Chill Maadi

Best Way To Invest Money Introduction

Like many of you, when I desired to learn to invest money I found investing came as a rather uninformed concept that, at least on the surface, presented a highly lucrative and appealing method for retiring quickly while providing a fast route to living the life I always dreamed. But in all honesty I had no idea what would be the best way to invest money.

However, unlike what many of us were taught, the best way to invest money does not necessarily or always mean throwing your hard earned money at some phantom pieces of paper that get waved around by yelling fanatics on the trading floor of Wall Street. In fact, there are dozens, if not hundreds of viable investment routes that each carry with them unique positives and negatives. All of these routes will help you learn to invest money better.

So I will begin this blog entry, about the best way to invest money, with a summary of the more common investment opportunities. Let’s get started with this lesson on the best way to invest money!

Stock Market Investing

The stock market offers a variety of investment strategies and terms that are shrouded in mystique. As this blog progresses I will discuss many of them and hopefully enlighten many as to the reality of what each investment type can do for them and will fit as YOUR best way to invest money.

Here is a brief (and not extensive) list of ways you can invest in the stock market, and a few of the types of investments to help you learn to invest money:

• Buy and Hold – stock market investing in this manner would be to purchase shares of a company with the intent of holding for an extended period of time
• Dividend Investment – buying share that award money to shareholders (quarterly or annually) to create a stream of bonus income from the money invested
• DRP – Dividend reinvestment plan. Buy shares that award a dividend (quarterly or annually) and immediately reinvest that money back into the same company
• Position Trading – buying at a low point, or shorting at a high point, with the intent of holding the stock for less than approximately 6 months. Sometimes positions are held for as little as a week.
• Swing Trading – buying or shorting shares with the intent of holding for a few days to a week.
• Day Trading – buying or shorting shares on intraday periods of time (between the opening and closing bells of the market). Sometimes day trading can refer to holding a stock for upwards of a 24 hour period, but typically refers to holding a stock anywhere from minutes (scalping) to hours only.
• Forex – forex stands for foreign exchange and is the process of buying and trading currencies in the same manner as you would stocks.
• Investing in Mutual Funds – sometimes called ‘fundies’, these are large institutions that invest large quantities at a time. Investors can buy mutual funds and as a form of ‘share’ in the fund and have their money invested alongside the fund (or by the fund)
• Index Funds – these are essentially a way to buy a share of a stock market index. In simplistic terms, what happens when you buy an index fund is that your money is placed into several different company shares across the whole index to give you the ability to ride the index’s ups and downs by averaging together shares that are bought and sold within it.

Real Estate Investing

Investing in Real Estate happens to boast one of the largest populations of self-made millionaires in all the investment groups. The large numbers of wealthy, however, are rather spread across the board and encompass several dozen ways to increase your money.

Here are brief descriptions of the more common avenues of real estate investing that will help you learn to invest money:

• Buy and Hold – similar to the stock market, many find real estate investing easiest to buy a single family residence (SFR) and pay it down while it appreciates. The net affect is that people can supplant rental expenditures with a non liquid form of saving.
• Buying Income Property – a very large section savvy real estate investors make their wealth by purchasing income properties. The real estate investing strategy here is to buy property that not only pays for itself, but can come with excessive rental payments that surpass the debt payments, leaving a positive amount of annual cash simply by taking out a loan to own the stick and mortar.
• Flipping – many entrepreneurs make a very comfortable living by seeking out discounted prices for homes/buildings that need a little bit of repair, then making those repairs and then turning around and selling the property for a much higher price. Discounts are most notably found through distress (foreclosure, inheritance, or liens).
• Tax Liens – although this does not really mean buying property, it can sometimes mean ownership at a severely discounted rate so this still qualifies as real estate investing. When a home defaults on paying property tax, the home government puts a lien on the home. These liens are purchasable from the local government and carry an hefty interest rate that is guaranteed by the government. Realistic interest rates for these liens range from 4-16%. The 50% rate you hear about with these loans are from Michigan are touted heavily by ‘get rich quickers’ but should not be considered normal by any means.

Business Investing

A definite way to invest money is by placing excessive cash with private companies, starting businesses (for tax purposes or extra income), or even by treating businesses like real estate. If you can stop looking at entities and start looking at how entities process money, then you will expedite your journey to learn to invest money.

Here are some explanations of the common ways you can invest in businesses:

• Purchasing – like real estate, businesses are bought and sold regularly. With businesses comes a positive or a negative cash flow. Many wealthy or intelligent investors make huge returns on investment by buying businesses that have a healthy positive cash flow.
• Flipping – some businesses are struggling due to poor marketing, management, or even because the owner has run into personal financial problems. These businesses are ripe for being purchased at a discount, improvements being made, and then being resold for a hefty increase.
• Creating – investing in your own business can be a substantial way to decrease the amount owed for taxes. The government offers many incentives to businesses in order to help the economy. It is not uncommon for people to create businesses that have a net loss every year, and thus remove much or most of the tax liability of the owner.

Conclusion

There are many, many, many ways to invest, and each of them will help you learn to invest money. The stock market is not the best way to invest money as there is no ONE best way to invest money. Learn to invest money in ways that work for you and your risk tolerance. Do not take on an investment strategy that is too risky because someone claims it is the best way to invest money, measure risk and compare it to your lifestyle and acceptance. Learn this, and you will learn to invest money better than you can imagine.

In future posts I will explore each of these methods and show real world examples and figures that will help flush out how viable each pathway to help you find your best way to invest money.

When it comes to learning about the stock market, there is an overwhelming amount of information and number of sources for that information. This sheer volume of information can make learning about the stock market a very daunting and difficult task. Many people completely give up on learning about the stock market simply because there is far too much to learn and the typical desire most of us have is to see immediate results.

Unfortunately, this is the exact opposite mentality that one should possess when learning about the stock market. The simple truth is that the stock market is a complex organism that takes plenty of time and tons of reading/education to really comprehend let alone be able to best.

Think about it, if it was easy to make money on the stock market then every person on the planet would be trading paper to each other and making infinitesimal amounts of money for minute amounts of effort.

The old adage holds true here, if it is too good to be true then it probably is just that. When I set out, learning the stock market seemed like an impossible feat. What the hell is a P/E ratio? Why on Earth would I ever want to examine a company’s balance sheet? Do I really need to listen in on company calls?

It seemed nearly impossible, and it still feels that way. What I mean is, no matter how much you study, you will never stop learning about the stock market. There will ALWAYS be more knowledge to gain. New strategies to study. New sources of information. Etc. Etc. Etc.

If you are looking some ‘get rich quick’ scheme with the stock market, keep dreaming. But do it elsewhere. I am laying down the simple truth of the matter. The stock market is complex. But it IS comprehensible. You simply need to purchase a few books and DO THE WORK. If you’re serious about learning the stock market then you better be serious about doing your homework.

The first step is always education. To begin learning about the stock market, go buy some books. No, not the late night infomercial ‘guru’ books. Go to an actual book store and sift through a couple shelves to find what looks like it will teach you the most for your CURRENT knowledge level. Take the time to read the thing, then go back to the book store and get another that caters to your NEW knowledge level.

Rinse, repeat. I have a dozen or so books that helped me in learning about the stock market, and you should too. There is not such thing as an easy road here, and searching for one will only be a waste of time. Time that could have been used learning instead of wasting. In fact, if you take the time you spend looking for the easy route, and apply that toward legitimate study, then you would probably be exponentially further along toward your real goal than you would be if you continued looking for some ‘get rich over night’ B.S.

OK, rant over. In summary, if you’re serious about the endeavor then you NEED to put in the work if you are ever going to be successful in learning about the stock market.

If you are new, then welcome to the wonderful world of the stock market! This is one of the fastest evolving industries in the world and demands information to be delivered to stock brokers, buyers, and traders at the soonest possible time to make the trading more accurate and productive for them. Stock market investing for beginners may be a little challenging but once you get used to it, things will become easier to handle. Here is some of the best stock market investing advice for beginners that you may find useful in your quest to learn how to invest properly. Stock market investing is going to be a breeze once you get yourself familiar with the below terms.

Stock Market for Beginners Term #1: The Stock

A stock is a share in a company. The more stocks you have, the more ownership or power you have over a specific company. NASDAQ and the New York Stock Exchange are two of the most influential and watched markets in the country. Since we’re studying the stock market for beginners, let’s take a look at the two forms of stocks.

Stock Market for Beginners Term #2: The Common Stock

As basic stock information for beginners, a common stock entitles you to an ownership of the company. The basic rule is: 1 common stock gives you 1 vote. The more common stocks you have, the more power you have over the company. Looking at the stock market for beginners, this would probably be the stock you will be investing more. This is more affordable and is easy to acquire. However, since this is a common stock, it would be nice stock information for beginners to understand that this ownership is the last to be given a dividend in case of company closure.

Stock Market for Beginners Term #3: The Preferred Stock

Preferred stocks, for stock market investing for beginners, are the “elite” stocks that entitle the owner of such to be given preference over common stocks. Further, these stocks can give you more voting power and guaranteed dividends, too. In the event of company closure, these stocks will be given dividends first versus the common stocks.

Stock Market for Beginners Term #4: The Bear and Bull Market

These terms are easy to remember and may be familiar to you. The bear market represents a slow market or a market that is predominantly unsuccessful. Majority of the transactions may have failed or there are a few traders for that specific day. On the one hand, bull markets are strong markets where transactions are successful and a lot of trading activity has been recorded same day.

Stock Market for Beginners Term #5: The Pigs

These are the greedy ones. They often want and prefer short term investments and would want to earn profit the fastest way possible using the most frequent stock market quotes. They are referred to by the business as high risk investors and are most commonly avoided by well-established companies.

The stock market for beginners may be scary at first, but this is how it’s supposed to be. It’s like your first day at school when everything is new and you would need to get a feel of everything first before you speed-up.

The secret to choosing good common stocks is that there really is no secret to it.

The winning techniques are tried and true; instead, it’s how you assemble and apply them that makes the difference. The techniques don’t work all the time, but they work often enough so that the methods employed by successful stock investors tend to be more alike than different.

The right way to succeed in the stock market is to invest for both growth and “value.” That means concentrating the bulk of your portfolio in stocks that pass a number of tests and holding them for the long term–three, five, even ten years.

For those in search of income, not growth, it means applying the same tests so that you don’t make any false and risky assumptions about the stocks you buy.

The right way is not based on buying a stock one day and selling it the next. It does not depend on your ability to predict the direction of the economy or even the direction of the stock market. It does depend on your willingness to apply the following measures before you place your order.

The aim: an average 12% to 15% annual total return (price increases plus dividends) on your investments when the market is performing in its historical range, plus the opportunity for much bigger gains when economic forces push it to much greater heights.

You’ll have no trouble finding candidates for your investment dollars. Brokers are full of suggestions, of course, and you may come across intriguing products or companies while walking through a store or leafing through a newspaper. Or your eye may be caught by one of the gorgeous “corporate image” ads that run in upscale magazines.

Most of the information you need to check is readily available from a number of sources and can be calculated from the data you find there.

You’ll quickly discover that the number of stocks that meet all these tests at any given time will be low. So what you’re really looking for are stocks that exhibit most of the following signs of value and come close on the others.

There are different trading strategies (Short, Medium and Long term) for every market conditions, and the process of selecting one strategy can be a very exhaustive task. The strategy that you will decide on should be part of your plan of stock trading, and it should assist you in limiting the choices for stock selection.

First, the short-term stock trading strategies, they involve losing confidence when high risks arise, this will result in losing whatever the investor worked for so fast. It includes Momentum Stock Trading, Penny Stock Trading, Shorting Stocks, News Trading, and Extended Hours Trading. The Momentum Stock Trading is based on complying with the trend, and when researching you should concentrate on determining stocks that are becoming of more strength (strong uptrend and downtrend). The Penny Stock Trading is concerned with trading with stocks that have extremely low prices. This strategy is of a high risk because it is hard to find information about penny stock companies, and a stock can be easily influenced and manipulated. The Shorting Stocks focuses on receiving profits from the decrease in the price of a stock. This strategy is very risky because it depends on stocks that experience significant falls, and is mostly used by professional traders. The News Trading strategy is concerned with following the most crucial and real time public statements (Macroeconomic new releases, earnings releases of companies, bond auctions, political speeches, etc). This strategy is short term oriented. The Extended Hours trading strategy is usually combined with News trading. It involves a trader buying or selling a “moving” stock before or after the market opens/closes, and then the position gets closed inside the regular hours of trading.

Second, the medium-term and the special stock trading and investment strategies, they include; Gap Trading, ETF Trading, Elliott Wave Theory, Fibonacci Trading Strategy, Contrarian Investing Strategy, and Following Insiders. The Gap Trading strategy involves gaps which are sections on a chart where the stock price moves significantly up or down without any trading taking place. Gaps take place for different reason, for instance, when the earnings of a company are much more than expected, as a result, the price of the stock starts higher than it closed the day before. These gaps are discovered by traders who want to profit when the price of the stock reverses to meet the gap. The ETF Trading strategy involves risk diffusion, and it contains a set of stocks in a certain region or sector. It could be short, medium or long term. ETF and Momentum trading strategies are usually used together. The Elliott Wave Theory strategy depends on a theory that the psychology of the investor drives the prices of the stock up in a set of five waves and down in a set of three waves. Charts are used by traders to figure out these waves. The Fibonacci Trading strategy involves the usage of Fibonacci sequence in trading. This type of technical analysis demonstrates the possibility that the price of a financial asset will follow a large part of an original move and detect support or resistance at the major levels of Fibonacci before it goes on in the original direction. The Contrarian Investing Strategy focuses on gain returns by investing in a way that is different from the conventional wisdom one. Finding and buying stocks after their prices have decreased, and selling them when their prices increase can lead to very high returns. The Following Insiders strategy involves observing the main insider trading transactions. Insiders are directors and officers of a company or stockholders that posses at least 10% of the company’s equity.

Third, the long-term investment strategies, they include Income Investing, Value investing, and Growth Investing strategies. The Income Investing, also called Investing for income, focuses on stocks that provide high dividends. These stocks are usually volatile and safely pay dividends every year. The main aim of this strategy is to hold a low risk stock and generate income. The Value Stock Investing strategy focuses on determining stocks from successful companies that are severally undervalued comparing the price of the stock to their true value. When investing in these companies, you need to know the company’s fundamentals in order to realize their actual value. The main aim of this strategy is to combine capital growth and income generation with a medium level of risk. The Growth Investing strategy involves determining stocks that have a high growth possibility. This type of stocks is usually riskier than value stocks because they have a higher possibility of going down. These stocks sometimes don’t pay dividends because they use the company’s profits for future investments. The main aim of this strategy is capital growth but still involves high levels of risks.

Stock market for beginners often seems very discouraging. Many people believe that it’s a dangerous place to invest in, but in fact, stock market investing can be very safe, and most of the fundamental concepts can be simply applied by beginners. Understanding these concepts will enhance your decisions about stock market investing. Most people get involved in stock market investing without the sufficient knowledge, and they expect to gain large returns, but end up losing too much, this is why it’s very important to understand how the stock marker performs, and what to anticipate from it.

When you observe the stock market investing history, you will know that the investors’ emotions are their worst enemy. There were times where many individuals thought that the financial world was coming to an end, and at every single time they were significantly wrong. It is impossible to determine how the market will perform in the future. Having a good stock market investing plan will keep you calm and feeling safe during the continuous ups and downs of the stock market.

The stock market for beginners usually seem very attempting, it appears like a place where they can receive fast financial returns. Many individuals regret not investing in certain stocks after these stocks’ prices rise. One should know that he/she can make money in the stock market, but this money doesn’t usually come fast. Acting slow and calm is one way to be successful in stock market for beginners. To be successful in anything in life, you have to be patient, thus beginners should spend enough time to receive the sufficient knowledge and determine the appropriate stock trading strategy for performing successfully in the stock market.

A stock is a small share that represents an equal part of ownership of a company. The stock market in general is a huge, automated superstore that allows exchanging of stock between buyers and sellers. The Exchanging process that takes place between the sellers and the buyers assists in setting the prices of the shares and facilitates the trading process. In other words, the stock market works the same way as any marketplace; it helps exchanging goods between different parties, setting prices, and operates to minimize the distribution costs. Stock market investing is becoming one of the most important investment decisions, it is considered a very good decision in the long term; this is because it involves risks and returns. In the stock market, your money is at a higher risk than if it was invested in a savings or CD, thus the expected possible returns become higher.

The stock market is always changing and competitive, there are some times where the changes make sense, but on many other times no one can demonstrate the reason for these changes. The supply and demand drive the stock market, the supply is represented by the number of available shares of stock, whereas the demand is represented by the number of shares that are required by investors. For every share that is bought by an investor, it is at the same time sold by a supplier on the other end. There are continuous fluctuations in the stock market, where the stocks within it rise and fall regularly. Many people mistakenly believe that when a specific stock is rising, then it will continue rising in the proceeding period and vice versa, and they make decisions based on this belief. But in fact, following this gut instinct will probably result in purchasing at high rates and selling at low ones. It’s important to understand that when stocks fall, they become less expensive and thus less risky. The same thing takes place when stocks rise; they become more expensive and thus more risky.  Many investment writers claim that whenever the stock goes up then it becomes safer, but unfortunately, this is significantly wrong. Buying a stock is very similar to buying at the grocery store, whenever prices increase we get less excited and buy less, this is why when stock prices increase, it is more expensive to purchase the same stock. However, there are rare times where essential information arise and drive the way we value a stock.

In general, the fluctuations in the stock market can cause large gains and losses, but if the time horizon of an investment is sufficiently long, these short term fluctuations will lead to relatively high returns. The stock market is expected to rise quicker than underlying earning during periods of economic growth and prosperity, whereas it is expected to work worse during hard economic situations, political uncertainty, and lower consumer confidence.

A charge off is essentially when a company declares your debt as a financial loss in its records. You are still responsible for paying off your debt, however. You will just not be able to use the specific credit card in order to make purchases anymore.

There are two basic concepts that apply to creditors and lenders: profit and loss. A lender will generate profit off of the collection of interest and principal and lose money from lending out an amount of money that is not paid back. When you do not pay your debt and the creditor accepts and acknowledges your debt as a financial loss, they are declaring your debt as a loss for the company. This charge off is then added, by way of a negative entry, into your credit report. By adding a charge off to your credit report, they will attempt to continue contacting you and try to collect on the debt that you owe the company.

The usual interval of time that must transpire before a debt can be charged off is six months of less-than or no minimum payments. However, a charge off does not mean that you are clear of that financial debt. A charge off will remain on your credit report for seven years.

A charged off status can be updated, however. There are two status updates that can be applied to a transaction once it is charged off: charged-off paid or charged-off settled. If you pay your debt after it has been charged off, it becomes a paid charged off. Before paying the creditor, however, try to negotiate with the creditor to see if they will remove the line “charge off” from your credit report. Paying the charged off account without removal of the trade line will increase your credit score relatively little. Even though that these two aforementioned updates are better than a single charge off status, they are still considered poor and unsatisfactory. Therefore, avoid placing a charge off onto your credit report.

It is best to pay all of your monthly bills on time to avoid a possible charge off. This is because the only way to remove a charge off from your credit report is to complete the seven year allocation of time until the charge off is eliminated by default or negotiate with the creditor to have the charge off removed if you pay the entirety of the debt you owe in full.

If you are having problems managing your debt by yourself, you might consider outside help. You decide you don’t want to have your property repossessed, you certainly don’t want your credit score to plummet, and you definitely don’t want to declare bankruptcy. What else can you do? Well, be cautious if going this route, but you could consider a debt settlement.

Debt settlement is the actual reduction of the amount of debt you have to pay. It’s a difficult route to take because it takes some people skills, and the higher number of credit cards you have, the more difficult it will be. The first step to take is to contact the collections department of each credit card. When you contact them, you will have to persuade them into accepting less than what you owe. Whether it’s on the phone or in a written letter, you need to tell the collections department about your financial situation and the amount of money you can pay.

Only unsecured debts can be settled in a debt reduction settlement. These are debts that do not have collateral, or a pledge of specific property if the debtor cannot pay the debt. For the most part, this consists of credit card debt, although medical bills also apply as a type of unsecured debt. Therefore, do not go this route to negotiate your car payments or your monthly mortgage payment.

More often than not, your credit card company will agree to make some amount of reduction in your debt. If you are on the verge of bankruptcy, they want to help you out. If you declare bankruptcy, after all, your creditors will risk losing the entire amount of money owed by you, and they don’t want to see that happen. But if you are not persuasive enough, you might be turned down.

If you credit card company denies your attempt to reduce the debt, you can try a third party. You can contact a collection agency or junk debt buyer and tell them about your financial situation. The agency or buyer may purchase your debt from your creditor, and you can negotiate with them. Be aware that collection agencies often have fees involved, unlike negotiating with your credit card company. A positive of turning to a third party, however, is that you can request to have the collection removed from your credit report. This could improve your credit score, but it might cost a pretty penny.

Whichever way you decide to approach a settlement, you must be able to make the payment once the settlement is made. If negotiating with your credit card company, your debt reduction must be paid in full within 60 days. If you turn to a debt settlement company, be careful to avoid debt settlement scams and understand that you might enter a program that requires a monthly payment for up to five years. This route is not easy, but if you have the patience and the negotiation skills, debt settlement may be an option for you.