Showing posts with label Investment. Show all posts
Showing posts with label Investment. Show all posts

Thursday, 18 September 2014

Why Invest In Stocks?

by: Hari Wibowo


Have you ever wondered why investors behave the way they do? For example, why do people invest in bonds or stocks or not at all? Since I am an advocate of stock investing, let me make the case for stock investing.


So, why invest in stocks? No, I won’t just invest in any kind of stocks. There are goals associated with investing in stocks. For starter, stock investors would want to be compensated more than if they put their money in the bank. Anything else? Yes. Stock investors would want to be compensated more than the risk free interest rate which currently yield around 4.7%. For your information, risk free interest rate here is the 10 year Treasury bond which is backed by the United States Government. These bonds are deemed to be free from the risk of default.


Therefore, when we invest in stocks, we would want a return in excess of 4.7%. How much more? That varies within individuals. Some wants a 5% return. Others are satisfied with 6% return. Personally, I would want at least 7% return for my stock investment. There are reasons for this. Stock investing is relatively volatile and full of uncertainty. Interest rate goes up and down which will hamper our return as stock investors. For example if interest rate rises to 8%, would aiming a 7% return for your stock investment worth the risk? Probably not. In this case, most people prefer to put their money in the bank and enjoy the higher return.


Having said that, we need to know how much stocks have given investors historically. For the US stock market, the return for the last century has been in the neighborhood of 10%. That, my friend, is the sole reason to invest in stocks. Not because you want to own a piece of corporate America. You invest in stocks because historically it gives you a better return that other investing alternatives. No other investments boast that high of a return over the last century, not even real estate.


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Monday, 25 August 2014

The Seasons of Business

Seasons of Life – Seasons in Business


By


Nature gives us clues on the change of seasons. Seasons happen… its nature in action. Maybe differently in tropical areas, yet there are hints even in the tropics that change is happening. Seasons are also natural laws that govern our physical lives. You can debate these natural laws all you want, yet they are real, they happen. Either go “with the flow of nature in action” or you get caught in its tidal wave of destruction when you resist what is natural… change.


Going with the “natural law of flow” is a choice you have to make daily. A choice to allow nature and its laws to help you or resist. Those are your only choices, yet it still is “your” choice.


Let say you refuse to believe in or trust the “Law of Gravity“, does the law change through your lack of trust in it, no. If you jump from a plane with no parachute what happens? Do you stay statues quo with the height when you jumped? No! Why not? The “Law of Gravity”. It exists if you believe in it or not. It takes over and will take you down until you hit something that stops you dead in your fall.


What about the “Law of the Harvest”? If you plant “20″ acres of soy beans, you will not reap “100″ acres of something different. If you’re thinking how stupid, yet many expect to reap what they do not sow. They become confused when they don’t get what they want because they ‘THINK’ they are outputting time and energy and therefore “should” get the results they want. SORRY… NOT NATURE. Think about it. A farmer does not wonder or get confused on what his harvest is going to be, he knows. He knows because he knows what he planted, what he had to do to “nurture” his crop to grow, then he had to give it time to grow, then he picks the harvest. The “Law of Harvest” is as reliable as the “Law of Gravity” when it comes to bringing us to a solid footing of what is real… not illusionary. Natures “Law of Harvest” is finite, we reap what we sow. If what you are reaping is NOT what you want… know what you are reaping is what you are sowing, period.


Harvesting the vegetable farm.

Harvesting the vegetable farm. (Photo credit: Wikipedia)



In business I often hear individuals expressing major disappointments, complaining that they don’t understand what is happening because they “think” they are doing all the right things therefore they feel life is “unreasonable” or “down right unfair” because they do not know why bad “things” are happening to them. They are surprised by others:


1. Lack of real commitment.

2. Turnover being high and what seems to be never ending.

3. (My personal favorite) Revenue is up and down… and appears to shrink again… after being up.

4. Everyone undermines each other… there is no team work.

5. There is no fun at work… there’s no joy in the entire process of coming to work doing the necessary tasks and building successfully.


Why are these common statements caught in what appears as a gerbil wheel of a lot of energy output with no positive lasting results? Because the focus is on the state of a situation that we feel requires an immediate action or attention, verses what is really important in sowing an action that follows natures laws. I will fully agree that leadership, either in the home as a parent or in business requires sound direction and ongoing attention. There is always some detail, or problem that requires our attention. Times are always changing, its nature in action… but one absolute reality, a truth that remains constant about life and leadership and a law that will never change – we reap what we sow for better or for worse. Do we sow judgment, blame, guilt or shame… into our choices… personally, professionally or organizationally? Or do we sow unconditional accountability in taking command in the fact that it is our choices, for better or worst that we are reaping.


Spring Flowers

Spring Flowers (Photo credit: NixBC)



Use nature to guide your choices. Start with Spring. This is the time to invest in seeds to develop our harvest… investing in others is the seeds of strong growth. Support high performance by being clear, then cultivate a strong culture by building a strong “root structure”. Strong roots create a solid foundation for growth. A strong inner structure doesn’t break in adversity… then nurture it. In divine timing… the law of nature in action… your investments in what you plant will pay off. Summer: Protect and nurture your investment. Do not wait until the fall, assess daily… moment to moment… how you are doing. True intent equals outcome always. Regardless of how you feel about it… reality does not lie. Figures don’t lie. Did you live up to your word? Look back. Don’t judge… yet assess honestly what could you have done differently to improve the results/situation. Stop… assess, restart and keep what works… let go… without out judgment, blame, guilt or shame what doesn’t work… simple. Then integrate… again and again. Consistently applying what does work produces results. If you can’t see the whole forest because your in the middle of the trees ask others, your team, family or friends for constructive feed back. Fall: Prepare for new levels of output. Fall brings the effects of the work (seeds) planted in the in spring. Remember, do not expect to reap what you did not sow. You will either enjoy abundance from your honest labor or “make excuses” why you are not. View adversity as the blessing it is… instead of a curse that a judgmental mind will take you to. Adversity reveals our true character. Rise above excuses or be buried in the “nature” of blame. Winter: A time for appreciation and reflection. Turn your thoughts of appreciation into acts of appreciation, then reflect on what requires change to keep up with the changes life brings.


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Friday, 22 August 2014

ETFs Should Be In Your Portfolio

Investment Advice: Exchange Traded Funds As Part Of Your Investment Portfolio

by: Kathryn Dawson


‘What should I invest in?’ This is the most pertinent question for most individuals striving to formulate a financial plan. Zillions of books and millions of web pages are not sufficient to answer this question. This is because investment advice is not universal and one size does not fit all. It changes as per the unique situation and specific requirements of every individual. Thus, it is essential to consult an investment expert personally to devise a customised financial plan.


For their investment and retirement plans, many people do not want an actively managed portfolio but would rather invest in the lower cost option of passive funds, which will just track the selected market index. There are currently two main options available for passive investment: tracker funds or ETFs.


Investment Advice: Understanding ETFs


Seek investment advice on ETFs to understand how they could form an important role in your portfolio. According toCNN financial experts, ETFs are “invented to combine the simplicity and low costs of index mutual funds with the flexibility of individual stocks”.


The main advantages of investing in ETFs are:


• Ability to track a wide range of market indexes, like the FTSE, S&P 500 etc.


• Diversified, global portfolio can be constructed relatively simply


• Costs can be low, but smaller investors should keep an eye on total costs of investment


• ETFs can be traded like shares


Why Investment Advice is Essential for Trading ETFs?


Investment advice from your financial advisor will help you build a well diversified portfolio that achieves your long term objectives. ETFs could form an important part of this portfolio as by buying a limited number of ETFs you could have a global, well diversified range of investments that track key market indices.


Investment Advice on Buying an ETF


Do consult with your financial advisor, as they will be able to recommend an approach that fits in with your retirement and investment goals. They will consider which range of ETFs will fit in with your overall portfolio of investments, so that it is well diversified, suitable for the level of risk you find acceptable. Your advisor will also consider the total cost of investment and the tax implications of your investments.


Here are some tips for choosing an ETF:


• There are a large number of ETFs, across a broad range of markets available. Be clear about your objectives and do your research


• Choose ETFs with proven performance records or those listed on broad market indexes.


• Try to diversify your portfolio by investing in four or five ETFs. Diversification is a smart investment option, as it diffuses the amount of risk associated with a particular product.


Keeping it simple is the best strategy for smart ETF investments. Although ETFs are not very complicated products, it is prudent to consult with a financial advisor London. They help to blend ETFs with other investment products to create a comprehensive portfolio. You can also seek other financial services, such as inheritance tax advice, SIPP investment and retirement planning, from an expert financial advisor.


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