Investing, Let start with Mutual Fund.

Mutual fund is spreading introduce to investors. Get to know about Mutual fund and why you should not miss this type of investment.

What is Mutual Fund and how does it work?

Mutual Fund is the common name for an open-end investment company.
Mutual funds pool money from many investors and invest the money in stocks, bonds, short-term money-market instruments, or other securities depend on the investment objective of fund. Mutual Fund issue redeemable shares that investor’s purchase directly from the fund (or through a broker for the fund) instead of purchasing from investors on a secondary market. Furthermore the investors can sell their shares back to the fund (or to a broker acting for the fund). The investment portfolios of mutual funds typically are managed by professional known as "investment advisers" that they must register with the SEC.

How can the investors earn money from mutual fund?
Investors can earn money from mutual fund investment in three ways:

1. Increased NAV
NAV (Net Asset Value) the value of the funds assets minus its liabilities.

NAV = (Funds Assets – Funds Liabilities)/ number of outstanding shares

SEC rules require funds to calculate the NAV at least once daily. So If the market value of a fund's portfolio increases after deduction of expenses and liabilities, then the value (NAV) of the fund and its shares increases. The higher NAV reflects the higher value of your investment. When you sell your share back to the fund you can profit from capital gain of share.

2. Capital Gains Distributions. At the end of the year, most funds distribute these capital gains (minus any capital losses) to investors.

3. Dividend Payments. Like a company, the fund may earn income from dividends and interest on the securities in its portfolio. The fund then pays its shareholders nearly all of the income (minus disclosed expenses) it has earned in the form of dividends to the investors.

This depends on the fund policy that they state in Prospectus of the Fund. Not all fund pay dividend to investors, so you need to read the prospectus clearly.
If the mutual fund has no policy to pay dividend, they use the dividend to reinvest in their portfolio, result to fund growth and increasing of NAV and Capital Gains that the investor can earn from the fund instead of dividend.

Mutual Fund is a good alternative to invest. Why should invest in mutual fund?

Mutual fund is recommended to the new investor with a lack of experience and who does not have a lot of money to invest but want to earn more than interest from saving you can try mutual fund, but remind that investment in mutual fund is higher risk than saving. Some mutual funds accommodate investors who don't have a lot of money to invest by setting relatively low dollar amounts for initial purchases, subsequent monthly purchases, or both.
Mutual fund also spread your investments across a wide range of companies and industry sectors can help lower your risk if a company or sector fails. Some investors find it easier to achieve diversification through ownership of mutual funds rather than through ownership of individual stocks or bonds with small money.

Moreover the investors who do not have much time to follow market news this may cause highly loss. Mutual fund manages by professional money managers who research, select, and monitor the performance of the securities the fund purchases. So they may use less time to research and make decision than invest directly to stock on bond on their own.

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Achieve Your Dreams: Six Steps to Accomplish Your Goals and Resolutions

From Susan M. Heathfield,

Don't let your goals and resolutions fall by the wayside. Chances are that to achieve your dreams and live a life you love, those goals and resolutions are crucial. Goal setting and goal achievement are easier if you follow these six steps for effective and successful goal setting and resolution accomplishment.

• You need to deeply desire the goal or resolution. Napoleon Hill, in his landmark book, Think and Grow Rich, had it right. "The starting point of all achievement is desire. Keep this constantly in mind. Weak desires bring weak results, just as a small amount of fire makes a small amount of heat." So, your first step in goal setting and achieving your dreams is that you've got to really, really want to achieve the goal.
• Visualize yourself achieving the goal. Lee Iacocca said, "The greatest discovery of my generation is that human beings can alter their lives by altering their attitudes of mind." What will your achievement feel like? How will your life unfold differently as a result? If the goal is a thing, some gurus of goal setting recommend that you keep a picture of the item where you see and are reminded of it every day.
• If you can’t picture yourself achieving the goal, chances are – you won’t.
  Make a plan for the path you need to follow to accomplish the goal. Create action steps to follow. Identify a critical path. The critical path defines the key accomplish-ments along the way, the most important steps that must happen for the goal to become a reality. Stephen Covey said, "All things are created twice. There's a mental or first creation, and a physical or second creation of all things. You have to make sure that the blueprint, the first creation, is really what you want, that you've thought everything through. Then you put it into bricks and mortar. Each day you go to the construction shed and pull out the blueprint to get marching orders for the day. You begin with the end in mind." He's right.
• Commit to achieving the goal by writing down the goal. Lee Iacocca said, "The discipline of writing something down is the first step toward making it happen." I agree completely. Write down the plan, the action steps and the critical path. Somehow, writing down the goal, the plan and a timeline sets events in motion that may not have happened otherwise. In my own life, it is as if I am making a deeper commitment to goal accomplishment. I can’t fool myself later. The written objective really was the goal.
• Establish times for checking your progress in your calendar system, whatever it is: a day planner, a PDA, a PDA phone or a hand written list. If you’re not making progress or feel stymied, don't let your optimism keep you from accomplishing your goals. No matter how positively you are thinking, you need to assess your lack of progress. Adopt a pessimist’s viewpoint; something will and probably is, going to go wrong. Take a look at all of the factors that are keeping you from accomplishing your goal and develop a plan to overcome them. Add these plan steps to your calendar system as part of your goal achievement plan.
• Review your overall progress regularly. Make sure you are making progress. If you are not making progress, hire a coach, tap into the support of loved ones, analyze why the goal is not being met. Don’t allow the goal to just fade away. Figure out what you need to do to accomplish it. Check the prior five steps starting with an assessment of how deeply you actually want to achieve the goal.

This six step goal setting and achieving system seems simple, but it is the most powerful system you will ever find for achieving your goals and living your resolutions. You just need to do it. Best wishes and good luck.

Resource : http://humanresources.about.com/od/strategicplanning1/a/goal_setting.htm

Let your Dreams Motivate your Investing

From Ken Little

Setting an investing goal of X percent return on your portfolio may be exciting to some people, but others find no motivation in numbers.

If you find that percentages just don’t get your pulse pounding or stir you to stoke your stock investments, try setting a goal that captures your imagination.
Since there is a good chance that one of your investing goals (if not the main one) is a solid retirement nest egg, why not focus on some specifics about that time to come that excite and inspire you?
It doesn’t make any difference what about retirement (or whatever other goal you are focusing on) excites you – playing golf every day of the week, travel, going back to college, a cabin in the woods or on the beach.

All you need is that tangible goal to focus on to get you motivated.

If you want to sail the South Seas, don’t just think about it, shop for a boat, plan your route, look up destinations on the Internet, and, most important of all, figure what you will need to make it happen financially.

Condos on the golf course cost how much? A trip to Europe every other year will cost how much if you stay in the small towns you always wanted to visit?
The point is set a goal for something tangible besides a sterile 8.5 percent annual return.
You’ll need a good return to make your dream come alive and that is where the motivation to fully fund your investment program comes from.

It’s much easier to put that extra $300 a month into your investment account and forgo the new car when the three-year-old model runs just fine, if you have a dream to build toward.
Not many people will sacrifice for an extra one-half percent return on their investments, but for their dreams, that’s different.

Article Resource : http://stocks.about.com/od/investingstrategies/a/101706Goals.htm

Don't Leave Stocks Unattended while on Vacation

From Ken Little

you are planning a summer vacation, don’t forget to arrange to take care of your stock positions along with the dog, the plants and your mail.
You don’t want to leave any of those unattended for any length of time.
Technology permits you to take stock monitoring with you virtually (pun intended) where ever you go. However, this is a vacation and you may not want to spend it watching the Dow.
Some protection What you need is some protection in place to prevent significant losses if your stocks melt down while you’re relaxing on a beach somewhere. You may also want to jump on a stock that you’ve had your eye on, but felt was currently over-priced.
You can solve both these problems with a couple of standing orders with your broker.
A stop loss order tells your broker that if the stock’s price slips to this level, you want to sell.

This prevents you from suffering a significant loss and is executed without any further action on your part.
You’ll want to set the stop loss price below the current trading range of the stock so normal price fluctuation doesn’t activate it. For some stocks, five percent below the current market price is just fine, while stocks that are more volatile may need a bigger cushion.
If you have a nice profit in a stock that is still rising, you probably want to use a variation of the stop loss called a trailing stop. Read my article on trailing stops for more information on this easy tool.
Long-Term Hold If you have a stock that you feel is a hold for the long term, you may be willing to let it slip farther.
If there is a stock you want to buy, but are looking for a better price you can leave a limit order with your broker. A limit order specifies the number of shares and price you are willing to pay for the stock.
If the stock hits that price or lower, your broker will execute the order.
Of course, there is a small danger with limit orders. What if the stock you had your eye on suddenly turns to dust because of some corporate scandal? Your limit order would be executed as the stock plunged into the toilet. It doesn’t happen that often, but it could, so be aware of the risk.
Conclusion You don’t have to leave your stocks unattended when you go on vacation. Use some of the available stock orders to help protect your portfolio and plenty of sun block to protect your skin and you’ll enjoy the vacation even more.

Article Resource : http://stocks.about.com/od/tradingbasics/a/Vac051005.htm

Commodity Option Buying - The Hidden Dangers PART 4 What The Option Pros Don't Want You To Know

By Thomas Cathey

The buying of options (rather than writing them) is the most popular way most new commodity traders start out. Little do they know that over time, their chance for success is 10% at best. The premium cost over a year is tremendous. Read about how the pros use commodity options and how you should too.

There are many ways to hold a speculative position in futures contracts and hedge yourself against unlimited risk. All methods will cost you something. The market is a wash and gives nothing away. It will reward you only if you uncover an advantage that the majority misses. You must use the proper trading vehicles and analysis to capitalize on these situations. The wild card is that the market and optimum tools are always changing.

I talk about the dangers of option buying from experience. Over the years, I've done well buying and selling futures contracts as well as other traders I know. But, except for a few tremendous gains when the market collapsed while holding put options, I've seen most traders lose consistently when straight buying options. This erosion happens even when the market forecast is correct. That is the most disheartening part - to have the move take place and the options erode in value. Unless you are expecting an unusually fast move in a short period of time, find a way to use futures contracts for the job.

Writing (selling) options is a good way to capitalize on this eroding asset. Again, there are no free lunches and it takes as much skill to make money writing options as it does trading futures contracts. Writing options also contains as much risk. This threat of risk is your reality check to make sure the market will pay you for your skills. Without taking on risk, you are an outsider trying to play a pro's game.

Let's not forget about the spreads when trading commodity options. Except for some very active financial markets, option bid and offer spreads are usually so wide you can drive a truck through them. The New York commodity option pit markets are notorious. An illiquid market is the problem with many commodity futures options.

Some trading is so thin you simply cannot get in or out without paying an outrageous price. After buying, try to sell it back minutes later and you might be down 30%. I've seen times when some option spreads have been one-bid to three-offered. Even 3/4 point is considered a good spread in some commodity option markets. Unless you follow a few rules to getting in and out, expect to pay. In defense, most financial commodity option markets are reasonably liquid and active.
When you add up the spreads in illiquid markets over a year's trading, they can be many times more than the brokerage commissions you paid! These are expenses that may take you from profitable, to break-even, to even losing for the year. Many traders think that they can pay these expenses "just this time" and the trade will take off and make it all up. This attitude gets contagious in a wild commodity bull market as traders buy at any price.

Trading has to be viewed over a long series of trades. Some trades will be losers, some will be break-even and some will be winners. They must be all taken together. Calculate your expenses to arrive at one bottom line. If the best pros have a hard time scratching out 50%-100% gains per year with their low overhead and expertise, how can you expect to cover greatly higher option expenses and come out ahead?

In contrast, most futures contracts are very fair in their spreads since they are more liquid. For example, the e-mini futures contract, (currently priced at 1200) if scaled down to equal 120, has an equivalent bid/offer spread of about 1/40th of a point! Now that a fair and low entry-exit expense!

I simply want to make you aware of what you're up against when buying options. Being aware is being prepared. You need to have skills, an edge, reasonable expenses, the proper trading vehicles and good advice to survive and prosper trading commodities. My advice is don't get lazy and depend only on the false security of buying options. Learn to use these trading vehicles like a pros. Take on the risk of futures, option spreads and other strategies that require more experience. Take on the challenge to learn more about commodity trading strategies.

Read my free course lessons #26 and #29 to find useful information on using futures and option hedges to avoid these pitfalls. I hope this lesson will help to clear the fog, false hope and comfort of buying these eroding assets. You will discover there are much better vehicles and techniques for position trading.

Good Trading!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, "Thomas Commodity Trading Course" - they're all free. http://www.thomascapitalmanagement.com/commodity/welcome.htm Main site: http://www.ThomasCapitalManagement.com
Article Source: http://EzineArticles.com/?expert=Thomas_Cathey

Under Standing Stop Loss : How Stop Loss Orders can Protect You

From Ken Little,

When the bottom falls out of your favorite stock’s price a stop loss order on file with your broker can help ease the pain.
A stop loss order instructs your broker to sell when the price hits a certain point. The purpose of the stop loss is obvious – you want to get out of the stock before it falls any farther.
A stop loss order works like this: You tell your broker you want a stop loss order at a certain price on the stock. When, and if, the stock hits that price, your stop loss order becomes a market order, which means your broker sells the stock at the best market price available immediately.
Setting a Stop Loss If the stock is trading at $30 per share and normally doesn’t fluctuate more than $1-$2, then a stop loss order at $26.50 might be reasonable.
A good example of how investors could use the stop loss order was when Merck, the pharmaceutical giant, pulled its blockbuster arthritis drug Vioxx off the market.

Studies linked usage of the popular drug to an increased likelihood of heart attacks and stroke.
As soon as Merck made the announcement, its stock began dropping like a rock because investors knew how much the company was counting on profits from the drug.
Wiped Out By the end of the day, the stock was down almost 27% or over $11 – wiping out billions in value of the company.
The stock opened around $45 the day of the announcement. If you had a stop loss order in for $40, it would have triggered very soon after the announcement.
When the market hit your $40 price, your stop loss order became a market order, meaning your broker sold the stock at the best current price. That may not have been $40.
A fast-moving market may go past your target before your broker can fill your order. The good news is you probably want out of a plunging stock at the best price you can get and will take what you can get.
You can also use stop loss orders to lock in profits, but
Important Points Here are some important points to remember:
Be careful where you set your stop loss points. If a stock normally fluctuates 3-5 points, you don’t want to set your stop loss too close to that range or it will sell the stock on a normal downswing.
Stop loss orders take the emotion out of a sell decision by setting a floor on the downside.
If you plan to be out of touch from the market, on vacation for instance, put stop loss orders in so you have some protection against an unexpected disaster.
Stop loss orders don’t guarantee against losses. When disaster strikes a stock, it may fall so fast the best you can hope for is to come out close to you price.
Conclusion Stop loss orders are great insurance policies that cost you nothing and can save a fortune. Unless you plan to hold a stock forever, you should consider using them to protect yourself.

Article Resource : http://stocks.about.com/od/tradingbasics/a/stoploss.htm

Commodity Option Buying - The Hidden Dangers PART 3 What The Option Pros Don't Want You To Know

By Thomas Cathey

The buying of options (verses writing them) is the most popular way most new commodity traders start out. Little do they know that over time, their chance for success is 10% at best. The option premium cost over a year is tremendous. Read how most pros use commodity options and how you should too.

There are special times when options can be bought. There are special reasons too. I've seen good buys when sugar is wallowing at its lows around 4-5 cents. Buying a nine-month-out call option near the money costs only 20 basis points. These are the times to take notice and buy options assuming you have a forecast showing a good rally. (or decline)
Another good time to buy is simply when the option gets way undervalued from current market volatility conditions and you are looking for it to swing back to its volatility norm. Reverse everything mentioned above when buying put options. You want to see panic buying and short covering so that the put premiums are deflated, of course.

The market pays you for having skills that are better than the average trader. It also pays you for taking on risk. Buying a load of inflated options based on the crossover of a moving average and then sitting on them for a few months takes no skill at all! In addition, there is really no "unknown risk" being taken. Yes, you pay your option premium, but it's really your bribe to the market to make you feel comfortable.

The option writer is the guy really taking on uncertain risk and is feeling uncomfortable. The market usually will favor him if only for that reason. A smart pro writing options will then lay off some of his risk by hedging some future contracts (or opposite side options) against the option write. How can he make money doing that? He locks in money because you were willing to pay a higher than normal option premium and/or were willing to buy at the offer price, giving him some spread and premium slush to work with.

It takes no skill to enter and maintain a position when buying a load of options. None at all. But entering a market with a futures contract and staying on-board requires sharp timing skills and a forecast that works out without a large adverse move against you. The good part is you have all the time in the world for the futures contract move to take place! No ticking clock eroding premium like an option. (there may be a small futures carrying charge when long, but it works for you when short)
Someone might say it's a wash... the advantages outweigh the disadvantages. But I say if you are a skilled position trader, holding futures have a tremendous advantage over buying put and call options. Generally, beginners have few skills and pay the price by getting wiped out due to eroding option premiums.

Many brokers will encourage beginners to buy options because they are very low time maintenance and of little risk for them. The broker and client become cheerleaders cheering or gagging as they watch the news. Lots of "safe, no risk" entertainment for a few months. Maybe one or two out of ten trades work out. But the end result is always the same.

These traders eventually lose all their money to the option writers and simply fade away. Nice ride while it lasted. Next. Buying a load of options removes "responsibility" to the market. If you're wrong, the account erodes slowly (or quickly) while you're fat, happy and hoping for a miracle .
In contrast, if you're sloppy entering a futures contract trade, you get booted out on your rear end within a day or two. There is instant feedback and pain. There's hard work and risk servicing a group of futures trading clients. But that's the price that must be paid for the chance for higher probability market success.

More advanced option buyers like to do "free" option trades where they buy two, and then sell one or two to take in some buffer cash. This is actually a decent idea and can reduce expenses or lock in some profits when the market chops or backs off after a rally. However, your upside potential is also reduced. No free lunches. See my free course lesson # 26 for more details on "free trades."

Part Four of Four Parts - Next!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas

Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, "Thomas Commodity Trading Course" - they're all free. http://www.thomascapitalmanagement.com/commodity/welcome.htm

Main site: http://www.ThomasCapitalManagement.com
Article Source: http://EzineArticles.com/?expert=Thomas_Cathey

Stop Loss Order – Are They Right For You?

By Bob Crane

I have been trading stocks now for over ten years and have never used a stop-loss order. There are several opinions as to whether you should use a stop-loss order or not but it comes down to your personal preference and trading style. If you are the type of trader or stock investor that takes long positions it really doesn’t matter just as long as you have quality companies in your portfolio.

During my years trading stocks I have set-up several accounts where I only paper trade to try out new techniques. The dummy portfolios range from tech stocks to under three dollar stocks. I also have dummy portfolios set-up for the various sectors that include the ETF’s for those sectors along with stocks of the most prominent companies in the sector.

The dummy portfolios where I have lost the most “money” is the three dollar and under stocks. It seems that the smallest companies where you could really make some money if they took off provide you with an opportunity to lose the most also. The stocks may seem cheap but if you look deep into the fundamentals of the company you will see that they aren’t really cheap at all. They just appear cheap because the stock is only three dollars. For someone who wants to trade those cheap stocks a stop-loss order would probably benefit you because if the economy itself doesn’t cause the prices of the cheap stock to go down the company usually has a secondary offering to raise cash that drives the stock lower.

If you are trading large high-quality companies you could actually be worse off from using a stop-loss. Let’s say that you had a hundred shares of XYZ company that you paid thirty three dollars per share for and you place a stop loss order to exit the trade if the price drops to thirty two dollars. Ok, so you are two days into owning your one hundred shares of XYZ corporation at thirty three dollars and it has already gone up five percent so you are making money on it then out of no where comes a newsflash that a terrorist may have a bomb in a key government building and a bomb squad is on the way..etc. Once the news hits the airwaves the stock market takes a big tumble and your shares of XYZ company drop to thirty-one dollars for one second and your stop-loss order is executed. One hour later the news comes back on and says that the terrorist threat was a hoax it was only someone working on the elevators in the building that scared someone into calling 911.
Three hours after you were taken out of your trade the price of XYZ shares go to thirty four dollars per share and continues climbing due to good news that the company just announced about a new product it is bringing to the marketplace. In that example you were whipsawed out of your position and turned what would have been a winning trade into a loser. In those cases instead of using a stop loss it would have been better to buy more shares of XYZ company as they went on sale if only briefly.

If you have a really profitable position in a stock and you are concerned about the recent quarters earnings report you may be better off just selling your position, but the next best thing in that case would be a stop-loss order to preserve some of your profits should the earnings news come out bad.

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Article Source: http://EzineArticles.com/?expert=Bob_Crane

Is The Stock Market Right For You?

By Gabriel J. Adams

You might have heard of small individual stock investors becoming rich from a few wise investments. Perhaps you long to become part of a large trading group that profits from the latest round of buying and selling shares of a company they hope will prove a moneymaker.

While all of these tales sound like something that could add to your financial stability, you should know that thousands of people across the globe take a stab at the stock market and plenty retreat with disappointment. Becoming aware of what it takes to succeed in the stock market world may help make the decision easier on whether or not taking this chance is right for you.

Stay Consistent
Before entering the stock market, you should establish a set of rules to stick by. It is important to stay consistent when dealing with the stock market. Lack of discipline will eventually lead to lack of profits. Those who get into the habit of chasing every stock market tip usually don’t make much money. These tips come a dime-a-dozen, so it is impossible to follow every lead. Showing discipline and sticking to a plan is needed in this business.

Avoid the Risk
Some traders jump into the stock market full of adventure, while others are more frugal. Some people, who carelessly make their decisions, have lost a fortune with the stock market. Those who spend their energy trying to protect their capital base will enjoy a higher level of financial safety. It is also said that you should never risk more than 3% of your portfolio on any one trade.

Don’t Lose Yourself
The stock market has its ups and down. Some people make a large profit while others lose a lot of money. Individuals with an impulsive personality must show restraint or rethink whether or not they will be able to handle the temptation to take risks. Once again, staying disciplined is highly recommended and knowing when to cut your losses if the time arises.

Know When to Take Chances
Traders also need to know when to take advantage of a stock that is rising. Some individuals become scared and jump out of a deal for fear that the stock will soon drop. Knowing when to take chances means allowing yourself to reap the benefits a little longer before abandoning a rising stock. If the stock should fall, you can then opt out with a little loss, but with more gain in the long run.

Not every transaction or decision you make has to generate money in order for you to prosper in the stock market. As long as you do not go below a pre-determined limit for yourself, testing the waters shouldn’t turn into a nightmare. Learning the ins and outs of the market before committing money will allow you to make the best decisions for yourself.

Learn how to invest the right way at http://www.1dayhold.com stock picks.
Article Source: http://EzineArticles.com/?expert=Gabriel_J._Adams

Commodity Option Buying - The Hidden Dangers PART 2 What The Option Pros Don't Want You To Know

By Thomas Cathey

The buying of options (verses writing them) is the most popular way most new commodity traders start out. Little do they know that over time, their chance for success is 10% at best. The option premium cost over a year is tremendous. Read how most pros use commodity options and how you should too.
Let's talk about the time advantage futures contracts have over options. If you bought a futures contract and the market went sideways for a full year, depending on the carrying charge differences between months, you could possibly break even on the year. But there is a chance of getting stopped out. So what? Get stopped out of the futures contract and then re-evaluate the situation. You most likely have most of your capital still intact and can always get back in. Or simply let the trade go and look for something better.
With options, many traders feel locked in after a loss and go down with the ship. They figure they have "limited" loss and the market may come back. Maybe, maybe not.
Successful futures traders with accounts under $20,000 are more likely to buy small lots - one or two futures contracts with loose stops. They will also consider buying an option as a HEDGE against unlimited risk. That's the right reason to buy an option. (as well as selling (writing) them to collect the premium as they erode in time) Buying options to reduce the risk of a futures contract or naked option position for small, critical periods of time is the correct way.
Many new option buyers let their options erode to nothing once the market goes against them. Option premiums have a tendency to get slammed during adverse moves in percentages far greater than the underlying futures contact's move. It's not unusual to see an option get cut by 50% in one day while the futures contract has moved the equivalent of 10%. (this is the futures contact's actual move times the margin leverage) Of course, an option can double in one day, which keeps the public hoping and buying more.
Some option buyers purchase options when "the cat is out of the bag" and pay greatly inflated premiums. This happens when dramatic news hits the market and the futures move sharply. But if the cash market then goes sideways, the futures contract prices stay intact, while the premiums in the options get sucked back out. Again, I've seen times where options have dropped 50% in value in a single day's time, while the futures contract price went sideways.
The bottom line is that an option buyer is paying a huge price to avoid taking on "risk." The professional option sellers taking the other side are the ones putting their hands in the fire and taking on the risk. The market pays us to add liquidity and take on risk. It penalizes us (through high option premiums in this case) when ducking risk and liquidity to feel comfortable.
Buying options for EVERY trading signal is the path to ruin. It cannot be done successfully over a long period of time because of this heavy premium expense load. There is a time to buy options when the market falls asleep. This happens near a major, dull bottom. They can also be a good value after a big correction market clean-out, or generally when nobody wants the option, for whatever reasons.
You must pick your spots carefully. Remember that to get the very best option buys you want the previous holders to be panicking and dumping them wholesale. Always wait for a selling panic to buy and a buying panic to sell on whatever time scale you trade. This gives you a great price cushion buffer in case you are wrong and need to dump the position later yourself! At these panic times, call option premiums can be so deflated that you can sometimes own an option (at or near the money) for a little more than the carrying charge cost of a futures contract. (That's cheap!)

Part Three of Four Parts - Next!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, "Thomas Commodity Trading Course" - they're all free. http://www.thomascapitalmanagement.com/commodity/welcome.htm Main site: http://www.ThomasCapitalManagement.com
Article Source: http://EzineArticles.com/?expert=Thomas_Cathey

Commodity Option Buying - The Hidden Dangers PART 1 What The Option Pros Don't Want You To Know

The buying of options (verses writing them) is the most popular way most new commodity traders start out. Little do they know that over time, their chance for success is 10% at best. The option premium cost over a year is tremendous. Read how most pros use commodity options and how you should too.
I am going to tell you some things about option buying that may save you a lot of money over your lifetime. This applies to both commodity and stock options. First of all, buying commodity options as a routine way to participate in a market's price move for long term trading is a losing proposition over the long haul. In fact, it's probably the leading cause for commodity trading failure by the public.
Most beginning speculative option buyers (and many brokers) wave the flag saying options have limited risk and you can only lose the money you put in. This is true. But at what cost? Paying a hefty option premium to the market for the privilege of holding it for several months is the price you pay. These premiums add up to a tremendous cost over time.
If you are in the market for a year, whether trading options in and out or holding long term option positions, the clock is always ticking and eroding those option premiums. There is a small window when commodity options are priced at good values and can be bought, but it is a tiny fraction of the time when markets get out of line and the historical volatility gets low. The majority of the time, long term option buying is a formula for failure.
In some cases, it may cost you 100% or more of your account value just to pay and maintain that eroding premium privilege for a full year. For example, it is common to pay about $1000 for a three month call option that is near the money. (near its strike price) If the futures market simply chops sideways, goes down or even rallies slightly, the option will expire worthless in three months. Do this three more times to cover a full year and you've spent $4,000 to simply hold ONE out-of-the-money call option for a year.
Multiply this times ten options and you're talking some serious money paid to the "insurance man" so you can feel comfortable for a year. Bear in mind it is not necessary to have an adverse move against your position for the entire year for this to happen. Think about these statistics and realize that most commodity pros consider it a great year if they earn "just" 30% on their accounts - for the year!
How can one pay many times that cost in option premiums and come out ahead? In compaison, if you were holding futures contracts, they would have been near break-even at year's end. That's a tremendous difference to start with. Also remember that when buying options, a good win/loss ratio for a skilled long term trader is only about 10-20% accuracy. This is low but normal and requires huge gains on the winning trades. This win/loss method information is throughly discussed in my free course lessons #2 and #21.
There is a tendency for many option buyers to "load up" and buy way too many options for their account size. I've seen it over and over. Option buyers are very prone to feeling comfortable and becoming "boy plungers." In contrast, serious futures contract traders are very aware of the potential risk and usually take extreme precautions by trading small for their account size. (small is always a good idea for survival - see free course lesson #28)
Remember that I am talking about the dangers of simply BUYING options and holding them. Selling options (writing them) or using them to hedge the risk of futures or using them in spreads to pay for an option buy position, can work well. To use options efficiently means spending the time to find the proper combination to lay off your risk while still participating in a chance for profit.

Part Two of Four Parts - Next!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, "Thomas Commodity Trading Course" - they're all free. http://www.thomascapitalmanagement.com/commodity/welcome.htm Main site: http://www.ThomasCapitalManagement.com
Article Source: http://EzineArticles.com/?expert=Thomas_Cathey

How to Get Started Trading Options Online

By Erik Schouman

Trading options online has become very popular, because not only is it fast but its easy too. Options trading is very similar to futures trading. They both involve the process of buying stocks at a pre-determined price and then selling them when the price is higher than what they were brought for.

Online options trading eliminate the need trade options face to face. You can simply log onto your favorite online options trading website and complete all of your transactions, simply, and easily at the click of a button.
The fact is, you will save more time and money trading options online because you will save yourself the hassle of meeting with your client or broker, this will give you more time to spend doing research and analysis of the different stocks and options that are on the market. With today's market being the way it is most online options trading websites have teleconference and even video conference facilities that allow you to communicate with your broker or client.
One of the best advantages to online options trading is that you are able to get real-time updated statistics on the options market just like you are with the stock market. You can monitor and observe the trends taking place in the market from the comfort of your own home. If you need assistance or needs or advice concerning the market, you can email, instant messaging or even use skype to communicate with your broker or other fellow investors.
Options trading forums allows you to communicate with your fellow investors. Forms are a good place to start if you are a beginner that is new to options trading. You can hang out in the forums and pickup advice from more experienced investors.
Many people have learned about the latest option trading techniques being used, in the forums from other forum members. However you should never take any advice that you are given as the truth, until you test the advice yourself or consult your broker for clarification.
Online options trading provides so many benefits that traditional trading doesn't. It is not difficult to get started because many online options trading websites provide a wealth of information to get you going.

To learn the truth about options trading and discover some useful options trading tips then visit: http://www.LearningOptionsTrading.com
Article Source: http://EzineArticles.com/?expert=Erik_Schouman

Stock Market Investing and the Power of Contrary Opinion

by John Reizner

The term "contrary opinion" in the field of equities refers to taking the course of action which is least popular in the stock market. Simply said, it means buying stocks when the majority are selling and selling when most others are buying. This often means taking an action which is against the emotions you may be feeling.
Generally when the market is rising strongly, the predominant mood of investors is quite buoyant and many players will often "catch the buying fever" if the increase in market values are strong enough. When a stock or the market is being marked up, the individual "feels" richer as he or she has increased profits on paper (the profits are not realized until the shares are sold). The investor may buy certain stocks that will make him feel better emotionally or feel like he is doing the safe thing. However, in many cases, according to the theory of contrary opinion, that may be exactly the wrong time to buy shares. When most analysts are positive on a stock, it is probably time to sell, and the reverse. The time to sell is when your shares are at a premium, at a price that will bring you a good return, while you may be feeling good about the stock and many analysts are touting it. If you are a seasoned enough investor, and believe in the power of contrary opinion, you will take the enthusiasm surrounding the stock as an opportunity to sell shares at the highest possible price.
A reverse scenario also holds true. For example, sharp declines in a company's stock price produces a reaction of fear in most people as they see their stocks decline in value. But if you are experienced enough, you will see that more profits in the market are made by buying when there is fear and panic in the market or your stock candidate, as the emotions of the day may be unnecessarily pushing the stocks downward to a bargain level. The point to buying a good company, whose stock is under pressure where you might be feeling fear, is to make money by selling when the market mood is more buoyant. The firm may be an otherwise good company whose stock is overreacting to unfavorable news or the decline in the general market - the stock sell off may be only temporary. You will have to weigh company specific factors. You can also weigh the analyst opinions out on the Street - are they divided, or are they mostly positive or negative? Usually a one sided analyst consensus is the wrong way to go. Remember, when most all players are on one side of a trade, consider taking the other side.
One of the most glaring examples of buying when the prevailing opinion is on the sell side was illustrated during the real estate and banking crisis of the late 1980's and early 1990's. The atmosphere for banks and real estate was quite poor, to say the least. Banks were failing left and right - the bank where I held some of my investments had only two banks on their buy list. A common expression of real estate developers and investors, some who were going or close to broke at that time was "stay alive till '95".
As I explain in my eBook, A Way to Wealth - The Art of Investing in Common Stocks, my reasons for my purchases of Wells Fargo and CoreStates Financial (now Wachovia) in the early 1990's was that Warren Buffett and company insiders (in the case of Wells Fargo) were buying. Wells Fargo in particular had large real estate loans on their books, which many believed were going to default, bringing the bank down. One really had to use the power of contrary opinion to buy bank stock at that time. Most analysts were extremely negative on banks - yet at least one investor, Mr. Buffett, saw something different in Wells Fargo. He apparently did not believe the run of negative declarations coming from analysts and fearful public opinion. I read interviews with fine money managers, watched financial television, steadied myself against the torrent of negative opinions - and bought the stock. Since then Wells Fargo stock has appreciated 1000%.
Another example of one of my purchases where contrary opinion was a factor, also represented in my eBook, is MBIA, a municipal bond insurer. In 1994, it was discovered that the Treasurer of Orange County had lost over a billion dollars of County money speculating on the future of interest rates. The County fell into bankruptcy. MBIA's shares sank under selling pressure. Some must have believed that the company was insuring Orange County debt and would be on the hook for it. I found through my reading on what was transpiring that MBIA would not be severely compromised and that the sell-off and the fear in the market concerning the company was an opportunity to pick up shares, which I did. Also, company insiders were picking up shares, a further sign of confidence (see my eBook for more on the importance and analysis of insider transactions). This has been a quite profitable transaction.
In my own mutual fund holdings, most which I have held for well over a decade, there was a period during the 1995-1999 technology stock euphoria when one of the fund companies where I invested actually lost customers because the fund manager chose not to buy increasingly overvalued tech stocks. After the market broke in 2000 and technology stocks crumbled, this company's funds performed well and garnered positive reviews and attention for their manager's long term value approach. An inflow of new investor money came into the fund. And so the choices of investors can change over market periods of optimism and pessimism, and be influenced as much by emotion as by common sense. The lesson to this story is that it often pays to act contrary to the euphoria or crazes of the day and not participate, as they almost always end poorly.
So I think it takes experience and courage to take actions with your money in the stock market that is contrary to what others are doing. I think that this is a skill which can be acquired over time. In my eBook, I illustrate a two-pronged approach to profiting in the market which often points to stocks that seem contrary to the prevailing emotional winds of the day - one need not be an expert or extremely sophisticated in stock market lore to practice this method.
This article contains the opinions and ideas of its author and is designed to provide useful information to the reader on the subject matter covered. The author may or may not have current positions in the investments mentioned in this work, and the author may from time to time make investments in a manner that is not described here. Past performance is no guarantee or prediction of future results and any investments made, based on the opinions and ideas contained in this work, may or may not be successful. The strategies contained herein may not be suitable for every situation, and the author is not engaged in rendering legal, accounting, investment advisory or other professional services.

About the Author
John Reizner was first exposed to financial markets when he started reading the stock quotes out of the newspaper to his grandfather, who was legally blind, when he was about ten. Papa always told him: "Buy Triple A" (the best stocks). His current e-book, A Way to Wealth - the Art of Investing in Common Stocks, is available at http://www.reiznersway.com

Are Stocks Still Worthwhile Investments? A Reconsideration: The Odds of a Panic

by John Reizner

The time at which most people believe a significant stock market correction will occur - whether because of interest rates, war, budget or trade deficits, excessive public and/or private debt, or events in China (or some other reason) -may actually be a time when it is less likely to happen. I have discussed this aspect of market psychology in my article, Stock Market Investing and the Power of Contrary Opinion.
The public has generally been conditioned to buy stocks on the dip when the stock market swoons. This has happened several times: in 1987, 1989, 1998, and recently in February 2007. There was great fear during this most recent swoon, which importantly occurred with terrible breadth and on NYSE volume of approximately 2.3 billion shares traded; but the market has sharply rebounded, at least so far. A significant break from the "buy on the dip" psychology could prove to be dangerous to the long investor, as the market could experience cascading selling waves. I realize that the latter point may appear unsubstantiated at first glance, but there is precedent for it in stock market and economic history.
When the crash of 1987 occurred, the market fell over 20% in one day. Pessimism was rife that a severe economic downturn would follow and that the stock market might follow the path of the last great crash that began on October 29, 1929, known as Black Thursday. The latter occurred on record volume and was followed by further brutal declines despite measures to stem it. After the crash of 1929, policy makers kept credit conditions tight to prevent a return to stock market speculation, restraining the ability of the market and the economy to resume a steady path. Restrictive trade legislation was also added to isolationist trade policy enacted in the 1920s, extending the life of the Depression that followed the crash.
After the 1987 crash, however, the calm demeanor of President Reagan prevailed when he stated that as long as consumers kept on buying refrigerators and such items, that we would weather the stock market storm. Reagan also did not panic and seek to implement legislation of poor policy measures such as the sort of protectionist trade legislation passed during the Great Depression. Further, Fed Chairman Alan Greenspan made the resources of the Fed available to the markets by promising liquidity. Bonds rallied strongly in a flight to safety, and in time, the stock market recovered and went to new highs.
The thing that troubles me about the February 27, 2007 market break is not only the high volume, terrible breadth, and sharpness of the fall, but also the sharpness of the snapback rally in its aftermath. It was reported that some market participants were hoping for a continuation, a washout of the speculation in recent stock prices after February 27th- a further decline. It is known that our market break followed the abrupt fall in the Shanghai market, which has also snapped back in the near term.
I believe in our case and perhaps as likely in the Shanghai market, the snapback may indicate an unsupported speculative fever underlying the markets. In the month or so before Black Thursday in 1929, the market fell but the speculators kept on pushing the market. When market selling finally took over, it was relentless. It may be a bit of stab to say that the two periods bear a resemblance, but the form of the speculative fever is can be compared.
But I will say that in my view the odds of a stock market panic have increased due to the widespread participation of the public in equities, as has happened in prior speculations. Also, hedge funds, for example, have created a culture among many money managers and some investors of short term and ultra short term investment time horizons. Together, these conditions may contribute to high market volatility.
One respected stock market money manager has overlaid our recent market period on the 1995-1999 period and has stated that the two times are quite similar. Both times experienced a trend of rising interest rates that paused the markets. The post 1995 period faced the prospect and in turn the reality of Federal Reserve Board cuts, as we may have now. These cuts, if they occur, according to this money manager, may propel the stock market significantly higher with technology leading the way as did the rate cuts after 1995.
In my article titled Inflation and the Stock Market: Does Anyone Remember the Seventies? I write of the possibility of an end to the benign disinflation we have experienced for over two decades. The prospect of increasing inflation may be the grinch that steals Christmas from the above mentioned money manager's argument of sharply increasing prices for equities.
As I state in that article, increasing inflation may not permit the Fed to cut its rates. Yet, on the other hand, policymakers' legislation in reaction to the problem of subprime mortgage defaults may result in a recession. As one subprime lender has stated on financial television, if policymakers "throw the baby out with the bath water," we will be in danger of overkill. Should the subprime situation turn into a widespread debacle, which is in my view unlikely, then I believe it would be incumbent on the Fed Chairman to lower interest rates. It would be better if some of our legislators had benefited from a study of our economic and stock market history, and thus gained insight into our markets today.
Yet, in terms of the probability of an actual market-wide panic, we all now have the advantage of insight into the 1929 and other more recent stock market panics, and Federal Reserve Chairman Bernanke has studied the 1929 period and its causes carefully. Thankfully, I imagine he is determined as our Fed Chairman not to repeat the mistakes of that awful time in our history should the stock market suffer a serious blow.
This article contains the opinions and ideas of its author and is designed to provide useful general information to the reader on the subject matter covered. The author may or may not have current positions in the investments mentioned in this work, and the author may from time to time make investments in a manner that is not described here. Past investment performance is no guarantee or prediction of future results and any investments made, based on the opinions and ideas contained in this work, may or may not be successful. The strategies contained herein may not be suitable for every investor or situation, and the author is not engaged in, and should not be construed to be, rendering legal, accounting, investment advisory or other professional services to the reader or any other person. Readers should consult their own advisers for advice particular to their individual circumstances.

About the Author
John Reizner was first exposed to financial markets when he started reading the stock quotes out of the newspaper to his businessman grandfather, who was legally blind, when he was about ten. His current e-book, A Way to Wealth - the Art of Investing in Common Stocks, is available at his website, http://www.ReiznersWay.com

The Risks of Forex Trading

by Donald Aday

There are definite risks to trading in the forex market. It pays to be knowledgable of these risks. A few tips may be of help to you.

You could lose your investment. This sounds too obvious to mention, but it's true. There is no guarantee of success. Between the time you place a trade and the time you close your trade, there is much that can still take place. For one thing, fluctuations in the foreign exchange rate will affect your potential profit, the price of your contract, and your potential losses in the deal.

Good management of your accounts is essential. However, be aware always that you could lose your entire investiment. Prices can move in a direction that does not favor your position. High leverage can result in losses in excess of your initial deposit. It's also possible that, depending on your agreement with your dealer, you may also end up paying for more losses.

Be wary of anyone stating that your investment is protected. In reality, forex trades are not guaranteed by any organization, nor are your deposits to trade forex contracts insured. If a dealer goes bankrupt, the funds deposited by that dealer in an FDIC-insured bank account may not be protected.
The Internet has its own risks. There is always a possibility, however remote, that an online system failure may occur. This would put you in a very difficult position, keeping you from making new orders, making changes to or canceling existing orders. In light of this risk, it's best to obtain the contact information, such as the telephone numbers and addresses of the companies and individuals you are dealing with online, so you may continue your business with as little disruption as possible.

Any investment carries the risk of fraud, and you should protect yourself against this as well. Scams are prevalent and increasing in number throughout the Internet. Due diligence on your part is definitely in order before you begin, and during trading.

Avoid deals that sound too good. Understand and remember that risk is inherent in forex trading, and anyone who assures you of the opposite is to be avoided.
Opportunities that sound too good to be true are worthy of extra caution from you. In fact, it may be best just to stay away from them altogether. Get-rich-quick schemes definitely fall into this catagory, and often tend to be fraudulent. Before you do business with anyone, be sure you know as much about them as you can, and be satisfied that they are reputable and trustworthy. If you cannot be certain that they are completely legitimate, it is best to not do business with that company or individual. One place to do your background check is at the National Futures Association (NFA) (http://www.nfa.futures.org) Visit the Background Affiliation Status Information Center, or BASIC, available throug NFA's web site, where you can find registration and disciplinary records about forex companies' and individuals in the futures industry. Not all brokers are required to register with NFA, but this is a good place to start your search for pertinent information. Before you make any trading decisions, consult with your financial advisor, get excellent forex training through a reputable program.

If you are new to forex, open a free demo account to learn how to trade online. if you have some experience, start trading now with an active account. Even with the inherent risks of currency trading, you can gain confidence from experience, and join the thousands of people worldwide who are making good money every day.

About the Author

Donald Aday is a writer and webmaster. To learn more about Online Forex Currency Trading, visit his website at http://www.xenocurrencies.com

Tip! How to buy a car

One of the first major purchases that most people make is a car. Interestingly enough, it is often considered one of the worst investments you can make, because, unlike other assets, cars almost always depreciate in value.

The first thing you need to determine what you need the car for? Are you more concerned with a reliable mode of transportation, or something that will make a statement? Is it just for going to work or school, or for hauling the kids to soccer and football practices? Is it for regular long trips, do you need to carry large items when shopping, or is it just for the occasional weekend trip?
Once you've identified the right car, think about whether you really need a new car or if a used car will still serve your purposes. Most cars depreciate 20% to 30% as soon as they are driven off the lot, so getting a one year old car gives you almost the same vehicle at a significant reduction in price. In fact, many major auto dealerships offer certified programs for their used cars which guarantee an accident free, regularly serviced vehicle that is tuned up with a complete warrantee. This gives you almost all the benefits without the full price tag. Of course, you can always look for used vehicles that fit almost any price range, so if you budget is tight, you may need to be flexible on specifics like model, color, and features, and concentrate more on the target price range.

If you decide to buy new, research is critical to getting the best value. There are many internet sources that can not only provide invoice costs , but also real numbers that people have paid on the street so you can go into any price negotiate fully armed with more information so you can even out the advantage that a car dealer normally has. Once you decide on buying a car, an important tip is to leave your financing method out of the pricing discussions and focus only on the final price of the car. A common strategy for dealerships is to fit a higher price tag into whatever monthly budget you offer, so avoid getting lost in the numbers and allowing them to adjust the terms to fit your numbers as you'll end up paying more for the car in the long run. Dealer installed options also come at a far higher mark-up than any other work, so be particularly cautious when reviewing the sticker price, knowing that you can get the same option at less cost than the sticker, so expect to have more negotiating flexibility with options than with the base price of the car.

Above all, the most important tip when buying any car is to do your homework, know what you want, know what a fair price is (which is fair for both you and the dealer, since you are likely to be servicing that car for several years), and be prepared to negotiate from the invoice price up, and not from the sticker price down. Don't be afraid to walk away from a deal if you are uncomfortable with the salesperson or with how the terms are unfolding - there are always other cars to buy and other places to buy them, and many car dealers rely on pressure tactics to get you to commit to a purchase before you're fully comfortable. The best approach is to leave your phone number, be clear on your options and price, and more often than not, the salesperson will consider your offer if the numbers are fair.

Resource: http://personalfinance.tipcentral.net/buyingacar.html

7 Things To Remember When Borrowing Money

By Michael Estrin
Financial Correspondent - Every 2nd Sunday
Resource : http://www.askmen.com

Whether you're starting a small business, remodeling your home or just paying some bills, from time to time you'll need to borrow money. Whether you choose to use your line of credit or take advantage of some equity in your home, you'll want to know what you're getting yourself into before you sign the deal. Here are some things to consider.

1- Shop for the best interest rate

The main thing that you'll be comparing when you're looking for a loan is the best interest rate, which is essentially the price of the money. It's easy to fall for a good sales pitch, but a prudent borrower does his homework. Ask several banks for quotes and then do the same with brokers. You'll get an idea of the price range, but don't be afraid to tell the lowest-priced broker that you think he can do better, especially if other quotes are close. Of course, you need to make sure that you're comparing apples to apples, so be certain that your loan quotes reflect the same amount and time period, and be sure to account for fees.

2- Consolidate your loan

Loan consolidation can have two advantages:A- It's easier to manage one bill at the end of the month instead of three or more.B- You can lock in a low interest rate.
Of course, you take a risk; if interest rates continue to drop, you may not be able to reconsolidate, which means you'll be paying more for your money. But if they rise, you'll be sitting pretty.

3- Use equity

Your home equity is actually your money, and sometimes it pays to use it. You can take equity out (essentially, get a check from the bank equal to some or all of your equity), or you can open a line of credit against your equity (essentially using your home as security for the loan). Because this is a secured loan, you should get a better interest rate than a credit card, but on the downside, if you default, you could lose your home. If you take out a home equity loan, make sure you do so to finance a worthwhile project.

4- Utilize your line of credit

If you don't own a home or don't want to use your home equity, you can use your line of credit. Essentially we're talking about a credit card. While charging it is almost never the foundation of solid financial planning, a credit card has its merits. First, they're great in an emergency. Second, you won't have to justify your plan to anyone before you charge, which means that you have ample flexibility. On the downside, you're going to pay higher rates. However, you should always try to negotiate a lower rate with your credit card company. Remember; credit cards are a competitive business and it never hurts to ask for a deal.

5- Check the fine print

Whenever you sign a loan document, you'll need to check the details. Two big issues to keep in mind are default and early repayment. Default means that you did not pay on time, and you'll want to know when you're technically in default (30, 60, or 90 days), and what that means (does the whole balance become due; can they seize your assets?). On the other hand, you'll want to know about early repayment. It may sound odd, but some lenders charge a penalty for repaying early. After all, the sooner you pay, the less interest they make. So you'll want to know if you can do that without a penalty.

6- Avoid payday loans

Companies that advertise cash loans with no credit check and no collateral make their money by doing volume business and charging outrageously high rates (upwards of 300%) and penalties. Those companies prey on the desperate guys out there, and they should be avoided at all costs.

7- Maximize your credit score before you borrow

The price you pay for the loan will depend greatly on your credit, so if you're planning to borrow in the immediate future (six months out), check your score and see what you can do to improve it. If you've missed payments on credit cards and utilities, make sure that you make timely payments for the next six months. And take that time to clear up any mistakes or outstanding issues on your credit report.

borrowing money

Shopping for a loan can seem like a daunting task, especially if you've never done it before. But in a lot of ways, a loan is just like buying a car or a major appliance; they all come with different features and prices. Once you get beyond the intimidation factor, you'll see that with multiple sources, you'll be able to compare apples to apples. So do your homework.

Use Credit Cards Like A Pro

By Corey Weiner
Financial Correspondent - Every other Sunday
Resource : Askmen

Credit is a commodity that is just as vital as the air we breathe these days. Even the U.S. government spends beyond its means and relies on credit at times. Here are a few ways to ensure that you use your credit cards wisely, and to benefit from them as well.

Do your homework

A little research will save you time, money and aggravation in the long run. Take a few minutes to weigh the good and the bad of a credit card before you even apply. In the credit game, all cards are not created equal. For example, some will offer very competitive introductory interest rates, while others charge an annual membership fee but offer frequent flyer miles or merchant discount coupons on certain purchases. Your credit card should suit your financial needs, so don’t just fill out any credit application that arrives in the mail. Assess your credit card use by considering what kind of balance you typically carry from month to month, then go with a financial institution you feel comfortable owing money to. Customer service can be a huge factor if you have to dispute a purchase or you miss a payment by a few days. Opt for a bank that offers a favorable grace period and is eager to help you versus an institution that treats you as though it is doing you a favor by issuing you a credit card.

Stick to one card

OK, two if you must. If you find yourself owing various amounts among several cards, consolidating those menacing balances into one at a competitive interest rate could be a very smart move. First, you’ll save by paying only one low rate; most companies offer an attractive annual percentage rate (APR) on balance transfers. The second advantage is psychological; it can be very draining on an individual to cut a host of checks to his creditors each month. Instead, you’ll have peace of mind making only one lump payment to a single company; you’ll spare yourself the headache of juggling statements and balance due dates each billing cycle.

Maximize your card’s benefits
The banking industry is always adapting as key players fiercely compete for market share. Use this to your advantage and seek the most out of your credit card. For instance, this could mean discounts on purchases from affiliated merchants, free points toward airline tickets or an assortment of alternative incentives for account holders in good standing.

One of the most valuable features of a good credit card account, however, is consumer protection under certain circumstances. Whenever possible, use your credit card for substantial purchases like moving services, major auto repairs or hotel reservations. If an arrangement goes south or someone doesn’t live up to their part of an agreement, it pays to have a paper trail. Major credit card issuers can often help you file a dispute, conduct an investigation and recover your money if they discover any foul play.

Do better than the minimum
Generally, the term “minimum” has negative connotations, such as in “minimum wage,” “minimum skills” and “minimum protection.” If you want to maintain good credit, discipline yourself to ignore “minimum” payment amounts. As a prudent consumer, you should be using credit cards to your advantage, not the bank’s. You pay for something with a credit card today, and when the statement arrives a few weeks later, you should pay back the same amount plus a small finance charge for “briefly borrowing the bank’s money.”

The reality is, however, that plenty of consumers don’t have the money to pay the outstanding balance when the statement inevitably arrives. Instead, they make the minimum payment and carry the balance; unfortunately, paying the minimum amount often barely covers interest, let alone any of the balance. Now multiply this by six or 12 months’ worth of purchases and you will see how quickly you can find yourself in debt.

Paying more than the minimum will minimize your finance charges and leave you in good standing with the bank. If you keep this up, you will soon receive a credit limit increase notice in the mail. So the next time an emergency pops up, such as having to replace a washer/dryer or the tires on your car, the necessary credit will be at your fingertips.

become a credit pro ....

Remember: Everyone uses credit, even the biggest, most successful investors and corporations in the world. Know the responsibilities that come with the territory, maintain your own records, pay attention to money-saving opportunities, and use the bank’s resources to your advantage.

Sleep Your Way to Riches, Using These Methods of Investing

by Brian Lee

If you are looking for a sure way to make your financial future better, one of the best things that you can do is to start investing. Even if you are relatively new to the investing world, there are a variety of investment options that you may want to consider. Before you get started investing for the very first time, make sure that you know your options and the benefits of different types of investments.

Savings Bonds - One type of investment that you may be interested in is a savings bond. There are various banks and credit unions that offer savings bonds, and basically, these bonds are special securities that the U.S. Treasury Department offers so you can invest your money and the government can use your money. Since you are, in essence, lending your money to the Federal Government, they pay you interest on the amount of money that you put into the bonds. The interest rates on savings bonds tend to vary and go up and down in accordance with the national economy. If interest rates are currently high, more than likely you will get high interest rates on your savings bond.
Savings Accounts - One simple and safe way that you can invest your money is to start a savings account at your local bank. Savings accounts help you to put away money and pay a small interest rate on the money that you have in the account. Usually, you are required to have a minimum balance, which usually is around $500, and the interest rate is usually quite low. This method of investment is very safe, but usually does not return a great amount of money.
Money Market Accounts - Another way that you can invest your money to earn income is to have a money market account. You can get money market accounts at your local bank, and the money that you place in that account will be invested in mutual funds. Usually, you will receive dividends from your money market account every month. While the rates on this type of investment are quite a bit lower than other types of investments, they are usually a very safe way to invest your money.

Real Estate - One method of investing that has often proved to be very lucrative is investing in real estate. Many people do not realize how much money can be made by investing in real estate. Real estate investing requires that you purchase a piece of property and then, perhaps, fix it up and sell it for a profit, or you can rent it out for a monthly income. There have been many who became very wealthy by investing in real estate, so this is an excellent option for investing.
IRA's - Individual Retirement Accounts (IRA) are a great way to save money that will benefit you when you retire and you will also earn interest on this money as well. There are many companies that are no longer offering retirement benefits, and with social security appearing to be quite shaky, it is important that you save and invest for your retirement years. Putting your money in an IRA account will provide savings, keep you from paying taxes until you take the money out, and will earn interest while it is in the account.
Stocks- Stocks are a part, if not a major part of nearly any investor's portfolio. Stocks or shares as some people call them are the same thing, which is basically a share in the ownership, assets and earnings of the underlying company. If you own a share of a company's stock, you are now a part owner of the company. As you purchase more of the company's stock, your portion of ownership and dividends increases. The importance of owning stock is your claim on the company's assets and earnings. Without this claim, the stock that you own will be worthless.
These are just a few ways that you can get started in the investment field. Remember that investments can help you insure a more stable financial future, so start saving and investing today!

About the Author

Brian makes his living as a full time trader and coach, if you enjoyed the article, be sure to get your FREE report. Find out more about Online Option Trading & Stock Option Trading
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Lowering Expenses

by Jacob Joseph

REDUCING YOUR MONTHLY EXPENSES. Do you struggle with managing your finances? Does it seem like you just never have enough money?
Featured below are some tips on how you can lower your monthly bills and expenditures. You may find that some of these suggestions are not going to help you. However, you will definitely be able to utilize more than one of them.
Shopping Smart
Never buy anything on impulse! Ensure that you are getting the lowest price for your purchases by doing research. This will entail visiting several stores and/or websites. Locating the best deals instead of impulse buying will typically save a significant amount of money. It will take you some time and effort, but anytime you save money its worth the extra work. The money you save can be used for paying off debt, investing, or for whatever your needs are!
Transfer High Interest Credit Cards to One Account
Credit card companies make their money by means of the high interest rates they charge. If you have several credit cards, it would be a good idea to apply for a card that offers an introductory rate of 0% for balance transfers. Not only will you be able to pay off your credit cards at a faster rate, you'll save money in the process. There are a wide variety of credit cards that offer 0% intro APR on balance transfers. Try and find one that offers rewards that will beneficial for you.
Lowering Your Bills
This entails cutting back on utilities like cooling, lights, water, heating, etc.. For example, when you are not home, make sure all of your lights are off. Or, regulate your thermostat warmer or colder so that you are not wasting money by making your house comfortable as though you were there. This may be simpler for some, but not others. Find a routine that works for you, and stick to it. **A good idea would be to research your home and cell phone plans to see if you can find a new one offering the same benefits, at a less expensive rate. Try doing this with your cable or satellite TV provider. No matter if it is only a few dollars that you are saving every month, it is more money in your pocket!
Avoid Dining Out
Going to eat at restaurants is costly. By eating home, not only will you be saving money, you have the potential to eat much healthier and spend more quality time with your loved ones!
**When shopping at the grocery store, make a list with you beforehand. It is very likely that shopping without a prepared list will result in you purchasing goods that you either do not need or do not eat.
Keep Records of How and Where Your Money Is Spent
It may be difficult to do, but try and keep track of every penny that you spend for about three weeks. It is likely that you will be able to spot areas where you can tighten your belt or eliminate altogether. Change your spending habits and proceed to keep tabs on where your money is going. This will allow you to continuously evaluate your spending tactics so that you can reduce your expenses and save!


Develop a Budget
Figuring out where you spend your money will help you gain control of your finances. Budgeting will help you determine areas where you can reduce spending and what areas of your spending habits need to be changed. A budget is difficult to develop, but even more to maintain. Learn more about developing budgets.

In conclusion....
Over time, you will become more alert as to how and where you are spending your money and what you can do so that you spend less and save. In order to accomplish you short and long-term goals, you are going to have to make a concerted effort at changing your ways.
Jacob Joseph is a financial expert for http://www.starloanservices.com. At Star Loan Services you can learn more about managing money.
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