Janet Schlarbaum, Mark Schlarbaum, Stock Market Portfolio

Posted by: Janet Schlarbaum

Author: Pauline Go

Mutual funds are fast becoming the most preferred investment portfolio for many prospective investors. Before opting to invest in a fund, it is always better to know about different companies selling them and the fee they charge for their services.

Insurance companies: Insurance companies should be the least considered option while buying a mutual fund. In most cases, insurance companies never sell this type of fund directly. They often combine the benefits of a mutual fund along with certain other products. These combinations are offered to customers in the form of unit-linked products. Another disadvantage of buying such products from an insurance company is the sales load that these funds carry. A sales load can be defined as the fund commission paid to brokers. This can range from 4 to 8 percent.

Banks: Another unfavorable place for buying fund is a bank. Disadvantages of buying a fund from a bank are the same as they are with insurance companies. Even banks prefer to sell the funds in the form of loaded funds. Investors either need to bear the entry load or the exit load. Another disadvantage is that banks do not offer much variety keeping in consideration the investment objectives of the investor. Also, in most banks, there are no capable financial advisors providing much information about the funds and their advantages to customers.

Stock brokers and investment advisors: One should approach these groups with caution. Some of these people tend to sell the funds loaded with heavy entry or exit costs. Even if an investment advisor offers a no-load fund, he charges heavy fees for his financial service.

Discount stock brokers: These people are one good source of buying these types of funds. This is because, these brokers are registered with different mutual fund companies and offer a wide variety of fund options to investors without any load. Discounted stock brokers are primarily preferred more than mutual fund companies due to their value of expertise in this sector and also the advice they offer to customers are usually based on their investment needs.

Posted by: Janet Schlarbaum

Author: Amit Malhotra

Stock market investment evokes two opposite feelings in general public. Some hate stock trading and treat it as gambling, while others love it fiercely. They probably think that investment in shares is a kind of lottery with a jackpot around the corner.

Both views are characterized by a herd mentality. If the stock market goes down steeply, the stock market haters say vociferously: Didn’t I tell you it was gambling?

On the contrary, if the market goes up for a fortnight, there is a sudden spurt in buying all around.

But people cannot stay away from stock investing for a long time. The reason is that the returns from stock market investment are consistently much higher than from fixed income deposits. Investment in stock markets provides the ultimate power to beat the inflation.

The best way to make income from your stock market investment is to evaluate your investment against the returns within a specific period of time. The most common mistake that the investors make at the time of buying the shares is that they do not target the specific levels of returns. Moreover, they do not evaluate the risks in making investment in a particular stock.

It must be understood that investment in share market cannot ordinarily result in windfalls of money. It has been found that share market tends to go up despite the frequent falls and over time an investor can earn an average return of 15% to 20% per annum on his investment.

It should be noted that an average return of 15%-20% should not be taken lightly. The returns can be astounding when they are allowed to be compounded.

The second necessity is that you should use the principle of stop loss.

If, however, you wish to earn 30% return in one year, you must set a target of rotating your investments thrice a year and also fix a target of earning 10% on your portfolio in each rotation, that is to say, when you enter or exit the market.

In the same way you must set a stop loss limit too. If you suffer a loss of 10% on your investment, you must exit the share. If you set similar limits on your losses, you are saved from incurring huge losses.

If you are a beginner in stock market investing, the best course would be to first try learning by trading on a mock portfolio. Even if you do not set target on your profits, you must set your stop loss limits.

You must learn to structure your portfolio on the basis of how frequently you need the income flow and the capital return. You must also determine the composition of your portfolio on the basis of your age, status in life, your sources of income and above all your risk appetite.

It is always advisable to follow the age old wisdom of not putting all your eggs in one basket. In other words, you must learn to diversify your portfolio. It must also be noted that diversification should not be resorted to for its own sake. According to Warren Buffet, wide diversification is only required when investors do not understand what they are doing.

Your broker may remain to be your guide in investing in stocks and shares, but you must ultimately try to build up your own methodology in trading or investing. So you must learn to track the movement of the prices of your stock rather than depending upon the signals provided by your stock broker. Remember, it is your own money that is at stake.

The best principle in managing your stock investments, as said earlier, is to fix and stick to the buy and sell targets. It is better to sell off your stock when you have reached your target even if its price appears to be shooting skywards. You do not know when it may fall all of a sudden or even wipe off your lower targets. Set small goals, because they are not difficult to achieve.