6 Hidden Investment Fees to Watch Out For
Every investor is on the lookout for the next hot stock or mutual fund to invest in. But how many take time to find out all the investment fees that will be associated with their investment? There are various investment fees you will be charged that you need to be aware of. When you approach your financial advisor, make sure that you ask them to explain to you in details all the charges that you will pay when you make an investment. Here are 6 investment fees to take note of before you invest:
4 Common Types of Alternative Investments
Alternative investments are non -correlated assets that are not among the conventional investments such as stocks, bonds, and cash. It is estimated that since 2005 the global assets have grown twice as fast as the traditional investments according to McKinsey & Company, a global consulting company. A survey conducted in 2015 showed that advisers had 73% of their clients in alternative investments. The assets increase is caused by the Investors need to diversify their portfolio so as to include a wider range of assets. This helps to reduce volatility, generates better returns, hedges against inflation and to access steady and reliable sources of income. A study conducted by the Informa Investment Solution and published by Blackrock revealed that alternative investments didn’t fall as much as the traditional investment during the 2001-2008 recessions. Majority of financial advisers recommend investing not more than 25% of your portfolio to alternative investments. This is because a majority of the alternative investments tend to be illiquid.
5 Incredible Investments to Supplement Social Security Fund
Majority of Americans have social security trust funds as an integral part of their investment plans. Investors can include other types of investments to supplement social security funds to accumulate wealth.
Top 4 Best Commodities to Invest
Commodity trading involves trading in commodity derivatives and spots. Commodity trading is very volatile and so investors should take relevant precautions before they enter into it. Commodity trading can help an investor to diversify their portfolio. It is an ideal investment that can significantly hedge you against the risk of inflation. Commodities traded mostly include agricultural products, minerals, and fossils. Commodity trading is usually done in the form of derivatives like futures and thus involves a lot of speculation which involves high levels of uncertainty and risks. The commodity trading market is not as controlled as the equity market and hence investors are exposed to a lot of trade manipulative behaviors. The commodity market is influenced by the forces of demand and supply and by inventory particularly when it comes to perishable commodities such as the agricultural produce and the high-demand products like crude oil. The 4 best commodities to invest in include: 1. Crude Oil Prices of gasoline are rising progressively with each passing day. Crude demand is high while supply is low and so the demand for oil goes beyond just gasoline to products made from petroleum such as plastics, medicines, shingles, synthetic fibers, fertilizers, solvents, ink, and cosmetics among others. This has caused the cost of a barrel of oil to increase gradually. Crude oil is, therefore, a good commodity to speculate in. 2. Base Metals Base metals are metals such as copper, aluminum, and zinc among others. Copper, in particular, is one of the best base metals to invest in. It is a reddish metal that is used in almost every industry around the world. The demand for copper is raising every day as more economies around the world are becoming industrialized. Copper is being used by industry for components of plumbing, motors, heating, air conditioning, wiring, computers, mobile phones, lighting, roofing and many more. It is very popular because of its flexibility, good electrical conductor and its corrosion resistant. Countries are building new airports, buildings, industrial equipment, transportation system and more. The supply of copper has diminished in the last century and so demand will soon go up and prices will subsequently increase. Copper is thus a commodity to watch. 3. Gold Demand for gold keeps increasing while its supply is still very low. Most demands of gold come from the central banks, governments, mutual funds, hedge funds, and private investors. Gold is viewed as a form of insurance against world inflation, war & unrests, and natural calamities. It is, therefore, a good investment to make. 4. Agricultural Commodities It is perceived that in the next half a decade year to come, the world population will have approximately 2.2 Billion extra mouths to feed. To meet that rising demand, farmers will need to grow more food commodities. Inflation surge signals a rise in the prices of the commodities. It is thus prudent to invest in agricultural commodities or in companies that deal with agribusinesses like Mosaic co., Agrium (AGU), and Monsanto Co. (MON). Wheat and corn are the leading agricultural commodities demanded in the world. Closing Line To determine whether to invest in commodities, always check the current levels of the world’s production, supply sources, and supply sources that are undergoing exploration. That can be a good hint to help you decide on the best commodity to invest in.
3 Types of Profit Margins to Determine Before Investing in a Stock
To decide whether or not a particular company’s stock is worth including in a portfolio is a daunting task. An investor must analyze various company aspects before they invest their dollars. One key aspect to consider is the financial position of the company and more particularly the profit margin. A profit margin is the amount by which revenue from sales exceeds costs in a business and is usually expressed as a percentage.
9 Types of Hedge Funds That Investors Need to Know
A hedge fund is an alternative investment that pools capital from accredited individuals to speculate and uses diverse strategies to earn active alpha or return for the investors. To achieve a greater return on capital, hedge funds utilize different strategies and investing styles. All the fund types generally fall into five categories which include macro, event-driven, arbitrage, long/short and tactical trading. Here are the 9 common types of hedge funds that you need to know:
5 Crucial Things to Consider Before You Buy a Stock
Investing in stock is an excellent way to build substantial wealth. However, stock prices are very volatile which makes investing highly risky and can even lead to massive losses particularly if investors are not keen enough before they buy a stock. It is imperative to do a thorough research before you place your hard earned cash on a company stock.
6 Key Benefits of Investing in Dividend Paying Stocks
Dividend-paying companies distribute a portion of the net income to the stockholders each year and reinvest the remaining profits back into the business. The payments are usually quarterly though there are companies that pay monthly. Dividend stocks are ideal for various reasons 6 of which include: 1. Generates Passive Income Dividend-paying companies make regular dividend payouts to the investors and thus it helps them secure a steady source of income. A dividend stock gives a passive income advantage of generating cash on a regular basis with little or no work. Dividends paying companies increase their dividends payouts over time. This makes it a very attractive investment. 2. Maximize Returns Through Reinvestment Dividend reinvestment is a powerful way that investors can take advantage of the power of compounding to increase income by using their earnings to generate more revenue. You can earn more money through reinvestments without having to invest any additional money from your pocket. This is a perfect way to make your money work for you. When you use your dividend earnings to purchase additional company shares, you will make extra earnings because every share you add earns its own regular dividend payout. 3. Gain in Two Ways With dividend stocks, investors have two ways to gain. This is gain from income and capital appreciation. You can profit when the share value rises and when the company pays the dividends. In addition, the blue-chip dividend-paying companies raise their dividends over time and so your income could rise over time. 4. Helpful in Equity Evaluation Investors can do a better and reliable equity evaluation and stock selection by examining the company’s ability to pay dividends rather than the use of the usual financial ratios. This is because how a company pays dividends to the stockholders is a solid indication of how the company is performing. The financial metrics given by companies can sometimes be manipulated through their accounting practices to improve their appearance to investors. A company has to have a real cash flow to pay the dividends and therefore, evaluating the companies’ current and historical dividend payout gives the investors a reliable point of reference in the basic fundamental analysis of the company’s strength. Consistent dividend payout is an indication that a company is generating profits steadily and it can’t easily be threatened by a temporary market and economic downturns. 5. Reduce Risk and Volatility Dividends payments help to mitigate any losses that occur from a stock price decline. Most studies have revealed that dividend-paying stocks outperform the non-dividend paying ones’ during the bear market and they report significantly better value than the non-dividend stocks. The dividend stocks also suffer less volatility compared to the non-dividend stocks over time. Companies that can afford to pay consistent dividends to their investors are stable and thus are more able to withstand economic downturns. 6. Offers Tax Advantages The way the dividends are treated in regard to tax makes it a perfect investment. The dividend paying stocks benefit from a special rate called the qualified dividend rate and is taxed at lower rates than the ordinary income. When the ordinary income tax rate is 25% or higher, the tax rate of qualified dividends is only 15% according to the IRS regulations of 2011. Dividend special rate can be 0 percent, 15 percent or 20 percent depending on your tax bracket and thus a dividend investment gives you the benefit of retaining more of your dividend income. Bottom Line The dividend stock is one of the safest investments to make. It may have a few disadvantages but the benefits make it such an ideal investment.
5 Significant Reasons to Trade Forex
Forex or the foreign exchange market is a decentralized or over-the-counter (OTC) market whereby currencies are traded at current or determined prices. This market brings together central banks, investment banks, commercial banks, hedge funds retail traders among other professions. According to the Bank of International Settlements (BIS) last triennial survey, the size of the forex market turnover was $5.2 trillion as of 2016. The forex market is thus the biggest financial market in the world.
6 Major Types of Strategies Traders can Opt for in Forex Trading
Trading Forex (FX) involves trading of currencies where you can buy one currency while selling another for speculation purposes. Forex trading just like any other investment involves taking calculated risks. When trading forex, you can make profits or losses. You need to master the best forex strategies that can work for you to benefit from forex trading. Currencies tend to fluctuate due to various factors like geopolitical, economical and more. The aim of trading in currencies is to make profits from the changes in prices.
3 Ways to Trade Forex
Forex exchange is an international market for trading currencies. According to a survey by the Bank for International Settlements in 2016, the average daily forex trading was 5.1$ trillion and of this, spot trading made up $2.6Traders have trillion.
Become a Successful Forex Trader in 4 Simple Steps
To become a successful Forex trader, you need to learn, practice and set a clear plan for the trade. Getting into the Forex business is easy and you can follow a few simple steps. You need to learn how to mitigate losses while maximizing profits which you can achieve by identifying good trade setups that have a positive risk and reward set up. Here are 4 steps you can follow to become a successful Forex trader: Step 1: Research and open an online Forex brokerage Research on different Forex brokerage accounts available in the market that is regulated by an oversight body. Visit their website, ensure that it has active links and read reviews about them. Find out the transactions cost per trade. Request for information about opening an account with them, you can choose either a personal or a managed account. A personal account enables you to execute your own trades and the broker will execute trades for you in a managed account. Step 2: Use a Demo Account The next step is to open a demo account that acts as a trading account with monopoly money in it which is connected to the live market. You can place trades just like in trading in a live account and have true losses and gains represented in real time. You should be able to trade profitably on your paper trading or demo account. You need to do a lot of practice before you commit your real cash to this trade. Using a demo account, you can practice the trade until you are contented. This is quite helpful because it gives the feel of the trading platform and you get well acquainted/versed with its features. However, do not overtrade on a demo account, switch to a live trading account as soon as you are ready. Step 3: Learn and practice FX trading before going live Another important aspect of forex trading is learning the Forex trading terminologies. You can read material and watch webinars to understand Forex trading better. Get advice from a forex trainer. You will need to develop unique trading style and strategies as a trader. Developing such strategies takes time and efforts and is a trial and error process. You can choose to become a swing trader, a positional trader etc. Set stop-loss order for every trade. Set a margin of about 2% per single trade. Never place a trade in a bid to compensate a previously incurred loss. Trade at the moment that you feel its right and never fear losses, every trader has them. Step 4: Get the trading capital and start trading Forex trading doesn’t necessarily require a lot of minimum capital to trade. The Forex trader should seek to trade on margin. On average a Forex broker requires at least $300 to open an account and to begin trading. A general rule of the thumb is to have at $1000-$2000 to open a mini account. It helps the trader to have a bit of buffer in case of losses. The idea is to avoid risking the entire amount but rather have just a higher cushion so that you can remain as a trader for longer. It is difficult to know when you are fully ready to switch to live trading. The process should take about a month after you gather a good understanding of the market and the risks involved in forex trade. You need to analyze the market and then determine your margin. You can then place your order, for example, a market order, a limit order or a stop order. It takes time effort and passion to become successful in Forex trading. Keep on keeping on until you all master the tricks of the trade.
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