Spending and Investing Practices

Introduction How come some spate make dance bands of specie, others basic all in ally maintain the status quo, and m any(prenominal) atomic number 18 awash in debt? What makes the difference? spending habits the difference between needs, indispensablenesss, and self-indulgence. spend practices how era and compound interest can create a fortune. Spending with knocked protrude(p) planning is seeking instant self-gratification NOW. Over-spending creates a bondage that limits opportunities. We all acquit dreams, priorities, fears, and limited time. In large part these argon the distinguish factors that influence what we do with our silver. After all, the money we hold back at the secondment is limited.The key questions ar What ar the things that are important to you now, volt age from now, in 25 old age, and so forth How much money do you have at the moment that is beyond the basics? What are your dress hat coronation choices based upon your age and the time ready (prenominal)? monetary cookery interpretation The process of managing your money and resources to achieve economical and personal satisfaction. The financial Planning Process. Determining your current monetary situation. What is your income, expenses, and debt? Developing your financial goals. What are your in store(predicate) plans for housing, transportation, medical, marriage, retirement, etc.Identifying courses of action. Evaluating each course of action. Every decision c aches off other alternatives. Creating and implementing your financial action plan. Write it down. Continually review your plan and revise as necessary. Selecting Financial Goals Should contain time goals Short term goals of a week, month, sextet months, a year or two years. Medium term goals that whitethorn be achieved inside five years. Long term goals such finance college for children, retirement plans, Should contain need goals Consumable product goals food, clothing, entertainment, etc. unchangea ble product goals cars, furniture, appliances, sporting equipment, etc.Intangible purchase goals health, education, leisure, relationships, etc. Goal- restrictting Guidelines Financial goals should be realistic. recount in specific measurable terms Should have a time frame Should indicate the type of action to be taken. Influences on Financial Planning Stage of adult life cycle young single, married, married with children, single parent, old(a) 50+. Marital status, household size, and employment. Personal value and major events such as graduation, marriage, children, retirement, etc. Local and global economic conditions such as consumer harms related to inflation. interest rates for borrowing money. oney add printed by political relation. unemployment related to job availability. Investing In The Stock moneymaking(prenominal)ize Investing started when someone had an idea that possibly would make money save didnt have the financing to develop it. So he seek money from other s who were willing to risk their coin in exchange for a share of the potential profits. When the idea proved profitable and looked as if it would incur an income for an ex turn tailed period of time, outsiders would try to steal shares in the come with by offering cash to the original owners. If several people start command for shares and the share owners were willing to sell, the expense increased.What Is Bought & Sold in the Stock securities manufacturing Stocks are shares of ownership in a participation. Shareholders may benefit from company profits and a rising stock footing. They may also lose their shirt if the company loses money and stock prices fall. Note, Penny stocks that are baseborn priced flow to be highly speculative with few buyers and sellers and high risk. below are some well-known stocks. Exchange Traded Funds (ETFs) hold a diversified portfolio of stocks and/or securities that are minimally managed. ETFs have the following advantages ETFs are safer t han stocks be have got an ETF is a basket of securities.With multiple securities, you arent subject to the wide coordinate of risk including corporate scandals, after marketplace earning reports, and other factors that affect soulfulness stocks. ETFs may be sightd during market hours. ETFs allow the use of limit orders and barricade-loss orders. ETFs have no penalties for early withdrawal and are no-load (although usual broker requitals apply). ETFs are passively managed so their expenses tend to be lower than comparable common funds. ETFs holdings are very apparent and portfolio changes are relatively infrequent. Options are available on some ETFs . Index Funds securities that represent entire sectorsS&P 500 Index (SPY) Dow Jones Industrial (DIA) NASDAQ 100 (QQQQ) Russell 2000 Fund (IWM). Options are purchasable and sellable contracts that guarantee rights, but non necessarily obligations to buy or sell a aegis for an agreed upon price within a certain time period. Mutual funds pooled money managed by pro money managers who charge for their services. Mutual funds are yet avocationd after the market closes each day. Mutual funds can non be cherish from falling prices during the day. If the market is crashing, a sell order to get out is initiated only after the market has closed.No-Load Mutual Funds no salarys supercharged for buying or selling. On an think about(a) these tend to be much profitable than loaded funds. Loaded Mutual Funds an upfront fee or exit fee is charged to enter or cash out a fund. Bonds loans made to a company or g overnment with a guaranteed return if bankruptcy doesnt occur. Often bonds are sold to increase cash to expand the business. Commodities raw materials such as sugar, wheat, pork bellies, metals, etc. During economic expansion commodity prices generally rise cod to change magnitude demand. During a recession or deflationary times the opposite is neat except in the case of precious metals.Sometimes when peop le lose trustfulness in their paper money they purchase gold or fluid as insurance against devaluation of the dollar. Currencies paper money that people believe has value. As the amount of paper money increases, the value of the paper money decreases. With to a great extent paper money chasing goodnesss, the rate of inflation rises (gas used to be 23 cents a gallon). REITs (Real Estate Investment Trusts) publicly traded companies that own and manage investment-grade commercial real estate. REITs invest in office buildings, malls, industrial facilities, hotels, resorts, health safeguard facilities, and self-storage.REITs provide a simple and inexpensive way to invest in commercial real estate without buying property directly. However, they are not very liquefiable. REITs provide a fairly reliable source of income. At least 90 percent of taxable income must be distributed annually to shareholders. Financial Participants Banks and Credit Unions typically manage accounts and provi de services including checking, savings, loans, computer address and debit cards, notary services, safe deposit boxes, etc. agentage Firms typically manage all types of trades (stocks, usual funds, ETFs, etc. ) for a fee.Some are sound service, providing advice and charging for their services. Others are discount brokers that handle transactions for a minimal charge. Broker a licensed professional who advises people about investments for a fee and may work for a brokerage firm. Stock and Commodity markets are exchanges where stocks, options, securities, indexes, currencies, commodities, etc. are traded. market Maker a professional securities dealer who buys and sells stocks or commodities held in inventory and must ALWAYS provide a bid and ask price at which they will buy or sell something.Investors (speculators) are individuals who usually hold longer-term investments. Traders (scalpers) are individuals who usually trade quickly looking for quick profits. Momentum investors t rack prices and loudness info to identify stocks trending higher. Market Timers try to time their investing so theyre buying at market troughs and selling at peaks. Growth Investors post stocks of companies that produce, and should continue producing, above-average earnings growth. Value Investors shop for bargains, hoping to buy low, as the commonplace goes, and sell high.There are four market trends. Down trending markets in which hostage prices are falling. People typically do not know how to trade this market. Yet trading a down trending market is usually the roughly profitable. Security prices fall faster than they rise, typically taking 5 years to reach a high versus 3 months to lose most of the gain. heights volatility markets in which security prices swing wildly from one total to the other. Day principals and professional traders are very active in this scenario. Up-trending markets in which security prices are rising.Most people invest in an up-trending market be cause of their approbative outlook. This market ranks third in trading profitableness. Sideways trending markets in which security prices trade within a fairly tight range with slim fluctuation. It is important to note that . . . Money can be made or lost no matter the market direction Protecting Trades With lolly Frequently novice traders fail to protect profits and lose money even though a security has bounced in and out of profitability several times. The use of a STOP is one way to protect an account.A STOP is a chosen price in which a trader wants to sell a security to prevent a further price decline. There are four kinds of STOPS. Automatic Hard STOP. This STOP is set immediately after the initial purchase and is not changed until it is deleted or adjusted. Market makers may see hard STOPS and often knock them out during trading by dropping the price suddenly and then education the price unawares on that pointafter. Trailing STOP a favorite. As the price of a stock ris es, this STOP correspondingly rises. A Trailing STOP allows a winning stock to run while protecting against a loss if the price drops.Mental STOP. This STOP is written down but not placed with the brokerage firm because full-time traders may not want to be inadvertently stopped out of a trade due to a momentary large price swing. STOP particularize. A Limit Order is an order to buy or sell at a specific price or better and is only ACTIVATED when the sought after price is hit. Searching For investments Determine market trends. What are the current market trends with the Dow, SP 500, etc. Select high-ranking industry in which money is flowing into it. Studies have shown industry ranking is responsible for at least 50% of a stock price execution.Scan For Higher Volume. case for securities that trade more than 750,000 shares periodical. A stock needs to be liquid conceiveing that there are plenty of buyers when it is time to sell. Search For pass by Contenders. The companies shou ld be profitable, with low or no debt. Trading Volume Drives Trends When there is a dramatic change in the volume being traded daily compared to its average daily volume, PAY ATTENTION Typically this means professional money managers are either buying or selling a security. Like a garage sale, when there are a lot of buyers, prices tend to stay put or rise.If there is an abundance of sellers, prices typically fall. Rising prices with high volume mean institutional professional money managers are buying. The larger the volume increase 50% above average the better chance it is a true breakout. During major breakouts it is not unwonted for new market leaders to show volume spikes from 200% to atomic number 19%. Rising prices with little volume is often a suckers rally and novice buyers tend to be taken to the cleaners because the price rise lacks support by institutions. Falling prices with high volume mean institutional money managers are selling.Falling prices with little volume may mean a strong base of support is forming for a possible uptrend. Professionals tend to purchase heavily and then wait four to eight geezerhood before buying again. Trend Insights A trend is the direction of movement of a market or individual security. Trends are characterized by a serial of zigzags that resemble a series of waves with peaks and troughs. There are collar trends An uptrend is a series of higher highs and higher lows. A downtrend is a series of lower highs and lower lows. A neutral trend is horizontal, or equal, peaks and troughs, and reflects a period of indecision.This is also known as the consolidation phase. If a trader is wrong about the trends all other factors are basically worthless. What is normal one moment may be a dog shortly thereafter. Trends are your friend. Money is always flowing somewhere Large Market Trends are determined by an synopsis of the buying and selling volume of the Dow, NASDAQ, S&P 500, Russell, etc. Sector Trends deal with an ov erall analysis of similar companies. Listed below are ETFs that cover sectors. Sector ETFs Internet HHH oil colour Service OIH Transportation IYT Telecom IYZReal Estate IYR Big tech QQQQ Software PSJ Media PBS Defense PPA Construction PKB Insurance PIC Financials IYF Nanotech PXN Alt. aptitude PBW Industry Trends are a subcategory of sector trends. This is where individual stocks are listed. schedule Trends. Some things happen on a recurring basis which cause stock prices to rise and fall almost like clockwork. For instance, Christmas goods are usually shipped in August and September influencing the stock prices of UPS or FEDX. Indias unify season increases the demand for gold. CAN lissom COMPANY ANALYSIS CRITERIAWilliam ONeil, open of Investors Business Daily Newspaper (IBD), developed the CAN SLIM investing analysis criteria that is based upon many years of research and quick displayed in IBD. The following is a summary of the analytical criteria used. C = current Quarter ly Profit Increases. Strong growth in earnings, more than any other factor, is what defines the market leaders that potentially are going to construe big price advances. IBD recommends looking for stocks with a profit gain of at least 25% compared to the same quarter of the previous year.IBD found that triad of every four such stocks boosted profits by more than 70% in their most recent quarter BEFORE their big run-ups. A = Annual Earning Increases should be at least 25% for the last three to five years. Some of the biggest market winners had annual earnings growth of 50%+ before starting their big run-ups. A trend of three to five years of annual earning increases coupled with recent strong earnings in the last several quarters increases the probability of success in an up-trending market. N = New Products, Management, or Highs.It seems that anything new that makes our lives richer, extends our health, or increases our productivity is desirable. Old companies or newly created co mpanies that provide these new things or new services tend to increase in value because of increase in sales. S = fork up & Demand. When there are plenty of buyers and few sellers, prices increase. When demand for stock shares increases, the company with the least amount of shares available will experience a greater price increase. The greater the number shares available (for sale) the less the price performance.Usually older larger companies with billions of shares are more sluggish than companies trading only 50 million shares. Note, the larger the percentage of ownership by management, typically the greater the growth potential. L = Leaders, Not Laggards. There are many wannabes failure companies. Their price growth results are average at best or a flash-in-the-pan. Select best-of-breed stocks from the top three in strong industry groups with the best quarterly/annual earnings growth. Note, in a diddlysquat market correction, the stocks that drop the least are usually the best on rebound.I = Institutional Sponsorship. When big traders (mutual funds, pension plans, etc) are buying millions of shares, it is a good sign the price will run-up. But not all mutual funds are equal in quality. Follow the leaders of the best mutual funds. M = Market Direction. Track the trend averages using the S&P, DJIA, and NASDAQ. And Finally CFO Corporate Fraud Officer. FIAT Money Financial Instrument Administering Theft of Money Insanity Doing the same thing over and over again and expecting different results. Einstein