Investing can best be described as putting money somewhere, where it would replicate, while you continue living your life. So, in essence, investing is having money work for you, from which you are likely to gain sizeable profits. Investing ultimately culminates into happiness, just as Warren Buffett defined it“… the process of laying out money now to receive more money in the future.” When investing, the goal should be to put your money to labour in a type of investment, so that it can grow over time.
Let’s use an example, and assume that you’ve set aside about $1500, and with that you want to start investing. Or for the sake of including all types of monetary investments and fund availability, let’s say you have available about $10 per week. We’ll discuss how to start out as an investor and will show you how to enlarge your investment while reducing any losses.
What Kind of Investor Are You?
Before investing any amount of your hard-earned money, it is important that you answer the following question:
What kind of investor are you?
Online brokers like Fidelity or Charles Schwab, will ask you about your investment goals and how comfortable you are taking on risks when you open a brokerage account. Are you the type of investor who likes to take matters into your own hands and manage the growth of your money? Or would you rather invest and “forget” about it? The traditional online brokers like Schwab and Fidelity, allow you to invest in markets like bonds, ETF’s, mutual funds and index funds, amongst many.
Brokers are classified as either full-service or discount brokers. Your full-service broker offers you a full service of brokerage services, inclusive of healthcare, retirement advice and other similar services. These types of brokers usually deal only with high-ticket clients, charging exorbitant fees, and on top of that also a percentage of the transaction, a percentage of the assets managed, and in many cases a yearly membership fee. With these brokers, entry accounts start at a minimum of $25,000 and up. They easily justify these high fees with tailor-made advice for your needs.
Whereas in the past discount brokers were considered to be an exception, they have now become a normal everyday occurrence. They provide you with the necessary tools in order to place transactions by yourself. Many discount brokers now also offer a roboadvisory service. These online brokers try to keep abreast with technological changes and add helpful features like educational guides on their websites and their mobile apps.
Although there are discount brokers with almost no or low deposit restrictions, they make up for that by imposing other similar restrictions, like fees being charged to accounts that do not have a minimum deposit restriction. You should take this into account when intending to trade in stocks. This are the brokers which are recommended by business24-7:
- IQ Option – click here for more information
- Plus500 – click here for more information
- eToro – click here for more information
- AvaTrade – click here for more information
- Olymp Trade – click here for more information
- IG Trading – click here for more information
The 2008 financial crises brought with it a new class of investment advisors named the roboadvisors. The guys at Betterment, Eli Bowerman and Jon Stein, were the first to enter into this space. Their goal was to provide investors with the kind of technology that would lower costs for an investor whilst offering top-notch investment advice.
After the launch of Betterment, more roboadvisor companies sprang up. Traditional online brokers like Charles Schwab, have also joined the ranks in introducing roboadvisory services. According to Charles Schwab, 58% of Americans are more likely to use these services by 2025. Roboadvisors are good at helping investors make investment decisions including rebalancing, tax-loss harvesting and long-term wealth building.
Investing Through Managed Forex Accounts
Investing is not easy for everyone, as you might not have the spare cash lying around to invest. However, you could invest one percent of your salary in a retirement plan your employer offers. These types of retirement plans offered by your employer subtract your monthly contribution from your salary before any taxes are calculated. In this way you will not easily notice the deduction.
You can also do it on your on by investing money through a managed forex account. This way you open an forex account on your own, but let professional trade on your behalf. You can read more about investing through managed forex accounts here: https://www.business24-7.ae/managed-forex-accounts
Once you get comfortable with the deductions from your paycheck, you could slowly increase the amount you invest, especially with yearly raises. You might most probably already have a retirement investment plan in place if you have a 401(k) account at work.
Minimums to Open an Account
Financial institutions require minimum deposits to open an account, which means that your account will not be opened unless you deposit a sum of money. Some financial institutions might not even consider your trading account if the opening amount is less than $1000. It is imperative that you do proper investigation before deciding on an investment institution. Also make sure to read different reviews on different firms.
Some companies do not require a minimum deposit, while others might have lower trading and account management fees if the balance in your account is above a certain amount. There are also those companies who rather offer no-commission trades on initial trades when opening an account.
Commissions and Fees
Although at times trading, investment and stocks are touted as a free for all, there really is no free in the investment world. Even though brokers will try to reduce or do away with commissions in order to attract clients, eventually brokers also need to make money from clients.
As a rule, whether you are buying or selling, brokers will charge a commission whenever you trade stocks. Trading fees vary heftily, from as low as $2 to as much as $10 a trade with discount brokers. Although some brokers charge no commission at all they eventually make up for it in one way or the other. As such you will not find charities running brokerage services.
These commissions can easily rack up and affect how profitable you are, the more you trade. Thus, it is important to remember that trading stocks can be very costly if you are not steady and regularly move from one position to another, and especially when doing so with little monetary investment.
Trading is considered an order to sell or buy shares in a company. Should you wish to buy shares in 6 other stocks simultaneously, you would unfortunately have to pay for each one, as these purchases are seen as 6 different trades.
Let’s imagine that you decide to buy the shares in those 6 companies with your $1500. You would be charged $60 in trading fees, that is if the fee is $10 per trade. This is 4% of your money. Should you want to invest all of your $1500, you would incur a 4% loss before you had time to earn anything at all.
In the event that you decide to sell your shares in these 6 companies, you would once again be billed another $60. Thus, in order for you to buy and sell your stocks would cost you $120, or 8% of your initial investment total. Should your investment not exceed the total fees incurred, you’ve lost money just by entering and exiting trade positions.
Mutual Fund Loads (Fees)
Apart from the fee you pay when buying mutual funds, there are also other costs involved in these transactions. Mutual funds are pools of investor funds that are managed professionally and that invest in large-cap US stocks. Investing in these types of funds usually incurs a lot of fees, with one of the important fees incurred being the MER or the management expense ratio.
This fee is charged by a management team on a yearly basis and is calculated based on the assets in the fund. It can be as low as 0.05% or as high as 0.7%. It varies depending on what type of fund it is. However, the higher the MER is, the more it has an impact on the returns of the fund.
When buying mutual funds, you might notice a couple of sales charges conveniently called loads. These loads also differ. There are front-end loads, no-loads and back-end loads. Before investing in a mutual fund, make sure that you understand whether the fund has a sales load. You might also want to see whether your broker has a list of no-load funds or no-transaction fee funds available.
As a beginning investor, it is important to realize that mutual fund fees are actually more favourable than the commissions charged on stocks. Reason being that the fees you incur on them are the same no-matter the amount invested. You can therefore invest little amounts in a mutual fund, as long as you meet the requirements of opening an account. This is called DCA or dollar cost averaging.
Diversify and Reduce Risks
Diversification is an investment principle that might save you a couple of dollars in the long run. The idea is that when investing, it is best to do so in a number of different assets like forex, binary options, CFDs, cryptocurrencies etc. This will help you reduce the possibility of losing it all. It can be compared to the saying “don’t put all of your eggs in one basket”.
When diversifying, it is quite difficult to do so by investing in stocks. Remember how we said that investing in a big number of stocks could reduce your initial investment funds? Therefore, with just an investment of $1000, you might find it difficult to have a nicely diversified portfolio, which might limit you to investing in only one or two companies.
When looking at the benefits of mutual funds and EFTs versus stocks, one can clearly see the huge benefits of both mutual funds and EFTs. Both these securities allow you to have more of a diversified portfolio of stocks within the fund itself, much more than the diversification of one stock.
The Bottom Line
You are able to invest, even if you do so with only a small amount to start with. When deciding what to invest in, it might not be as easy a decision as just choosing a particular investment. You have to take into consideration any restrictions you might encounter as a beginner investor. There is quite a bit of homework involved, like how much the deposit requirements are for various brokers and comparing different brokers to weight the pros and cons of each.
Is Now a Good Time To Invest in Gold For Quatar and Doha Residents?
Costs of the much in-demand 22 carat weight gold in Qatar has actually plunged to an all-time low of simply QAR 125 each gram, the most affordable ever before recorded in the last 5 years in Qatar.
Inning Accordance With Malabar Gold & Ruby assistant manager Sathique Mohamed, gold prices had fallen to a record low of QR131 in 2013, yet the present plunge has taken clients and also merchants by surprise.
“In the last 5 years, this is the first time that gold prices have actually plunged to QR125. This is the very first time I have experienced such a decrease in the cost of gold,” added Mohamed.
The price of gold is primarily dictated by rates in the worldwide market. Presently, an ounce of gold is traded at $1,100 in the international market. The current rate for 24k gold in Dubai and UAE is 145,75 AED
Aside from getting gold jewelry, a multitude of individuals, specifically those from the Indian subcontinent, acquire the yellow steel as a safe and secure means of investment. You can read more about how to buy gold online here.
What Does The Fluctuation of The UK Pound Means For Forex, CFD and Binary Option Trading?
If you need to know just how Brexit is going, take a look at the fluctuation of the British Pound.
Sterling is the most effective single measure of the success or failure of the UK’s efforts to redefine its connection with the EU and right now, it remains in a hopeless state.
At the beginning of 2016, when few expected the UK to elect to leave the EU, one British pound purchased you $1.474 or EUR 1.357.
On Wednesday morning it bought just $1.27, a drop of 14%, while it is down 17% against the euro at EUR1.130 (and also 4% in the last month alone). This is a good sign fore forex traders, CFD traders and Binary Option traders who are looking for a good investment opportunities.
British deportees or UAE residents with UK property or savings, pension plans or financial investments denominated in GBP will have seen the value of those possessions dive relative to other currencies. The UAE residents who are trading with forex, binary options or trading with CFDs will have now a good opportunity to make some extra money as the UK Pound seems to be fluctuating even more in the near future.
This even puts on investment funds that invested in non-UK supplies, if the underlying fund is denominated in British extra pounds.
However, other UAE citizens could see an admirable weak point as an opportunity to visit the capital of England a do some shopping. The same goes for UAE residents who are planning to execute some binary option trades.
Joshua Mahoney, elderly market analyst at online trading platform IQ Option, which has workplaces in Dubai, says the stronger pound was recuperating until it became clear Prime Minister Theresa Might’s deal was doomed, along with her leadership.
With leading Brexiteer Boris Johnson the frontrunner to change her, sterling is in limbo. “We are currently more likely to see an extreme event occur in the type of a no-deal Brexit, 2nd mandate, or general election,” Mr Mahoney claims.
No-deal is taken into consideration poor for the pound, while a 2nd vote good, as that might turn around the original outcome. If a basic political election occurs, after that all wagers are off.
Sam Instone, director of Dubai-based monetary advising group AES International, states most investors need to simply stick around and wait for the pound to gain his momentum again. “Maintain investing and also try not to take out too much while the extra pound is down.”
Until now you have just sustained paper losses, the only means you will lose genuine loan is if you need to withdraw your funds and also switch them right into another money, Mr Instone adds.
Some investors could intend to take advantage of sterling weak point by buying a GBP-denominated fund, in the hope of taking advantage of a future healing, yet Mr Instone advises caution. “Although individuals assume sterling is going through a duration of historic weak point, thinking its future instructions is pure supposition. Sterling might get even weak, and also stay weak.”
He suggests selecting a base currency for your trading profile as well as sticking with it via the unavoidable ups and downs of the forex markets, which need to hopefully level throughout the years.
Wise investors will spread their threat by constructing an internationally varied profile of affordable exchange traded funds (ETFs) and different contracts for difference (CFDs). “This is much more practical than trying to forecast or time any private market or possession course,” adds Mr Instone.
Tom Anderson, elderly investment manager at the plus500 online trading company, who has customers in the UAE, concurs that attempting to ‘play’ currency markets is dangerous. “If you require cash in a particular money, say, extra pounds to acquire a house in the UK, after that as a basic regulation it’s best just to obtain on with it due to the fact that nobody understands what happens next.”
Now might be a great time to acquire it in London as Brexit unpredictability has startled international purchasers, with prices falling 3.8 per cent in the year to February, official numbers reveal.
Throw in currency weak point as well and also there are deals to be had. The danger is that no-deal sends rates crashing even more.
The biggest issue for the pound is that there is no apparent escape of the Brexit morass.
Mr Anderson claims sterling may continue to fall versus various other currencies, although he sees the weird point of light. “Returns on 10-year British government ‘gilts’ are dropping, so someone is keen to get UK federal government bonds.”
Likewise, when the Pound will still face a rejection as we saw it till now, the FTSE 100 surges. That’s since companies on the index of blue chip companies generate 3 quarters of their profits overseas, which are currently worth a lot more when translated back right into a weaker sterling.
Mr Anderson states the UK must still create a component of a well-diversified investment portfolio. “Whatever your expectation, I would not suggest removing UK properties out of your investment profiles,” he adds.
Fawad Razaqzada, technological analyst at foreign exchange expert at eToro, states the pound might show resilience. “The worst-case situation of a no-deal Brexit has been partially priced in. On the various other hand, there is still nothing that may activate a purposeful rally,” he claims. “The pound may jump if markets choose it has actually been oversold, but I think it will certainly remain constrained up until we get even more clarity.”
The Traditionalists must have picked the brand-new leader by the summer season legislative recess, the 3rd week in July. Then all eyes will look to the new Brexit deadline of 31 October. It looks set to be a lengthy warm summertime for the extra pound, finishing in a possible horror tale in 2020.