Epic Finances - Investment Blog

Some Vital Keys to Successful Investing

2013-05-22T19:05:06Z

Many new investors spend their time trying to find the next great interesting opportunity without first learning the basics about investing. This can be a little bit like trying to ride a motorcycle if you’ve never even learned how to ride a bicycle. Sure, you may get the hang of it after a while, more than likely you’re going to fall flat on your face at least a couple of times.

With that visual note in mind we thought we put together a blog that features some vital keys to successful investing. If you are a new investor this should be required reading and, if you fancy yourself an accomplished investor, you may want to take a few minutes and look it over as well. You never know, you might pick up something valuable. Enjoy.

One of the most important of these vital keys is that you leave a margin of safety in your investment strategy so that you protect the most important part of it; your portfolio. There are two main ways that you can do this.

Always be conservative when you’re talking about valuation and try not to assume too much. The risk here is not that you’re going to overpay for an excellent business but rather that you will end up paying more than you should for a mediocre business. When it comes to estimating future growth rates it is best to err on the side of caution.
When purchasing any asset only purchase one that is trading at a substantial discount. If you’ve done your homework and conservatively estimated a stock’s intrinsic value should look for an extra margin of safety as well.

Another vital key is to only purchase businesses that you fully understand. Is only when you understand the business that you can estimate their future earnings. For example, a company like Hershey’s that makes chocolate will rise and fall with the cost of sugar. If you know this, and you know what it takes to produce their main product, you’ll be in much better shape to decide if they’re a valuable addition to your portfolio or not.

The best way to measure your success with any investment is to take a look at the underlying operating performance of the business that you are purchasing. Simply put, the operating results and the share price will, over time, become inextricably linked. Although it may not start out that way, the underlying business and the price of its stock almost always go hand-in-hand.

When it comes to investments there is one rule that is unavoidable; the more you pay for any asset in relation to what it turns, the lower your return is going to be. For example, a stock that you might consider a terrible investment at $50 a share you might just consider an excellent investment at $15 a share. The fact is, if you’ve done your research, have the aforementioned margin of safety in place and the long-term economics of the business are very favorable you may just view a decline in the company’s stock not as a bad thing but as an excellent opportunity to acquire more. Frankly, if all of these things weren’t in place when you first purchased stock in there there’s a good chance you probably shouldn’t have purchased it in the first place.

One mistake that many new investors make (and some that have considerable experience as well) is to trade too frequently. What happens when you do this is that you substantially lower your long-term results. Why? Because fees, taxes, commissions and ask/bid spreads create what is known as frictional expenses, something that can eat up your returns like termites can eat up your house. Even a 2% increase over 40 years could mean a significantly lower number in your retirement account when you’re ready to start golfing full-time. Simply put, frequent activity when it comes to investing can be the enemy of excellent long-term results.

The last thing we like to talk about today is the fact that, as an investor, you need to keep your eyes open for new opportunities at all times. If you’re always scanning the Wall Street Journal or the pages of Barrons or Fortune magazine something that you can add to your portfolio. Many new investors make the mistake of investing in companies that manufacture products or services that are outside of their knowledge base. Simply put, if you don’t understand the economics of an industry you will not be able to forecast where a business will most likely be within 5 to 10 years. If you don’t you really shouldn’t be purchasing their stock. (We learned this from billionaire investor Warren Buffett.)

What we’ve covered here today is really the basics but the basics are where the best investors always get their start. The good news is that you’ve already started learning and probably know more about investing strategies than many people will have much more experience than you do. Best of luck with your investing and, when you need more advice, tips and information, please make sure to come back and see us. See you then.

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What are Incentive Stock Options

2013-05-15T21:17:04Z

One of the perks of staying with the company for long time and working way up to corporate ladder that you can be offered stock incentives that, in many cases, will increase in value and afford you a huge amount of profit when you sell them. There are many different kinds of stock options and, depending on the type of company that you work for, how long you been there and how high up in the ranks that you are, the options available to you will certainly change. With that in mind we put together a small blog on one type of stock option that is offered once you make it to what will refer to today as ‘the big time’. Enjoy

A type of stock option that is usually offered only to key employees and those who are in top-tier management, incentive stock options (ISO) (also known as statutory or qualified options) allow these employees to receive, in many cases, superior tax treatment that can be quite enticing along with valuable stocks that they can sell down the road for high profits..

There are a number of scheduling details that one must know about incentive stock options. The date that ISOs are issued is known as the grant date and the exercise date is the date when an employee that’s been offered an ISO exercises their right to buy them. After this second date the employee will then have the freedom to either get rid of the stock right away or hold onto them for a specific period of time. 10 years is the offering period for ISOs (unlike non-statutory options) after which time an employee’s option to buy the stock expires.

ISOs also contain something known as a vesting schedule which is usually three years. At this time the employee usually becomes fully vested and is open to taking advantage of all the options, including ISOs, that are available to him or her.

There are some things about ISOs that resemble non-statutory options including that an employee can either pay cash upfront to exercise them or can acquire them by using a stock swap with no cash changing hands. In some cases an ISO can be exercised at a price that is actually below the current market value, allowing the employee to make an in immediate profit if they choose to sell them right away.

A clawback provision is something that allows employers to take back ISOs if an employee leaves the company for any reason besides their retirement, placement on disability or death. This can also happen if a company suddenly becomes unable to meet its financial obligations with the ISO options.

As we stated earlier ISOs are typically offered only to executives and key company employees, a form of legal discrimination as most other types of employee stock plans are offered to any employee who meets certain minimum company requirements. In some ways an ISO is similar to a nonqualified retirement plan that is offered to a company’s top people whereas a qualified plan must be offered to all employees.

As far as tax treatment, ISOs receive the most favorable tax treatment of any type of employee stock purchase plan, setting them apart from practically all other forms of compensation that is share-based. That being said, in order to be able to qualify for an ISO a company employee must meet certain criteria and obligations. One of these is a qualifying disposition, when an ISO is sold at least one year after options were exercised and two years after the grant date. On the other hand, a disqualifying disposition is when the sale of an ISO, for whatever reason, does not meet the requirements of the prescribed holding period.

Similar to non-statutory options, when an ISO is either granted or an employee is vested there are no tax consequences. That being said, the rules concerning taxes for the exercise of an ISO and its sale can, in many cases, be quite complex. The bottom line is that an ISO will, in most cases, provide a substantial profit to its holder. In most cases if they’re available to you the best thing to do be to consult your financial advisor or an HR representative from your company to find out what your options are.

We hope you enjoyed this blog about incentive stock options and that you will one day and work your way up to where you yourself can receive them. If you’re already there congratulations and we hope that this article has given you a little bit of insight as to how they work. In any case please come back sometime soon and visit us again as were always providing excellent blogs filled with equally excellent advice about all things financial. See you then.

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Top 10 Investment Ideas as per Morgan Stanley for 2013

2013-04-23T00:34:11Z

Normally on our blog we do the research and the information we provide here is sort of put through our ‘filter system’. Today’s blog is differentonly in that rather than give our opinions or advice we’re going to give you the advice of Morgan Stanley’s Global Investment Committee (GIC). As one of the leaders globally in investing we figure that they have a few good ideas and were glad to be able to share them with you, our dear readers. Enjoy.

The way Morgan Stanley sees it the economies of many emerging markets are going to grow in response to any of the policy easing steps recently passed. This is good news for commodity demand in these emerging markets as economic activity in these areas is generally more resource intensive than in economies that are more developed. This, in their opinion, will in turn spur the demand for investment in gold due to concerns about future inflation and currency debasement.

An asset class that has undergone a re-rating over the last several years, emerging market bonds are one of the more attractive sectors in the bond industry. The reason is that there sovereign issuers have improved their underlying credit quality. Morgan Stanley is encouraging their investors to seek unhedged, local currency denominated bonds.

Dividend paying equities, as far as they are concerned, should continue being an attractive alternative for investors looking for income. As they have consistently raised their dividend payout over the last several years, they are advising large, blue-chip companies.

Corporate balance sheets have strengthened under recent persistence of low interest rates and a rise in stock values. This has made investment-grade corporate bonds more attractive with their combination of higher yields and high credit quality.This makes them even better, as far as Morgan Stanley is concerned, than a traditional safe investment like US Treasury bonds.

Underpinning the demand for tax exempt municipal bonds will be the return to a 39.6% US income tax rate. Morgan Stanley favors A rated or better bonds that are general obligation and/or essential service revenue bonds. BBB rated or better with 5 to 11 year maturities are what they recommend.

Offering the same tax benefits as a limited partnership structure but coupling it with the liquidity of publicly traded securities, Master Limited Partnerships are a Morgan Stanley recommendation. They also recommend MLPs that concentrate on natural resource industries like minerals extraction, natural gas and oil. The reason they are attractive to income seeking investors is that, more so than conventional equity investments, they typically offer much higher dividend yields.

With a much better footing than their developed market counterparts, emerging market (EM) economies are the place to invest, as far as Morgan Stanley is concerned. The way they see it, growth in these markets is going to accelerate due to the policy easing steps that have been taken as of late.

While we’re not sure if Morgan Stanley coined this term, ‘Global Gorillas’ are one of their recommendations. These are large domestic market companies with oversized exposure to emerging markets and Morgan Stanley expects them to account for 80% of growth this year globally. Their best bets; India, China and Brazil, where rapid consumer spending growth is likely to happen over the next several years.

The last recommendation from our pals at Morgan Stanley is simply this; water. If there ever was an example of supply and demand water is it and, as the supply dwindles and the demand rises, the investor who has water in his portfolio is going to do quite well. It’s a global problem with global investment ramifications and there will be many new companies popping up that are going to search for ways to increase water’s availability, opening up many investment opportunities.

And there you go, Morgan Stanley’s opinions about the coming investment opportunities this year and into the future. We found them quite interesting and we hope you did also. Please come back and join us again soon when we get back to our regularly scheduled, advice filled and valuable tip heavy blogs. See you then.

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Tips and Advice for Investing in Gold

2013-04-19T15:07:57Z

Recently we brought you a blog filled with tips and advice for investing in silver. Today’s blog is going to be similar and yet quite different as it focuses on the precious metal gold, including gold coins and gold bullion. If you’re looking to diversify your portfolio and invest in a bit of one of the world’s most famous and popular metals then you’ve come to the right place. So sit back, relax and as usual, enjoy.

Investors who love gold will tell you that, if you want to protect your investment against inflation, weakness at the stock market, currency fluctuations and many other financial uncertainties, there is one item that you must have in your portfolio and that is gold bullion and/or gold coins. Most experts will say that, if you’re going to invest in gold, you should do it as a long-term investment and be prepared to hold onto it as long as possible.

The type of gold that you should invest in depends on the reason that you’re interested in investing in it in the first place. If you want to hedge financial uncertainty or take advantage of a price movement then you would do well to invest in contemporary gold bullion coins. Most experts agree that both this type of gold coin and historic gold coins normally trade at modest premiums over their melt value and enjoy internationally strong liquidity, so interestingly neither one is probably an equal bet.

Some investment experts will tell you that gold is ‘ wealth insurance’ and that the best time to buy it is when you can. They will also tell you that you can’t approach gold the same way that you would stocks or investing in real estate. Even further, some will say that the best reason to buy gold is to make sure that, when economic catastrophe looms like the kind were seeing in Europe and Japan right now, gold will suddenly appear like a very intelligent investment.

As far as who is investing in gold you might be surprised to know that it’s not the super-rich by any means. In fact, teachers, dentists, carpenters, attorneys, small business owners and university professors own gold, usually in the form of bullion or coins as we mentioned, which has made gold a very popular part of many portfolios. Recently a Gallup poll showed that gold was rated the best investment by 34% of American investors, higher than stocks, bonds, bank savings and real estate.

One of the biggest differences between gold and the vast majority of capital assets is that gold is the only one that does not rely on someone else’s ability to pay in order to get its value. Unlike bonds, stocks and other investments, gold is always an asset for you but never a liability for someone else. Even more, no matter what happens with the dollar, the stock market or the economy, gold is tangible and has an intrinsic value that cannot be overstated.

As far as how much of your portfolio should be made up with gold investments the general rule is between 10% and 30%. A recent analyst on CNBC advocated investing 20% of your portfolio in gold if you’re keen on protecting your investments from the current economic, financial and political situation happening all over the world.

There are also in gold stocks that you can invest in but most people make the mistake of thinking that they are an exact replacement for physical gold in coins or bullion. If you ask some mine owners about their recent experience with gold stocks they will more than likely express their dismay that, even as the price of gold rose, their stocks failed to do the same. Keep that in mind if you’re keen on purchasing gold stocks.

Well, we sure hope this information has been golden (excuse the pun) for you. Good luck with your adventures in gold investing and always remember to invest intelligently. See you back here soon

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Top Tips for Investing in Silver

2013-04-19T15:05:48Z

It is a well-known fact that when our nation’s economy weakens many start to lose trust in what would be called conventional forms of investing. During these times there is usually an accompanying spike in precious metal investing, particularly silver. Prized for millennia silver is beloved for its sheer beauty and also its physical properties that allow it to be made into a wide variety of different items. While we’re not espousing that investing in silver is the best it does offer an investor looking to diversify their portfolio the opportunity to do so at moderately low risk. With that in mind we put together a blog about the top silver investing tips. If you’re keen on putting silver’s precious patina into your portfolio then read on! Enjoy.

While not particularly complicated, any silver investment will certainly require a bit of research. When it comes to investing in silver there are several different ways to do so and one of the tasks that your research should accomplish is to show you what the best way is for your type of investing habits and portfolio. That being said, make sure to take your time and compare investment methods so that your needs will be met.

One of the most popular ways to invest in silver is with silver bullion and it’s also one of the most convenient. Most bullion is almost 100% pure silver that has been formed into consistently sized, identical bars that are convenient to ship and/or store. As they are easily stackable taking inventory is also quite simple.

Silver bullion bars also have an advantage in that they are not exclusive to a single demographic but rather are popular worldwide which means that trading in silver in this form is much easier to do. Not only that but silver bullion are normally marked with specific information about their origin and their purity, making bank deposits efficient. For those reasons and several others investing in silver bullion is a great choice.

Another popular silver investing choice is silver coins. Although the process involved here is a bit different, silver coins are nearly as profitable as bullion. The distinct differences in the process however need to be considered before deciding on any silver coin investment.

Ironically, the type of silver coins that investors favor most are referred to as ‘ junk coins’ because, as collectibles, they have very little value. Because silver coins tend to lose content if they have been handled a lot and are worn down, their true value depends on their overall condition.

One of the best reasons for investing in silver coins is that they can be purchased in relatively small amounts, opening the door for new investors or investors with limited investment capital. Not only that but, since their prices fluctuate regularly, they can sometimes be sold at a substantial profit.

We’ve taken a look at two of the most popular ways to invest in silver. As far as the advantages and disadvantages of investing in this precious metal there are several of both.

Advantages;

The demand for silver is rising in a large percentage of markets.
Silver is heavily used in the manufacture of automobiles, photovoltaic cells and several applications in the healthcare field.
Silver generally increases at a better rate than gold.

Disadvantages;

Unfortunately, the cost of silver is prohibitive for many new investors. This makes it difficult to actually purchase enough to see a substantial future profit.
Silver can be extremely volatile.
Drastic fluctuations in the price of silver are normal and quite frequent.

As we mentioned earlier we’re not saying that silver is one of the best investment opportunities only that it is one that can be interesting and sometimes profitable. For someone with a nicely diversified portfolio it definitely should be taken into consideration. As with any investment, do your research and purchase with caution. Good luck and we’ll see you back here soon.

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Investing Tips for the New Investor – Part 4 of 4

2013-04-15T14:00:33Z

Hello and welcome back to the 4^th and final part of our 4-part blog series on investing tips for the new investor. If you’re just joining us you are about to get some of the best advice that a new investor could want before beginning their stock investing career. If you’ve been with us since Part 1 then you know that the advice and tips that you are about to get today are going to be more of the same excellence that you’ve seen in parts 1 through 3. So, if you’re ready, let’s get started. Enjoy.

Safety nets, anyone? If you have a time machine then it’s going to be easy for you to make excellent, sound stock purchases. (And please contact us because we’d like to go back into the past and fix a few things.) Of course, since time travel hasn’t been invented yet the best way to make sure that you don’t get burned on your stock investments is to always have a wide margin of safety so that, if the future holds problems for some of your stocks, you’ll be protected.

If you’ve been keeping up with recent stock news you’ve probably seen that a safety margin is something that most excellent investors have, and this is not by accident or because they have a time travel machine, it’s because it was planned.

If you see lemmings, go in the opposite direction. There is a lot to be said for following the crowd but, in our humble opinion, the best investors are the ones that aren’t afraid to go in another direction. The reason being is simple; sometimes the crowd happens to be wrong.
Temper, temper. Another trait that excellent investors have is that they have not only a high degree of intelligence but also a stable temperament that allows that intelligence to overcome any problems that their emotions may cause. This allows them to buy stocks at the bottom and sell them at the top on a regular basis. (That’s a good thing, btw.)
Discipline is vital. It can be very easy to lose your cool when one or several of your stocks are wildly swinging up or down. It is at these times that the best investors show the most discipline and lose the least amount of money. An excellent example of this would be financial guru Jim Cramer. During 2008 he advised all of his investors to take any money that they might need for the next five years out of the stock market immediately because, in his expert opinion, things were headed south and weren’t going to be coming back anytime soon. If he would have shown a little bit more discipline (and we’re sure that today he would) he would have seen that the exact opposite was true and that 2008 was one of the best times to get into the market because practically everything started going back up that year.

If we can be frank for just a moment we would like to say this; investing in the stock market is not for the weak of heart or the weak of mind. Just like with anything else in life if you want to become a stock investing expert you will need to educate yourself, practice investing, have enough financial strength to survive if things don’t always go your way and have the wherewithal to be able to look at any business and any stock with unbiased clarity.

If you can do this you will certainly be ahead of most investors, many of whom play the stock market like a child plays with her toys, meaning that they are completely interested and fascinated at one moment and then completely uninterested the next. Investing in the stock market is a serious endeavor and should be treated as such. Unless you have a lot of money to waste you will definitely want to do your homework and your due diligence before jumping in with both feet.

We hope you enjoyed this four-part blog series and that it was the beginning and not the end of your stock investing education. Best of luck with your investing and please be sure to come back and visit us often as we will be presenting more information in the future about all sorts of financial endeavors. Take care until next we meet.

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Investing Tips for the New Investor – Part 3 of 4

2013-04-15T13:57:42Z

Hello and welcome back for Part 3 of our 4-part blog series on investing tips for the new investor. If you are just joining us you may want to go back and take a look at the first 2 parts of this 4-part blog series before continuing. That being said, the information that you will find in this blog should be useful no matter what you’ve already read before either here on our website or on another blog. Part 3 is chock-full of more great tips, advice and excellent info that any investor can use although it’s geared towards the new investor who is just getting started. So sit back, take mental notes if you wish and let’s get started. Enjoy.

There’s a fine line between patience and stubbornness. Patience is certainly a virtue when it comes to investing in stocks. If you keep an eye on the businesses that you have invested in rather than their stock prices and have patience with them if their stock has recently fallen (but little else about the company has changed) you will probably do just fine. However, when a business is deteriorating and you are constantly hearing bad news about them while continuing to hold on to their stocks you may have crossed the line from patients into stubbornness and, in many cases, being a stubborn investor can cost you money. If you’re worried that you may have crossed the line ask yourself this question; “Would I buy this stock today if I didn’t already own it?”. If you don’t say “yes” then it’s time to sell.
Use sound valuation models. When trying to determine what value a stock will have in the future you will use valuation models to determine those numbers. Always make sure to double check any projections or calculations that you make and, rather than using oracles as your guide, use DCF valuation models or similar models to get the best idea of future earnings.
Know the facts. Before buying any stock you should thoroughly research the business that’s issuing it so that you can make your decision based on more than just price. For example, does the business have a meaningful ownership stake? Are there company insiders who have been buying or selling? If a mutual fund owns the company, what is the record of the managers of that fund? All of these bits of information will help you to make a determination as to whether or not to buy a specific company’s stock.
Know when the tide is about to turn. We’ve all seen opportunities that exploded onto the scene, the kind that make headline news and have investors frothing at the mouth. If you can get in on these opportunities at the very beginning and ride the wave upward then of course go for it. It would be better however, to know when these opportunities are about to hit their ceiling and thus avoid getting in too late. For example, if the opportunity that you are looking at brags about the fact that they have successful medical doctors that have given up their practice to start ‘flipping’ real estate it’s probably a good sign that you shouldn’t get involved.
Look for wide moats. Focusing your attention on businesses that have wide economic moats will usually help you to find the ones that will have higher earnings in 5 to 10 years. Companies that are constantly increasing the intrinsic value of their shares are the best to focus on as these will afford you the luxury of being able to hold onto them for a longer period of time.
By based on price and value. Simply put, the main difference between an excellent investment and an excellent company is the price you pay for their stock. Certainly you should search for excellent companies but, if their stock price is out of line, you’ll still want to skip them. Purchasing stocks at an appropriate price for their value is a key aspect of successful investing.

As we mentioned earlier this is the 3rd part of our 4-part blog series. If you’ve been with us for all 3 parts so far then you have already gotten quite a bit of excellent stock investing information. We’ll be back with part 4 very soon and, if you haven’t had a chance to read parts 1 and 2 yet we strongly urge you to do so. All 4 parts of this blog series, when finished, will give the new investor a solid base for beginning their investing career. We hope you enjoyed today’s blog and that you’ll be back to join us soon for Part 4. See you then!

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Investing Tips for the New Investor – Part 2 of 4

2013-04-15T14:01:17Z

Welcome back for part 2 of our 4-Part investing tips blog series. Hopefully you got a lot out of the 1st Part and have a little bit better idea about how you should go about getting started in the investment game. Part 2 will give you more of the same great advice, tips and information that you need in order to invest intelligently and build an excellent, diversified portfolio. So without further ado let’s get started. Enjoy.

Anchors away? There is a concept in behavioral finance called ‘anchoring’ which refers to the practice of clinging to a specific reference point in your mind. This can be troublesome as there are many people that ‘anchor’ to the specific price that they paid for a specific stock and thereafter gauge that stock’s performance relative to this initial price. The reason that you should avoid this is simply that stocks, over the long run, will be valued based on the estimated future cash flow and value of the business that offered them. Focusing on this fact rather than the actual price that you paid for the stock will keep you from focusing on data that will eventually become irrelevant and could cause you to make errors in your investing strategy.
Trust economics rather than management. What we are referring to here is simply that even the best managed business will sometimes fail and, conversely, a business that is managed poorly but still is wide-moat and a cash cow can sometimes perform incredibly well. Base your stock choices not on the management team but rather on the overall performance of the business and you will usually come out ahead.
Take the high road. Many times you will be faced with a decision to purchase stocks from the company that engages in business or management practices that are not exactly what one would call ‘morally sound’. Our advice; skip these companies even if the returns might look favorable and find a business that treats people (and the planet) well. Even if you don’t make as much money you’ll still sleep better at night.
Past trends can be an indicator of future results. No doubt you have heard it said a number of times, even if you’re just getting started in investing, that past performance is no guarantee of any future results. We agree with this statement to a point. Simply put, past performance shouldn’t be banked on like it was a certainty but it can be a really good indicator of how well a company will do in the future. Frankly, if you find a winning manager don’t be afraid to stick with them when they find new business opportunities as their strong record is a good indicator that they are future record will be strong also.
Going south? It’s surprising how fast a business can deteriorate. Keep that in mind and be wary of companies that look like they have great stock prices but are generating little economic value. That being said, a strong business with solid competitive advantages can sometimes exceed what you expected. When you encounter a troubled business make sure to increase your margin of safety and when you find a business that has a shareholder friendly management team don’t be afraid to decrease that same margin.
Surprises can be positive and negative. If you’re looking at a stock that has just had a huge surge you can bet that it will probably have more of those. On the other hand, a business that has just taken a big dive will probably continue to do so. Keep this in mind when you’re looking at any specific stock and purchase accordingly.

What did you think of Part 2? We hope that you are saying in your head “it was excellent” and that not only did you get a lot of great advice out of it but that you were looking forward to coming back for more. We’ll be back soon with Part 3 of course and more advice for the new-ish investor. We hope to see you then and, for now, take care.

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Investing Tips for the New Investor – Part 1 of 4

2013-04-11T00:41:43Z

Many of our readers have asked for investment advice and tips over the years and indeed we have given a lot of advice back as well as great tips and other useful information. What we’ve now done is taken all of those tips and put them together in a 4-part blog that should give anyone the tools they need to start investing intelligently. With that in mind would like to present Part 1 of our 4-Part blog series on Investing Tips for the New Investor. We hope that you not only enjoy it but that it gives you the information you need to get started investing on your own and using the stock market to build a healthy, wealthy portfolio. Enjoy.

Simple is smart. When it comes to investing the new investor would do well to keep things as simple as possible. Don’t trade too often don’t focus on irrelevant data and certainly don’t try to predict the market. If you can focus on companies that are sound, use your common sense and invest with the idea that you’re going to make money in thelong-run (and thus not in the short-run or at least not very often) your odds of success will increase substantially.
Don’t set your expectations too high. If you’re getting into the stock market because you want to get rich quick then you’d do well to not start at all. The only real way to make quick money in the stock market is to already have a lot of money and also have a good bit of luck on your side. If you don’t have either one of these two necessities (and luck certainly isn’t quantifiable) you’d be better off putting your money in a savings account. That being said, if you go in expecting to make a moderate return over many years then you should do just fine.
Long term investing is your friend. Stocks can be extremely volatile. That’s a fact that you should definitely get used to. In the short run your stocks may bounce all over the place but, in the long run, if they are constantly paying you dividends and interest then holding on to them will make you look like a genius. Many people make the mistake of dumping a stock because it’s not increasing in value but it’s possible that the business that issued the stocks may still have a sound business plan and just be growing, in which case the stocks will definitely rise in the future. If you can grasp this fact and deal with it without getting too antsy or nervous you’ll do better than the vast majority of investors.
Pay attention to the market but don’t over analyze. Simply put, there are so many investment media outlets screaming for your attention that trying to listen to all of them is going to make you crazy as well as second guess yourself regularly. While we don’t espouse ignoring them completely what we do recommend is to tune out the noise a bit and focus on things that are more important like the actual performance of the company whose stocks you own.
Research, research, research. Whatever business that you are looking to buy stocks from make sure that you do your due diligence and research them completely. Take a look at where they started, where they are now and what has happened between those two time periods. The more you know about a specific company the better choices that you can make with your stock investments.
By your stocks when they are priced low and sell them when they are priced high. As simple as this sounds and as many times as we have heard it said you would be surprised to know how many people simply don’t take this basic advice to heart. With that in mind will say it again; when stocks fall and are low you should buy them and if those that you own have suddenly skyrocketed and are extremely high you should sell. Other than those 2 situations don’t let your greed or your fear cause you to make poor financial decisions.

Those 6 excellent bits of advice should get you started on your investing adventure. We strongly urge you to take them to heart, refer back to them often and use them in every facet of your investing strategy and plan. Of course we also invite you to come back for the remaining three parts and we hope to see you very soon. Best of luck with your investments.

The post Investing Tips for the New Investor – Part 1 of 4 appeared first on Epic Finances - Investment Blog.

10 Stock Investing Tips That the Beginner Needs to Know

2013-06-17T14:42:24Z

When it comes to investing in stocks many people assume that they can just jump right in and start trading without ever having done anything with stocks before. This is a very dangerous assumption and can lead to what can only be described as a financial disaster. (We don’t know about you but we hate those.) Like anything in this life it is best to start something new by taking baby steps, keeping your eyes and ears wide open and learning as you go, little by little. This is especially true when it comes to your financial health. With that in mind we put together a blog with the 10 best stock investing tips for beginners that we know of. Now I’m not saying that you need to take out payday loans online to start investing, but if you have the extra income this is a good palce to put it. While you may not be an expert when you’re done with our blog you will certainly no more than you do right now as you read this. Enjoy.

Remember that, when you buy a share of any stock you are actually an owner of the company, albeit in a small fashion. Any company being traded is owned by the shareholders and each share represents your claim on any assets and earnings that that company has.
Another vital piece of information that you need to know is that there are many different kinds of stocks. Company size, sectors, types of growth patterns and so forth all determine what type of stock that a company has. There are also large vs. small-cap stocks, growth vs. value stocks and energy versus technology stocks, to name just a few. Be aware of this before you start investing.
Look at a stock’s short-term earnings to determine what’s going on with it now but look at its long-term earnings to get a better idea of what it will do in the future. Simply put, short-term behavior is based on many different factors but long-term is based on one thing; the actual facts about how your stock performed.
If you’re looking to beat inflation, stocks are more than likely your best bet. It’s a known fact that, since the end of World War II, there has been approximately a 10% return yearly on stocks which is much better than inflation or the return on bonds, real estate and most other savings and investment vehicles. With that in mind we recommend stocks for taking care of your long-term goals like setting up your retirement fund.
While the market tends to rise and fall together there are always stocks that will buck whatever trend is actually occurring. Even if the market is going down you may find an excellent stock that is increasing as well as a lousy stock the decreases while the rest of the market is booming.
Remember that an excellent track record, while it bodes well for the future, is not a guarantee that your stock will increase in value. The fact is, even stocks and companies that have done well for years can sometimes slip.
Looking only at the price of a specific stock is a bad way to tell if it is ‘expensive’ or not. For example, if you find a company that has excellent earning prospects their $100 per stock price can be seen as a bargain while a $2.00 per stock price can actually be expensive if the company that issued the stock is poorly run and eventually fails.
A good investor must learn to compare stocks by not only their prices but by their value as far as revenues, earnings, cash flow and other vital criteria go. Comparing a company’s performance to other companies in the same industry before you purchase their stock is also an excellent idea, keeping in mind that you will sometimes find slow growth industries and need to judge them differently than a company in an industry that has strong growth.
The smartest investors know that having a portfolio that is diversified is the best way to protect their investments. The reason for this is simple; if you put all your eggs in one basket and that basket drops, you’re going to lose a lot of eggs. However, if you have many baskets and only one basket drops, you will only lose one or two eggs. We recommend more baskets so that, when the time comes, you’ll have a lot more eggs. (Our apologies to chickens everywhere for the analogy.)
Investors who hold onto their stocks for the long term usually make out much better than those who buy and sell too often. While the fact is that the cost of trading has dropped dramatically there are other trading costs that can easily eat up your profits if you’re not careful. Unless you are a full-time trader you probably don’t have the time to play as close enough attention to the market as you should if you’re going to buy and sell regularly. It’s for that reason that we recommend that you don’t but rather hold on to your stocks for the long term, especially if they are showing gains every year.

And there you have them; 10 excellent tips that should help you to get started trading and putting together an excellent, diversified portfolio that will pay high dividends down the road. Again, you don’t necessarily need to take out cash loans to start investing, but if you have the necessary funds then don’t hesitate, because inflation will get you everytime. We hope you enjoyed this rather wordy blog and that these tips were valuable for you. Best of luck with your investing plans and please come back soon for more investing, financial and general tips for saving money. See you then!

The post 10 Stock Investing Tips That the Beginner Needs to Know appeared first on Epic Finances - Investment Blog.