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TIPS ON SENSIBLE STOCK MANAGEMENT PROCESS TO SAVE MONEY

The rising stock market condition comparing to the previous few years have opened vast opportunities of investment and saving money by that. The open market, recent economic and financial policies have transformed the investment industry into a more flexible and approachable area for all class of people. Those with moderate earning can now think of buying and selling stocks and make it as an avenue for income.

This revolution has set trends for wide spread investments in stock trading by all types of people from various backgrounds. Sometimes, they do not even have enough idea how to handle a stock portfolio or a single stock. For this often they end up with huge loss. But if you can proceed sensibly with a prior knowledge on stock management and a little awareness on the basics on stock trade, you can save lots of money.

Here are few tips on sensible stock management process to save money -

- Before you start buying a stock analyze the market condition and the prospects of various industries including different companies. There are many risk factors that you always should be aware of. There can be market risk, credit risk, interest rate risk, inflation risk, currency risk, liquidity risk etc.

- Calculate the beta of the market. As you will know the beta value, you can easily apprehend the forthcoming changes in stock market.

- Estimate the correlation. It will help you to presume the change of an index with the time series considered.

- Acknowledge the volatility of the stock. This is the ultimate help to determine the behavior of a stock.

- The return and risk ratio of a particular stock market can guide you on where to invest and how much to invest.

- Also calculate the value at risk to measure the risk of a single stock or a stock portfolio.

- To neutralize the risk, consider the option for hedging. Hedging is the complete process of analyzing and determining the necessary steps to be taken on a single stock.

- Consider the drawdown option to save money. A drawdown at the correct time can fetch you huge amount of money. Also the amount of drawdown affects on the profit value.

- There are different options of position sizing. There are fixed amount model, baseline model, equal leverage model, percent volatility model etc. Choose the most suitable one to save maximum amount of money.

- As you buy the stocks, determine along side how much money you are prepared to loose. Then set a stop-loss level to save money.

- Along with stop-loss level, calculate the cut-loss and take-profit levels. Also test the liquidity of the stock to determine the characteristics of your stock.

- Do not forget to raise the stop-loss level as your stock starts to get profit.

- Along with these basic financial and market analysis procedures, you must enhance your own personal

character to suit with the changing stock market. You need to be very careful, organized, analytic, patient and a strong ability to take decision sharply and implement them completely.

By following these basic tips for sensible stock management process, you can save money and earn huge profits at once.

GETTING STARTED IN THE STOCK MARKET - HOW MUCH SHOULD I INVEST & WITH WHO

Thinking about investing in the stock market? Not sure where to start? Here is a step by step guide to getting started in the stock market.

Step One: Evaluate Your Financial Situation

Before getting started in the stock market, it is important to determine whether or not you can really afford to invest in stocks. Start by looking at both your savings and your debts. If you have credit card debt or an auto loan, it would make no sense to invest in the stock market. The average annual stock market return is seven percent. If the interest rate you pay on a credit card or auto loan is any higher than that, you will be much better off paying down your debt versus investing in stocks.
Step Two: Decide What to Invest InThe next step involves deciding which stocks to invest in. You have two main options: straight out stocks or mutual funds. Stocks are shares of ownership in a company. A mutual fund is pooled money from a large group of investors that is invested in stocks, bonds, and other securities. Mutual funds are often the best choice for beginning investors because they are managed by someone else and are easy to invest in. Whatever investment option you choose, be sure to research your picks before you buy.

Step Three: Decide How Much to Invest

When you have chosen your investment vehicle, the final step is deciding how much to invest. A good rule of thumb is to not invest any more than you can reasonably afford to lose. No stock pick is guaranteed, which means it is just as easy to lose money as it is to make money. It is also important to think about diversification. Spreading around the money you can afford to invest is the safest way to get started in the stock market.

HOW TO INVEST IN STOCK MARKET - A QUICK OVERVIEW

Although the stock market can be profitable, you need to have a solid understanding of what stocks are and how they can be bought and sold before you can begin to make any money.

What are Stocks?

Stocks are shares of a publicly traded company. When you buy a company's stock, you buy a portion of that company. There are two types of shares: common shares and preferred shares. Preferred shareholders receive guaranteed dividends; common shareholders do not.

Using a Brokerage

There are three ways to invest in the stock market. The first involves using a brokerage. Investors can choose a full service broker, who will offer investment ideas and prepare reports about investments, or a discount broker, which will simply execute orders. Discount brokers are considerably cheaper, and are usually the best choice for hands-on investors who are already familiar with the stock market.

Direct Investment Plans

The second way to invest in the stock market is through a company's direct investment plan. There is no commission to pay, and the stock is exactly the same. Investors who choose this method typically know exactly which company they want to invest in and how many shares they can afford to buy. If you are interested in going this route, contact the desired company and ask about the availability of a direct investment plan.

Dividend Reinvestment Plan

The final way to invest in the stock market is through a dividend reinvestment plan (DRIP). Companies that do not have a direct investment plan usually have a DRIP plan. To invest in a company's DRIP plan you need to hold at least one share in the company. You can then purchase fraction shares and build your portfolio without paying brokerage commissions.

BEGINNING STOCK MARKET TRADING - 4 KEYS THINGS TO KNOW

Trading stocks can be intimidating if you aren't familiar with the process, but that doesn't mean you can't learn how to do it. If you want to give stock market trading a try, get started here with this beginning guide to stock market trading.

What Trading Really MeansWhen applied to the stock market, the term trading can be a little misleading. You don't actually trade stocks like you would baseball cards. In the case of stocks, trading translates to buying and selling.

The Easiest Way to Trade StocksOpening a brokerage account is the easiest way to trade stocks. You can choose to work with an individual broker or a firm. There is typically no fee required to open an account, but you will need an initial deposit. Required deposits will vary depending on where you go.

After You Open a Brokerage AccountAfter making your initial deposit, you can choose which company or companies you want to buy stocks in. If you are inexperienced, it is best to start off with only a few shares so that you can acquire a diversified portfolio. Your broker will be able to tell you how much a share sells for and will also be able to complete the transaction for you.

The broker will then deduct a commission from your account as a fee for his services. The shares you bought will be stored in your brokerage account until you decide to sell them--a task your broker will handle for you for a fee.

Stock Market Trading Without a BrokerYou don't need a brokerage account or a broker to invest in stocks. Many companies have direct stock purchase plans that provide the opportunity to buy stock directly from the company. When you want to sell the shares, all you have to do is mail the stock certificates to the company's stock transfer agent

BEGINING INVESTING IN THE STOCK MARKET - HOW YOU CAN MONEY

Stocks represent shares of ownership in a company. When a company makes a profit, company stockholders profit too. If you are a beginner interested in investing in the stock market, there are three basic principles you should be aware of before you get started.

A Diversified Portfolio is Recommended

Investing in the stock market is a gamble, but there are ways to minimize your risk. One of the easiest and most effective methods is portfolio diversification. Having a diverse portfolio means that you don't put all of your eggs in one basket. In other words, you own stocks in different companies (preferably though different industries). This way if one company's stock declines, you still have a chance to make money with the rest of the stocks in your portfolio.

Investing Regularly Will Increase Your Profits

If you want to makes real money in the stock market, you need to save and invest regularly. This is known as dollar cost averaging, and it works amazingly well over the long term. For example, if you invest $1,000 in stocks, you will most likely have approximately $2,000 ten years later. If, on the other hand, you invest $1,000 every year for ten years, you'll end up with $14,000.

Investing for the Long Term is the Best Way to Make Money

Stock investing is a way to grow you money over a long period of time, which means it is important to be patient. It takes an average of ten years to double your money in the stock market. If you can't wait that long or if you will need to tap into the money you are investing in the near future, stocks may not be the ideal investment vehicle for your situation.

LEARN STOCK TRADING - 3 CRUCIAL BASICS

The buying, holding, and selling of stocks is how investors make money in the stock market. If you are interested in learning stock trading, there are three crucial basics you should learn as soon as possible.

Broker Commissions Vary

Brokers have access to electronic markets; individual investors do not. For this reason, most investors have a broker or brokerage firm to handle trades on their behalf. The fee or commission for this service varies depending on the broker and the services being offered. Some brokers (discount brokers) handle the transaction and nothing else. Other brokers (full service or traditional brokers) offer investment advice and other services in addition to taking care of the trade. It is a good idea to compare services and commission fees prior to choosing a broker. Large commissions can cut your profits severely.

You Must Pay Income Tax

When you sell (trade) stocks, you have to pay capital gain tax on your profits. This is important to keep in mind while you are watching your investment and making the decision to sell. If the money you spend in brokerage commissions and taxes eats up all of your profits, trading the stock may not be the best idea. On the other hand, if your gain will be exceptionally large, you may want to consider making a quarterly estimated payment to the IRS to cover the tax.

Long Term Investments are SafestShort term stock trading, also known as day trading, is a lot like gambling. It can be a very risky venture for the amateur investor. This method of stock trading should not be attempted by beginners. It is much safer to look to the long term. This means investing and leaving the money sit until a sizable profit has been made.