He’s 20 Tips this New Style of Investment Part I
The global economy is facing many uncertainties, especially related to the debt crisis in Europe and also increasingly in the U.S. economic recovery is slow.
These conditions greatly affect the movement of financial markets continues shaken until the end of the year. Some ways investment valued the old ways can no longer valid in the middle of this condition. How can you survive in times of global economic uncertainty like today?
Below are 20 new ways to protect your investment while building your wealth as quoted by Forbes, Monday (21/11/2011).
1. Buy and Hold Portfolio Risk Under
Nowadays, if you buy stocks or bonds and planned to arrest him if possible as long as possible could be very dangerous on the investment. Buy and hold strategy only works well if the market continues to move upward in a fairly long period of time. But actually this way has been ineffective since ten years.
“You have to be a jungle explorer rather than be the pedestrians on the sidewalk,” said economist Gary Shilling. Continue to monitor your portfolio and be prepared to sell stocks that are included the trend of weakening, and then move to stocks that are ready to strengthen.
2. Diversified Investment Will not Save You
When the crisis in October 2007 to March 2009 which is destroying the entire stock market in the world, the S & P 500 Index plummeted more than 57%. Not one sector or industry that survived the attack. Warren Buffett once said: “Diversification is a protection to your investment, it made perfect sense for those who really understand.” You Warren Buffett or not? It’s okay to diversify, but remember, too much investment in different sectors will not provide maximum protection.
3. Price / Earning Comparable with Low Investment
Many brokers and analysts chase stocks with price / earnings are still below average and the book value. Way too much to follow ‘guide book’ this proved to be a trap even when the financial crisis, when drought destroyed the value of asset liquidity and earnings. In fact, until now cheap stocks that had destroyed have not been able to rise again
4. Tax Investing Is The Key
With a professional calculation you can get a net gain of about 6% per year, a tax refund in one investment instrument can produce quite a big difference. Prepare a strategy, separate bonds which would be taxable from short-term investment instruments and pension funds. Hold the long run stocks will be taxed to cover the shortfall derived from shares are tax-exempt short-term.
5. Take Advantage of Volatility
Market volatility will not completely disappear. Volatility of stock markets in the world already has nearly doubled since mid-2000. For example, in the year 2011 this index the S & P 500 has gone up and down more than one percent in 75 trades. Take advantage of this volatility to reap a profit. One way you can do is look for buying opportunities when the index is down.
6. Watch the movements of politicians
A new era in a time of great uncertainty already present. News and political events affecting the movement of the index is now more than fundamental factors, such as the issuer’s profitability. For example, in early 2011 Agutus ago, many blue chip stocks good fundamentalist suddenly plunged as market participants await the decision of the U.S. Congress on the issue of default. Fundamental factors still play an important role, but watch the movements of politicians.
7. Notice of Investment Costs
Cost and value of invested heavily encourage high returns over the long term. However, recent research on financial growth by DAL Investment Co. indicates whether the value of investments can not be predicted yield. What about broker commissions? The high competition pushing down on its own commission. So, avoid the high commissions and unnecessary expenditures. If you are not a passive investor, then do not let it interfere with the high cost of your investment plan.
8. No Need to Wait Long To reap Investment Income
Several years ago, only stocks that have been ‘cooked’ which can generate high dividends, or bonds that have been ‘retired’. Today, with a thin margin between profit rate and the inflation rate, there are several instruments that can provide results 5% more. Research shows, in the long term providers performing far better dividend than non-dividend stocks, and more stable as well.
9. Investing with Target, Do not Fight the Index
You may often hear the shares much higher performance than the stock index. This is typically used to draw your stocks similar to type guarantee of high returns. However, it is better to concentrate on specific targets rather than have to surpass the performance of joint-stock index. This target is similar to the purpose of life, like choosing a college or when you will retire.
10. Develop Network for New Ideas
Manager is a good investment that can combine the research and purchase of shares as well. Internet provides good connectivity between the two. Frequently webpage professionals like LinkedIn to in-depth report about the investment in the Value Investors Club. In addition, there Value Forum, a forum that almost every day talking about the yield and investment sectors ..