Developing an investment plan:
To invest wisely, you must have a suitable investment plan that ensures the appropriate amount of growth for you. Your investments should also be safe and easy to administer.
The first step in developing an investment plan is to identify what type of investor you are. Types investors are often determined by their stages of life. Here's a guide:
- Unmarried person under 40 years. Focus: Long-term investments, medium and high risk. Emphasis: capital gain, compound growth.
- Two-income married couple without children, ages 20 to 40 years. Focus: Long-term investments, medium and high risk. Emphasis: capital gain, compound growth.
- A family income, young children, aged between 20 and 40 years. Focus: The long-term investment, low-risk environment. Emphasis: compound growth.
- Single person, 40 to 60 years. Focus: Medium-term investments, medium risk. Emphasis: capital gain, compound growth.
- Married with children or separated children from 40 to 60 years. Focus: Medium-term investments, medium risk. Emphasis: capital gain, compound growth.
- All investors aged 60 and over. Focus: Short to medium-term investment, low risk. Focus: Revenue.
The following examples are mixtures of the investment portfolio for different types of investors.
Low risk investments:
Low risk investments consist primarily of cash, fixed interest and retirement. This has the lowest risk of all investments, but also has the lowest performance - on the market today, about 3% to 6% annually. Fixed interest include cash, cash management trusts and bonds. Return of about 5% to 10%, sometimes as high as 15% if you invest in global bonds in good markets.
pension returns and risk profiles vary from one institution to another, however, the best and safest usually return on average by 10% each year.
Medium-risk investments:
Medium-risk investments include shares held and not speculative. Diversified funds that invest in a range of asset groups, are also considered medium risk profiles. The average yield of these investments will be between 8% and 15% per year.
I also like to include a wide range of investment funds, as we shall see later, in the range of medium-risk investments. Some can return up to 25% and more, depending on the type of fund and administrators.
High risk investment:
High-risk investments include all speculative shares, futures contracts, and any other type of investment that is purely speculative. Because this type of investments we bet if the price will go up or down sometimes, I often classify this as a form of play. Therefore, returns are limitless, but it is also the ability to lose the money invested.
The basic rule for investing in highly speculative stock is to build on thresholds "sell-out" three and three down. For example, if you buy a stock at $ 20.00 per share, its sell-out thresholds can be:
Sell out threshold of 3 $ 30.00
Sales threshold of 2 $ 25.00
Sell out threshold of $ 1 22.50
Buy $ 20.00
Selling Out Threshold -1 USD 17.50
Mandatory redemption threshold -2 $ 15.00
Mandatory redemption threshold -3 $ 10.00
Whenever your stock reaches a threshold levels, sold a third of its population.
If the action starts to rise, sold $ 22.50 one-third and one-third to $ 25.00, and so on. If the stock starts to fall, also sells third party to $ 17.50, and another third to $ 15.00 and the final third at $ 10.00. This way, you will never lose all your money, however, has also set a limit on the total profit you will make on the investment. What I have found to be the best and safest way to invest in speculative stocks. In 1987, my husband and I have been saved severe losses to the collapse of Wall Street because we were well and truly on the market by taking our profits in advance. Like all systems, this strategy will only work as long as you obey the rules and do not be too greedy.
Mutual Funds:
Mutual funds are a selection of investments that are professionally managed by a financial institution or organization. These institutions have a wide range of specialists, researchers and counsel who devote their time to ensure that the fund invests in the best companies and assets.
Besides the advantage of having experts manage your investments, managed funds also give you the opportunity to invest in a wide range of stocks, real estate and bond markets, either locally or abroad, however small that an expense of $ 1000. In the latter case, also require a "savings plan" where you agree to deposit an additional $ 100.00 per month at least.
Because managed funds cover the full spectrum of investment risk profiles, you can easily cover your preferred investment portfolio, as described above, by investing in several different funds.
Develop its investment program:
After identifying the type of investment, it is necessary either to find a good financial advisor or devote his time to research investment options.
Actions always exceeded other groups active in time. However, the equity markets may fluctuate widely in the short term, so any entry must always be done with a long-term up to 10 years. Even better managed equity funds can fall if the stock market crashes or enters a severe downward cycle. While ensuring that you are with a serious background with good managers and be ready to roll "waves", your investment will do well in the long term. If you are short-term, low risk category then your investment should be in the safest and most stable neighborhoods with declining profitability.
Rules for Investing:
The investment may seem daunting to many people. Maybe you've tried it once and not, or maybe you're just afraid of losing their money.
To avoid losing capital, you just have to be aware of the major pitfalls and always avoid. Simple and reliable rules for investment are:
1. Have a plan. Always make sure that you or your financial advisor develops an appropriate investment strategy for you incorporating your risk profile, time and financial objectives. As silly as it sounds, many people plunge headlong into the substantive work by investing these fundamental issues.
2. Do not put all your eggs in one basket. Obvious advice, but many people can not follow. Many people think they are on the right financial path pay the mortgage on their family home and then buy another property for investment purposes. Think about it! He put all his eggs in the basket a financial asset - property. What if the housing market collapses? Despite the common thought that this is a safe way to invest, the result is very risky. You have invested all their hard earned money in one area.
3. Build in time. There is an old saying: What this means is that when the market share is so high that everyone starts to climb "When the tea lady starts to invest in the stock market, it is time to go." board, has probably peaked. There are two ways to delay investment success. The first is to always choose the low-end market to buy high-end market to sell. It's very hard to do. Even the most competent experts have problems. The second way is to choose a good investment and keep them in the long term (say 10 years or more) and ride the waves in the market. Sure, easy investment, choose the second method. Do not buy into the top end of the market and sell once it begins to fall. You will definitely lose money that way.
4. Avoid high-risk investments. These include commercial enterprises at risk, tax avoidance schemes highly speculative stocks or too good to be true propositions that promise unusually high returns.
5. Avoid loans for their investments. Although some financial advisors advocate "the preparation of their investments," which can be fraught with danger. Equipment means borrowing. If loans for investments that takes care of its costs by 40% fixed margin must cut too much, especially if you lose your current income level.
6. Stay with the traditional and known. As described in this chapter, the best and safest investment interest, property and shares are set. Calculates optimum combination for your investment profile, have an insurance plan to work with and you can not go wrong.
Ann Marosy is an accountant, consultant and motivational speaker. She was formally the controller of the subsidiary Aust Fortune 500 company, Jardine Matheson; Finalist of SA Executive Woman of the Year and is the author of "The Money Programme: Managing the six steps of the wealth" and "Rules of Money: The 7 simple rules of money management."
To invest wisely, you must have a suitable investment plan that ensures the appropriate amount of growth for you. Your investments should also be safe and easy to administer.
The first step in developing an investment plan is to identify what type of investor you are. Types investors are often determined by their stages of life. Here's a guide:
- Unmarried person under 40 years. Focus: Long-term investments, medium and high risk. Emphasis: capital gain, compound growth.
- Two-income married couple without children, ages 20 to 40 years. Focus: Long-term investments, medium and high risk. Emphasis: capital gain, compound growth.
- A family income, young children, aged between 20 and 40 years. Focus: The long-term investment, low-risk environment. Emphasis: compound growth.
- Single person, 40 to 60 years. Focus: Medium-term investments, medium risk. Emphasis: capital gain, compound growth.
- Married with children or separated children from 40 to 60 years. Focus: Medium-term investments, medium risk. Emphasis: capital gain, compound growth.
- All investors aged 60 and over. Focus: Short to medium-term investment, low risk. Focus: Revenue.
The following examples are mixtures of the investment portfolio for different types of investors.
Low risk investments:
Low risk investments consist primarily of cash, fixed interest and retirement. This has the lowest risk of all investments, but also has the lowest performance - on the market today, about 3% to 6% annually. Fixed interest include cash, cash management trusts and bonds. Return of about 5% to 10%, sometimes as high as 15% if you invest in global bonds in good markets.
pension returns and risk profiles vary from one institution to another, however, the best and safest usually return on average by 10% each year.
Medium-risk investments:
Medium-risk investments include shares held and not speculative. Diversified funds that invest in a range of asset groups, are also considered medium risk profiles. The average yield of these investments will be between 8% and 15% per year.
I also like to include a wide range of investment funds, as we shall see later, in the range of medium-risk investments. Some can return up to 25% and more, depending on the type of fund and administrators.
High risk investment:
High-risk investments include all speculative shares, futures contracts, and any other type of investment that is purely speculative. Because this type of investments we bet if the price will go up or down sometimes, I often classify this as a form of play. Therefore, returns are limitless, but it is also the ability to lose the money invested.
The basic rule for investing in highly speculative stock is to build on thresholds "sell-out" three and three down. For example, if you buy a stock at $ 20.00 per share, its sell-out thresholds can be:
Sell out threshold of 3 $ 30.00
Sales threshold of 2 $ 25.00
Sell out threshold of $ 1 22.50
Buy $ 20.00
Selling Out Threshold -1 USD 17.50
Mandatory redemption threshold -2 $ 15.00
Mandatory redemption threshold -3 $ 10.00
Whenever your stock reaches a threshold levels, sold a third of its population.
If the action starts to rise, sold $ 22.50 one-third and one-third to $ 25.00, and so on. If the stock starts to fall, also sells third party to $ 17.50, and another third to $ 15.00 and the final third at $ 10.00. This way, you will never lose all your money, however, has also set a limit on the total profit you will make on the investment. What I have found to be the best and safest way to invest in speculative stocks. In 1987, my husband and I have been saved severe losses to the collapse of Wall Street because we were well and truly on the market by taking our profits in advance. Like all systems, this strategy will only work as long as you obey the rules and do not be too greedy.
Mutual Funds:
Mutual funds are a selection of investments that are professionally managed by a financial institution or organization. These institutions have a wide range of specialists, researchers and counsel who devote their time to ensure that the fund invests in the best companies and assets.
Besides the advantage of having experts manage your investments, managed funds also give you the opportunity to invest in a wide range of stocks, real estate and bond markets, either locally or abroad, however small that an expense of $ 1000. In the latter case, also require a "savings plan" where you agree to deposit an additional $ 100.00 per month at least.
Because managed funds cover the full spectrum of investment risk profiles, you can easily cover your preferred investment portfolio, as described above, by investing in several different funds.
Develop its investment program:
After identifying the type of investment, it is necessary either to find a good financial advisor or devote his time to research investment options.
Actions always exceeded other groups active in time. However, the equity markets may fluctuate widely in the short term, so any entry must always be done with a long-term up to 10 years. Even better managed equity funds can fall if the stock market crashes or enters a severe downward cycle. While ensuring that you are with a serious background with good managers and be ready to roll "waves", your investment will do well in the long term. If you are short-term, low risk category then your investment should be in the safest and most stable neighborhoods with declining profitability.
Rules for Investing:
The investment may seem daunting to many people. Maybe you've tried it once and not, or maybe you're just afraid of losing their money.
To avoid losing capital, you just have to be aware of the major pitfalls and always avoid. Simple and reliable rules for investment are:
1. Have a plan. Always make sure that you or your financial advisor develops an appropriate investment strategy for you incorporating your risk profile, time and financial objectives. As silly as it sounds, many people plunge headlong into the substantive work by investing these fundamental issues.
2. Do not put all your eggs in one basket. Obvious advice, but many people can not follow. Many people think they are on the right financial path pay the mortgage on their family home and then buy another property for investment purposes. Think about it! He put all his eggs in the basket a financial asset - property. What if the housing market collapses? Despite the common thought that this is a safe way to invest, the result is very risky. You have invested all their hard earned money in one area.
3. Build in time. There is an old saying: What this means is that when the market share is so high that everyone starts to climb "When the tea lady starts to invest in the stock market, it is time to go." board, has probably peaked. There are two ways to delay investment success. The first is to always choose the low-end market to buy high-end market to sell. It's very hard to do. Even the most competent experts have problems. The second way is to choose a good investment and keep them in the long term (say 10 years or more) and ride the waves in the market. Sure, easy investment, choose the second method. Do not buy into the top end of the market and sell once it begins to fall. You will definitely lose money that way.
4. Avoid high-risk investments. These include commercial enterprises at risk, tax avoidance schemes highly speculative stocks or too good to be true propositions that promise unusually high returns.
5. Avoid loans for their investments. Although some financial advisors advocate "the preparation of their investments," which can be fraught with danger. Equipment means borrowing. If loans for investments that takes care of its costs by 40% fixed margin must cut too much, especially if you lose your current income level.
6. Stay with the traditional and known. As described in this chapter, the best and safest investment interest, property and shares are set. Calculates optimum combination for your investment profile, have an insurance plan to work with and you can not go wrong.
Ann Marosy is an accountant, consultant and motivational speaker. She was formally the controller of the subsidiary Aust Fortune 500 company, Jardine Matheson; Finalist of SA Executive Woman of the Year and is the author of "The Money Programme: Managing the six steps of the wealth" and "Rules of Money: The 7 simple rules of money management."
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