Investment with High return

A lot of people only think of stock market when they are asked about investment. Many of them would tell you that the last place they want to invest their money is in stock market. They still remember the major market crash in US during 1920an. They would tell you that the stock market is too unpredictable and eventually you would ‘burn your fingers’ if you try to play with fire. Many Asians are still having nightmares when think about the market in 1997-1998 when there was money crisis in Asia. However, you must remember a few facts here,

a) although most people think that the safest way to invest money is through bank deposit,I must tell you that it is the worst investment vehicle in term of return.

b) although you always hear people saying that the higher the return, the riskier the investment. It is not always true!

c) it would save half your energy if you have written plan about investment and consistent in your investing.

d) stock market is not the only vehicle for you to achieve your financial goals, there are other ways as well such as property investment, mutual funds, money market , gold ……..etc

You would feel unsecured if you try to put your hard earned money in something that you do not know. Therefore, for you to start your first investment, learn as much information as possible so that you know your risk tolerance and understand your financial needs.
As I mentioned above, although fixed deposit gives you certain return, this return will be eaten away by your inflation. Although a lot of people hate stock market, history shows that the average return in US stock market is around 10% (before transaction costs and all other expenses) and UK is around 10-12% per year .The lesson to be learned here is you need to know how to diversify your investment in order to earn the maximum return.

I always tell my friends that there are 3 types of investors in the world, one group of investors whom I call as “Kamikaze” group, they would invest in almost everything as long as they think it is a good investment no matter how risky is the investment. Although you may think that these people are stupid, you would be surprised to find that a lot of rich people belong to this group.
The second group, I would say that they are ” middle average people”. They believe in Confucius thinking of ‘walking the middle path’ . They invest their money in vehicles that give them the average return with average risk. Another group of people whom I call ” sweet dreamers” simply because they sleep well at night no matter how bad or how good is the stock market. They put all their money inside the bank or even under thier pillows. However, they usually would lose in long run in term of return as compared to the previous two groups.

I would like to advise you that which group you should belong to depending on your age group and how much you need your money that you plan to invest. If you are young and have extra money to spare , try to become the ” Kamikaze” group, if you are approaching retirement age, then better keep your money in the safest place in the world because you may need them tomorrow!

To learn more, click www.young-investors.blogspot.com

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Unfortunately, many investors who are seduced by the lure of easy money try to become “active” investors before they have the skills, the resources, or the appropriate intellectual framework to do so.

This is not to say that investing in stocks is extraordinarily difficult … It is not!

However, beating the market on a regular basis is far from easy and requires that an investor bring to the investing process a singular discipline, knowledge, or passion that will allow him to rise above the herd.

Like in any other competition, not everyone can win! In fact, for every amount of money that outperforms the market, somebody else’s money is not doing quite so well!

How can you tell if you are ready to become an “active” investor? Not an investor who buys and sells stocks on a regular basis, but active in the way the academics mean it — someone who selects his own stocks. It is not like there is a licensing process or anything. In fact, there is not even a formal course of instruction. Much like parenting, you tend to find out if you are really cut out to be an investor only after you have made a pretty substantial commitment!

In my opinion, you should not be investing in stocks:

… If you need the money within two to three years at the least.

… If you don’t like to do math.

… If you use the word “play,” “gamble,” or any similar speculation-oriented word when you describe your investments!

… If you think indexes matter more than what companies you own.

… If you are unprepared for volatility. A lot of people look at the returns for the stock market only to turn pale at the first loss! If you cannot stand to lose money, you should not own stocks… Period!

… If you think you will only ever buy stocks that go up. You are not perfect! No system is perfect. No provider of advice is perfect. You can — and will — lose money at some point during your investment career! You can minimize this loss if you do your homework and are careful about valuation, but money lost is money lost.

… If you believe that the share price alone or share price movements alone tell you anything about the underlying quality of the company or its business. All too often people buy low-priced shares with the idea that they are cheap, only to find out that they are low-priced because the underlying business sucks.

… If you couldn’t write down a list of why you bought and what might make you sell. If you don’t know why you bought a stock in the first place, how can you know when to sell it? Bad scene. Avoid it.

… If you cannot tell the difference between a balance sheet and an income statement. Especially if you don’t even know where to find a copy of either.

… If you cannot make a rudimentary assessment of the underlying quality of a company.

… If you cannot define any of the following words: gross margin, operating margin, profit margin, earnings per share, costs of goods sold, share buyback, revenues, receivables, inventories, cash flow, estimates, depreciation, amortization, capital expenditure, market capitalization or valuation, shareholder’s equity, assets, liabilities, return on equity.

… If you only have one source of information about the company. I don’t care whether it is your best friend, a message board, or some content provider. If you cannot independently verify the facts, you are bound to get unintentionally bamboozled. No one likes to admit he is wrong. If you depend on one source of information, odds are when it finally coughs up the conclusion that it made a bad call it will be too late!

… If you cannot name the major products a company makes or the company’s major competitors.

… If you don’t use the Internet. Seriously folks, come on! Almost all of the disadvantage of being an individual investor from the information side was erased by the Internet. If you aren’t on it, you are at a major disadvantage to all of the other players.

It is like trying to wrestle with no limbs!

Ioannis - Evangelos C. Haramis was born in Greece in 1951 and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the publisher of http://www.greekshares.com

Copyright © 2005 I.E.C. Haramis

haramis@greekshares.com
http://www.greekshares.com

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Given recent events in the news, many employees have begun wondering what would happen to their 401(k) dollars if their company were to go into bankruptcy, out-of-business, or was merged or acquired by another firm. This is a question that few employees think about when making contributions to their company retirement plan. Yet, in the economic environment of today where corporate closings and restructuring are not uncommon, it makes sense to know what level of safety exists.

Retirement plans are managed exclusively for the benefit of participants by plan officials called fiduciaries and trustees. A fiduciary is any person who exercises any discretionary authority or control over the management of the plan or its assets, or any person who is paid to give investment advice regarding plan assets. A trustee has the responsibility of collecting and holding plan assets in trust for the participants. The obligations required of fiduciaries and trustees means that they are ultimately responsible and held accountable for the safety of the participants’ money.

It is important to know that there are laws specifically designed to protect the interests of qualified retirement plan participants and their beneficiaries. The Employee Retirement Income Security Act (ERISA) was passed in 1974 to specifically protect the retirement plan assets of qualified retirement plan participants. For defined contribution plans - such as 401(k)s - the Department of Labor (DOL) and the Internal Revenue Service (IRS) also oversee various rules and regulations to enforce fiduciary compliance, participation, vesting (ownership) and funding standards.

Under the various rules of ERISA, benefits under a 401(k) plan are protected from creditors if a company goes bankrupt. No matter how much a struggling company may need access to funds, they cannot use plan assets for such purposes as buying equipment, paying rent or paying creditors. Your retirement dollars are held “in trust” for your benefit - not for the benefit of your company.

Participants are always 100% vested in their own contributions to a 401(k) plan. While it usually takes several years to become fully vested in any employer contributions, if a qualified plan is terminated, the employees immediately become 100% vested. IRS approval must be received before any qualified plan can be terminated. Once approval for a termination is obtained from the IRS, the full amount of plan assets are distributed to plan participants.

If you would like to know more about ERISA, or if you require more general information regarding qualified retirement plans, such as a 401(k) plan, contact your financial advisor. After all, the more you know about your retirement plan, the more secure you are likely to be upon retirement .

Fearing the American worker is being left in the dark, Mr. Morris, a fee based Investment Advisor Representative with Raymond James Financial Services, Inc., helps 401k participants get the most out of their retirement plan.

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