Basic Principles Of An Investing Club

Basic Principles Of An Investing Club

Investment clubs are created by individuals who not only want to pool their funds together to make a joint investment but would also like to gain knowledge on the various types of viable investment opportunities that are available in the market. Each member of the club contributes periodically an agreed amount of money to purchase growth stocks by means of a dollar cost averaging approach.

The dividends as well as the capital gains are usually reinvested to gain more interest. The security purchases are voted upon by the club members. This is also one way of decreasing personal risk of club members. There are also investment clubs that allows non-club investors to participate in larger investments of the club provided of course that the non-member investors receive a much lower share of commissions.

Likewise, it is also the role of investment clubs to assist their club members in becoming more knowledgeable in all aspects of investments. A well-known trade group for investments clubs is the National Association of Investors Corporation (NAIC) which is a non-profit organization that provides guidance as well as imparting investment knowledge as part of its membership.

A good choice of investment clubs are those that have been around for many decades already and have a track record of having a continuous increasing interest in the stock market. By joining investment clubs, small investors are given the opportunity to increase their buying power, share their collective knowledge and socialize while earning from their investment. Another good benefit derived from investment clubs is the fact that investors are not expected to invest a great deal of money but still will be able to receive a greater amount of interest that is usually possible if you have similarly invested a big lump money.

A typical investment club usually meets once a month and members are given individual responsibility of researching investments and then sharing their ideas with the other members of the club. Likewise, these meeting also served as an occasion for members to contribute to their monetary fund, which is intended for purchasing stocks, mutual funds as well as other types of feasible investments.

One of the main goals and objectives of an investment club is the opportunity to learn. Most investment clubs spent a great deal of effort and time in research since they believe that a well-researched investment plan has a much greater chance of success. This is also the reason why risk is minimized when joining an investment club.

Starting an investment club is not really that difficult and does not require any special knowledge. In fact, a group of friends or even co-workers can decide to set up an investment club. This is usually a good place to start as you will know the people you dealing with.

BY EDSON CANO

BetterTrades

BetterTrades

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BY EDSON CANO

Why You Must Invest In Gold Today

Why You Must  Invest In Gold Today

Gold. Rare, beautiful, and unique. Treasured as a store of value for thousands of years, it is an important and secure asset. It has maintained its long term value, is not directly affected by the economic policies of individual countries and doesn't depend on a 'promise to pay'.

Completely free of credit risk, although it bears a market risk gold has always been a secure refuge in unsettled times. Its ‘safe haven’ attributes attract wise investors. Gold has proved itself to be an effective way to manage wealth.

For at least 200 years the price of gold has kept pace with inflation. Another important reason to invest in gold is its consistent delivery within a portfolio of assets. Its performance tends to move independently of other investments and of key economic indicators. Even a small weighting of gold in an investment portfolio can help reduce overall risk.

Most investment portfolios are invested primarily in traditional financial assets such as stocks and bonds. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset class.

Portfolios that contain gold are generally more robust and better able to cope with market ncertainties than those that don't. Adding gold to a portfolio introduces an entirely different class of asset.

Gold is unusual because it is both a commodity and a monetary asset. It is an 'effective diversifier' because its performance tends to move independently of other investments and key economic indicators.

Studies have shown that traditional diversifiers (such as bonds and alternative assets) often fail during times of market stress or instability. Even a small allocation of gold has been proven to significantly improve the consistency of portfolio performance during both stable and unstable financial periods.

Gold improves the stability and predictability of returns. It is not correlated with other assets because the gold price is not driven by the same factors that drive the performance of other assets. Gold is also significantly less volatile than practically all equity indices.

The value of gold, in terms of real goods and services that it can buy,has remained remarkably stable. In contrast, the purchasing power of many currencies has generally declined.

Traditionally, access to the gold market has been through: investment in physical gold, usually as gold coins or small bars,or, for larger quantities, by way of the over the counter market; gold futures and options; gold mining equities, often packaged in gold-oriented mutual funds.

BY EDSON CANO

Why your share market investing is failing?

Why your share market investing is failing?

Every investor has several characteristics that combine to make them successful. The degree of success depends on how well you can implement these and how well your strategy works.

The method investors have for selecting shares that they want in their portfolio is arguably one of the most important areas of being a successful investor. For me personally I have stuck to selecting shares that are leading ie blue chip companies, whose price histories are in a long term uptrend and that are themselves doing better than the market average.

The next vital component is the trading plan. This doesn’t need to be overly complex.  You just need to know what you will do if the share price goes up, down or sideways. If you can cover these three things then you have a contingency for anything the share price can throw at you. And more importantly you will prevent yourself from reacting to sudden market fluctuations that happen all of the time.

The trading plan should also incorporate an overall strategy for the share that you have selected and explain the reasoning behind why you’re doing what you’re doing ie why you decided to place your order level at this particular point.

You will need a robust risk management strategy and to be successful in the long term you will need to implement the strategy. The number of times I’ve seen people unwilling to action there risk management plan when the share price reaches their pre-determined value price is a little bit scary.

The above three things are great to have in place but don’t forget that you must be disciplined in implementing them otherwise you’re setting yourself up for failure.  And you should remember that to get good at anything you need to practice and you need to gain experience.  Champions are made in training.  Not on the track.

After identifying these strategic factors you should consider how much you are willing to outlay on each share. It is important to try and spend the same amount on each share ie $5000 across a portfolio of 10 shares in different industries in order to maintain a balanced portfolio.

Finally before deciding to go ahead with any investment you should asses whether its risk to return is worth it. There is no point risking $1 to try to make 50 cents.  Over my investing lifespan I have stuck with a ratio of 1:3.  For every dollar that I am risking I stand to make at least three or if I stand to make $3000 from a trade then I am willing to risk $1000 in order to make it. The reasoning behind this ratio is that no matter how good you are you will always loose in some of your investments. Having a ratio like this ensures that when the of the investments pay off they more than compensate for any that lose.

To recap any successful investor must exhibit these characteristics over the long term.

Take responsibility for themselves and make their own decisions. They take the credit for making profit and accept the responsibility for any losses. They learn from these decisions and improve over time;

Make investment or trading plans and stick to them. They make trading plans based on reliable information in the clear calm light of day and not emotional reactions that may emanate from the panic or euphoria of the share market. And, they stick to their plan;

Assess the Risk/Return Ratio of each trade. They only enter into investments that offer reasonable potential for profit;

Manage the risk of every investment . And never lose too much;

Allow for contingencies in the plan so they know what they are going to do if the share being traded goes up, down or sideways in price. The share price can do nothing else.  But you can do what you planned.  The plan then dictates the actions and prevents unprofitable emotional reactions;

Only put their money into financially secure companies ;

Buy shares when they are cheap and sell those that are expensive relative to their price trends;

Only trade in companies whose prices are in trending up; 

Trade unemotionally and have the discipline to trade the plan. They plan the trade and trade the plan;

Keep taking money out of the market. You only make money when you sell shares;  and

Have sufficient confidence that has been gained from experience.

BY EDSON CANO