Invest in Stock or buy real estate?

TIPS HOW TO INVEST IN STOCK?

2009-12-23T23:21:00.000-08:00

•Always check Roth IRA. It will be beneficial to you in the long run because you will be able to save on your tax.

•When a company has competition, it can mean that competitors may drive the other company out of business. Or supply of similar stock of similar companies may be too large. In result, stocks are not going to have good value. Thus, not much demand will be created for such stock.

•Diversify the choice of companies you chose. It is generally not a very good idea to invest in and stick with one type of a company. Look for new companies even if you have never heard of them – learn about them, and read their financial information.

•If you are looking for a long-term good investment stock, consider well established brands. Among them are P&G, Coca-Cola, Google, 3M, etc.

•Monopolies are good if you find a good deal on their stock. It means that there is no competition, and the company is stable. Thus, its stock price and value are stable.

•A lot of businesses are seasonal. Travel industry, retail industry for example are not good choices because their income and revenue are not steady. It changes over time of the year and it is not a good idea to have an “unsure” stock. Such cyclical stocks have periods of strong growth and decline, so it is up to you to watch for that trend .

•If the company is shareholder oriented – you gain on your stock! If the company pays more attention to its CEO and Vice-Presidents, than the choice is not so good. These types of companies will choose to pay bonuses to its officials rather than pay out dividends.

•Profit margin is a good determinant when looking for a good investment stock. At least 10%-15% is a good choice.

•Don’t try to beat the stock market in the short run. It simply doesn’t work. You can beat the market in the long-run, thus invest in stable companies.

•Avoid brokers that closely follow S&P 500 or Dow. They do it to insure themselves against of market failure. Diversification is good, but it is also a “safe measure” for brokers to make money on you.

•Don’t get hung up online on stock market. It is always a good idea to learn how to trade options, futures, commodities, foreign currencies, preferred stock, or bonds. Learn about these markets and effects of one on the other. In many cases, currency markets can be good determinants for stock markets.

•When you buy stock, make sure you are confident in it. In case the stock value goes down – you should feel confident about it and only buy more of it. When you have good knowledge about the market and the company, your stock pick should be a good one!

•Make sure the business you are investing is profitable!

•The stock price is not a reflection of its actual value. Market value of a stock can be different from its actual value. It can be over priced, underpriced, or it can also be the same.

Seven helpful steps to how to invest in stock:

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1.SAVE! Don’t start investing in stock unless you have extra cash and savings. If you are a new stock investor – do not borrow money, or take out loans to invest. This is a very dangerous strategy. Save some money first, and then invest it in stocks.

2.READ! Make sure you read a lot about investments, good stock picks, stock market reviews, and company financials. Motley Fool, or the Tycoon Report are good sources for that information. You can use secondary sources as financial blogs or websites. Bloomberg is a good one too. It has currency trading info as well as stock trading info. Read articles written by experts. Warren Buffett publishes a lot of valuable financial information on his website.

3.SMALL PORTFOLIO! Learn about individual stocks enough to purchase them, or you can always get a mutual fund which is a low risk investment.

4.DO NOT SELL! Don’t be frightened if the market is not doing well any particular day, week or even month. Wait until it bounce back because stock generally grow rather then decline in value.

5.PLAN! Set aside a certain percentage of your paycheck for investments, as well as for savings every month. Stick to this plan.

6.CONSULT A BROKER! Talk to someone. Find an honest guy who does free consultations, and work with him. You can certainly pay for stock consultation if you want to.

7.BUDGET! Be wise with your money. Don’t spend it all. Don’t spend your profit. If you make some profit, set some money aside for savings, and reinvest the rest.

What are penny stocks? Should I chose Penny Stocks or regular stocks to invest in?

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Penny Stocks are generally referred to as common stocks that are traded for less than five dollars a share. Penny stock is traded over the counter (or OTC). Pink Sheets, or the OTC Bulletin Board are the quotation services that trade penny stock over the counter.

Penny stocks are also being traded outside of major stock trading exchanges such as NYSE and NASDAQ, or AMEX.

Investors find it somewhat difficult to invest in penny stock, as opposed to regular stocks, because legitimate information about penny stocks is not wide spread. It is easy to manipulate penny stocks, because it is hard to find reliable information on penny stock companies.

Because penny stocks are traded below five dollars per share they are attractive to investors, and especially to inexperienced investors. Low price stock is usually perceived to have a potential for rapid growth, or for quick cash. Penny stocks are not a very good idea for a long-term investment. They lose value in a long-run. Short-term investment is probably a most suitable option for penny stocks. But it doesn’t mean that penny stock will bring you high percentage return over night. Penny stocks are considered to be high risk investments, because investors loose on it just as much as they gain on trades.

Securities Exchange Committee warns all investors that penny stocks are high risk investments and should be carefully examined before purchase. Various things can happen with penny stocks. Among them, fraud, limited liquidity, and lack of financial reporting. It might become very difficult to sell penny stock because demand for it fluctuates and is not stable.

Manipulations of stock are done easily because there is not much regulation or listing requirement compared to major markets such as NYSE, NASDAQ and AMEX. There is not much protection for shareholders. There are a lot of penny stock company insiders as well as fraudulent investors online that pretend to be unbiased stock reviewers. Confusing links, multiple websites, confusing graphs and charts, inconsistent data and much more can lead new investors to buy penny stock and take a big loss. In some cases, if a trade is done online, it can be fraudulent. Thus if you think of trading penny stock, you should consider using well established companies such as Scottrade.

Stock market update as of 12/07/09

2009-12-07T17:52:00.001-08:00

Lack of market-moving headlines on Monday morning caused a lot of "wondering around" for stock investors. Lack of such news made a lot of trades uncertain, thus stock trading didn't look confident. When such things happen, currency takes a lead. The market was somewhat determined by U.S. dollar currency.

Federal Reserve' Chairman Bernanke pointed out that interest rates will remain low for some period longer. Although there is some pressure to raise interest rates related to job market. In result, stocks where traded with modest gains on Friday. However, this afternoon stocks where traded at a modest loss.

Shares of banks, as well as diversified financial services remained week. Citigroup announced that the company asked to repay $20 billion of its bailout funds. Bank of America announced to repay $45 billion dollar TARP loan.

The Wall Street Journal reported that the total cost of TARP could be cut by $200 billion dollars.

Utilities and Telecom stocks performed fairly well. Telecom stocks gained 4.2%, and utilities stock gained 4.6% both during last six sessions of stock trading.

Gold prices and oil prices closed at a lower price. However, natural gas prices had a modest gain.

Reports show that consumer credit demand is moderate but could increase by the end of 2009.

Advancing Sectors: Telecom (+1.8%), Utilities (+0.7%), Consumer Discretionary (+0.5%), Consumer Staples (+0.1%), Materials (+0.1%)

Declining Sectors: Financials (-1.6%), Tech (-0.5%), Energy (-0.3%), Health Care (-0.2%), Industrials (-0.1%)DJ30 +1.21 NASDAQ -4.74 NQ100 -0.5% R2K +0.1% SP400 -0.1% SP500 -2.73 NASDAQ Adv/Vol/Dec 1381/1.88 bln/1329 NYSE Adv/Vol/Dec 1630/941 mln/1402

Source: Yahoo Finance

Now let's look at some tips on how to invest in real estate

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Should you invest in real estate?

It is a good idea you own one home first before you start investing in another property to earn money. Financing and mortgage I think is one of the most evil things created in the finance and real estate industry. Buy houses for cash, and buy house by owners as you can avoid paying fees and commissions.

Once you own your first home, you will probably want to get another house. It is a great opportunity to make some money and have along-term investment. Because housing market is in shit right now, it is a good time to cash in on foreclosed properties. Don't let the economy scare you. Be confident in what you are doing because real estate prices will bounce back today or tomorrow, it doesn't really matter as long as you can get a good deal.

Although financing isn't that easy like it used to be, you still can get a mortgage if you don't have the cash for it obviously. Interest rates have been dropping to promote the economic bounce-back, and there is a lot of expectation that it will continue dropping. Since foreclosure rates are going up, the supply of houses increases and drives housing prices down.

Finance Smart!

Once you decide to invest your money in real estate, your first objective is to figure out to finance foreclosed property that you put your eye on. The problem here is not like with any other business. You can't buy a house and expect to resell it at a higher rate right away.

Make sure you know your clear goal and expectations from the property. Answer these two following questions first:

Do I want to keep this property as a long-term investment and rent it out?
Do I want to flip this property and make some cash fast?

In the second case, get an adjustable interest rate mortgage, find your buyer, and sell your house fast! The reason you want to get adjustable interest mortgage rate is that for a long-term investment it will create a lot of problems (like what we are experiencing with our real estate market now). But if you are confident that you will flip the property fast and find the buyer, do it before mortgage adjusts! Make sure you pay only interest, because then the buyer will be responsible for it when the buyer buys house from you.

For longer-term real estate investments, fixed mortgages are better because they allow you to plan your cash flow accordingly and get by when things are tougher.

Here is just a list of some banks and companies that you can apply for mortgages:

www.LendingTree.com
www.QuickenLoans.com/Mortgage
www.mortgage101.com
www.mortgage.com
www.mortgage.chase.com
www.MortgageLocators.com
www.wellsfargo.com
www.usbank.com
www.suntrustmortgage.com

***I really have no idea which one to go with best, just try to look around for the best deal

When you buy your property and plan to subsidize your mortgage with rent money, make sure you don't spend a lot of money on remodeling because tenants will mess it up anyways. If you have a rush to pay off your mortgage go ahead and pay it off. But really there is no point to stress about your mortgage, because your tenants are paying most of it and so you won't have to worry about making those payments. If you are an aggressive investor, go ahead and pay your mortgage off and then enjoy rent money. If you have a rental property, make sure you are also leveraging all of the tax benefits of depreciation and expenses.

Do it yourself where you can, and save yourself some bucks!

When you made your real estate deal, you may have made $20,000.00 dollars but paid an attorney $2,000; $7,000 to a contractor for remodeling and fixing; your real estate agent took $6,000; your attorney took $3,000, etc etc. and you end up not making anything or even loosing!

Take a look at this property here:

Remodeled Suburban Home in Toronto for resale

When you end up buying your real estate property, improvements can really add some value to your property and benefit you in many ways. New cabinets, landscaping, tiling, furnishings, etc. are among and part of interior design additions that will help your property gain some value. Hire contractor only if you need it. if NOT - DO IT YOURSELF!!!

You can change locks, plant plants, painting, etc. are things that you could probably do yourself. But don't be stupid! If you don't know how to do sheet rock - DON'T DO IT! You will waste time and money yourself, and then you will end up hiring a professional again. It will be quiet astonishing to see how much you can save by doing things yourself. If you really feel like you are helpless in this stuff, make sure you budget the right amount and do not go over. Real estate is tricky, don't get caught in your own mess.

One last thing - Know your market!

Sometimes it may feel that you are on top of things, but later you will find out that real estate is extremely competitive and difficult to survive in. A lot of guys out there have in this business far longer than you have, and they can squeeze you out of business just with a snap of fingers - watch out! Do price research, look up classifieds, property listings in your area, estimates, projections, you can save a lot money doing this. The more you know, the better deal you can negotiate. Knowledge prevents you form under-pricing or overpricing - so do your research!

Should I invest in stock or real estate?

2009-12-05T17:51:00.000-08:00

I am just brainstorming here whether to invest money in stock, real estate, or both? Should I buy some property for cash and be safe? Wait until mortgage crisis ends and real estate prices go up? Should I get a foreclosed prop erty? Or should I invest in stock online? I could put my money towards some IPO (initial public offering)? Or buy some stock that is already stable and gives a good stable return on investment?

I could buy stock and watch the market price grow right? But how liquid is it? Has anyone invested their money before? I was thinking of using online stock trading like E-Trade, or Scottrade.com or something like that. Stocks online should be just as good of a tool as actually going in person to stock brokers office and talk with him face-to-face. Price of a stock is what concerns me though. I am not sure how can I determine whether the price of stock is at market price, or is it overpriced or under priced?

I haven't gotten a degree in finance at a university, but I do have some understanding about stock market. The following is what I have learned when I was taking financing classes at a local community college.

Common Stock is ownership of business, the shares that a distributed among the owners of a corporation or a company.
Preferred Stocks are not like common stock, they are special types of stock that most of the time pay out high dividends that investors later use to buy more stock :-) I wonder if you could trade online this preferred stock?
Bonds – I have never fully understood what this is but I remember there are varius kinds of bonds: corporate bonds, municipal bonds, savings bonds, U.S. government treasuries, etc.I think there a lot of various kinds of these securities for sale out there.
Money Markets are markets where they trade money? :-) I know that these are highly liquid funds that were created to protect your purchasing power ($PPP). In economic terms, purchasing power is simply - how many hamburgers can you buy for your dollar? For example, in 1960 you could buy far more hamburgers than you can now. Money markets are highly liquid, thus a lot of investors consider them to be cash equivalent, but still, its not like you have cash in your hands.
Real estate investment trusts (REITs) are pecial type of company designation that allows no taxation at the company level provided more than 90% of earnings are paid out to the shareholders. The assets are often invested in a variety of real estate projects and properties.I copied this one from somewhere, really have no idea what these real estate investment trusts are, but you can look at pretty real estate here. :-)
Mutual funds are a bunch of stock put together in a portfolio. Investors consider them very low interest on return investments and so they are popular among investors that have no experience or investors that are really scared of investing.

How to Invest in Stock - and actually do the research

There five documents that you as investor should worry about

when you search for investment opportunities. You need to

know the quality of a stock that you are going to trade on online

stock trading website or at a brokers office.

The 10K – this is the annual filing with the Securities and Exchange Commission (SEC) and is probably the single most important research document available to investors about a company.I wish they could just give away 10K worth of stocks and futures. Futures are cool things too, you can earn money on them somehow too!
10Q's are the same forms as 10K's except they are filed at the end of each quarter of a business cycle.
Proxy statement will help you learn more about Board of Directors, managers, CEO's and other officials who probably own more stock of the company than the rest of the guys, and make huge salaries!
When you pick a company that you want to invest in, or buy stocks of - make sure you read their annual report first. Not only make sure to read it, but makes sure you understand how to read it. Look what CEO's and CFO's say about company's future and economic performance. It will be very smart of you to look at what Warren Buffett has to say about it :-)
Morningstar, Value Line, S&P, and Moody’s and others provide statistical reports in chronological order . Read those.

How to Invest in Stock - The Three Financial Statements that you need to understand and read

There are three financial statements you will want to understand :

The income statement
Th balance sheet
The cash flow statement

Other than what was stated above - I don't know what to do. Please comment, let me know what's going on in the world of finance.

Or you can always complete a finance international internship in Sydney, Australia!