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Investing basics focuses on two broad sets of goals: short term and long term. The vast majority of investors have a plan for both and they have portfolios of stocks and bonds that they put together in order to best meet their short term and long term investment goals.

When it comes to short-term investing, one of your short-term investment goals may be to give yourself a “bonus” of $3,000 by the end of the year. For meeting that goal, one thing that you could do is invest money in companies that are known to be paying out dividends.

Dividends are paid out by companies to their qualifying stock holders. They are typically paid out in what is known as DPS, or Dividends Per Share. Typically, dividends are paid out quarterly, or four times per year. Not all companies who issue stock pay dividends. However, the vast majority of well-established and basically stable companies that are not in periods of rapid growth (meaning they need to use up most of their profits instead of pay them out) do pay dividends, and they are often a way of balancing out the volatility of their stocks’ share price and thus attracting more potential investors.

Dividends are also paid out to the owners of mutual funds. If you own what is commonly called an “Income Fund” type of mutual fund, then it is your mutual fund manager’s job to make sure he’s investing your money in a whole basket of stocks and maybe other investment vehicles that can get you short-term income in dividends and, usually, also in what is known as capital gains.

Capital gains are increases in the value of a financial vehicle, including real estate, so that the financial vehicle is now worth more than the price you paid for it–in other words, it would be sold for a profit if you sold it today.

That’s mainly how capital gains are earned in mutual funds: Once the share price of a given stock rises a certain amount above what it was paid for by the investors’ money, the fund manager of the mutual fund sells off that stock, and investors who have put money into that fund are credited with capital gains profits in their fund account.

The constant buying and selling of stocks that are held (bought and then not re-sold) for only short periods of time (one year or less), often called “day trading”, can lead to large capital gains–big profits–for an investor. However, it takes great financial insight to successfully “day trade” or manage something like a mutual fund, because doing it wrong can lead to the disaster of tremendous losses.

Thus, short-term investing, while a proper part of a balanced investment portfolio, is inherently riskier than its counterpart, long-term investing.

David Brishen is a private investor who writes about investment fundamentals and strategies. Learn how you can make more out of your money at the author’s website Top Investing Basics.

We live in a society that seek instant gratification. Most people these days want to earn money the fastest way possible without thinking of the dangers and consequences to themselves or their love ones. Sad to say, that the quick money mentality has reached the stock market and has left a lot of people investing unwisely on stocks that may often be too risky to begin with. Let us learn more about Penny Stocks.

What Are Penny Stocks?
Penny stocks are common stocks that are sold for less that a dollar or, in some cases, less than five dollars for each share.Penny stocks are traded over the counter (OTC) through quotation services such as the OTCBB or the Pink Sheets. Although they are said to be “thinly traded,” share volumes traded daily can be in the hundreds of millions for a sub-penny stock.As per the SEC definition, penny stock status is determined by share price, not market capitalization or listing service.

Returns From Penny Stocks
Penny stocks make it possible for the small investor to invest small amounts of money to test the waters or just play it safe. You can literally invest $100 or even less and have thousands of shares.Of course the more money you invest the more you will make but gradual profits are the key to averaging your way to penny stock wealth.Do your research very carefully and invest in penny stocks with strong fundamentals.Penny stocks provides the potential for rapid upside which may be as high as several hundred percent in just a few months.

Risks of Penny Stocks
What you should know about these stocks is that trading them may be much riskier as compared to regular stocks. After all, with such issues as these stocks having no adequate backgrounds, offer very limited information about the companies, and may often pose huge threats for scams.Investors are lured to the appeal of penny stocks due to the low price and potential for rapid upside which may be as high as several hundred percent in just few months.

1.Lack of Background
Companies that are willing to trade stocks in such small amounts are mostly those which has very little business history or may have a very negative one. These companies are either just starting out in the business or they may have experienced bankruptcy, thus they resort to selling their stocks at such low prices.

Because there isn’t a lot of information available on penny stock companies, there is a very huge possibility that you might be making a bad investment. And of course, you may end up losing more money than you plan on gaining.

2.Limited Information
For most companies that offer penny stocks, not a lot of information is really available for investors to view online or elsewhere. After all, most exchanges in this market operate on the Over The Counter Bulletin Board (OTCBB), which do not really require thorough reports for public posting. Without such valuable information, it would be very difficult on the investor’s part to make the right and objective trade decisions, and this could often lead to unwise guessing.

In conclusion, although there is a lot of potential for growth in very minute sized stocks, there are greater risks involved. And often times, if you are not well acquainted with the business background as well as with the necessary information on how your investment is doing, there is a huge chance for you to get scammed.

And so, if you are new to the whole stock exchange market, make sure that you decide wisely on which type of stocks to invest and do not go after what may seem easy to get you rich. Take in mind that, although penny stocks may be alluring, they may involve huge risks on your part.

Paul Hata is active in various social and community programs aimed at providing equal access to education,health and jobs to all.Paul has over 10 years experience in managing a multi-million dollar advertising company.Paul can be reached at - TradePlanets.com

The Foreign Exchange or Forex is the largest market today for stock trading, and it is continually growing with more and more people investing in it. However, as promising as this market may be when it comes to profit, like any other trade it can be very volatile as well. It is therefore important to be familiar with certain factors that influence trends in the Forex market if you are decided in joining this arena. After all, acquainting yourself with the many scenarios that can cause currencies to go up or down can help you a lot in making decisions for when to buy or sell.

There are basically three major factors that affect the foreign exchange market - economy,political conditions and market psychology.

1. Economy
Economic factors are the most basic things that create changes in a country’s currency. When such economic conditions as a budget deficit or surplus is present within a country, there will surely be reactions in the market and values will be reflected on currencies. Other conditions may also include inflation trends, and the general economic growth of the country.

The more prosperous a country’s economy is, the more investors will be able to adhere to doing trade in a more positive attitude. Such indicators as a growth in a nation’s gross domestic product (GDP), employment levels and retail sales among others will basically attract more investors and that nation’s currency value will likely go up.

2. Political Conditions
Another very important factor that influence trends in Forex, are the conditions of a country’s political sector. This is because political instability or turmoil can generally create negative fluctuations to an economy. But if such instances occur wherein a country may rise above political obstacles, the opposite may occur and the economy may improve.

Events in a region can surely create negative or positive interest among investors for a nation’s currency. And so, such conditions surely influence the trends for demands and prices of a certain currency.

3. Market Psychology
Of course, the perception of traders and investors will greatly influence the Foreign Exchange market in so many ways. After all, the market is highly dependent on whether or not people would want to invest on a country’s economy in order to determine whether currency prices will go up or down.

For example, such conditions wherein unsettling international events may happen, people would generally want to look for a safe haven for their investments. Whenever there is a greater demand for a certain country’s economy, then a higher price will be given to buyers and the currency’s value will go up and become stronger.

Other events that contribute to traders perceptions may be long-term trends where people invest based on what they have seen for a long period and time, and even economic numbers where people may base their investments depending on what numbers show a greater value.

The market in Foreign Exchange is often unpredictable and fluctuating. Therefore if you are interested in doing trades in this market, make sure that you take the time to be knowledgeable about good strategies that can help you play the game.

But more importantly, keep in updating yourself with the different economic trends in the international scene. After all, this currency market would greatly revolve upon events that would occur in the different countries. Familiarizing yourself with the factors that affect the Forex will surely help you make better decisions.

Paul Hata is active in various social and community programs aimed at providing equal access to education,health and jobs to all.Paul has over 10 years experience in managing a multi-million dollar advertising company.Paul can be reached at - TradePlanets.com

The size of the stock market is estimated at about $51 trillion. The concept of trading fundamentally consists of the buying and selling of stocks among individuals or companies through brokers.

Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order. Through buying a share of stock or a share of ownership in a particular company, an individual can then benefit and earn money from the company they have invested.

There are two basic methods in which the stock market operates on the exchange floor where buying and selling is done more traditionally and electronically where technology takes on the exchange game.

1. Trading On the Exchange Floor
The trading that occurs on the more traditional exchange floor of the New York Stock Exchange (NYSE) is basically what most of us have become accustomed to from seeing it in the movies and on television. Basically, the NYSE consists of many brokers who negotiate the deals for individuals to be able to trade stocks.

Trading System - As chaotic as the stock exchange floor may seem, there is actually a common pattern that occurs among most simple trades. First, an order to buy a certain number of stocks would be negotiated through a broker. After this, the broker’s order department would forward this arrangement to their floor clerk on the exchange. The floor clerk would then inform the company’s floor traders in order to find other traders that are willing to sell the equal number of stocks from the company that is offered to be bought. After the two parties agree on a price and close the deal, the message would be forwarded back up the line, and the broker would then inform the interested buyer on the final price.

Negotiations may take a few minutes or even longer, depending on the performance of the stocks as well as the market. For more complex trades and larger orders of stocks however, there may be a more complicated process but the principles basically remain the same.

2. Trading Electronically
A growing trend these days however, is trading stocks electronically, which is done through advanced computerized systems. Unlike the NYSE that generally operates through the manpower of brokers, its counterpart, the National Association of Securities Dealers Automated Quotations (NASDAQ), trades stocks completely through electronic means.

These electronic markets forgo with human stockbrokers and instead make use of advanced computer networks to match buyers and sellers. And through this method, transactions are usually faster and more efficient.

Through electronic trading, investors get many benefits such as being able to get faster confirmations, as well as facilitating control by having online investing readily available through the Internet. However, brokers basically still handle the trades, as investors do not have direct access to the electronic markets.

The process that takes place in both methods however is usually hidden from investors. Typically, if you are an investor, a call from your broker and regular reports on your stock investments would be provided for you, but you will not really get to see what is happening behind the scenes.

Through the investments that individuals make, many businesses are kept afloat and running. And in exchange for this, investors get a fair share of earnings. Stock trading may be a complex process, but at the end of the day, many people basically benefit from all of it. As a result, the whole concept becomes simple.

Paul Hata is active in various social and community programs aimed at providing equal access to education,health and jobs to all.Paul has over 10 years experience in managing a multi-million dollar advertising company.Paul can be reached at - TradePlanets.com

The stock market can be a heaven or hell for investors.It is the arena to make serious money. Whether you are a newbie or an experience stock investor, you need to be well familiar with the stock market trading terms and terminologies. Here are a few terms that you may need to familiarize,especially if you are not familiar with the many terms and tactics used for negotiations.

Basket Trades - Large transactions made up of a number of different stocks.

Bear Market - Bear markets mainly characterize significant losses and declines in a particular market. With this type of behavior among stocks, most investors would generally want to sell more of their stocks and may be pessimistic about investing.

Bid and Ask - Highest price and lowest price that an investor will pay for a tradable.

Broker - A stockbroker is the person who handles the actual trading of stocks. He or she does the negotiations to buy and sell the stocks in behalf of the investors and the companies involved. The many various types of brokers may include full-service, online, auto-trade and discount brokers.

Bull Market - A bull market is a market that manifests a continuous increase in the value of its stocks as well as a steady growth. Generally, with this type of market, investors gain an optimistic attitude and may want to buy more rather than sell stocks.

Buy and Hold - The acquisition of a tradable for the long term rather than quick turnover.

Capital Losses - Losses resulting from selling at a loss.

Consumer Price Index - The gauge of US inflation.

Day Trader - A day trader is the person who buys and sells stocks aggressively in one day. Usually, he or she does this for several times each day in order to make quite a few small profits within the day.

Dividends - Dividends are added or bonus payments given to stockholders after a profitable quarter. With this sum of money, many people may often reinvest on more shares of stock, which allows individuals to earn so much.

Futures - Futures, just like stocks, are also traded in the market. However, these are purchased against future costs of commodities. You can earn from these, if in time, the actual price of commodities become higher than what you paid for the futures. On the other hand, you can also lose money if the price becomes lower that what you paid for.

Stocks - Stocks are probably the most important and common items traded in the stock market. These are actually shares of certain companies, which are publicly sold and traded.Whenever people buy a portion of stock in a particular company, this means that they acquire a share of ownership and investing in that specific business. Through this, a stockholder is given certain rights towards the company such as a vote in stockholder meetings as well as his or her financial share from the company’s earnings.

Trading on Margin - Trading on margin may be similar to trading stocks with the use of borrowed money. Through this, you can purchase shares of stock for only a portion of the actual price. The remainder of the cost can be paid upon the actual sale of the particular stock, or on a later date.

These terms are only a few of the most commonly used language in stock trading. And upon encountering them, you may certainly have the impression of how intimidating the stock market can get. With the many complicated terminologies and tactics, you may easily get backtracked if you do not know enough about what you are dealing with.

Remember that if you are new at doing business in this arena, make sure that you take the extra mile to learn more about more terms as well as strategies on how you can best maximize profit. A little hard work will certainly get you far, and one of these days you will realize how all of this can pay off.

Paul Hata is active in various social and community programs aimed at providing equal access to education,health and jobs to all.Paul has over 10 years experience in managing a multi-million dollar advertising company.Paul can be reached at - TradePlanets.com

The foreign exchange or Forex Market exists wherever a currency is traded for another. It is by far the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions.Trade in the global forex market is currently at over US$ 3 trillion daily.

Forex or foreign exchange trading is actually the largest and a fast-rising financial industry in stock trading these days. Here is a quick introduction to trading in foreign exchange.

What Is Forex Trading?
The Foreign Exchange market (Forex) is actually the largest financial market in the world. It actually makes a volume of over US$3 trillion a day, and as compared to its counterpart - New York Stock Exchange (NYSE) which usually only trades a volume of 25 billion dollars each day, this industry is so huge that it becomes a profitable playground for many investors including central banks, large banks, multinational companies and even governments.

What is actually traded on the foreign exchange is money. It actually consists of the concurrent buying and selling of currencies, which are traded through brokers and are traded in pairs.

When you are buying currency, it is like you are investing on the economy of a particular country. For example, if you buy U.S. dollars then it is as if you are buying a share of the U.S. economy. Whatever the market thinks about the current health of a country’s economy would directly be reflected on the price of its legal tender and this is how currencies go up or down.

Forex Trading For The Masses
Originally the whole concept of trading in the Foreign Exchange was only intended for huge companies and banks, but not for normal citizens. After all, you could only take part in the trade if you have around ten to fifty million dollars minimum.

Online Trading
However, with the rise of globalization through the Internet, trading is now offered to retail traders. And these days, almost anyone can now invest on the foreign trade. All you really need to join is some small amount of money, a computer and a high-speed Internet connection, and you can sign up for an account with online Forex trading firms.

Main Forex Centers
There is no exact physical office for Foreign Exchange unlike its counterpart in New York. However, the three main centers for this trade are United States, United Kingdom and Japan. These countries handle majority of Forex transactions and trades goes on for 24 hours everyday.

Today, the Foreign Exchange, as the largest market in the world, is fast paced and enormous. And it has become a very lucrative arena for many traders who may have had participated in stock trading and in other markets. Many large institutions and even smaller-based individuals have gone out to play in this market.

Exercise Caution
Although this particular market gives huge promises, remember that there is still too much at stake. It is estimated that around 70 to 90 percent of the Foreign Exchange market is still speculative. And the parties that trade currencies may not always have a plan to actually take delivery of the said currency, and more are still speculating on movement of money.

If you are interested in investing in this particular arena, take time to be familiar with the game and make sure you get the right educational background. Taking the extra mile will all be worth it, and once you have tasted your success in this arena, you will be ready to take on anything in trading.

Paul Hata is active in various social and community programs aimed at providing equal access to education,health and jobs to all.Paul has over 10 years experience in managing a multi-million dollar advertising company.Paul can be reached at - TradePlanets.com

There are several different types of investments, and there are many factors in determining the success of your investment.Before you get there,remember that all success story began with researching the various available types of investments, determining your risk tolerance, and determining your investment style along with your financial goals.
Do Your Homework - If you […]

The big question I am often asked is, “how do I find stocks that will keep falling in value”. Well, it is actually much more difficult to identify stocks that will continue to fall in price as compared to finding stocks that will appreciate in value. This is why I recommend bearish plays only to more experienced investors who have mastered the art of buying bullish stocks first.

The most common reason for a stock to decline is because of bad news that causes investors to lose faith in the company’s ability to continue increasing earnings at the projected rate.

The most common reasons that cause a stock to fall are:

1. The company reports earnings (on a quarterly basis) that are below analyst’s forecast

2. The company loses its competitive advantage (e.g. A drug company loses its patent on a best selling drug)

3. The company is being investigated for accounting irregularities

4. Analysts downgrade the stock as a result of any of the above reasons

5. The economy is in a recession and the whole stock market is in a downtrend, pulling every stock down with it

Avoid Shorting Stocks When the Bad News Seems Temporary

Usually, when the bad news hits a company’s short-term profitability but DOES NOT affect its competitive advantage to grow earnings in the future, its stock price will usually turn around after the initial decline.

Most companies who report lower than expected quarterly earnings usually fall into this category. There are many factors that could cause a company’s profits to drop temporarily. They are rising material cost, failed products, poor acquisitions and a temporary drop in demand. These are stocks that you would NOT want to buy Put Options on.

When the Bad News is Permanent, Go for the Kill!

I usually buy Puts on stocks which I am very confident will continue to decline for a couple of weeks or even months! These are stocks hit by bad news that causes long-term or permanent damage to its profitability of financial stability.

The best bets are when a company is being investigated for accounting fraud. This process usually drags on for months or even years and the fear & uncertainty about the extent of the damage keeps buyers away and allows sellers to push the stock even further down. In such scandals, there is also a big possibility that even more bad news will be uncovered. As more dirt is dug up, it will usually send the stock price spiralling downwards.

For example, when AIG was first investigated for accounting irregularities, it was believed that it inflated its earnings artificially by about $1 billion. As investigations went on, the figure got larger and larger. These sequence of events caused AIG stock to continue its decline from $78 to $51.

What makes the stock decline even stronger is when a company is being pounced on and regularly attacked by the media. For example, when Tyco’s CEO was first being investigated for stealing millions of dollars, the media kept playing up the bad news almost every hour on CNN and CNBC. This bad publicity caused even more panic and sent the stock to spiral down even faster!

One reason why I love betting on such falling stocks is because stock prices tend to fall a lot faster (from bad news) than they rise (from good news). As a result, you earn your profits much faster!

Adam Khoo is an entrepreneur, best-selling author and a self-made millionaire by the age of 26. Discover his millionaire investing secrets and claim your FREE bonus chapter of his latest bestselling book ‘Secrets Of Millionaire Investors’ at Secrets Of Millionaire Investors.

So far, you have learnt how to make money when a stock appreciates in value. Basically, it is to buy when stocks/calls are at a low price and sell when stocks/calls move to a high price.

However, the best investors in the world can make huge profits no matter which direction stock prices take! When Enron Corporation’s stock price plunged from US$90 to US$0.30 in 2001, after it was found to have hidden billions of dollars in losses through accounting fraud, and people had their entire life savings wiped put, there were also many smart investors who made millions in the process!

When the Dot Com bubble burst in 2001 and stock markets plunged by over 50%, smart investors made huge fortunes at the same time! Wouldn’t you like to learn how to do this? Wouldn’t you like to make huge profits no matter what the market does? While most people have to wait for a bull run in the stock markets to make money, you will be able to make money in a bear market and even in a prolonged period of consolidation (i.e. stock prices move sideways).
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What many people do not know is how they can make money when they expect a stock’s price to FALL. Traditionally, when stock traders expect a stock to fall from its current price of say, $50 to $35, they would SHORT SELL the stock. What this means is that they will SELL the stock NOW at $50 (without owning the stock) and they will then BUY it back later at the lower price of $35. So, by selling HIGH ($50) and buying LOW ($35), they make a profit of $15 per share.

One question that confuses most beginners is, “how do you sell stock you do not own?” Well, your broker will LEND YOU the shares to sell at the high price. You must then go and buy the shares at the lower market price (within a certain period of time) and return it to the broker. This entire transaction is done automatically when you short sell stock (also known as “sell to open” and “buy to close”).

Short Selling Leads To Unlimited Risk of Loss

However, I do not encourage you to engage in short-selling of stocks unless you are extremely experienced. This is because if the stock does not fall as expected, you can suffer unlimited loss.

For example, let’s say Osim’s stock price is $1.60 and after posting disappointing financial results, you expect the stock to fall to $1.40. You short sell 10,000 shares at $1.60 and collect $16,000. However, you must buy back the shares within two days to return it to your broker. What if Osim’s share price suddenly surges to $2? Then you will have to buy 10,000 shares at $2 and fork out $20,000. You suffer a loss of $4,000!

Talk to most people and the majority of them would only understand the concept of making money only when stock prices rise in value. In fact, many people only understand the concept of buying something at a low price and selling it at a high price.

As a result, the masses tend to panic and fear recessions, downturns and bear markets as it could wipe out their hard earned savings. They tend to sit on the sidelines until the time comes when the economy and market sentiment improves and prices start rising again.

Adam Khoo is an entrepreneur, best-selling author and a self-made millionaire by the age of 26. Discover his millionaire investing secrets and claim your FREE bonus chapter of his latest bestselling book ‘Secrets Of Millionaire Investors’ at Secrets Of Millionaire Investors.

Would you like to start building an investment portfolio, but are not sure where to begin? Beginner investing is not as difficult as you might think. With the internet, researching any subject is relatively easy and investing is no different. There are wealth of sites and gurus, just waiting to advise you on your next best financial move.

Investing is something that essential to your financial stability. You are going to need to have investments to be able to retire, but it can also be interesting to see how things changed depending on what is going on in today’s economy. But whether you find investing interesting or not, there is something for everyone. There are investments that are almost considered a sure thing. You may not make as much from them, but you do not have to worry that you will lose everything. And if you are a risk taker or a trend watcher, there are stocks out there that fit into that category.

If you are just starting out you will want to follow some simple steps. Investing can be quite complicated depending on what you are investing in:

* Set a budget and do not exceed it. This is pretty much like everything else in life. It is best if you start out small until you get your feet wet and know what to expect.

* Start out with a single type of investment to you become familiar with how that investment vehicle works and then broaden your horizons and start to diversify your portfolio.

* Diversify-become familiar with the many types of investments that are available today. With a diversified portfolio you minimize your risk. You are better able to manage what the economy dishes out.

* Read, read, read. Find out what the experts are doing. There are an endless number of publications available with an infinite amount of information on building a portfolio.

* Get started. Many people put off starting something that is unknown to them. You will be a novice until you get some experience and you cannot do that until you get started.

Today, learning to invest is essential. Unless you win the lottery, your investments will be what you are living on after you retire. Learning to invest is investing in your future and there is no time like the present to get started. Start building for tomorrow, today. You never to young to start investing and a person never gets to old to make changes in there portfolio.

Get more information on beginner investing and how to pick stocks. There is no time like the present to begin preparing for your future. Get free stock picks at stockpicks4today.com.

I believe the questions you are probably have about investing are, “How do I get started? How do I actually achieve a 12.08% annual return by buying all the stocks in the Index” How can I achieve a 20-25% return a year by beating the market? “How do I select the right stocks”? How long […]

What sets average and successful investors apart is their psychology or way of thinking. Although all master investors use very different strategies and investment tools that may even contradict each other, they all share the similar psychological makeup that makes them successful.
Here are seven of the most powerful success habits of successful investors.
1. Buy On Strict […]