There are few men who can speak with confidence about their investment portfolios. Besides, out of thousands of stocks which ones are the winners? Thats not an easy question to answer as many investors have discovered. Yes you could just follow the popular stocks but thats not where the real money is. You could just copy your friends portfolios but who is to say they know what theyre doing? Here is an overview of how your portfolio should be structured. Keep in mind that everyone has a different risk tolerance and so you can make adjustments where necessary. We will speak in generic terms here and give percentile ranges instead of exact recommendations. This way you can make your own decision according to your particular situation.

To start with, if you know nothing about investing then you need to take the time to learn first. That or just jump into some mutual funds and have someone manage the allocations for you. There is no reason to take unnecessary risks at this point. It is only an unnecessary risk if you lack the proper knowledge.

Large Caps. Now there are many investing consultant types who will tell you to put a large percentage in large cap stocks. I say, unless you are big on dividends, which can be a nice constancy, you should only put a small portion of your portfolio in large caps. The reason I recommend this is because these stocks have already seen their glory days. They are wonderful companies but the potential for them to double your money is quite small. So I would recommend a 10% to 20% allocation here depending on your long term goals. Looking for slow less risky growth? Then lean on the latter end of that percentile recommendation.

Mid Caps. I believe that mid cap stocks in reality should take the place of the typical large cap recommendations. Why? Because these companies have experienced growth but still have a decent amount of potential to bring great profits. Safe with great potential, sounds like a winner to me. So Im going to recommend a 20% to 30% allocation here depending on your risk tolerance and long term goals.

Small Caps. These companies have huge potential if you follow trustworthy recommendations and stick with them. We are not talking about short holds here. We are talking about finding a super star small cap company and sticking with it until it becomes a large cap stock. I would recommend a 30% to 40% allocation here.

Micro Caps. This is a personal favorite but I am willing to take the risks. Micro caps are often called penny stocks and dont trade on the normal stock exchanges. Keep in mind that penny stocks are only for those with a big tolerance for risk. If you are uncomfortable with losing money then you should steer clear of this investment all together and use this allocation in other parts of your portfolio. There is a big risk of losing money but a huge potential for big gains not found else where. I would recommend a 10% to 25% allocation depending on your risk tolerance and goals.

In the world of investing there are many different investment vehicles and strategies but they can be split into three broad categories. The advantage of thinking from this point of view is that it makes it easier to decide which form of investing or which combination of investing will best suit you.

Let’s have a look at the three broad categories of investing and look at the advantages and disadvantages of each.

Passive Investing

Passive investing is when you put the investment decision making into the hands of someone else, ideally an expert investment manager.

The advantages of passive investment are that you are not required to have any investment expertise and you don’t have to invest your time, only your money. The disadvantages are that firstly you have relinquished your control over your money and secondly the returns for these types of investment are usually uninspiring.

Common examples of passive investing are savings accounts, government bonds, property trusts and mutual funds. Most people invest for their retirement under some form of passive investment that usually has special tax concessions which vary from country to country.

Active Investing

With active investing you take an active role in managing the investment. This form of investing could have a long term focus such as a buy and hold share portfolio or it could be a short term focus such as futures trading.

To do well in active investing you need to have considerable knowledge of the investment vehicle or vehicles that you are using. You also need to understand the basic principles such as when to collect profits, when to cut losses and how to analyze the market. You also need the emotional strength to apply these strategies as required (this is often the most difficult aspect of active investing).

The advantages of active investing are that you have greater control over your investment than you do with passive investing and the potential for profit is theoretically higher. The disadvantages are that you need to invest time in acquiring knowledge and skills and in managing your investments and also that the potential for loss is also generally far greater than in passive investing.

Common examples of active investments are share, options, futures, and currency trading, buy and hold share portfolio building, buy and hold residential or commercial property, and property trading.

Creative Investing

With creative investing you actually change the investment in some way that is designed to manufacture profit. This form of investment requires a lot of skill and experience but if you have that skill and experience then you can create huge profits by being able to visualize what your investment could be once you have applied your imagination to it. For this reason creative investing is often described as turning thought into money.

For example if you are a property developer there is a huge variety of possible developments that you could design and build on a particular piece of land. Amongst that huge set of possibilities there are also a huge range of potential outcomes ranging from high profit to huge loss and including all the points in between.

The advantages of creative investing are that it has the highest profit potential and the highest degree of control and flexibility. The disadvantages are that it requires the highest degree of knowledge, usually involves borrowing large sums of money and also has a huge potential for large losses if you get it wrong.

Common examples of creative investments are property development, property renovation, business renovation and new product development and marketing.

When you are deciding which of these three broad categories best suits you need to consider your knowledge and experience, your strengths and weaknesses, your access to resources, including time and money, and in particular you need to consider your personality including your time management skills, decision making skills, tolerance for risk and your self discipline.

There are of course many expert consultants to help you in each field and many sources of knowledge and experience to tap into.

I hope that this article was useful in helping you see where the various types of investments fit into the scheme of things.

The word Investment is very commonly used nowadays. But to understand it accurately you should know that Investment is an act or contract that obtains or increases enduring economic links with an existing institution or one that has to be formed.

Everyone knows that in todays era Investment is important. But, how do you know the correct Investment moves that could be right for your personal needs and goals.

The concept of Investment

A good Investment can be a well-coordinated suit and sports jacket for some or may be buying a piece of land or may mean anything to any person. But Investment is a term with several closely related meanings in finance and economics, related to saving or deferring consumption.

An asset is typically purchased, or similarly a deposit is made in a bank, in hopes of getting a future return or interest from it. Literally, the word Investment means the action of putting something in to somewhere else.

The most important exception for the purpose of investment is the acquisition of interest in land, which is governed by both statutory and customary law. The judiciary that comprises both the lower courts and the superior court.

The major difference within the use of the term investment in economics and finance is that economists are known usually as referring to a real Investment. Case in point a machine or a house but financial economists typically refer to a financial asset money that is put into a bank or the market which can then be new to buy a real asset.

The world of Investment can seem to be mind-boggling for a beginning investor and the amount of information required to be consumed can appear daunting. So how does one decide what kind of security to invest in?

Considering the point, would you choose stocks, bonds or some combination of investments? Or could you invest in mutual funds? How do you choose a particular fund, stock or bond? How do you assess the risk to your money? Well! Seems confusing right.

Undoubtedly, the most commonly new Investment service is buying and selling stocks. Since only licensed brokers are allowed to trade stocks, an individual who wants to buy or sell a stock is required to work through a broker.

Individual brokers work for financial services companies known as brokerage houses. In general for Investment purposes, there are two main types of brokerages, the most commonly known full service broker and the more recently developed discount broker.

Since prices of things are rising, doesn’t it make sense to enjoy now rather than save and consume later when we will obtain less for the same money?

Yes, if we are going to keep money under the carpet.

No, if we are going to do proper Investment and the rate of interest is higher than inflation rate. So if inflation is 5% and we obtain 8% return, the money successfully grows 3%. Hence a year later, we will enjoy more than what we would enjoy in most cases, if you or someone that understands and has expert knowledge spent now.

This is the concept of delayed gratification a type of Investment thought of for the future.

Usually taxes are the biggest expense. But you could also watch out for loads in mutual funds, any fee you pay to your Investment advisor, subscription to Investment magazines, demat your Investment account charges.

In most cases, if you or someone that understands and has expert knowledge are investing one lakh a year and its most important to understand if you are paying 5000 as a fee to your advisor and its much more important to understand if you are successfully paying 5% entry load, your chances of this portfolio beating a well diversified AAP, compliant portfolio over the long term is almost nil.

What could you prefer: Rs 10,000 right now or Rs 10,000 five years from now?

Common sense tells us that we could take Rs 10,000 today because we know that there is a sure time value of money. The Rs 10,000 received now provides us with a better chance to put it to work immediately and earn a sure return on it.

A single rupee today is worth more than a single rupee Investment a few years down the line. Given this, households that have surplus funds highlight within the form of savings want to have Investment in those funds so that the value of the funds over the years does not go down.

There are various forms of Investment at the availability of people. These include real assets like a house, an auto, a television, or financial assets like stocks in companies, bonds, units of funds, et cetera.

Traditionally, term deposits in banks, post office savings schemes, bonds and common stocks are the most accessible forms of Investment available to the investors. Term deposits, post office savings schemes and bonds give a fixed return over a period of time.

Investors would usually want their Investment in an asset, which gives them maximum return on their Investment. However, life is not as simple as that. Different assets come with different risk profiles. So choose correctly.

I am looking to invest long-term (20+ years) and this is my first time buying stocks. I have a medium to high risk tolerance. I will be initially investing $2500. The goal is growth for retirement fund.
Wondering how many different stocks to buy with my $2500.
Also, what would you say are good markets/industries to buy into now for maximum growth over the next 20 years?
I already have mutual funds… so I’m hoping to get into something with more potential payback (realizing the added risk also).

FINANCIAL FREEDOM

Save, Not Sorry

It sure is an eye-opener to see what spending less now can do to your bottom line later on down the road. Opt for a cheaper car, and you may be able to retire earlier than you had planned. Shell out less on nights out with pals, and you can have that rainy-day fund you’ve been meaning to set up. Easy to say, hard to commit to, I know. But these facts should get you motivated. If you’re saving for a short-term goal, such as a home down payment or an emergency fund, you want your money to be super safe. That means a money market or savings account, CD, or T-bill. Currently, you can earn about a 5 percent annual rate of return. That may not sound like much, but here’s how it will add up:

·Save $100 a month, and you’ll have $6,829 in five years.

·Save $250 a month, and you’ll have $17,072 in five years.

·Save $1,000 a month, and you’ll have $68,289 in five years.

For longer-term goals, such as retirement, your money belongs in stocks or mutual funds, which offer the best odds for growth over time. (Remember, you won’t touch the money for another 10, 20, or 30 years.) An 8 percent average annualized gain is a reasonable expectation. This is how it will grow:

·Save $100 a month, and you’ll have $59,295 in 20 years and $150,030 in 30 years.

·Save $250 a month, and you’ll have $148,237 in 20 years and $375,074 in 30 years.

·Save $1,000 a month, and you’ll have $592,947 in 20 years and $1.5 million in 30 years.

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While it can seem very difficult to put money away each month for retirement or savings, not doing so can leave you with a lifetime of living paycheck to paycheck with no possibility of retirement. Just putting the money away, though, is not enough. You have to invest that money in something that will put your money to work for you, earning money on its own. The stock market, retirement plans, mutual funds, and other investment vehicles offered through banks and investment companies are great ways to do this. Be sure to avoid these common pitfalls when considering how to invest that money:

1. Don’t ignore your employer’s 401k plan, if it is offered. Most employers do have such a plan, and many match the funds you put in in some way. By not taking advantage of the 401k, you may be giving up free money, and you are definitely giving up one of the best possible investment vehicles around. If this is available to you, be sure to take advantage of it as soon as you are eligible.

2. Lack of some kind of investment and savings plan. Your age, budget, family situation, and other economic factors will determine how much you can invest each month, and what kind of investments you should make. Familiarize yourself with basic investing philosophies and then invest according to your needs and situation.

3. Being too conservative with your investments. If your timeline to retirement or other financial need is more than 20 years away, you need to consider maximizing your returns through riskier investments. While you may lose some money, at least on paper, in the short term, history has proven again and again that you will make significant returns over the long term. Riskier investments invariably provide higher returns.

4. Taking too much risk with your investments. As you get closer to retirement, you will need to start taking a different outlook on your investing. The name of the game here will be capital preservation, rather than high returns. As a result, you will want to start moving your portfolio to less risky investment vehicles such as money market funds, bond funds, and CDs.

5. Investing too heavily into one sector or type of investment. The best way to preserve capital, while at the same time earning high returns, is to diversify your portfolio. This will allow your money to grow regardless of current economic conditions and keep you from suffering the consequences of knee-jerk market reactions to short-term economic factors.

6. Getting involved in get rich quick scams. Once you’ve established investment accounts, you will be continually bombarded by less-than-honest people trying to get you to buy into their “hot stocks” tip sheets, and other investment advisory information. Don’t fall for it. Chances are, these opportunities are outright fake or just short of impossible to get them to actually work.

7. Hanging on to a hot investment for too long. From time to time, you will find a stock or other investment that pays very high returns. Keep in mind that it will not stay that way, and set a goal to get out before you lose money on it (double or triple your money, whatever makes sense). Once you’re out, don’t look back. Be happy that you made good money on it, not sad that you might have made more.

8. Information overload. You can spend way too much time on analyzing an investment, and by the time you are ready to make a move, it’s too late. Don’t let this happen to you. Lots of money is lost everyday because people were unwilling to make a move in time. Get just enough information to confirm your hunch and then just do it. If you don’t know enough about the investment or the industry, use an investment advisor to limit any mistakes you might make.

9. Investing while being saddled with debt. Your debt will accrue interest charges much faster than your investments will make money. Before investing your first dollar, get out of debt, particularly credit cards and other revolving debt instruments. A mortgage is just fine, as that will likely make you money in the long term, but revolving credit is just not necessary for most people.

10. Paying too much in commission fees. Few things will eat into your investment returns faster than commissions. Unless you are already very rich, and you’re constantly trading in and out of stocks and bonds, you should not be paying high commissions. For most people a discount broker is the way to go. For the cheapest possible commissions, consider using one of the online investment brokers, and be sure to compare commission structures before deciding which broker to use.

Where is a complete list of the trading symbols for all stocks, bonds and mutual funds that are traded on US exchanges and OTC?