Determining Where You Will Invest - how to use forex trading charts

Determining Where You Will Invest ~ how to use forex trading charts

There are several different types of investments, and there are many factors in determining where you should invest your funds.

Of course, determining where you will invest begins with researching the various available types of investments, determining your risk tolerance, and determining your investment style – along with your financial goals.

If you were going to purchase a new car, you would do quite a bit of research before making a final decision and a purchase. You would never consider purchasing a car that you had not fully looked over and taken for a test drive. Investing works much the same way.

You will of course learn as much about the investment as possible, and you would want to see how past investors have done as well. It’s common sense!

Learning about the stock market and investments takes a lot of time… but it is time well spent. There are numerous books and websites on the topic, and you can even take college level courses on the topic – which is what stock brokers do. With access to the Internet, you can actually play the stock market – with fake money – to get a feel for how it works.

You can make pretend investments, and see how they do. Do a search with any search engine for ‘Stock Market Games’ or ‘Stock Market Simulations.’ This is a great way to start learning about investing in the stock market.

Other types of investments – outside of the stock market – do not have simulators. You must learn about those types of investments the hard way – by reading.

As a potential investor, you should read anything you can get your hands on about investing…but start with the beginning investment books and websites first. Otherwise, you will quickly find that you are lost.

Finally, speak with a financial planner. Tell them your goals, and ask them for their suggestions – this is what they do! A good financial planner can easily help you determine where to invest your funds, and help you set up a plan to reach all of your financial goals. Many will even teach you about investing along the way – make sure you pay attention to what they are telling you!

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10 Advantages Savings Plans Have That The Forex Does Not - how to learn forex trading charts

10 Advantages Savings Plans Have That The Forex Does Not ~ how to learn forex trading charts

1. Safety. In general an investment paying 12% interest is not as safe as one paying 6%, but it is doubtful if the 12% investment involves twice the risk.

If the income offsets the additional risk or provides a reserve against which to write off losses when they eventually come, then high yield investments justify themselves, and they do when they are chosen with intelligence, with information at hand on the investment and when they are administered carefully, as we will see.

Along with this general theory that there is a good deal of merit to investing in high yield opportunities, safety should be stressed. This leads us to the second characteristic of the investments we are going to examine.

2. Collateral or guarantees. A home owner may show you his bank account and also prove that he owns his home free and clear, so that you conclude that he is a good risk whose signature on a note is as good as gold but it is far wiser for you to take a mortgage on his home. Or if he has securities it is better to have him assign the securities to you than just to take his promise to pay.

If a dealer sells you a customers conditional sales contract on an automobile he sold on which the customer is obligated to pay in time payments over a given number of months or years, it is well, if possible, to have the dealer guarantee the contract in case the customer defaults. Two people are obligated to pay, and certainly two are better than one.

3. Provision for easy repayment. If someone borrows $2000 from you at an attractive rate of interest and promises to repay it at the end of 12 months with 15% interest, the proposition on its face is a bad one. If he needs the $2000 now, what assurance is there that he will have it to repay at the end of 12 months? Such a sum is not small. Does he intend to borrow from Peter to pay Paul at the end of a year? In New York City a seemingly very substantial man did just this for years and got away with it until he died. That was over two years ago and the creditors are left holding the notes.

Periodic, small payments are a sensible requirement, and it must be demonstrated that the debtor can make these payments out of his income when all of his obligations are taken into consideration, and these obligations must be known.

4. Responsibility for payment. Some individual or individuals, or a corporation composed of very distinct individuals must be obligated to pay in the type investment we are talking about. Unimproved land on the edge of the city may be a fine investment. Some day it may double or even triple in value, but what we are trying to emphasize is the type of investment in which there is an obligation on the part of a person or persons to pay a given amount at a given time or in time payments, and you as the investor must look to this person or these persons to pay you on the due date.

5 .Liquidity. The longer a contract runs the less liquid it is and generally the less desirable. You cannot get your money out of it for a long time, and then the business or the business climate may change. The person who lent $10,000 in 1928 for five years in all probability had difficulty in collecting in 1933. A demand note is certainly preferable to a five year note. You may have need for the money sooner than you thought when you made the investment, and if you are tied up for five years you cannot get your funds back. Perhaps better opportunities will present themselves. Stay as liquid as possible.

6. Spreading of the risk. If you have $10,000 to invest it is best not to put it all in one place into a mortgage for instance. It is far better to put it into five mortgages of $2,000 each. The $10,000 mortgage could be defaulted, but there is not so great a probability that all five mortgages will be defaulted.

7. Part time administration. We are not writing for the purpose of getting a person to quit his job in order to devote all of his time to his investments. We are writing for the person who wants to invest in his spare time and look after his investments in his spare time. The investments described here may in some cases require more watching than others he has made, but by definition they must require a minimum of administration on the investors part. Payments must be made regularly, and the skipped or late payment must be the exception.

8. Business functions performed by someone else. You as the investor should not undertake to perform any business function. The only function you should perform, once the investment is made, is to receive the payments, and in the event that payments are not made, you should be able to resort to a simple procedure at law to retrieve your money. If you invest in a filling station you should not have to hire a manager and then proceed to sell gas and oil yourself, under our definition of the type investment discussed here. The filling station should be leased to a major oil company for a fixed rental, and the oil company should perform all of the business functions.

9. Investment not subject to litigation. When a debtor cant or wont pay, the first thing he thinks of generally is some defense (and his imagination is unlimited on this point) against paying you: you had agreed to lend him more at the end of a year, and because you did not lend more his business failed. Or the rate of interest you charged was usurious and thus contrary to law; or you really owed him something before you ever lent him the money, and this should be an offset against what he owes you. These defenses are used almost every day.

If he signs a note, he should sign a waiver of judgment note (in states which recognize such notes) and such a note will be described later. Your investment should not be subject to litigation, and you must be sure of this fact before you make it.

10. Tax advantage. The Internal Revenue Code and Regulations state what the obligations of a tax payer are and what they are not. You are obligated to pay every cent you owe, and you are not obligated to pay what you do not owe.

Certain types of investment are more heavily taxed than others. There is nothing the matter with investing in state and municipal government bonds just because you do not pay any federal income tax on the interest. This is the law, and it works to the advantage of the investor in government bonds and incidentally makes it less difficult for the state and municipal governments to finance their operations. Investments with a tax benefit or tax shelter are more desirable in many cases for the investor than those without such a benefit or shelter.

However the Forex can make you rich within months instead of years.

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