It is scary when you see most everything you own declining in value and with it, all your dreams of retirement, education or a home. You can and will survive this by following these 5 tips.
Surviving a Stock Market Crash - 5 Tips to Show You How
By [http://ezinearticles.com/?expert=Fern_Alix_LaRocca]Fern Alix LaRocca
It is scary when the money you were counting on for retirement, education, or your home is rapidly declining in value. Don't panic though. Here are some 5 tips to help you survive:
1. People are living longer:
Males that reach the age of 65 nowadays will have a 49% chance of living to 86. Women will have a 49% chance of living to age 89. With that in mind, it's obvious that you will still need the help of equities (stocks and stock mutual funds) to help you grow your portfolio and keep ahead of taxes and inflation.
Don't abandon these investments.
2. Rebalance where necessary.
Take a look at your portfolio winners. If you had targeted say 20% in international and it is now 30% of your portfolio. Sell enough to bring it back down to 20% and use that cash to invest in another sector that you don't own. Remember that you don't have a realized loss until you sell. Take just enough of a loss to offset the gain that you took above, and then you will pay no tax on the transaction.
3. Diversify.
Don't have any winners? Then you weren't diversified enough to begin with. You should have had enough in each asset class (large-cap, mid-cap, small-cap, international, etc.) and each style (growth, value, blend, balanced, etc.) to create an investment plan to reach the return you need with the risk you are comfortable with, and in the time period that you targeted. Believe it or not, there are some mutual funds that have managed to keep their returns higher than the more than 23% loss of the S&P500 Index this year. There are a lot of free resources such as morningstar.com that will give you the data you need to diversify and feel better about your holdings.
4. Make decisions now.
Act now. Don't look for bottoms. You don't ever know where the bottom is but you do know that stocks are steadily getting cheaper and there are some fantastic buys out there. You may not have control over the market but you do have control over what you buy and what you sell. Don't wait.
5. Get a guaranteed income for life.
Along with positions of cash, bonds, and equities, a fixed annuity should play a part in a portfolio of someone close to working part-time or retiring altogether. An annuity is an insurance contract that in return for a lump sum of money gives you a steady fixed stream of income that is guaranteed for your life or the life of you and your spouse. For people who want to spread out their risk, this is an excellent addition to a portfolio. The downside is that you don't get any inflation protection since the payments remain the same. The upside is that you get an income stream guaranteed by the insurer so you don't have to worry about managing the money. Of course, you need to make sure the insurer is financially strong enough to be able to pay you throughout the term of the contract.
People like Floyd Odlum made millions during the Great Depression, not by fleeing into cash and bonds but by buying into stocks as the market dropped. His motto during the crash was: "There's a better chance to make money now than ever before."
Don't lose this opportunity to arrange your portfolio to meet your future needs. Follow the five steps above, and you won't have to worry about what the stock market is doing ever again.
2008© Fern Alix-LaRocca CFP® All Rights Reserved
Interested in more tips to survive this [http://wholeheartedway.com/index.html]crisis? Get the [http://wholeheartedway.com/]Whole-Hearted-Way eNewsletter written by Fern Alix LaRocca, a fee-only Certified Financial Planner TM with over 24 years in the industry today.
Article Source: http://EzineArticles.com/?expert=Fern_Alix_LaRocca http://EzineArticles.com/?Surviving-a-Stock-Market-Crash---5-Tips-to-Show-You-How&id=1566884
Showing posts with label investments. Show all posts
Showing posts with label investments. Show all posts
Sunday, October 12, 2008
Saturday, October 11, 2008
Money Management 101!
This is the most important aspect of Forex trading! Nothing else even comes close. All the investment experts agree that with proper money management you don't even need a trading plan!
Money Management 101!
By [http://ezinearticles.com/?expert=Joshua_Geralds]Joshua Geralds
If you've been trading a while or have been reading up on trading then the term money management will be familiar to you. But money management in Forex trading is very different from money management else where.
Especially in currency trading money management takes the top spot for making or breaking an account! Just what exactly is money management you ask?
Well money management is a series of steps an experienced trader takes to protect the profits gained and to ensure that losses are minimized.
To give an example money management is the safety net for a trader to make profits.
For instance you are a day trader and you trade the 5 minute charts. So let's say on the average you make 10 trades a day. Now your daily tally should be the average score of all 10 trades. Thus you will have a daily pip profit and not base your success on individual trades
Money management is also concerned about position sizing. This is the way professional traders control their risks and returns for any given trade.
To learn and use position sizing is thankfully straight forward and simple. Take for instance you trade the Cable (Pound against US dollar). Each lot you trade is 100k how you can mitigate your risk is by breaking up the size of each lot you trade in.
By diversifying your lots you give yourself the flexibility to hedge your position should a trade turn against you. In that way you can position your trades in uncorrelated economies thus increasing the probability of a day profit. Money management in this way will serve to protect your account. Over here it is appropriate to touch on the compounding effect and how it works with money management. As you are aware a trader makes money by steadily growing his or her account. Steady growth for day traders do not mean a profit in each and every trade. But you have to ensure a profit every day. The worse position is a break even. When compounded and coupled with position sizing the trader grows his or her account.
Words of caution here do not expect to make every trade a winning trade. If you trade 10 times a day you have to expect to have 50% of your trades as failed trades.
If your edge is good and you have made a due study of the market, expect a failure rate of 35% and that's saying you're a very good trader already!
In conclusion let up recap on what money management is and what it can do for you. First money management is a process of controlling risk. Second it is a method of increasing profits. Third it is a way to discipline a trader. Fourth it is not a way for quick bucks. Fifth it will enable a small account to compound at the best rate possible and earn consistently. Lastly coupled with position sizing it gives to the trader flexibility to hedge their trades thus ensuring a daily profit. So make some money for yourself.
Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. Visit http://www.pipsalot.com to learn how to make steady profits through safe trading and down load your FREE e-book "Money Management" for a limited time only!
Article Source: http://EzineArticles.com/?expert=Joshua_Geralds [http://ezinearticles.com/?Money-Management-101!&id=1564884 ]http://EzineArticles.com/?Money-Management-101!&id=1564884
Money Management 101!
By [http://ezinearticles.com/?expert=Joshua_Geralds]Joshua Geralds
If you've been trading a while or have been reading up on trading then the term money management will be familiar to you. But money management in Forex trading is very different from money management else where.
Especially in currency trading money management takes the top spot for making or breaking an account! Just what exactly is money management you ask?
Well money management is a series of steps an experienced trader takes to protect the profits gained and to ensure that losses are minimized.
To give an example money management is the safety net for a trader to make profits.
For instance you are a day trader and you trade the 5 minute charts. So let's say on the average you make 10 trades a day. Now your daily tally should be the average score of all 10 trades. Thus you will have a daily pip profit and not base your success on individual trades
Money management is also concerned about position sizing. This is the way professional traders control their risks and returns for any given trade.
To learn and use position sizing is thankfully straight forward and simple. Take for instance you trade the Cable (Pound against US dollar). Each lot you trade is 100k how you can mitigate your risk is by breaking up the size of each lot you trade in.
By diversifying your lots you give yourself the flexibility to hedge your position should a trade turn against you. In that way you can position your trades in uncorrelated economies thus increasing the probability of a day profit. Money management in this way will serve to protect your account. Over here it is appropriate to touch on the compounding effect and how it works with money management. As you are aware a trader makes money by steadily growing his or her account. Steady growth for day traders do not mean a profit in each and every trade. But you have to ensure a profit every day. The worse position is a break even. When compounded and coupled with position sizing the trader grows his or her account.
Words of caution here do not expect to make every trade a winning trade. If you trade 10 times a day you have to expect to have 50% of your trades as failed trades.
If your edge is good and you have made a due study of the market, expect a failure rate of 35% and that's saying you're a very good trader already!
In conclusion let up recap on what money management is and what it can do for you. First money management is a process of controlling risk. Second it is a method of increasing profits. Third it is a way to discipline a trader. Fourth it is not a way for quick bucks. Fifth it will enable a small account to compound at the best rate possible and earn consistently. Lastly coupled with position sizing it gives to the trader flexibility to hedge their trades thus ensuring a daily profit. So make some money for yourself.
Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. Visit http://www.pipsalot.com to learn how to make steady profits through safe trading and down load your FREE e-book "Money Management" for a limited time only!
Article Source: http://EzineArticles.com/?expert=Joshua_Geralds [http://ezinearticles.com/?Money-Management-101!&id=1564884 ]http://EzineArticles.com/?Money-Management-101!&id=1564884
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