Investment Scams and How to Avoid Them
November 5, 2009
Most people, especially those new to the investment arena, do not realize there are a number of common scams which are used to victimize investors each year.
The misconception about investing scams is that most smart investors believe they will “know one when they see one” - this is simply not true. Especially in the modern marketplace were criminals have all the resources of the world wide web to create realistic investing schemes which capture the investors attention as well as their money.
The anonymity of the world wide web is a breeding ground for scam artists targeting individuals who so desperately want to get rich quick. Many of these criminals will set up web pages with news letters, forums, and prospectus for companies which do not even exist.
These sites are design with information including success stories from other investors. This is used to lure new investors in. By following un-research claims an investor can easily lose his investments, retirement, and education funds.
Remember professional investors live by the mantra that customers buy products but investors buy securities. Do not be lured in but what merely sounds good. The key is to keep a keen ear for what sounds and is valuable. Major red flags include the use of emotional and subjective words in combination with an investing recommendation.
If you become interested in a stock there are several ways to check if it is a valid stock tip or not. The first place to start is research the company that the stock is for. Take a look at their financial statements to get an idea of how well the company is doing by checking both income and debts. If both of those are in order call the company and speak with human resources. Ask them to validate th claims in the newsletter, email or web page are true. These are great ways to check if a stock tip is fact or fiction.
Another great place to look for information about a specific company is the SEC. Public companies must register with and file yearly reports to the SEC to document their growth and development.
These reports are thoroughly checked to make sure they are truthful and accurate. This helps not only to confirm if you have a valid investment but will also document if the company’s profits are going to continue to increase or decrease.
Access to the SEC and public companies can easily be found on the world web wide. If the advertisements claim to have certain investors feel free to call those companies and confirm their investments and their satisfaction with the company.
Many scam artists will use high profile company names to make the document more alluring to potential investing victims.
Additionally the NASD can be contacted. This organization helps states’ regulate securities and has all the information needed to verify if a company is real or not.
Only through being an aggressive and educated investor can you utilize your money to it’s fullest potential. Take the time to do the research, ask the questions, and if something feels funny, go with your gut.
There are plenty of real investing opportunities out there if you take the time to look.
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Short Sale Real Estate Investing
November 5, 2009
Short sale investing involves buying a piece of property from a lender for an amount less than the balance owed on the property. Basically, there are two types of short sale realty investments. The first type refers to when you purchase a property, foreclosed by a lender listed with a realtor. In this type, you simply offer the lender, who has now become the owner on record, less than what is owed on the property. In this case, you can offer less than the balance that was due on the foreclosure. Such a short sale, realty investment calls for a good relationship with the realtor. The other type involves negotiating directly with the lender of a motivated seller. It is essential to be determined in the negotiation process, mainly in reaching the right person at the lender Real Estate Owned (REO) department and then to get the price of your choice.
The key to be successful in the first kind of short sale, real estate investment lies in forging a relationship with a reliable local realtor. You can always search for one or two realty offices in your area that handle majority foreclosures and short sale, realty investments. In order to build your relationship with the realtors, you need to inform them about your ability to buy. Make sure you follow through, once you make the offer. It will help the agent know that you are the investor to turn to, whenever he has a deal regarding short sale, realty investment.
There are three fundamental steps that can be incorporated, in order to be successful with short sale, real estate investments. They are as follows:
. Search for the properties: The first step to success in a short sale real estate investment is to search for properties. This can be accomplished through regular realty advertisements and looking for distressed or overgrown property. It helps you get calls from sellers close to foreclosure.
. Get the seller on your side: The second best way to earn success in this type of investment is to get the seller on your side. In order to do so, you need to listen, communicate and empathize openly and honestly with the seller, regarding your plans. Besides, you will also be required to answer all questions and speak to the concerned parties frequently, so as to keep the channels of communication open. It helps to keep doubts out of the picture.
. Find the right person at the lender to speak with: Though it is not easy to find a reliable person, but this step is essential. More often than not, the first person you speak to will not necessarily be the right person and you may require cross certain hurdles to finally reach the person with some authority. You would certainly require patience in order to get the job done.
Short sale realty investment is considered to be lucrative for building wealth too. Owing to the increase in foreclosures across the country, the trend of learning and applying short sale realty investment skills is likely to continue.
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FOREX Accounts One Size Does Not Fit All
November 5, 2009
Once you have decided that you have the proper mindset and are ready to start investing on the FOREX exchange you are ready for the next step. That step is to select the type of FOREX account you want to open. You should make this decision before you pick a broker to work with. Some brokerage companies specialize in one type of account or another. The type of account you choose could affect your broker choice.
You will find that most brokers offer several types of accounts. The primary differences between the account types will be margin requirements, minimum deposit and lot sizes. You will need to consider your trading strategy and financial resources to select the right account. The three most common accounts are mini accounts, standard accounts and managed accounts.
The most popular account with new investors is the mini account. One of the factors that make the mini account so popular with beginners is that it has the lowest minimum deposit requirements. The minimum deposit requirements for a mini account are dependent on the broker, some will allow you to open an account with only a $100 deposit. Most mini accounts will deal with lot sizes as small as 10 thousand currency units. Mini accounts may provide as much as a 200 to 1 margin rate and only require $50 per lot to trade. This means that with $50 you will be able to control $10,000 worth of currency.
Most mini accounts have a built in safeguard because they are aimed at beginning investors. This is usually referred to as “Guaranteed Limited Risk”; this guarantees that you will never lose more than your initial investment in a trade. In the case where the currency drops and the broker would need to make a margin call to keep your position open they automatically close the trade. This will cause you to lose the money you invested into this trade but you will not end up owing the broker money. The downside to this is that if the currency rebounds you will no longer have a position that you could profit from.
A standard account is another common account that has higher deposit requirements than a mini account. The usual investment to open a standard account with most brokers is $2,000. These accounts usually trade in lots of 100,000 units. With a standard account you will still usually have a margin ration of 200 to 1. To purchase a normal lot of 100,000 thousand units then will require a deposit of $500 from you. It is still pretty common with a standard account to have the “Guaranteed Limited Risk” safeguard included.
Some brokers will also offer what is called a “Managed Account”. With a managed account you will not be actively trading. A professional trader will be assigned to your account and will use your money to make trades. This requires a much lower investment of time and knowledge from you. Managed accounts usually have a higher minimum requirement amount, often of $10,000 or more.
You will want to consider your knowledge, financial situation and risk tolerance when deciding which account type will work best for you.
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Negotiating a Real Estate Purchase Top 6 Tips
November 4, 2009
Negotiating may be the most critical part of the real estate purchase process. Being able to strike an advantageous deal with the seller virtually guarantees your profit. Negotiating is both an art and a skill that you will master with time and practice. Here are six tips to get you started.
Know the Property
You should know as much as possible about the real estate purchase you’re about to make. This knowledge comes from researching the neighborhood and knowing how the property compares to others around it.
Know the Seller
The best way to learn more about the seller is to listen. People will be more likely to volunteer information if you give them a chance to talk. But if you aren’t finding out what you need to know, ask questions. Understanding the seller’s situation and their possible flexibility will help you negotiate financing options as well as price.
You also need to find out what the seller’s motivations are. Why are they selling? Understanding the reasons behind the sale can help you structure a deal that meets their needs and yours.
Think Win-Win
The best real estate purchase deals result from negotiations that seek to provide something to both parties. There are certain things you want out of the deal and certain things the seller wants in order to sell. Every real estate purchase has several facets. If you can give the seller something they want, that will increase your chance of getting something you want.
Negotiate Terms, Not Just Price
Price is not your only negotiating point. Sometimes the terms of the deal are more important to the seller than the price. Once again, if you can address the seller’s needs in a real estate purchase, your offer will be more persuasive.
Maintain Control
If the seller counters your offer with an offer of his own, don’t let things spiral out of control. Prepare for counter offers by starting your negotiations low. Don’t focus on price, but use other aspects of the deal in your negotiations. Don’t re-negotiate things that have already been decided.
Be Prepared to Move On
Don’t walk away from an attractive real estate purchase without offering your best deal, but know when it’s time to walk away. There will always be another property.
As you can see from these tips, negotiating a real estate purchase is more than two people in a room. Negotiations are won or lost in the preparation. Achieving the outcome you desire depends on your research and mental preparation.
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Do Not Lose Your Shirt With a Margin Account
November 4, 2009
The key to the FOREX market for the average investor is the margin. Without margin trading currency trading would be beyond most investors. I will explain what the margin is and how it works.
When you have a margin account you are able to control large amounts of currency with a relatively small cash deposit. When you have a margin account with a broker you are in effect borrowing money from the broker to control a larger lot of currency. Currency is normally sold in lots with a value of $100,000. A common term used when discussing margin accounts is leverage. Leverage is how much you can control with a certain amount of money. The leverage is usually displayed as a ration such as 1:100. That would allow you to control currency worth 100 times the amount of money you have invested.
To better explain this in a FOREX exchange with a 1% margin account you could control $100,000 worth of a currency while only investing $1000. Margin accounts can allow you to greatly increase your profit; they also allow you to increase your risk. With a margin account it is possible for a trader to lose more than their initial investment. With a little prudence though losses can be minimized. Most brokers will terminate a trade before the losses exceed the original deposit.
Benefits
As discussed before a margin account allows you to buy more with the money you have which can greatly increase your profit on successful trades. By controlling a $100,000 worth of currency for only $1000 the potential gain is greater. When dealing with large lots of currency even small changes can produce significant results.
Currency on the FOREX market is traded in far more precise units than actual cash is. As an example the American dollar is traded down to four decimal points. So when you were to quote the dollar against another currency you will see a price like $1.7834 instead of $1.78. A PIP is the smallest unit when trading currencies, when dealing with $100,000 lots then each pip is worth about $10.
If the price of the American dollar changes from $1.7834 to $1.7934, you have a net difference of 100 pips. If you have a lot of $100,000 then that 100 pips will translate to $1000 where as if you were not using the margin your original $1000 would only show a profit of $10. Hardly what most would consider a highly profitable trade?
In short the primary benefit of using a margin account is that it can greatly increase the profit margin of a trade.
Risks
Since there is such a significant increase in profit potential when using a margin account it only stands to reason that there is also an increase. In fact it is quite possible to have your entire margin account wiped out fairly quickly. When using a 1% margin account a shift in the currency of a single penny will cost you $1000.
The FOREX exchange has many safety features to help you reduce the risk of this happening. One example is a stop loss order. A stop loss order will automatically close out your position in a currency if the price crosses the point you have set. This allows you to limit your losses while still having the opportunity to realize a profit.
Another risk that many people overlook is that if the price nears the point where your losses are close to being equal to the value of your margin account your broker may close out your position. If you were trying to rid out a temporary downturn that you expect to turn around soon you could find that your broker has closed it causing you to lose your entire balance and have no option to make a profit if the price moves up again.
This is a basic introduction to margin accounts and how they work, visit the website listed below to learn more about the FOREX market.
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Things To Know Before Investing Online
November 3, 2009
Before you take your hard earned money and invest it, it is a good idea to have a plan before you get started. First you will need to define your goal.
A goal can be owning a new home, buying a new car, having enough money for your child’s education as well as a host of other things that need to be thought through. Write a list of yours and your families goals and choose the one thing you desire the most. Next to each item write by when you want to achieve that goal.
You will then need to decide how many years you have to meet each of your targeted goals. This is important because you will need to find the best investment plan for the timeframe you have set up for yourself. You can find many tools to help you figure these things out when you do a little research on the internet.
The next step is to make a financial plan. This will entail figuring out your finances. You will have to be honest about the situation you find yourself in right now When you plan a trip, you never leave without knowing where it is you are starting from and the same can be said about the journey to a secure financial future. Make a list of your assets as well as your liabilities and see how they stack up against each other. With any luck and a lot of hard work, you should have more money coming in than going out and it is with this money you must decide whether to invest online or not.
If you are interested in investing larger amounts of money, but are wondering where it will come from, making small changes in your daily routine can end up saving you a lot of money. Take the cost of a large cup of coffee every morning. If that coffee is more than $1.75 per day, you are wasting as much as fifty dollars a month. If you took that fifty dollars and invested it wisely, it could wind up being five hundred dollars. So make an effort to get a travel cup and make your coffee at home. Put the money you would have spent in a jar, and take the money and invest it.
If you put your money into a savings account that earns 5% interest in a year, you could be talking a nice piece of change you will have to invest. You can do the same thing with going out to eat or going to see a movie. Whenever you deprive yourself of a treat, pay the container anyway and watch your savings account grow.
When you decide to invest online, you want to be sure you have enough money to take the risk. You don’t want to take away from your family needs on a chance that you can double or triple your money. You may lose it instead, and money earmarked for your family expenses shouldn’t be used for online investing.
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Knowledge Is Power A Research On Stock Market Investment
November 3, 2009
A stock, a.k.a. share or equity, represents one’s ownership of a company. For example, a person who has 100 shares of company A, out of its total of 1000 shares, means he owns 10% of the company. As part owner of a company, the shareholder earns, when the company makes profit. In the same way, if the company loses, so does the shareholder.
A stock market is a place (real or virtual) to trade (buy and sell) one’s stocks. The New York Stock Exchange (NYSE, http://www.nyse.com/home.html) and the NASDAQ (http://www.nasdaq.com/) are examples of real and virtual stock markets, respectively.
That’s a brief overview. For a more comprehensive understanding, go to http://www.investopedia.com. For the stock market investment newbie, try to play a virtual game at http://investsmart.coe.uga.edu/C001759/usmarket/usmarket.htm, without spending dime. Students can practice stock market investment at www.smgww.org. and www.stocksquest.com.
Then why invest in stocks? Because it earns 10% - 12%. This is higher than any other type of investment (savings account, bonds and the like). The way to earn is to sell your stock market investment at a higher price than when you bought it; the price difference is your profit. You can earn in 3 ways:
1. Buying stocks at IPO (Initial Public Offering). When companies decide to sell stocks, they will offer it at an initial price. After some time, with the company’s good performance, the initial price increases, thus the earning;
2. Dividend. As a reward for investing in their company, the company may choose to give a portion of its earnings to its investors through dividends per share. However, this not a requirement for stock market investment, but purely voluntary;
3. Trading stocks. If you intend to invest in Company A, but did not catch its IPO, you can still do so by buying at the stock market. A broker, in your behalf, will bid for the best-priced stock of Company A, according to the price you want. The same happens, when selling. Compare and find the best broker at http://www.fool.com/dbc/tables/compare.htm?ref=60broker.
The key to success stock market investment is to know everything there is to know, about the company and the factors affect its performance. Consult the following:
The official website of the company. This should show the company’s corporate set-up, financial health and organizational structure as well as historical data of their stock performance.
Investment websites such as Yahoo!Finance, MSN Central and DowJone’s MarketWatch;
The news. To be aware of all the factors that may affect your investment, be updated with the news. For all you know, the weather forecast is the ace up your sleeve.
Knowledge is power and so it is in stock market investment. Invest successfully, with the power of knowledge!
Find out more about stocks and shares at http://stocksandshares.us
How To Invest Your Money Safely
November 2, 2009
When it comes to making investments, most people know that there is always room for a possible loss. Stock market investments in particular are rather notorious for taking a rather well funded portfolio and emptying it rather quickly. Of course, that does not happen all the time, otherwise no one would do it. If, on the other hand, you do not want to take what many consider to be an unnecessary risk, there are a number of other investments that are reasonably safer, can still bring a good return, and are definitely worthwhile. Here are a couple of them.
A common phrase that is often used these days to refer to the making of your investments safer is having a balanced portfolio. This means that you are not putting all of your eggs into one basket. You know that some markets are a much greater risk than others, such as trading on the stock market, and so you put some of your investment capital into some that are much safer and less likely to be lost. This “balance,” created by placing some of your investment into a variety of potential interest bearing accounts, should result in an overall gain.
Investments Depend On The Person
If you are a young person, then it should mean that you would be willing to take a higher risk (assuming you have some capital that may be lost). The possibility of the highest gains, unfortunately, also come from the markets with the potential for the highest change. This means that there is a much greater likelihood of a real loss - especially if you do not know what you are doing. By using the services of an experienced trader however, a stockbroker that has been doing it for years, you minimize the possibility of loss. But you should only invest a portion of your finances into the stock market.
If, on the other hand, you are much closer to retirement age, then you do not want to take such a risk with your funds. Instead, you would want to place your soon to be needed funds into a much more stable growth account, where the loss can be minimized and yet still bring a return in interest.
Stable Investing In Trust Funds
If you are looking to stabilize your investments in the stock market with something that is relatively sure, then you need to consider mutual funds. This form of investing places your investment into the hands of investors that basically do the investing for you. They watch the market, manage the funds, and make the changes necessary in order to keep your account growing. After you inform them of what level of risk you are willing to take, then the rest is done for you. They take your funds and spread them over a diverse sort of investments, and it gives you a much more stable package.
The Most Stable Investment - Bonds
Probably the most stable investment you can make is to buy bonds. The safest, of course, are the US Savings Bonds. These are purchased at a set price and guarantee a set interest amount in a specified time period. You cannot get much safer than that - and probably not much is safer than the US Government - investment wise. If you are looking for the highest stability available, then you need to take some of your investment portfolio and add some bonds to it. Bonds are also available from other corporations, cities, etc., but their strength is limited to the financial strength of the company. The longer the time period of your investment - the greater the risk that the company may not be around.
In addition to creating a balanced portfolio, you need either to become very knowledgeable about financial investing, or you need to seek professional counsel. Many people lose a lot of money every year simply because of unnecessary risks. These risks would never have been taken if they had sought counsel from someone who knows much more than they did about the market and investing methods. A truly balanced portfolio will also have an expert to help guide you through the many potential hazards of the investment world.
Joe Kenny writes for the Personal Loans Store, allowing visitors to compare loans and also focuses on personal loans in the UK.
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Why Choose Oil Investing
November 2, 2009
Great risks and potential huge monetary gains. This can sum up in itself what oil investing is about. Not a market for the faint-hearted, oil investing is a highly volatile sector where changes are the norm, and risk runs the gamut from quite low to extremely high.
Still, why do so many choose to invest in this highly unpredictable market? There is much that is said on the scarcity of oil, its dwindling volume, its absence of supply growth, as well as the tightening of supply by oil-producing countries. Balanced against the increasing demand for oil in a world which is driving towards consumerism, where oil needs are vital, it results in a situation where the price of oil is not likely to go down. In fact, it might just remain on the up, or constant at its relatively high price on the market. While it is true that fossil fuels are not something that can be classified as a renewable resource, the investor will often look at the situation and not the ongoing demand for the product. Any product that has a steady demand that will only grow over the next few years is a sure bet when it comes to investing.
This makes for a safe and relatively lucrative investment. However, oil investing should not be attempted as a hobby or in a happy-go-lucky way. Professional advice is best sought for this endeavor. Expert advice can be provided by portfolio managers, and investors can go one step further and learn about geographical characteristics of drill sites as well as seismic and structural features of oil industry sectors when considering potential investment.
Oil investing also provides a rather large spectrum of risk potential, ranging from relatively low to highly explosive. The easiest and less risky investment is by buying stocks of well-known major or independent oil companies. More risk and higher returns can be found in smaller, aggressive companies and service companies which are expanding into new markets. Some of the riskiest but which may provide the highest return pertains to investing with independent operating companies on a direct participation investment, and also commodities futures trading.
Other methods of oil investing include mutual funds which focus their portfolios on the energy industry, oil and gas companies traded on stock exchanges, independent oil and gas companies, drilling funds, royalty funds, lease acquisition funds, and combination funds.
However, in all these cases, sound business acumen and diligence are advised. Investment acumen, investment objectives, and investment vehicles should all be determined prior to oil investing.
Mayoor Patel is the writer for the website http://oil.oil-universe.com. Please visit for information on all things concerned with Oil Investing
5 Ways to Find the Best Stock Picks
November 1, 2009
There is no doubt that penny stocks are a risky and thinly traded breed of stocks issued by relatively tiny companies. Also, the SEC does not require penny stocks to follow their reporting rules. This combined with unclear or unverifiable financials can make this stock seem like something to avoid altogether. Penny stocks can be dangerous for investors of all experience levels but especially for amateurs just getting their feet wet. Here are five tips to help find the best penny stock picks.
1. Profit
First off is the company you are interested in investing in experiencing any sizeable profits. Better yet is their profit to debt ration favorable. Youd be hard pressed to find one of these little companies without debt but that doesnt mean you cant be picky. In this case the least amount of debt with the most profit will be a better investment. Another thing to watch is how progressive the debt payoffs have been. This would be a sign of good or bad financial management.
2. Industry Trends
This is one of those methods that almost all people use anyway. If there is a high demand for oil then people instinctively want to go buy oil stocks. The only problem with this kind of trend analysis is it really isnt forward looking analysis. This is just waiting and seeing which doesnt get you in on the ground floor of and investment before the public takes notice. Investing ahead of an industry trend is far better. So look for stocks in industries that are the edge of more demand.
3. Personal Interest
Theres a saying that you do well at things you enjoy to do. This makes logical sense and it works with stocks as well. If you invest in something that actually interests you then you will naturally be more studious and make more of an effort to choose the best stocks. It can be very boring researching stocks that dont interest you and you are likely not to be as thorough as you should be.
4. Tenure
How long has the company been in business? This is not to say that investing in newer companies is a bad idea but its more likely to be safer investing in a more established company with some kind of track record.
5. Bad Behavior
Last tip is an obvious one. Stay away from companies whose operations or transactions have been questionable. Even if the bad press is not completely true it will be difficult for a company to recover in the short and maybe even long term.
Scott Johns conducts research and analysis of stock market picks for a penny stock analysis company. To check out penny shares for some of his company’s latest picks.
