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Monday, 19 March 2012
Saturday, 17 March 2012
Thursday, 15 March 2012
What to Look for When Choosing a Stock
In a previous post, I outlined the reasons why to avoid any type of investment (besides the purchase of an asset) other than a stock. But that post deals with more of why not to invest in a mutual fund or, to a lesser extent, an index fund. Stocks truly are where it's at, particularly if you have 5 or more years that you are able to invest your money.
General Perks
Stocks provide the greatest opportunity for growth without a significant amount of risk. If you are smart about your investment, and only review it once per year, then you will avoid the emotions that most investors ride and suffer from. Each investor knows the basic principals of buy low, sell high - but despite this, millions of investors pulled their money out of the market when it dropped 20%, 30%, 40% and 45% in the great recession a few years ago.
Knowing What to Buy
Over the years of investing, I have learned that the greatest asset to any investor is research. I fully utilized the skills that I gained through journalism and applied them to stock market. In the olden days, a time that I fortunately wasn't around for, investors had to pour hundreds of hours into searching the details of their stocks. The average investor was at a huge disadvantage because those who were relatively close to the company received the quality of information any investor should know before buying. The average Joe would have to wait for reports in newspapers, but a large amount of that information wasn't useful.
Now, once you open an online investment account, you have 20 years or more of information about the stock's performance and you can look at financial reports from up to 5 years ago. If you want to go further back, you can request the information from the company's public relations officer.
Type of Information for Which to Look
I will get into more detail about the exact process in a week or two when I start looking to see where I want to put my money. But, in the meantime, start thinking about the company's chart. Look at the stock's past performance and line up the opening price to where it is now. Move a ruler down at the top half until you get a rough estimate of the growth (This will be in line with the opening price, but lower to consider the stock's downtimes). Look at where the ruler is lining up with the price in a year, 2 years, 5 years and 10 years from now. Is this where you would like the price to be when you sell your stock. Consider the length in which you want to put your money in the account.
Next, you should only look at stocks with a track record dating back to about 3 years ago.You may miss a lot of gems this way, but those company's stand a much larger chance of losing your money.
Look at the gains over the past five years. If the company has increased profit by 10% or more, then it is worth keeping on you list.
These are just a few of several tips when choosing a stock. More information is to come.
As usual, if you have any questions or comments, feel free to include your commentary below. Happy Investing!
General Perks
Stocks provide the greatest opportunity for growth without a significant amount of risk. If you are smart about your investment, and only review it once per year, then you will avoid the emotions that most investors ride and suffer from. Each investor knows the basic principals of buy low, sell high - but despite this, millions of investors pulled their money out of the market when it dropped 20%, 30%, 40% and 45% in the great recession a few years ago.
Knowing What to Buy
Over the years of investing, I have learned that the greatest asset to any investor is research. I fully utilized the skills that I gained through journalism and applied them to stock market. In the olden days, a time that I fortunately wasn't around for, investors had to pour hundreds of hours into searching the details of their stocks. The average investor was at a huge disadvantage because those who were relatively close to the company received the quality of information any investor should know before buying. The average Joe would have to wait for reports in newspapers, but a large amount of that information wasn't useful.
Now, once you open an online investment account, you have 20 years or more of information about the stock's performance and you can look at financial reports from up to 5 years ago. If you want to go further back, you can request the information from the company's public relations officer.
Type of Information for Which to Look
I will get into more detail about the exact process in a week or two when I start looking to see where I want to put my money. But, in the meantime, start thinking about the company's chart. Look at the stock's past performance and line up the opening price to where it is now. Move a ruler down at the top half until you get a rough estimate of the growth (This will be in line with the opening price, but lower to consider the stock's downtimes). Look at where the ruler is lining up with the price in a year, 2 years, 5 years and 10 years from now. Is this where you would like the price to be when you sell your stock. Consider the length in which you want to put your money in the account.
Next, you should only look at stocks with a track record dating back to about 3 years ago.You may miss a lot of gems this way, but those company's stand a much larger chance of losing your money.
Look at the gains over the past five years. If the company has increased profit by 10% or more, then it is worth keeping on you list.
These are just a few of several tips when choosing a stock. More information is to come.
As usual, if you have any questions or comments, feel free to include your commentary below. Happy Investing!
Wednesday, 14 March 2012
How to Make Money on the Stock Market
In today's post, we will be focusing on gearing up to invest in the stock market. As you may already know, this blog is focused on tracking my Road to $100,000. One way I am going to accomplish this goal is by investing in the stock market. While I have averaged about a 60 per cent return in the past, I have since sold all my assets to become involved in real estate. I since went back into journalism two months ago and have been getting back on track to saving $100,000. I am more mentally equipped and I can use the information I learned about investing five years, or so, ago to propel my savings at a faster rate.
Getting Started in the Stock Market
Since pulling approximately $20,000 out of the stock market in the last year, I have hit a financial low. However, since returning to journalism, I have managed to pull myself out of about $3,000 of debt and save nearly $2,000, all in 2 months. Mind you, only about 60 per cent of this money was saved from my journalism job, the rest is through online writing and subletting my apartment.
Anyway, when I had about $20,000 invested (60 per cent was accrued interest over about three years), I reviewed my holdings once every year or so. This is because instead of getting caught up in the highs and lows of the market, and becoming extremely emotional (any investor's greatest enemy), I looked at each stock practically. Reviewing your stocks once every year or so requires you to update your knowledge on an annual basis. And by "knowledge," I mean technical knowledge. You see, investing is completely based on market research. There are at least 10 steps you should look at in each stock, and I'll go over these at a later date.
Read Read Read
I will break down for you in a future blog the exact steps I take before buying a stock. To give you an idea, you want to compare the annual profit growth of the company in question. If the company grows at a rate less than 10 per cent per year, move on. To give you an idea, I looked at every NYSE, Dow and TSX stock available each time I reviewed my holdings. After I narrowed my field to stocks priced between $5 and $20, I was left with about 200 to review. Of these, I picked 7.
So far, I have explained a couple of the indicators I pay attention to -- price and growth. By reading investment books, I managed to boil down a formula that works. It is from the book "The Motley Fool Investment Guide," and my style completely matches that what is explained in this book. You could read every book out there, but it will just confuse you. The Fool's Guide is all that is needed. Each year, when you review your stocks, read this book again.
Timing is Key
The time in which you make your move into the stock market is everything. I rarely pay much attention to what is going on with the world politics, such as the issue in Greece. However, when the problem was at its peak, in October 2011, I did pull some stocks out of the market. I anticipated people would begin to freak out and think the entire market would collapse, again. However, the issues in Greece wouldn't hold the stock market down for long -- because even though Greece is struggling, the nation is tiny when you compare it to the world economy.
Timing can also mean personal timing. I will have $2,000 saved at the end of the month. That means I can get a margin account and double that money to $4,000. But it's too early for me to invest. You want to have about 40 per cent of your holdings in large-cap companies and the rest in medium-cap stocks. This means, you should have around $5,000 to invest before you get into the market, and that's only if you plan on securing a margin account, which will double your holding to $10,000. With $10,000 to invest, you can buy 5 stocks at $2,000 each. I would recommend owning at least 7, however, but if you know you will have money coming in shortly, then you might as well put that first chunk into the market. I expect I will be investing in June if I save $1,000 per month.
Stay tuned to get tips about each step on the way to choosing a stock. I will then consolidate the steps together so you can follow them while choosing stocks.
Tip of the Day: Buy the Motley Fool Investment Guide and follow the strategy for choosing stocks, or continue to read my blog posts for a consolidated version.
As always, if you have any questions, feel free to comment and I'll do my best to answer. Also follow this blog for the latest information. Happy investing! Btw, I think it's sad that I'm the only one following my blog... please follow me, lol.
Getting Started in the Stock Market
Since pulling approximately $20,000 out of the stock market in the last year, I have hit a financial low. However, since returning to journalism, I have managed to pull myself out of about $3,000 of debt and save nearly $2,000, all in 2 months. Mind you, only about 60 per cent of this money was saved from my journalism job, the rest is through online writing and subletting my apartment.
Anyway, when I had about $20,000 invested (60 per cent was accrued interest over about three years), I reviewed my holdings once every year or so. This is because instead of getting caught up in the highs and lows of the market, and becoming extremely emotional (any investor's greatest enemy), I looked at each stock practically. Reviewing your stocks once every year or so requires you to update your knowledge on an annual basis. And by "knowledge," I mean technical knowledge. You see, investing is completely based on market research. There are at least 10 steps you should look at in each stock, and I'll go over these at a later date.
Read Read Read
I will break down for you in a future blog the exact steps I take before buying a stock. To give you an idea, you want to compare the annual profit growth of the company in question. If the company grows at a rate less than 10 per cent per year, move on. To give you an idea, I looked at every NYSE, Dow and TSX stock available each time I reviewed my holdings. After I narrowed my field to stocks priced between $5 and $20, I was left with about 200 to review. Of these, I picked 7.
So far, I have explained a couple of the indicators I pay attention to -- price and growth. By reading investment books, I managed to boil down a formula that works. It is from the book "The Motley Fool Investment Guide," and my style completely matches that what is explained in this book. You could read every book out there, but it will just confuse you. The Fool's Guide is all that is needed. Each year, when you review your stocks, read this book again.
Timing is Key
The time in which you make your move into the stock market is everything. I rarely pay much attention to what is going on with the world politics, such as the issue in Greece. However, when the problem was at its peak, in October 2011, I did pull some stocks out of the market. I anticipated people would begin to freak out and think the entire market would collapse, again. However, the issues in Greece wouldn't hold the stock market down for long -- because even though Greece is struggling, the nation is tiny when you compare it to the world economy.
Timing can also mean personal timing. I will have $2,000 saved at the end of the month. That means I can get a margin account and double that money to $4,000. But it's too early for me to invest. You want to have about 40 per cent of your holdings in large-cap companies and the rest in medium-cap stocks. This means, you should have around $5,000 to invest before you get into the market, and that's only if you plan on securing a margin account, which will double your holding to $10,000. With $10,000 to invest, you can buy 5 stocks at $2,000 each. I would recommend owning at least 7, however, but if you know you will have money coming in shortly, then you might as well put that first chunk into the market. I expect I will be investing in June if I save $1,000 per month.
Stay tuned to get tips about each step on the way to choosing a stock. I will then consolidate the steps together so you can follow them while choosing stocks.
Tip of the Day: Buy the Motley Fool Investment Guide and follow the strategy for choosing stocks, or continue to read my blog posts for a consolidated version.
As always, if you have any questions, feel free to comment and I'll do my best to answer. Also follow this blog for the latest information. Happy investing! Btw, I think it's sad that I'm the only one following my blog... please follow me, lol.
Tuesday, 13 March 2012
Adsense Approval
Google Adsense is a massive tool to help those who are blogging earn money. When I started this blog about a week ago, I thought I would maybe make a buck or two per day with Google Adsense. After receiving approval early this morning, I noticed that by the end of the day, two people had clicked on my Google Adsense ads, earning me my first $1.61 from my blog. This was an amazing feeling and so I called my mother to share the good news. She of course had no idea what I was talking about. I read somewhere that you can expect to receive about $1 per day from each blog you have. So, if you are able to keep traffic up on 30 blogs, you'll make about $900 per month. That about covers my goal of saving $1,000 per month. However, I believe I have found an even better way to make money online than by simple Adsense ads.
Micro Niches
There are still some micro niches out there that haven't yet been overly saturated. Take for example a pool niche that I have discovered. The website, which is in its infancy and is called myundergroundpools.com, will sell all things related to pools. I will post on the website and link to it, driving up its traffic. But I have another advantage here: I am able to sell ebay.com and amazon.com products on the site. I can also find pool supply companies to advertise. Each time I make a referral to another site and a purchase is made, I get a cut. It's amazing what you can discover and the unexpected roads that arrive after diving into a topic. As if I'm not happy enough about making the $1.61 today, but I also have a lot of potential revenue from this micro niche. Now I just have to bring traffic to my site and I'll be all set. I intend to share the entire process with you.
Finding a Micro Niche
An amazing resource that I've been using to investigate each niche is called Market Samurai. This tool allows me to see how many people search the key work on Google per day, how many sites are competing for that business and how strong the competing sites are. If I analyse a keyword and it shows that the Top 10 on Google are strong, based on their page rank, whether they are pay for Yahoo, if the key word appears in their URL, how long they've been around, how much traffic they have and several other factors, I can determine whether I want to build a website that caters to the product. I then set up a blog and away I go. I am using Wordpress for this and it appears to have better features than Blogger, which is what I am using for this blog, so we'll see. I also bought my own domain, so I can sell it later if I want -- I read that you can sell your domain for about 10 times its monthly earnings. It also protects you from randomly being shut down.
Tip of the day: If you set up a blog, look to buy your own domain and set up a market niche.
As usual, if you have any questions, please comment and I'll be glad to answer them.
Micro Niches
There are still some micro niches out there that haven't yet been overly saturated. Take for example a pool niche that I have discovered. The website, which is in its infancy and is called myundergroundpools.com, will sell all things related to pools. I will post on the website and link to it, driving up its traffic. But I have another advantage here: I am able to sell ebay.com and amazon.com products on the site. I can also find pool supply companies to advertise. Each time I make a referral to another site and a purchase is made, I get a cut. It's amazing what you can discover and the unexpected roads that arrive after diving into a topic. As if I'm not happy enough about making the $1.61 today, but I also have a lot of potential revenue from this micro niche. Now I just have to bring traffic to my site and I'll be all set. I intend to share the entire process with you.
Finding a Micro Niche
An amazing resource that I've been using to investigate each niche is called Market Samurai. This tool allows me to see how many people search the key work on Google per day, how many sites are competing for that business and how strong the competing sites are. If I analyse a keyword and it shows that the Top 10 on Google are strong, based on their page rank, whether they are pay for Yahoo, if the key word appears in their URL, how long they've been around, how much traffic they have and several other factors, I can determine whether I want to build a website that caters to the product. I then set up a blog and away I go. I am using Wordpress for this and it appears to have better features than Blogger, which is what I am using for this blog, so we'll see. I also bought my own domain, so I can sell it later if I want -- I read that you can sell your domain for about 10 times its monthly earnings. It also protects you from randomly being shut down.
Tip of the day: If you set up a blog, look to buy your own domain and set up a market niche.
As usual, if you have any questions, please comment and I'll be glad to answer them.
Monday, 12 March 2012
Ways to Make Money From Home
So far in this blog, I have set out to you why I intend to save $100,000... to live my dream. My dream is freedom. I've also posted a bunch of random articles - which I won't do again - to drive up the content on my site. All the material was articles that I had rejected when writing for Demand Media. By having articles on my site, I am more likely to be approved by Google AdSense and I can start making money from my blog, though I'm not sure the amount I will make will be enough to make a dent in my $100,000 goal. However, I am still waiting to hear back from Google. They said they would approve or reject my blog for AdSense 6 business days ago and they said they'd respond within 4. Oh well, I guess I can be patient for a little while longer. The last several articles, however, have been into the financial insights that have helped me save and earn interest on my investments.
Other Income Sources
Since starting this blog, I have discovered a potentially better way to make money. I stumbled upon a free web series called www.thritydaychallenge.com. It has taught me an incredible amount of information for free. Instead of simply making money on AdSense from this blog, which could take a while, I have decided to find a niche market and advertise products for that niche site. Don't worry, I will continue to operate this blog (to my faithful readership of 0, so far). In the affiliate programs I can secure a percentage of all sales that I refer to places like EBay.com and Amazon.com. Currently, I have registered my domain name and I am in the process of building a website through Wordpress. You may notice that this blog is Blogspot, but I want to use both to compare which I like the best. Apparently Wordpress has more tools. I am spending a considerable amount of time figuring out how exactly to make the site work by taking the "Thirty Day Challenge", and I have given little time to anything else.
When I take a break from the website and decide to commit the time to something else, I am helping students edit their essays. I find this work by advertising my service on Craigslist. Last week I made $100 by editing one essay. I also write for a company called Interact Media, where I write about 5 articles per week and get paid around $6 per article. They are usually very quick and easy to write. But I haven't written there in about a week because I've been focused on my new niche website.
I am also subletting my Vancouver apartment and earning an extra $150 off that.
The Point?
The point of me telling you this is that you can find numerous ways to make extra money on the side. This blog is not only designed to monitor how I am saving, it's also to help you meet your financial goal. I am a writer, which allows me the benefit of writing online content and making money. But I didn't know how to make a blog, though I've done that. I also found out how to make extra money by keeping my apartment. What is it that you can do on the side to make your money? I've found that you have to be willing to become immersed in whatever it is. I am fortunate that I really enjoy writing and building websites, so I have learned a lot in the last couple weeks by working constantly on it after my regular 9 to 5.
Tip of the Day: Figure out what it is that you are good at, so you can make money on the side and save for your goal.
Other Income Sources
Since starting this blog, I have discovered a potentially better way to make money. I stumbled upon a free web series called www.thritydaychallenge.com. It has taught me an incredible amount of information for free. Instead of simply making money on AdSense from this blog, which could take a while, I have decided to find a niche market and advertise products for that niche site. Don't worry, I will continue to operate this blog (to my faithful readership of 0, so far). In the affiliate programs I can secure a percentage of all sales that I refer to places like EBay.com and Amazon.com. Currently, I have registered my domain name and I am in the process of building a website through Wordpress. You may notice that this blog is Blogspot, but I want to use both to compare which I like the best. Apparently Wordpress has more tools. I am spending a considerable amount of time figuring out how exactly to make the site work by taking the "Thirty Day Challenge", and I have given little time to anything else.
When I take a break from the website and decide to commit the time to something else, I am helping students edit their essays. I find this work by advertising my service on Craigslist. Last week I made $100 by editing one essay. I also write for a company called Interact Media, where I write about 5 articles per week and get paid around $6 per article. They are usually very quick and easy to write. But I haven't written there in about a week because I've been focused on my new niche website.
I am also subletting my Vancouver apartment and earning an extra $150 off that.
The Point?
The point of me telling you this is that you can find numerous ways to make extra money on the side. This blog is not only designed to monitor how I am saving, it's also to help you meet your financial goal. I am a writer, which allows me the benefit of writing online content and making money. But I didn't know how to make a blog, though I've done that. I also found out how to make extra money by keeping my apartment. What is it that you can do on the side to make your money? I've found that you have to be willing to become immersed in whatever it is. I am fortunate that I really enjoy writing and building websites, so I have learned a lot in the last couple weeks by working constantly on it after my regular 9 to 5.
Tip of the Day: Figure out what it is that you are good at, so you can make money on the side and save for your goal.
Sunday, 11 March 2012
Why to Avoid Mutual Funds
My experience with the stock market began with an analyses of mutual funds. I read the book "The Wealthy Barber," which was great at teaching me the importance of saving at a young age and watching my money grow - the book suggested that almost anyone can save at least 10 per cent of their income by erasing unneeded expenses such as coffee from Starbucks and eating out, as opposed to dining at home. This was a great lesson at the time, but the book recommended putting my money into mutual funds. This is a long road to making money on my investments and there are much better options available.
10 per cent average
Since its creation in 1923, the S&P 500 has increased by an average of 10 per cent per year. The average mutual fund increases at about 10 per cent per year, but you have to pay the fund manager about 2.5 percentage points of your earnings. However, if you choose to invest in an index fund, which follows the stocks on an entire exchange and is even more diversified and secure than a mutual fund, you will average about 10 per cent and you don't have to pay the 2.5 per cent MER (management expense ratio) fee.
Mutual fund boundaries
Mutual funds are also much worse than an index fund or regular stocks because the mutual fund company is only legally allowed to invest up to 5 per cent into one stock. This means they need to find at lest 20 stocks worth investing into. After you know my formula, which has earned me an extremely high rate of return, you won't be able to find 20 stocks worth buying in Canada or in the U.S. This is because the formula that I use, cuts down risk and increases reward by choosing a select group of stocks, consisting of about 8.
Types of investments
You have your GIC's, bonds, treasury bills, etc., these sometimes don't even keep up with inflation, but they are great if you want extreme security. However, if you have a bit of time to ride the highs and lows of the market, you should at least invest into an Index fund - definitely not a mutual fund - and ride the market wave. But, once you learn a formula, which I will teach you, that can virtually guarantee top market return, you will be wondering why anyone invests in Index funds, and you'll definitely wonder why they bother with mutual funds.
Tip of the Day: Banks do a great job at selling people on mutual funds, but it is only because they make 2.5 percentage points (on average) off your investment.
10 per cent average
Since its creation in 1923, the S&P 500 has increased by an average of 10 per cent per year. The average mutual fund increases at about 10 per cent per year, but you have to pay the fund manager about 2.5 percentage points of your earnings. However, if you choose to invest in an index fund, which follows the stocks on an entire exchange and is even more diversified and secure than a mutual fund, you will average about 10 per cent and you don't have to pay the 2.5 per cent MER (management expense ratio) fee.
Mutual fund boundaries
Mutual funds are also much worse than an index fund or regular stocks because the mutual fund company is only legally allowed to invest up to 5 per cent into one stock. This means they need to find at lest 20 stocks worth investing into. After you know my formula, which has earned me an extremely high rate of return, you won't be able to find 20 stocks worth buying in Canada or in the U.S. This is because the formula that I use, cuts down risk and increases reward by choosing a select group of stocks, consisting of about 8.
Types of investments
You have your GIC's, bonds, treasury bills, etc., these sometimes don't even keep up with inflation, but they are great if you want extreme security. However, if you have a bit of time to ride the highs and lows of the market, you should at least invest into an Index fund - definitely not a mutual fund - and ride the market wave. But, once you learn a formula, which I will teach you, that can virtually guarantee top market return, you will be wondering why anyone invests in Index funds, and you'll definitely wonder why they bother with mutual funds.
Tip of the Day: Banks do a great job at selling people on mutual funds, but it is only because they make 2.5 percentage points (on average) off your investment.
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