Investing is a daunting task and sometimes could be confusing especially for a beginner. In the past, an investment process began by making a call to a brokerage firm to obtain an advisor who would advise the investor throughout the process. However, the technological advancement has made it easier for beginners who want to start trading. Now, they can just download an app on their PC or Smartphone and use it to trade securities. Different apps offer automation, low cost and high-security measures to make investing easy and exciting for all.
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.
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.
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:
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.
Different Stock experts and traders have grouped stocks into classes and subclasses. The main class is the ordinary and the preferential shares. All publicly traded companies issue common or ordinary stock and some companies also issue preferred stock which is less risky but has lower returns. The subclasses are many and each has its own characteristics and is subject to specific external demands that affect the stock performance at any given time. The stocks are described based on the behavior that is subject to a variety of factors.
Trading a stock is in most cases done via brokerage firms. The investor first finds a reputable brokerage firm to facilitate the process. The full-service broker charges a hefty commission that eats into your investment returns. For these among other reasons, you may be compelled to decide not to use a stockbroker or avoid having a brokerage account to reduce the costs. The direct investment option has some pros and cons which you will need to weigh given your unique circumstances and preferences.
Penny stocks are shares that are traded for $5 each or less. Majority of these penny stocks are on the major stock exchanges such as NASDAQ, NYSE, American Stock Exchange, and the Bulletin board. The Bulletin Board is the best to get higher quality penny stocks. However, there are a few smaller ones which trade on the dark markets such as Pink Sheets, OTCQX and OTCQB. Focus on the high-quality companies which trade on the major trading exchanges to avoid losses and refrain from trading in the dark markets. Also, avoid free stock picks that promoters are pushing you to buy as they could be scams. Most of the genuine companies increase in size and price without a promoter.
It is important for every stock investor to know the different types of orders in the stock market and when it is appropriate to apply them especially when you want to sell or buy stocks through a brokerage firm. Trade orders are instructions that are given to brokers to buy or sell a stock. All trades must have two orders which consist of an order to get into the trade or the buy order and an order to exit the trade or the sell order.
An Investor should always seek for opportunities to increase their portfolio and capitalize on such opportunities. The need to hedge your investments against risks and other emerging issues is a valid reason to increase your portfolio exposure and to work on your investment strategies. Here is a list of the most popular types of ETFs to consider adding into your portfolio.