Category Archives: Investing

Should I invest in a mutual fund?

how to invest in a mutual fundMutual fund is a term used to describe a structure of investments which is managed by financial experts. These experts are increasing the capital by selling stocks. The capital of the mutual fund is invested in the group of corporate securities, options, commodities etc. The possibility of investing in mutual funds is available for everyone, regardless of their age or whether we are talking about individuals or legal entities. In order to make a decision whether you should invest in a mutual fund, you will need to understand what characterizes mutual funds and what the benefits from those possible investments are.

When it comes to characteristics, these investments are usually characterized with attractive yield, the money is always at your disposal, it is not deposited, the funds are managed by financial experts, the investment is made in a large number of securities which means less risk, there is no need for huge investments, the process of investment can always be upgraded, there is no binding contract, lower costs compared to own investment, daily monitoring of the movement of assets, availability of a large number of financial instruments etc.

The biggest benefit of investing in a mutual fund is that you are investing in a diversified portfolio of securities which means – reduced investment risk, reduced investment cost, automatic income reinvestment, liquidity and professional management of the fund, and it means you dont need to monitor hundreds of penny stocks to watch on a daily basis.

Today, there are more and more people investing in mutual funds and there are some good reasons behind this popularity of mutual funds. First, you don’t need to know what individual penny stocks to buy – instead you are investing in a basket of stocks. Also, they are considered to be the safest and you can quickly see the results. In addition, you don’t need to follow the latest events on the stock exchange because your investment is managed by experts. Furthermore, we are investing depending on our desires and capabilities, we can withdraw funds at any time, we can also check our assets at any time and finally we don’t need extensive knowledge, patience and experience.

In a situation where we place the invested assets in the hands of others (financial experts), we are clearly interested about the details, especially the details regarding the safety of the investment and the risk of collapse. We also want to know who is guaranteeing for the investment too.

When it comes to security, it is good to know that the investment and its security is linked to several factors: investment structure, capability and expertise of the company that you have hired and of course the situation on the market. Strict legislation is additional factor that guarantees the safety of the investment.

It is very important to understand that there is a possibility that your investment will lose its value. The value rises and falls depending on the situation on the stock exchange. That’s why you should be prepared for a long-term investment because these types of investments in mutual funds are almost always profitable. Finally, you should seek advice from an expert in this field who will clear all the dilemmas that you might have.

Should I invest in growth or dividend stocks?

There are many different types of stocks on the financial market and this situation creates dilemma in potential investors – which type of stock investment is best for them. Should I invest in growth or dividend stocks? Which are the best penny stocks to watch?

This dilemma is often present when investors plan to invest in certain types of stocks that have many similarities like growth stocks and dividend stocks. Before we present their advantages and disadvantages let’s define these terms. Growth stocks are stocks of a company that has steady growth and whose profit is expected to rise in the future. This is especially the case with companies that are presenting new and interesting products and patents – hint: there are many hot penny stocks out there that fit this criteria.

Dividend stock is a broader term which can even include the growth stocks too, but this term is usually used for stocks from regular companies (no matter if they are showing constant progress, they have new products on the market etc.) and they are most often popular among investors who play safe and investors who expect long-term profit.

Probably the greatest advantage of growth stocks is the possibility of gaining large profit for relatively short period. Of course this type of stocks usually pays smaller dividends at first because the companies are reinvesting their earnings to improve their projects. However, once their capital project is over you can expect very high dividends and increased value.

Unlike growth stocks, dividend stocks are more or less predictable and you know what you can expect in the near future. They are usually bought by investors who are looking for a steady income source. With these stocks you can expect a stable passive source of income. You can also use the dividend to buy more stocks which will ultimately increase your income.

Growth stocks are usually very expensive and in some cases overvalued. It’s logical for companies that expect expansion or some breakthrough patent to have stocks at higher price. Dividend stocks cost less. Investors that look for these stocks hope that their value will rise because the market doesn’t recognize their real value.

Finally, the best penny stocks are more risky. They are suitable for investors that can deal with potential losses and those who have limited amount of money to invest should probably avoid them. Of course, investors who are not attracted by safety and smaller profit find them very attractive. Unlike growth stocks, dividend stocks are linked with companies that are already established and working steady for several years. They are satisfied with their size and don’t plan expansion which makes their stocks very safe. They don’t seek reinvestment and return part of their profit to the stock holders. Of course, this means that the gain for the stock holders is much lower.

Conclusion

Since the world economy is slowly getting out of the crisis investing in growth stocks is a good choice but it really depends on your ability to deal with unsuccessful investments. If you want to play safe settle with dividend stocks, if you have extra assets to invest go for growth stocks.

Using Stocks to Fund Your Retirement

invest for retirementA problem that plagues many retirees is the best way to handle retirement income in the face. Despite average inflation, prices of living often grow as time passes. This can reduce the retirement income retirees can get from fixed income investments while they must match with higher expenses. Where can you locate a way to obtain retirement income that can keep of with inflation, as well as your expenses?

Our idea: consider placing some of your cash into a portfolio -paying stocks as an income generation option and using stocks to fund your retirement. There are many sources out there to help you find the right stocks to invest in for dividend income and the best penny stocks for growth.

Data. Interest rates on 6 month Certificate of Deposits from Federal Reserve year end rate. Previous performance isn’t a guarantee of future results and an evaluation of an interval that is distinct may have revealed distinct effects.

Although freely traded stock will be able to help inflationary threats to be managed by you, the dividends these stocks pay out are highly dependant upon the total profitability of the issuing firm. As a result, you may want to consider the company’s dividend payment history before making this type of retirement investment.

A couple of added things is highly recommended about Certificate of Deposits and stocks. First freely-traded stocks will willingly take on the added investment risk and are usually satisfied for investors which are seeking asset appreciation. Certificate of Deposits on the other hand, are satisfied for investors which are concerned with keeping their primary investment and are unfavorable. Bearing this in your mind, it needs to be recalled that CDs are FDIC insured while freely-traded stocks will not be. The values of freely-traded stocks may lead to either a gain or loss upon deal and fluctuate in value.

The retirement income is additionally subject to income tax rules that are differing. Certificate of Deposits may have an early withdrawal fee if cash is taken before maturity. On the other hand, the stock of firms that were mostly capitalized sold and can usually be bought at any time when industry is open.