Real Estate Versus Stock Investment - Which Way to Go?

When the stock market crisis began in 2008, one of the reasons operators sited then was investors shift of focus to the real estate sector. The explanation then was that many investors who made money during the stock market boom divested from the stock market and were investing in real estate.
Apart from individuals, most corporate organizations joined the race to invest in properties and sell later. However, the property sector suffered weak demands too as the global economic crises worsened.
Like the stock market, many investors both corporate and individuals had their fingers burnt and suffered huge losses. But the negative experiences in both markets - stock and real estate- will not stop people from investing. Already the stock market is showing signs of recovery due to increased investor confidence. Despite this, many investors who are liquid are still contemplating on where to invest - stock or properties.
In the opinion of leading investment experts, both markets are good but the investment objectives and ones sources of income will determine ones choice. Another investment consultant concurred, saying that the choice of any form of investment will depend on many factors.
Real Estate Versus Investment, Which Way To Go? has been a raging question for long. First will be the motive or intention of the investor. Is it for a short term or long term> Is the investor interested in capital returns or in streaks of returns in form of regular income? Is it an investment to be left for ones children in death? The answers to these questions among many others will set the tone for the rest of the investment decisions that will follow.
If one is only interested in short term investment of funds that are not needed immediately but may be required in a short while - say in two to five years, buying stock may be more preferable than real estate. This is because it is easier to convert stocks to cash than buildings. However, beyond this simple reason, is necessary to examine the principles of investment and apply the different tests to both stocks and land properties before concluding on which one is more suitable in any particular case.
SECURITY OF CAPITAL
Whatever your intention, the first thing to consider is the safety of the capital to be invested. Any investment that does not guarantee the recovery of the capital invested is not worth considering at all. When you relate this to stocks and investing in buying buildings, to a large extent capital investment in land and buildings are more secured than stocks. Except in the case of war or natural disasters, an investor can guarantee the safety of his or her investment in properties by taking out an insurance policy. Hence in the invent of fire or other agents of destruction, you can always recoup your loses from the insurer. But investments in stocks can vanish in one day if for instance the stock market crashes or the company fails.
CAPITAL APPRECIATION
The second point to consider is the issue of capital appreciation. It is known that except in rare cases of war or natural disasters, land and building values are always on the increase, even if marginal.
SECURITY AND REGULARITY OF INCOME
In most cases, the major reason for investment is the expectation of income from the investment. In this regard, dividends are expected from investments in stocks and rents from investments in land and buildings. However, while it is certain that rent will be paid on your property [barring a bad defaulting tenant] you can never be sure that dividends will be paid on your stocks. Many companies has not paid dividends to their share holders for many years. More over, you can never know how much that can acrue to you as dividends from stock investment until they are paid. One year it may be $0.20, the next it may $0.10. It is difficult to plan on such irregular source of income. Regarding income from real estate, except the unusual happens, you will know your rent at the beginning of the year or term of the lease. In some cases, the rent is even paid in advance.
We have made a fair attempt at answering the question, Real Estate versus Stock Investment Investment, Which Way To Go? I hope you found it useful enough as a guide to profitable investment decisions.

Investment Basics & Financial Planning

Once you get a handle on a few investment basics financial planning and investment management get a whole lot easier. Here are 5 investment basics or factors you need to consider before investing money.
Much of financial planning involves investment management and selecting the best investments to reach your financial goals. There are long-term goals like accumulating money for retirement or earning more investment income in retirement. And there are shorter-term goals like putting money aside for future college expenses, for a cash reserve, or for a down payment on a new house. What investment basics should you consider before investing money earmarked for specific goals? Keep in mind that the first step in financial planning is to define your financial goals.
For shorter-term goals SAFETY and LIQUIDITY are the investment basics that take center stage. Here you are investing money that needs to be safe and available when you need it. The best investments in this case are the likes of bank CDs and savings accounts, money market mutual funds and perhaps short-term bond funds. Don't earmark stock funds or other riskier investments for short term goals. The cash you need might not be available when you need it if the market goes south at the wrong time.
If you are doing financial planning to accumulate a retirement nest egg you have a long- term financial goal, and GROWTH and TAX ADVANTAGES are the investment basics to concentrate on. Growth simply refers to earning a higher return over the long term. The best investments for most people here are stock funds, which come in many varieties. How much of your investment portfolio you allocate to stocks will depend on your age and risk tolerance. Here is where investing money in stocks and accepting more risk makes good sense. If you have a bad year or two you've got time to recover and won't need to liquidate or sell at a loss... because you have this money earmarked for retirement, and other funds like a cash reserve to cover short-term needs.
Look for tax advantages when investing money for retirement. In a 401k or traditional IRA most people can accumulate money tax-deferred, with a tax deduction each year you add to it. There is no limit imposed by the IRS on the amount you can invest in a tax deferred annuity, and a Roth IRA offers tax-free investing. If you invest $5000 a year into a stock fund averaging 10% growth per year in a tax-free or tax-deferred account your money grows to $286,000 in 20 years. This money can continue to grow uninterrupted by taxes until you start pulling money out in retirement. In a Roth plan there will be no income taxes to pay if you follow the rules.
The last factor to consider is INCOME. For most people in search of higher income or interest, bonds and bond funds have been the best investments over the years. Millions of retired folks invest in bonds to supplement their income. Investing money in bonds for the income they produce is secondary for average younger investors, who should include bond funds in their retirement portfolio primarily to add balance and decrease overall risk. Please note that bonds and the funds that invest in them are not without risk. There are numerous articles available on the subject.
Now you know the 5 things you need to consider in investment management, selection and financial planning. I call them the investment basics. Don't invest money without them.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Retirement Investing Goals - An Overview

Goal-based investing for retirement is becoming increasingly important to the modern retiree. Traditionally, the goal of investing during retirement was safety and protection or investing for income. Changes in demographics, economic circumstances and increases in average life expectancies have made planning and investing during retirement much more important and even diverse.
It is no longer enough for retirees to liquidate their assets gradually upon retiring. The retiree must continue to manage investments properly. It is not possible to conduct good planning and investment without goals. The goals of retirement investing link to the reasons for investing during retirement as well. They include:
i) Protection of retirement funds
ii) Tax minimization
iii) Risk minimization
iv) Provision of retirement income
v) Funding retirement activities and periodic expenses
Protection of retirement funds
Since retirees are normally more dependent on money working for them than full-time employees are, they are understandably very concerned about the safety and protection of their retirement funds. In the initial stages of retirement, there should be an even greater concern for protection and safety. This is because the impact of losses in the earlier stages is greater. However, once the retirement fund appreciates, the retiree can focus a larger portion of the retirement fund on higher income and capital growth.
Tax minimization
Paying tax on a fixed income that steadily declines in value is anathema to a retiree. Inflation and taxation are two sinister elements that act to reduce the outcome of investing. Retirees who invest to ensure that they leave an estate should also be mindful about the impact of estate taxes based on their net asset worth. Strategies to minimize taxes include using annuities (particularly immediate annuities) and taking advantage of available tax deductions. Selecting the appropriate investment fund has significant tax implications.
Risk minimization
Retirees must encounter several retirement risks; the way that they invest often determines how well these risks are managed. Since inflation erodes the real value of investments, it is important to maintain average returns that exceed inflation. Erring too much on the side of caution can actually result in loss of real value- if not nominal value. The longer retirement periods that many retirees enjoy compounds other retirement risks as well. Health risks are another major retirement risk that investing goals must aim to address. Although purchasing long-term care is not strictly an investment, investing in such a way that you can comfortably afford health insurance into retirement may be a win-win situation.
Provision of retirement income
Investing is more than just capital appreciation but the concept of money working for you. When investing for incoming, you should not simply put money to work just about anywhere. The main question to answer is, "How well can my money work for me?" Yielding low returns on your investment portfolio has a high opportunity cost and does not give you adequate reward for your money. Dividends or returns can be quite handy in augmenting retirement income.
Funding retirement activities and periodic expenses
When investing in general, you should diversify your portfolio according to asset classes. However, you must also diversify your portfolio according to different investment needs, horizons and goals. In retirement, you may undertake activities that involve capital outlay from time to time. Goal-based investment during retirement involves investing fragments of your overall portfolio according to your plans and contingent expenses- both in the short, medium and long term. Some expenses are not necessarily daily or even annual- although they are recurrent. Through investing, the retiree must be to be able to meet actual and anticipated needs in the future.
Conclusion
Naturally, some goals of retirement may seem to be at odds with each other. For instance, safety and protection are at the opposite end to growth. Therefore, it is important to prioritize your goals and be realistic about them as well. The quality and effectiveness of retirement investing is premised on how well you match competing retirement investment goals to your circumstances and needs.

Timing the Stock Market

Most individuals will lose money, over time, buying and selling stocks. A fundamental mistake most people make is the notion that the stock market will continually rise. Technically it will, but there are time restraints for most people in the simple fact that none of us live indefinitely and depending on when the stock market goes through one of its corrections can negatively impact our portfolio.If you are under the age of 50 (as an example) and the market goes through a severe correction, more than likely you still have enough time for your portfolio to recover until retirement, assuming it never goes through another correction in your lifetime. How about if you are in your 60's and the market corrects itself? Chances are you will never recoup the losses that you incur.
A second mistake most people make when purchasing stocks is that they never have an exit strategy. Probably more important than buying a stock is knowing when to sell a stock. I learned a long time ago to never fall in love with any stock because eventually it will break your heart.You may have done your due diligence in researching a stock, but there are forces at work that may limit the ability of a particular stock to move in a positive direction. Some, but not all stocks are manipulated by Wall street. Many times a stock is over hyped by analysts and brokerage houses in an effort to get people to buy the stock and drive up the price. Once the stock reaches a certain price, the Wall street insiders then sell their shares and the rest of us are left with a stock that starts to decline. The problem for most people is that they generally get into a stock after its made it big climb only to then see the price drop. It is the old buy high-sell low mentality; a sure strategy for losing money in the stock market.I have read in more than one source that 70 percent of stocks move in the direction that the overall market is moving, so if you have a stock with great fundamentals and the market is declining, guess what? Your great stock is probably declining as well. Additionally, 20 percent of the movement of a stock is based on the sector that it is in (eg: transportation, health care, banking, etc.), so if your sector is not doing well then chances are your stock will not as well.Lastly, 10 percent of a stocks movement is based on the true fundamentals of a stock, but those fundamentals can be skewed by management of a given company as well as the brokerage houses and the analysts.Back in the mid 1990's everyone was a stock picking genius.
It seemed every stock you purchased did nothing but go up. Then in 2000-2002 reality set in. Most people who were in the stock market without an exit strategy suffered severe losses. At that point many people vowed to never play the stock market again. What happened in 2003? The market soared again, but of course those with a sour taste for stocks either did not get in or got in after the big run up to end up either making very little money or no money at all. Once again, the buy high-sell low strategy came into play.So, what are you supposed to do? You could buy mutual funds where "supposedly" your money is professionally managed to avoid these corrections.
The problem here is two-fold. One, these funds have managerial fees which take away from your profits and two, perhaps even more important, during the downturn from 2000-2002, mutual funds in general also performed poorly.The problem we all face is that we are looking for a place to invest our money and after considering all options it would seem the stock market offers better opportunities than other investment vehicles. If you are going to invest in the stock market, as I said before, you must have an exit strategy to protect your assets.One option is timing the market.
You will read every where that you cannot time the stock market. Truthfully, no one can predict which way the market will go on any given day. BUT, there are ways to see trends in the market, either up or down (and sometimes sideways). Once you are able to identify these trends you can have your money in the market when it is going up and have your money sitting safely on the sidelines when the market is going down.Over the last ten years I have looked at a number of stock market timing systems. None of them will get you into the market at the exact bottom, nor will they get out at the top, but they will get you in and out somewhere in between so that you can walk away with a profit and most of them will have you out of the market when it is correcting itself.
Active trading like this gives the average investor a tremendous advantage over the person who buys a stock then "hopes for the best".My suggestion is to do an internet search for "stock market timing" and take a look at the various programs out there. Look at their track record, consider how many times they have you switching in and out of the market (you do not want to be jumping in and out every few days) and the cost for the service.Find one that meets your investing needs and give it a try. You will find that you are able to sleep much better at night.

Are You Wondering How to Start Investing in a Stock Market?

Are you wondering how to start investing in a stock market? Well if so this article will help you understand how a stock market works. If you understand how a stock market is run then you can increase your financial status. In fact our economy and business corporations depend on the stock market to be successful.
The first step to take to get yourself acquainted with the stock market is to understand it. Research the topic online or at your local library to familiarize yourself with the terms and how it is run. Looking at the stocks on your television of in the newspaper is another great way to learn and understand how they work.
After you familiarize yourself with the stock market then you can develop goals and techniques for yourself. If the concept of goal making or determining which stock to go with is hard for you to decide, then ask a professional stock broker for assistance.
Developing a strategy is a key when beginning to look at the stock market. Once you developed a game plan, go ahead and look at the specific stocks you might be interested in. Company reports as well as annual and quarterly reports are sources that will help you see how individual stocks are doing. There are also online resources for you to check at your own convenience.
After looking over the individual reports, you can begin investigating. It is very important for investors to realize that they should not put in more money than they can afford. Invest in companies that you know and are in your general location so that you can have more experience with their practices and procedures.
Investing in a wide variety of stocks is the best way to ensure security against a fallen stock. If you are still unsure of good stocks to invest in, then contact a professional organization that specializes in mutual funds. They will help you find which stocks are doing well or poorly.
Another thing to consider is the amount of time you can hold the stock. If you pick a good secure stock then you should be able to keep that stock for a number of years. Remember that stocks fluctuate so do not sell a stock right away because it is starting to fall on a bad day.
You should now understand how to start investing in a stock market. Looking at stock details and researching the market are good to do before investing money. Always be aware of the professionals who are available to help you at anytime if you have questions to be answered.

Buying Options on Stock Splits

In order to buy options on stock splits and to make the investments on these stocks worthwhile, it is imperative that a proper understanding of what stock splits are should be in order. Simply put, what is referred to as a stock split or a stock divide is the way in order to increase the number of shares in one company, but the market capitalization of the company remains and no dilutions happen in the process of the split. This can be best understood by way of an example. Say a company with 20 shares is priced at $10 each. If the company decides to do a 2-1 split, then there will be now 40 shares that are available to the company's stockholders. After the split, the price of each stock will be adjusted.
With the split, the cost of one stock stands at $5. Any ratio can be used by the company but the ratio that is usually used is the 2 for 1 split, the 3 for 1 split and the 3 for two splits. Some people will argue that with buying options on stock splits come higher stock prices. Research and experiences suggest that this isn't true. One good thing that can be done by splitting the stocks of one company is that this can increase the liquidity of the stock. In layman's terms, the stock will move better and stocks can exchange hands faster. Investors will snap up stocks that cost $ 5 dollars fast than stocks that cost $10 each.
If the effects of buying options on stock splits can't be substantiated by research and experience, then why do a number of investors buy options on stock splits? This could be explained by psychological factors.
For example if investors will expect and believe that stock splits can increase the price of shares, then stock prices may increase as well. Often stock splits can be a vote of confidence of the company, as a split can signify that the management of the company has confidence in the company's future. The stock split has a number of so-called stages. These stages include the pre-announcement, the announcement, the dormancy, the pre-split run, the split execution and the post split depression. The pre-announcement of the split will tend to have an impact on the stocks as stocks will climb faster than usual. The announcement of the split will usually be the time when the price of the stocks of the company jumps sharply. And the valuation of the stocks may increase for a period of time. After announcement of the stock split comes dormancy. This is the time when the price of the stock of the company will level off.
There are some instances when the stock of one company doesn't enter this phase as the price of stocks tend to increase some more. The split execution can be a great time to buy stocks on split as well. The post split depression is where the excitement tapers off. This is also the stage where the short sellers and who has low-risk opportunity to profit from the brief pull back. Most stocks will retreat after this time, but some will continue to post gains. This is the challenge to those who may want to engage in buying options on stock splits.

The Top 10 Questions People Have About Stock Trading

At some point in time people often begin to wonder about the stock market. Is it risky? Is it a good place to invest? Is it right for me? Can I do it? How do I start?
I did a simple search on the internet for questions relating to "stock trading" and compiled the top 10 questions that people had when it came to trading stocks.
1. What is the best online company for trading stocks?
By far and away the most common questions I found (almost a third of them) were concerned with finding the best online stock trading company. This appears to be one of the most common stumbling blocks to getting started trading stocks online.
2. How can I learn about and get started trading stocks?
The next most popular questions were on how one gets started trading stocks. Where can you learn what you need to know, and what do you need to do to get started?
3. What are the definitions or meanings of common stock market trading terms?
More than a few questions centered on finding the definitions of common stock market trading terms. Some examples include: portfolio, volume, forex and options trading.
4. What is the best stock trading software out there?
The next most popular questions on people's minds related to finding good software to assist them in finding reliable trading signals and setting up trades.
5. What is the best virtual stock trading platform?
Next, we had a group of questions relating to virtual or simulated stock trading? Apparently, new traders want to test the waters before making a capital investment. Not a bad idea.
6. What are the best mobile devices for trading stocks?
This group of questions came as a little bit of a surprise, but I guess reflects the changing landscape of the way people access the internet. No more being glued to your computer screen. Now, you can day trade from just about anywhere.
7. How can I do international stock trading online?
It seems that more than a few people are interested in the international stock market scene.
8. How do I start a stock trading account?
Just as baffling as how to find a good online broker (Question #1) is how one actually sets up their trading account.
9. How can I start day trading?
Day trading is something of a mystery to many, but it apparently has some mainstream appeal.
10. What are the rules that govern stock trading service providers?
This last group of questions, rounding out position 10, tended to be very specific and related to what stock trading companies will and won't let you do. These include questions like 'can I day trade without margin?', or 'can I settle my cash profit the same day?' This is a further refinement of Question #1 on finding the right service provider.

After considering all the questions that people are looking for answers to, I think it can be summerized in a single question.
How can I learn how to trade stocks?
The answer can be found here, but ultimately comes down to learning the basics and then finding a good stock trading system to follow.

VAT - The Volatility Acceleration Trade Setup for Online Stock and Option Trading

The VAT setup was designed to take advantage of explosive moves that change and/or accelerate the trend in a stock's price action that can be exploited with online stock trading and stock option trading. This technique was inspired by a similar method detailed in Victor Sperandeo's work as written in his book, "Trader Vic II: Principles of Professional Speculation". The VAT setup can be implemented with either the stock itself or stock options depending on your preference. To use the setup for stock trading or stock option trading you will need to be able to determine whether the market is in a confirmed rally, to select the stocks with strong fundamentals and price action, have access to stock charts, know how to draw a trend line, utilize Bollinger Bands, spot gaps or laps in a stock's price action, and have a trading plan once a trade is entered.
My preferred method of confirming a market rally in the general market or indices is the one developed by William O'Neil, founder of Investor's Business Daily and author of the book "How to Make Money in Stocks". In O'Neil's method, one looks for a Follow Thru Day or FTD after a market decline. When the market shows a rally equal or greater than one percent of that particular index with greater volume than the previous trading day then that marks Point 1 or Ground Zero as I call it. Once that occurs then ideally you want to see the same type of rally again at one percent or greater on higher volume than the previous day within 4 trading days. This day is the FTD and confirms the market is set to rally.
You must then have a list of stocks that are high in price volatility as well as possess strong earnings along with low debt. For online stock and option trading, ou will watch these stocks daily on your stock charts to review their performance while watching for certain types of price patterns which I will detail later. On your charts, you must have a technical indicator called Bollinger Bands on the screen. These bands measure the fluctuation of volatility in a stock's price action. If the bands are expanding then that shows that price is accelerating in a particular direction. If the bands are constricting or the ends of the bands are turning outward then it indicates low volatility as price action becomes constricted.
Each day, you must watch to see if there is any explosive price action in any of the stocks that is bullish which results in a gap in price or a lap in price. A gap results when a stock opens higher than the previous day's high but still within the previous day's high of that day while a lap results in a opening above the previous day's high of the day and never comes down within that previous day's price action. Between the two, the lap is the more powerful pattern to trade off of.
Once a gap or lap pattern occurs then you must observe whether that results in a break in a defined trend line as well as reach the upper Bollinger Band. Once that occurs then you have a VAT setup in place and now ready to trade. Commonly, a trader can take a position as soon as the stock opens and/or pierces the upper Bollinger Band however there are many other methods which are beyond the scope of this article.
Stocks such as Apple Computer, Google, Goldman Sachs, Blue Nile, Chicago Mercantile Exchange, and many others have all offered up VAT setups in the past which have resulted in huge returns to stock and option traders that were watching for this type of trade. Apple recently resulted in a 75% gain in just this past year for the author of this article and, presently, RIMM has just triggered a VAT trade as well while the market has been in confirmed rally at the date of this writing.
These moves are explosive and make accelerated gains in a short time that can be exploited with a proper trade management as well as make huge gains making intelligent use of stock options. Take the time to build a "hit list" of high performing stocks and watch for these types of trades and you will be rewarded. This is a powerful method of getting in early on stocks that are fixing to make huge bull runs in price and, with practice, you can become an expert in trading them as well as profitable.