Investment Archives | Page 13 of 20

Top 5 Investments Business Owners Should Make

When you run a business, whether it’s a small start-up or a large corporation, you need to be confident in where you invest all company profits. Pumping a lot of the money back into the business is the place to start in order to help it grow and remain profitable. Yet there are many other areas in which you can invest as a business owner that will provide dividends to gain further profits for strengthening the firm. Here are five of the best investments for business owners to make.

Penny Stocks

Especially for start-ups, new and small businesses, penny stocks are a great place to start for any business owner making their first investments. These are companies that trade with exceptionally low share prices (usually £3 or less), which means a lot of shares can be invested in with a low amount of capital. They are a highly volatile investment but do make a great starting place for learning the basics of investing.

Forex

If you want to find a reputable way of making some extra money for your business by investing profits, then forex trading with Fx Pro is a good option. There are a number of safe currencies to invest in during times of uncertainty, or more risky choices if you’re feeling brave. For beginners or experts, it offers a good way to boost profits across international currency markets.

Equity

Buying an ownership stake or equity investment in another company can provide additional capital for your firm. Obviously, it is highly inadvisable to invest in any competitors. Finding a successful company or one that is on the rise to take an ownership stake can result in good percentage profits for your business, as long as it doesn’t perform poorly or go bankrupt.

Property

Real estate is a great way to enter an entirely new market and with house and rent prices still rising, it can be incredibly lucrative. It may be better to invest in commercial property, related more to your business though, such as buying your office rather than renting if you have the profits. This provides a useful asset and one that will hopefully grow in value.

Bonds and Mutual Funds

For long term, safe investments bonds and mutual funds are the go-to option. Government bonds are some of the safest investment options out there, while mutual funds can be found that have low risk attached to them. They provide a good place to learn about market trends without the risk of losing big in one go.

Consider these five investments if you’re a business owner looking to put your profits in a worthwhile place.

How To Make Safe Investments In Uncertain Times

The world is seemingly getting smaller every day. Online platforms, newspapers and financial television stations usually monitor events happening in one country that can have effect on other countries worldwide. People are now updated and interconnected compared to any other time in the history. It is without doubt that globalization has its own advantages, but when economic crisis, global recession, war and trade imbalances occur, it suddenly leads to the idea of making safer investments and working on government deficits. The occurrence of such uncertainties can even confuse experienced investors.

Uncertainty

Every time an individual risks his money for a chance to make profit, there is always a level of uncertainty. When fresh threats such as political unrest, recession and war arise, levels of uncertainty increase rapidly as organizations can no longer correctly predict future trends and earnings. As a result, influential investors will cut their holding in stocks significantly where they consider it unsafe and transfer their funds to other sectors such as government bonds, precious metals and money –markets ventures. The results of the sell-off when large portfolios are repositioning themselves, causes the stock market to be unattractive for both small and big investors.

Effects of uncertainty

Uncertainty can be termed as the inability to predict future trends and events. Investors cannot be able to predict the possibility of a recession, how much it will cost, when it going to start or end or which organizations will be able to make it through without being affected. Most organizations usually make predictions of productions and sales trends to give public the confidence to invest in normal market conditions, but changing uncertainty levels can result in inaccurate prediction. Uncertainty can affect economic situations both at macro and micro levels. At micro level, uncertainty focuses on particular companies within an economy that is faced with recession or war, whereas on the other hand, uncertainty on the macro level focuses on the economy as a whole.

On a micro- level company perspective, uncertainty is a major concern for companies that deal with consumer goods and services on daily basis. Consumption can fall rapidly if there is a threat of recession as customers refrain from buying goods and services. As a result, uncertainty can cause organizations to lay off some of its employees in certain sectors to reduce the effects of lower sales. Uncertainty levels that surround company sales also affect the stock market.

On macro level perspective, uncertainty is expanded when the countries at recession or war are major consumers or suppliers of goods and services. For example, a country that supplies huge amounts of oils goes to war, uncertainty concerning the levels of globe oil reserves would increase significantly.

Another macro- level event that brings in uncertainty is the devaluation of exchange rates. Countries that are faced with recession and war are deemed to be unstable. Therefore, investors tend to move their currency and investments away from these countries.

How to react

When uncertainty situations heighten, the best weapon is to be well informed about all the events occurring worldwide. One can research individual companies, read newspapers and watch financial televisions to keep updated. It is also critical to analyse sectors that are likely to gain more and the ones that are going to lose during the crisis and choose a long term plan to invest. In addition, uncertainty times are also a good opportunity for investors who position themselves to take advantage of the situation. Brilliant investors will search for companies that provide goods and services that will be in high demand when the situation normalizes. However, it is very hard to commit investments in uncertainty situations, but one can reap huge benefits in the long run.

Online Forex traders such as CMC markets and their clients are good example of investors who should be updated about uncertainty. CMC markets operate in many currencies and therefore it is critical to monitor the performance of every currency. When a certain currency becomes weak because of a various uncertainties, it is advisable for traders to change and trade with other stronger currencies. Where a possibility of situations normalizing, traders can take the risk and hang on to reap the huge benefit that’s come along with such situations.

Robo-Advisors: The New Wave Of Wealth Managers

Wealth Management Services used to be exclusive to the people who are insanely rich. These people were expected to pay at least 1% of the value of their assets as fees. Many wealth managers charge more than this! This is why these services leave no room for small-time investors.

Traditional wealth managers provide tailorized advice on financial matters such as investments, retirement, taxes, and estate planning. You must keep up with your annual fees to reap these benefits. However, a new wave just hit the country! Several FinTech (i.e., Financial Technology) companies have digitalized wealth management services.

These digitalized wealth managament services make use of “robo-advisors”, which allow all sorts of clients to build a portfolio at a cheaper rate. Robo-advisors measure your risk appetite and diversify accordingly. The gradual growth of robo-advisors is seen around the globe.

Know more about robo-advisors by watching this short video:

The local FinTech companies that I mentioned above include Bambu and Smartly. Let me kick off with Bambu. Bambu chose the B2B (i.e., Business to Business) route in marketing their robo-advisory platform. This means that they offer their services to the financial institutions themselves.

Ned Philips, the brainchild and CEO of Bambu, believes that the quick rise of digital adaption will greatly benefit the consumers. He explained that it may cost his company US$1 million (S$1.45 million approximately) to acquire 3,000 customers. The low fees that robo-advisors charge make it possible for him to sustain the business.

Smartly, on the other hand, allows its clients to invest in internationally diversified portfolios. The company offers ETFs or Exchange-Traded Funds. You can invest for as low as S$50 per month. You read that right! Their fees are very affordable!

Clients or investors are mandated to provide basic information about themselves. Then, Smartly’s proprietary algorithms will suggest a personalized portfolio based on the profile. It is possible to change the allocations of the funds if the client does not agree with it. Its mere slogan will say it all: “Anyone can be an investor – an investment service built for you.”

In summary, robo-advisors allow you to create a portfolio on autopilot. The digital algorithms access your tolerance to risks and your preferred timeline. Afterwards, a portfolio will be built. It is undeniably cheaper than the traditional wealth management services. This is why it welcomes more and more small-time investors to open their accounts.

Image Credits: pixabay.com

Do you think that this will benefit the Singapore market? Well, I hope so!

Sources: 1 & 2

The Basics of Technical Analysis

A technical analyst’s best friends are charts and patterns. But to the uninitiated, these are hard to make sense of. Once you get a hang of the basics however, your new-found knowledge can be used to search for potential investment opportunities.

The Assumptions

Before we get ahead of ourselves, let’s start from the beginning. What is technical analysis anyway?

Simply put, it is a study of past price movement patterns and market data to forecast future price movement directions that is built on 3 key assumptions:

1) Key factors are accounted for
The company’s fundamentals, broader economic factors and market psychology, are all priced into the stock, removing the need to consider these factors separately.

2) Prices follow trends
After a trend has been established, prices tend to move in the same direction.

3) History tends to repeat itself
This is because market participants tend to react consistently to similar market events over time.

However, it is important to remember that past performance is not necessarily indicative of future results. New factors or market conditions may arise which deviate from past trends and patterns.

Candlesticks as Building Blocks

You can’t think about technical analysis without picturing a candlestick chart. It may surprise you to know that candlestick charts are not a modern-day invention. They have been used since the 1700s, having been introduced by Homma Munehisa, a rice merchant in Japan.

There must be something to candlesticks if they have been able to stand the test of time. And indeed, a single candlestick holds invaluable information which investors can distil at a glance:

Spotting Patterns

Individual candlesticks can be strung together to form charts which technical analysts pour over, looking for patterns which give them trading ideas. However, you will have to understand how to spot these patterns and what they mean before you can capitalise.

Here are two simple patterns to ease you into things:

Putting It Into Practice

These two patterns are just the tip of the iceberg. There are many other technical analysis patterns that you can learn about that may help you spot potential trading opportunities.

But even if you know what patterns to look out for, there is an entire universe of stocks to choose from. If you have no prior interest in any stock, it would be hard to know where to begin. It simply wouldn’t be efficient to look at charts of every single stock and find actionable patterns within.

One possible option is to use stock screeners to identify stocks that meet your own criteria. For example, a stock screener can help you find stocks like the one below that exhibited a head and shoulders pattern, during a specified period of time.

Source: Technical Insight on Maybank Kim Eng’s KE Trade platform

Technical analysis is useful for investors to understand. But like we highlighted earlier, it isn’t infallible and is built on several assumptions. Therefore, it is best to use technical analysis along with other tools in your investment toolkit, like fundamental analysis, and to practice often in order to gain a better understanding of how these strategies could help you meet your investment goals.

Disclaimer: This message is for general knowledge or information only. It is not an offer or invitation to buy or sell securities, futures or other products or services. Our products or services vary in different jurisdictions, subject to their respective terms and conditions and the licences our affiliates and us hold. This message is not an advice or recommendation for any financial planning, investment, legal, tax or other purposes and, accordingly, no responsibility or liability is assumed by us or our affiliates, whether directly or indirectly, from any person taking or not taking action

What Exactly Is Short Selling?

In the dynamic world of the investments, you will encounter the term “short selling”. How does it work and what are the rules behind it?

The age-old practice in investing is that you will profit by purchasing stocks in a low price and selling them for a higher price. Although you have invested in a seemingly good performing economy, some stocks or securities may go down. You cannot earn money by “buying low and selling high” in this circumstance. Fortunately for you, there is another way to make money! That is short selling.

Short selling plays a soothing music to the risk-taker’s ears. Its concept is relatively simple. It takes advantage of the market transitions from higher to lower prices. It occurs when an individual borrows a stock, sells it for a higher price, and purchases the stock again at a cheaper price. Watch this short video to grasp its essence:

Most local brokerage firms let you experience the ease of selling short. Just place an order to sell the stock and communicate with the broker. The brokerage firm will borrow the shares for you to sell. Then, it loans the shares to your account and conducts the sell order.

As with everything, rules shall apply. Here are just some of the common rules in short selling:

1. The “Uptick Rule” is one of the key edicts that short sellers abide. It refers to selling a stock short only when the last trade was a move up. You cannot short a stock that is moving down.

2. The odds may not be in your favor if you heard that a flock of investors are shorting the same stocks that you are shorting. There are so many risks if you short a stock that everyone else does. They can simply abandon their shorts if things do not go as planned. Doing so will drive the price to hike.

3. Short selling during seasonal holidays or during “options expiration week” may attract painful losses because those circumstances do not follow the natural or normal supply and demand.

Short selling takes advantage of the market transitions from higher to lower prices. The steep learning curve intimidates some investors, leading to avoiding it entirely. It is undoubtedly a skill that experienced investors develop!

Sources: 1, 2, & 3

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