover that research is available but not necessary and that they control the amount of time they want to devote to research.
Therefore I have come to conclusion:
Like any commitment you make, investing will take up some time, but how much depends on your decision. The truth, however, is that by the time you have so many stocks that maintaining them is actually causing you time problems, you should be rich enough to afford to pay people to do that for you.
Small recap
# Financial terminology should not be intimidating
# The basics of the stock market are not complicated
# Investment options exist for people of any income level
# The market is a safe stable place to put your money
# The stock market is not a game of chance
# The time required to manage your investments is minimal
Thank you for reading I hope this information was helpful.
Regards
Archy
Thursday, April 16, 2009
Investing in stok market (part 1)
Hi!
Today I am starting a new series about stock markets and this is the first lesson, advice, in other words here you will find out what is stock market, what you must know about stock market and so on...
I am sharing this information because I believe that out there are many people like me who are keen to know more about opportunities how to make money. One thing I have learn that money don't come easily. You most work hard and do your homework.
What you need to know before you beginning
Many outside factors, such as lack of cash and preexisting fears, may affect your investment abilities and decisions. Learn about fears before attempting to invest.
Here are most common fears that regular people have from stock market.
# Fear of technical-ease
# Fear that your financial knowledge is insufficient
# Fear that investing is only for millionaires
# Fear of stock market crashes
# Fear that investing in the stock market is a gamble
# Fear that investing is too time-consuming
As we all know we must face our fears so we can move forward and reach our goals. The best way to overcome our fears is to face them. So I will tell you how you can overcome your fears.
Fear of technical-ease:
To deal with the fear of technical-ease, or the terminology used in the financial community, keep in mind that as a beginning investor you need for learning these terms is limited.
It is like a riding a bicycle in the beginning you don't know how but in some time you learn hoe to ride. Its the same situation here. In the beginning you doesn't understand anything but after you have read some information in financial forums, financial magazines you realize that it is not written in Chinese.
Fear that your financial knowledge is insufficient
Up to now you have probably had little or no reason to learn about the workings of the stock market. Until the time I decided to take sky diving lessons, I couldn't have told you at what altitude the cord must bee pulled. Before I took my first plunge, however, I assure you I was very sure of when I was supposed to pull my chute. In much the same fashion, you should learn everything you can before the investment plunge.
As with the technical terms, you have to learn the workings of those investments that pertain you.
The golden rule of investing is "Know what you are getting yourself into." Fortunately, expanding your financial knowledge is not hard, just check financial web sites, frequently look at the stock pages and listen to the financial news. You can do these activities even if you doesn't understand them in time you will get the picture.
And one more thing. Remember that your own money is on the line. If an investment is worth your hard-earned cans, then it's certainly worth taking the time to understand all the information available on your investment.
Fear that investing is only for millionaires
The belief that stocks are only for millionaires is probably the most common reason why people avoid the stock market.
One fear is that the stock market is geared to big investors and that the average person doesn't have enough founds to actively participate. Deal with this fear by discovering the many investment options that are designed to accommodate people at any financial level.
Now days people can invest in stock even they don't have much money. There are many companies that offers a new way of investing it would require $50 or $100 per month.
This strategy of small but regular deposits can be rally distasteful at first. Once decision to invest has been made, you like most investors, will probably want to see progress immediately. Many investors are even disappointed enough by this inertia to abandon their investment careers. But if you stop now you won't to reach your goal. So be strong and patient.
To be continued
Today I am starting a new series about stock markets and this is the first lesson, advice, in other words here you will find out what is stock market, what you must know about stock market and so on...
I am sharing this information because I believe that out there are many people like me who are keen to know more about opportunities how to make money. One thing I have learn that money don't come easily. You most work hard and do your homework.
What you need to know before you beginning
Many outside factors, such as lack of cash and preexisting fears, may affect your investment abilities and decisions. Learn about fears before attempting to invest.
Here are most common fears that regular people have from stock market.
# Fear of technical-ease
# Fear that your financial knowledge is insufficient
# Fear that investing is only for millionaires
# Fear of stock market crashes
# Fear that investing in the stock market is a gamble
# Fear that investing is too time-consuming
As we all know we must face our fears so we can move forward and reach our goals. The best way to overcome our fears is to face them. So I will tell you how you can overcome your fears.
Fear of technical-ease:
To deal with the fear of technical-ease, or the terminology used in the financial community, keep in mind that as a beginning investor you need for learning these terms is limited.
It is like a riding a bicycle in the beginning you don't know how but in some time you learn hoe to ride. Its the same situation here. In the beginning you doesn't understand anything but after you have read some information in financial forums, financial magazines you realize that it is not written in Chinese.
Fear that your financial knowledge is insufficient
Up to now you have probably had little or no reason to learn about the workings of the stock market. Until the time I decided to take sky diving lessons, I couldn't have told you at what altitude the cord must bee pulled. Before I took my first plunge, however, I assure you I was very sure of when I was supposed to pull my chute. In much the same fashion, you should learn everything you can before the investment plunge.
As with the technical terms, you have to learn the workings of those investments that pertain you.
The golden rule of investing is "Know what you are getting yourself into." Fortunately, expanding your financial knowledge is not hard, just check financial web sites, frequently look at the stock pages and listen to the financial news. You can do these activities even if you doesn't understand them in time you will get the picture.
And one more thing. Remember that your own money is on the line. If an investment is worth your hard-earned cans, then it's certainly worth taking the time to understand all the information available on your investment.
Fear that investing is only for millionaires
The belief that stocks are only for millionaires is probably the most common reason why people avoid the stock market.
One fear is that the stock market is geared to big investors and that the average person doesn't have enough founds to actively participate. Deal with this fear by discovering the many investment options that are designed to accommodate people at any financial level.
Now days people can invest in stock even they don't have much money. There are many companies that offers a new way of investing it would require $50 or $100 per month.
This strategy of small but regular deposits can be rally distasteful at first. Once decision to invest has been made, you like most investors, will probably want to see progress immediately. Many investors are even disappointed enough by this inertia to abandon their investment careers. But if you stop now you won't to reach your goal. So be strong and patient.
To be continued
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