How Life Stages Affect Investing

Young people need to start thinking about investment options as soon as they graduate from high school or college and enter the working world. After all, one never knows when an emergency is going to happen, and you need to have some liquid assets at your disposal.

Sadly, the first thing that comes to the mind of most people is a traditional savings account, and though this may work in the beginning, it should not be used for very long as the interest rates on savings accounts now average at most banks less than 3% per year.

This may sound like a good deal when you first start working and don't have more than a few hundred dollars a month to save, but you need to look to the future and the changes that may take place in your life.

As a new college graduate, probably the first life change that is going to come your way is buying your own car, or if you've been one of the lucky ones to already have one, a newer car. This, of course, takes money unless you walk into a great deal where you need no down payment, just your old car to trade.

You will probably also want your own place, and if you're fortunate enough to have parents who are not adverse to still having you live at home, think about staying there until you can buy your own home, even if it's only a townhouse or mobile home to start. These, also, cost money, so you need to think bigger than that 3% a year savings account. The best way to work your way up from that savings account is to use it until you have enough money in it to convert it to either a CD or a money market account.

Keep in mind that the CD requires a wait until it matures, usually a minimum of 3-5 years for the best rates, so unless you are willing to wait that long, you may want to consider a money market account instead. Many banks and credit unions offer these with as little as a $1,000 investment, and you can add to it without opening a new account. Additionally, you are allowed to make up to three withdrawals a month without facing a penalty.

As a new working adult, you also need to plan for retirement, and the best way to do that is through a company sponsored 401K Plan or if that isn't available, an IRA. Naturally, a 401K Plan is going to be the better investment because your company is going to match your contributions in some way - it's generally either 25%, 50%, or 100% matching up to 6% of your pay. These plans also allow you to save on a before tax basis, which means you pay less taxes on your earnings.

With an IRA, though there are no employer matching contributions, you are allowed to claim up to $4,000 currently as an IRA contribution if you're under the age of 50, and $4,500 for those over the age of 50. Remember, both of these are long-term investments, intended for your retirement as a supplement to Social Security and either a supplement or replacement for your pension.

The good thing about a 401K Plan instead of a pension plan is that it can be taken with you when you leave the company and rolled over into another company's 401K Plan or into an IRA. With a traditional pension plan, if you leave the company before you are vested, you lose your pension totally.

Once you marry, these investments become more important, and you will see the true benefit of everything that you have chosen. Remember, start with the savings account, upgrade to the CD or money market, and always contribute to a 401K or IRA Plan. If you start when you are young, when you retire, you will be able to enjoy the things that you have worked so hard to achieve, including sending your children to college, and maybe even helping the grandchildren through some rough spots that their parents can't.

Don't look at savings as cutting into your spending money, look at it as an investment in your future and that of the family you will eventually have


Source : www.articlecircle.com/finance/personal-finance/how-life-stages-affect-investing.html

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Day Trading - What Does It Take?

Day trading: an exciting world of tense drama as traders make or lose a fortune every day. Day traders make split second choices based upon their analytical skills, always hoping to beat the market - the great leveler!

The success of a trader depends upon his alertness, risk-taking ability and analytical skill. But in the final analysis, the successful day trader is above all else lucky!

What are the characteristics of a day trader?

Bear in mind that a day trader believes in the saying 'all is fair in love and day trading.' Right from holding positions on long trades (buying first at low prices to sell later at higher prices) to short selling (the exact reverse of long trades) selling first at high prices in the expectation of covering when prices fall later in the day) to speculating wildly, unworried by the fundamentals and hardly ever, giving a glance to the technical aspects of his trades.

Let us look at some more of what it takes to be a day trader:

Day Traders:

1. want to finish the day with no open deals
2. try not to listen the many rumours that float around
3. are strong in analytical skills - usually not just in their own field
4. Are not distracted by market sentiment
5. are active in both bull and bear markets and know how to profit from each
6. are good at math
7.keep abreast of the latest regulations, taxes, trading fees, , etc.
8. are not worried by the movements of financial indicators such as NASDAQ or DOW JONES). They are confident in their own skills.

Do you want to become a day trader?

Starting as a day trader is easy. You can become a day trader by opening a trading account with either a brokerage company or your own bank, if it offers trading, or even with a stock exchange. There are some legal and commercial details to deal with before you start trading on an exchange. You can become a day trader in any of the following fields.

1. Commodities - these are metals, oils, wheat etc.
2. Forex - this is foreign exchange - currency)
3. Stock - bonds and securities (shares)

Just making the decision and doing the paperwork will not really make you a day trader. Day trading is, as much as anything else, an attitude of mind. You have to be as clear minded and focused as the hunter stalking his prey. Nothing else matters but making the deal, closing and taking the profit - or if losing, in cutting losses and moving on.

What makes you buy or sell

The trader can not afford a mistake. The risks the trader takes convert into real earnings on reacting rapidly to two things:

1. Liquidity (The volume of trade that decides whether you should enter or leave)
2. Volatility (Price fluctuations to decide the number of trades on a particular stock, either to short or long sell and the price of trades)

At close of a days trading, your position should be back to zero and you either walk away in tears or with joy. And there is always tomorrow


Source : www.articlecircle.com/finance/investing/day-trading-what-does-it-take.html

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The Housing Bubble is About To Burst

The latest numbers are now in and, guess what? The housing market continues to slow. Housing prices are once again down and housing starts have come to a halt. Is this the start of the housing market bubble burst we've all heard so much about? My answer: You bet!

Now, that Democrats have something to do with it, you bet the recent Bush tax cuts will be repealed. You bet the investors will come under assault. You bet this will cause interest rates to rise and you bet the housing bubble is about to burst!

I hear you say, "What about the Clinton years? Clinton's a Democrat and interest rates were low, when he was President. The economy was great, then. The stock and housing markets were going full speed ahead, then."

You are s-o-o-o-o right, but remember, the Republican congress along with Clinton/Gore got many international trade laws passed. This made the price of goods lower in the States and that acted to stimulate the economy. Also, remember that the Republicans sent up a bill to Bill that would lower Capital Gains taxes. Clinton, knowing that the economy needed a shot in the arm at the time, signed it. This, too, stimulated the economy and that one-two punch led to the rip roaring economy of the 90's. The point is; almost every Democrat voted against these things.

Now, it is the era of Nancy Pelosi. So, look out capitalism! We have a real socialist on our hands here. If it was up to her, the only money you'd have is the money she'd let you have out of the goodness of her heart. Pelosi and her comrades won't even admit that Bill Clinton was a big reason why we have free international trade today.

Go figure, one of the only things Clinton/Gore did that was really very good for the economy and the Democrats want to hide it from you. Why? Because it's easier to gain support of middle class voters by telling them the lie that free trade costs Americans jobs!

In short, with the new congress you should look for higher mortgage rates. That really means higher housing costs with lower equity accumulation. Now, that's a real boon to the middle class! Look for less free trade. That means higher prices on imported goods. Imagine what your computer would cost if it were made in total, in America.

One scholarly economist told me that a computer made of American parts would cost $14,000 to $20,000! Now, we're giving the middle class a break! Also, don't forget those "tax breaks for the rich" being repealed. A family of four with a household income of, a very opulent, $60,000 a year, on average, because of the Bush tax cuts, pay less than $4,000 in federal income tax. So, in an attempt to get these rich people to pay their fair share, they will be paying over $9,000 after Nancy and the gang reverse the evil tax cut.

Let's not get started discussing our likelihood of surrendering to the terrorists. This article is about Mortgage rates, housing bubbles, interest rates and the economy in general. That's depressing enough. We'll save the part about weak-kneed foreign policy for another time.


Source : www.articlecircle.com/finance/real-estate/the-housing-bubble-is-about-to-burst.html

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