Wednesday, July 28, 2010

Guest Post: 7 Keys to Smart Stock Investment

Have you been contemplating lately to make money by trading in the stock market? Are you aware of the fact that thousands of people have filed for bankruptcy after suffering huge losses in the stock market? Are you sure your knowledge of how the market functions is good enough to give you a great return on your investment? If you really want to maximize your trading opportunities for maximum gains, then read on to know how you can go about achieving it.
  1. Plan: Many investors do the mistake of jumping into the investment market without even having a clue as to what they want to accomplish from it. This is the worst mistake you can make. Sit down and plan. Prepare a strategy and ask yourself what you want to achieve with your investment plan. Do you want to buy a car by the end of this year or a house after 5 years? Planning out this way and being clear about your goals helps you to plan effectively.
  2. Do extensive research: You should identify the industries which are losers today but are posed to return handsome investments in the long run. Be aware that the companies which are doing well today may altogether be left behind in the investment race tomorrow. The market is volatile and the losers of today might provide you with great returns once the economy turns around.
  3. Begin with small investments: It is advisable to start of your investment career by investing small. If you start off with big investments and lose it immediately, it might put you off stock investing for life. Learning the basics and gathering experience is vital to increase your confidence in the investment market.
  4. Diversify: An effective strategy in building a long term investment plan is to opt for a combination of investment options. Just going for an arbitrary collection of stocks will not be very beneficial. The idea is to find a combination of investments which will help you to achieve your financial goals. Spread your investments to lower the risks involved. This will help you create an unsinkable portfolio!
  5. Wait for the right time: Timing is everything in the stock market. To maximize your returns, you should know how long you should hold on to your investment before selling them. It can make the difference between earning and losing money.
  6. Seek advice from a stockbroker: Stockbrokers are experienced and can help you out with valuable advice with your investment plans. However, they charge fees and it’s up to you whether you want to seek their advice.
  7. Never risk more than what you can afford to lose: The most important advice is never to risk more money than what you can afford to lose. People are tempted to invest beyond their means if the potential investment seems safe. This is a mistake, there is always a risk involved and it’s better to always be prepared for it.
Making money in the stock market requires learning. Do not get carried off by stories of people making millions of dollars in the stock market overnight. The shifts and turns in the stock market are consistently fluctuating. With patience, practice and education you can also pave the path to a successful and rewarding investment career!

About the Author
This guest post was written by "Jack Reed". He writes on various financial topics with a special focus on bankruptcy. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Friday, July 16, 2010

Money Market Rates 7/10

Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:

1.35% Discover Bank Online Savings
1.29% Ally Bank Online Savings
1.10% HSBCAdvance Online Savings
1.10% ING Direct Orange Savings
1.04% Shorebank Direct Online Savings
0.80% Citibank Ultimate Savings
0.65% Western FCU Money Market
0.50% Chase Premier Savings
0.30% E*TRADE Complete Savings
0.15% PayPal Money Market*

NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 7/15/10. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

This month, Discover Bank Online Savings has the highest interest rate of the banks that I'm tracking. So, there is the latest list. Please let me know if you know of any higher interest rates.


Wednesday, July 7, 2010

Tesla Motors: A Broken IPO

Shares of electric car maker Tesla Motors (Nasdaq: TSLA) began trading last Tuesday, June 29 after the stock's initial public offering (IPO) at $17 per share. Tesla's shares rose 40 percent on their first day of trading, and peaked as high as $30.42 on Wednesday. The hype surrounding a new IPO is usually the main driving force behind a rapid run up such as this one.

However five trading days after its IPO, things seem to be turning around for Tesla Motors. Yesterday, July 6th, Tesla dropped over $3 to close at $16 and change ($16.11 to be specific). This closing price is below its initial $17 offering price. Traders call an IPO that has dropped below its initial offering price a "broken IPO". So, Tesla is now a broken IPO.

On this blog, I have written about buying IPOs before. While getting into an IPO can be a way to make money quickly, I have warned that not all IPOs go up in price. A point that I will again underscore is that buying an IPO can involve significant risk! This is certainly appears to be the case with Telsa.

Disclosure: I do not own any interest in Tesla Motors.


Thursday, July 1, 2010

Annual Income and Net Worth

The single most popular post that I've ever written for PFStock is my Net Worth Update post. This post has several tables listing median networth versus age and annual income. I found that most people are searching for hard data that compares how they are doing compared to others, especially those who are the same age with a similar income.

For a while now, I've had an annual income poll in the sidebar of PFStock that asks readers to respond to the question: "How much do you make?" So far there have been 93 responses. In constructing this poll, I deliberately set the income ranges to correspond with the income ranges for the CNN Money website. This table tells you the median net worth for people that fall into each income category. Here are the latest data from the sidebar poll:

CNN Money: Net worth by income and percentage of PFStock readers within each income range.

Annual Income    Median Net Worth% of PFStock Readers
less than $25k $1,2504%
$25k-$49k $34,37513%
$50k-$74k $168,5009%
$75k-$124k $301,47534%
$125k-$149k $644,1003%
$150k and higher $1,122,90034%

Note that the percentages do not add up to 100% due to rounding. From these statistics, I found it interesting that a large percentage of my readers fall into the higher income categories. Approximately 70% of PFStock readers have an income greater than $75,000 per year. Does anybody want to share their insights on this statement?

Given that I have the median net worth for each income category and the percentage of readers that fall within each category, it would be tempting for me to calculate the "average median net worth for PFStock readers" based on the CNN data. But, what value could such a data point possibly provide? Nevertheless I will throw caution to the wind and and let you know that using an Excel spreadsheet of these data I have calculated that the average median networth for PFStock readers is $532,050.27.

This result corresponds well with the other poll that I have on PFStock: What is your net worth? Again, I was surprised that a large percentage of readers fall within the higher net worth categories, with more than one-half of all readers reporting a networth of more than $500,000. If you haven't already, please participate in the polls in the PFStock sidebar, and I will update the information periodically.

Here are some interesting related posts:

Annual Income Survey (2/10)
How much do you make? (4/09)
Net Worth Update (8/09)
Net Worth Comparison (6/08)
Are You Wealthy? (3/08)
Calculating Net Worth (9/06)