Leverage - Is This A Strategy For You?

By Gnifrus Urquart

Leverage is simply investment jargon for borrowing. Its called "leverage" because you use the value of an existing investment to underwrite, or as security for, the borrowing.

If you have not borrowed to invest before, but are considering it, you really should discuss this with a licensed financial advisor before you do. The concepts provided in this article are general in nature and should not be taken as specific advice to be applied to your specific circumstances. A financial advisor will be able to tailor a borrowing structure which perfectly matches your goals.

When I started investing, my borrowing habits where the same as most peoples. I had a floating credit card debt which varied to my whims. I had a small personal loan for some household items and a bigger one which enabled me to buy my car.

All these debts were used to fund consumables - objects for my pleasure. I learned that there are two issues with this. Firstly, the objects this debt bought all rapidly lost value. They were depreciating assets. Secondly, as I used the debt to purchase things I consumed, the interest on that debt had no tax benefits. I had to pay it all.

Things have changed over the years. I learned that debt is much more efficient when spent on investments. So now my credit card debt is negligible and paid off every month. My personal loans are completely paid off. Despite this, I have a lot more debt. I have a massive debt on an investment property. I have a margin loan for share trading. And I have a FOREX investment account which is leveraged at 400:1 (Which means I borrow $400 for every $1 I put in)

So what are the benefits of borrowing to invest?

When you borrow to invest, you increase your investment earnings potential. As you borrow money, you have more to invest. Therefore, the returns on your investments increase by the net returns on the borrowed money. Obviously the basic key here is to ensure your investment return rate is higher than the interest rates on the loan. If this is the case, you will always make money with the money you have borrowed.

The second benefit you can get from borrowing to invest is a possible tax benefit. In my situation where I have borrowed to purchase an investment property in Victoria, as I rent out that property and earn an income from it, the interest payments on that mortgage become a cost associated with that income. As such, in my circumstance, I can claim those interest payments as a tax deduction. This means that while my asset is making me money, the tax office is actually giving me a discount on my borrowing by making it tax deductible

Margin loans work similarly. Basically I buy a bunch of stocks, fund 50% of the purchases myself and borrow the other 50% in a margin loan. This means I can double the size of my share portfolio and hopefully make a lot more money. Because I borrowed money though to buy the stocks which will make me money, the interest accrued in the margin loan is tax deductible.

So there are definite advantages you can gain from leveraging your investments. There are risks also though, which is why you should seek proper financial advice prior to moving down this path.

There is the risk of over-extending yourself. When you borrow, you need to do so in a way that does not leave you unable to meet your repayment obligations. In a normal loan (like a mortgage, or investment loan) this means you need to be able to fund all your agreed repayments. If you cannot meet these payments, your lender has every right to take your investments off you. This is not good.

In a margin loan situation, it is a little different. If you borrow too much here, you may breach the allowable % of assets to debt you are given and if this happens, you will be expected to put more money in to put the loan back in "good order". This can be quite difficult if the market swings strongly against you. So you need to know that in extremely adverse market conditions (2007 - 2009 are a good example of this) you can generate enough income to cover such margin calls.

Obviously also there is the risk that your investments will lose, leaving you with an investment loss and a loan. So you need to be confident with your strategies.

All risks with investing can be mitigated with strategy. That is why it is so important to speak to a licensed financial adviser before you invest and especially before you borrow to invest. So if you are considering leverage, speak to an adviser about risk mitigation. Leveraging your investments can definitely be financially rewarding, but only when you properly understand and manage your risk and when it is backed up by a consistently high performing investment strategy. - 23200

About the Author:

Gnifrus Urquart has had impressive success investing for many years. As such, he likes reviewing investment strategies and offering trading tips to others who enjoys investing

Quick Profits With Hot Stocks

By Hannah Page

In the previous few years, a recently discovered way of playing the exchange has appeared. Ignoring the typical wisdom of buy low, sell high, hot stocks employs a different method of gaining high returns on investments. Buy high and sell higher is the idea behind hot stocks. It's a strategy that's's working for many investors. It's a hit and run approach to investing.

Instead of purchasing undervalued stocks and waiting weeks or months for them to rise in worth, with the hot stocks approach, you purchase stocks that are rising in value . Instead of holding the stocks, you wait only a short time and sell them when their value is higher than the price you paid. You turn a fast profit.

This investment plan is especially suited to day traders. You have to be conscious of the market trends and select stocks that are showing a conspicuous consistent increase. Buy the stock and after it rises enough to give you a profit, sell it. Don't be tempted to keep hold of it beyond making an honest profit. This is a strategy, not a get wealthy fast scheme.

If you chance to pick a stock that starts to stagnate or drop in price, sell it straight away, even if you have got to suffer a loss. Never think the stock will recover and you'll get your investment back. If it drops lower you can lose even more. The idea is to maximise your gains and keep your losses as small as possible.

Hot stocks are transient investments and shouldn't be held onto for at least a day or two. Keep on top of the market trends and your stock prices so you can sell at the most advantageous time. This method of investment has risks and infrequently you will lose. That's's alright. The most important thing is to chose more winners than losers.

Don't put all of your money into hot stocks. This is just a method to earn a profit in the stock market. Investors should have a portfolio with solid stocks from different areas of business to guard their investments. Don't neglect your long term investments in favor of hot stocks. Some of your profits from hot stocks should be put into long tern investments.

These stocks are intended to be really short term investments. Never keep hold of a hot stock for at least a few days. You sold and the stock continued to rise, you're feeling like you lost money. You made money, the undeniable fact that the stock continued to rise did not cost anything.

If you are employing a broker for your stock transactions, you will have to pay a fee each time you sell or buy a stock. This can have an effect on your bottom line. There are online trading services that are less costly than brokers for transactions of this sort. If you are considering investing in hot stocks, you must look into ways to save on brokerage costs. This could be substantial when many transactions are concerned and could even wipe out your profits.

the market is a way to grow your investments. Hot stocks is a method to make reasonable profits in a short period of time. When investing your money always use more than one strategy and ensure that at least part of your money is in a safe, if low yield, financial instrument. Never gamble on the market with money you cannot afford to lose. Remember the old Wall St. Saying" sometimes you eat the bear, and often the bear eats you." Good luck! - 23200

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Find more on best stocks to buy now and stock investment newsletters.

The Key to Securing Your Financial Future Through Investing

By Ejima L. Pitt

In these testing economic times, a lot of people want insure their futures since they know that if they are relying on Social Security Benefits and in a lot of cases retirement plans, they might be in for a hard time. It will be rather impracticable at the present time for individuals to rely on paycheck for their whole lives so, having an investment in stocks or mutual funds will assist to get through future financial problems.

Over the years you might have been saving money in a low interest savings account but right now you desire to see that money multiply at a a lot faster pace therefore, investing is the way out. This is the how we plan for the shorter term to obtain things that require planning for in the immediate to near future and this influences where the funds will be invested for the best financial gain.

It is as well likely when funds is needed quickly to invest it in areas that are considered higher risk, but large sums could be gathered in a short amount of time this way. This is not the type of investment area that you might want to risk your retirement on however so a safer, longer term approach is needed.

To generate wealth and security are the overall purpose for investing, over a frame of time as well as it is also important to take into account that you will not always be able to earn an income and will eventually would like to stop working. You besides cannot depend on the Social Security system to do what you anticipate it to achieve and because we have seen with Enron, you cannot necessarily rely on your company's retirement benefit either so investing is the solution to insuring your own financial future, however you have to make intelligent investments!

That is not to declare that investment is without risk also and is considered to be a game by man, one you will not know if you have won or not until the very end. Similar to any game, it is the way you play that will make the difference between success and failure and investment needs a game plan. If you know immediately how much funds you will require when you give up work, it is simply a matter of preparing where to invest to meet that need.

If you are looking to do this, can be assured that flexibility is the keynote of long term financial speculation with each fund set up to meet the wishes of the individual. The most well-known of these areas is the stock market with factually hundreds of thousands of companies available to speculate savings in. This is not an area that should be hurried into as akin to a game there are regulations and if you do not understand them you will not play very well and the opportunities of success reduced, therefore learn what you can prior to involving in it. The financial plans you use might indicate that your future will be assure although ensure that your present monetary requirements are in good physical prior to you begin. - 23200

About the Author:

To learn more about investing opportunities, go over to my blog to learn more about investing in mutual funds, what is mutual funds, and why mutual funds investing is a great option to have in your portfolio

Vital Elements Of A Forex Trading System

By Bart Icles

Forex trading systems are one of the most indispensable tools that can be used for Forex trading today. As with other systems created for business purposes, though, it is not without its pros and cons. It all depends on what a trader specifically needs and wants to help them effectively do currency trading. But for some, it may not be the case. Some may give better highlights and coverage of Forex information, while others are designed for faster access of currency prices or provide how to open and close orders efficiently. When one is searching for the best one, it is best to give them a try by getting a free demo account to determine how it actually works.

With so many trading platforms to choose from, it would be wise to narrow down the search with at least three or four such demo accounts and start from there. Forex brokers or dealers are more than willing to accommodate you with this, so mainly you won't have a problem with this. If ever there are issues or problems with doing so, ask some exploratory and penetrating questions why this is so. Should they not be agreeable to giving you a free demo account, then go on to the next trading system on your list.

Your next step would then be to see with using the account if you can make a straightforward trade from the charts or if not. Integration is key here, so with the account you are using, it should be able to do direct trading without having to log out before your order can be placed. Follow this up by reviewing the technical indicators being displayed on your screen, of which you should be able to see trend lines, moving averages, and volume overlays and moving averages. Next, determine what the available ordering system can be done and if it is allows you many options when order placements are concerned. The more available options, the better. Also, be sure to check if it allows you access to some background data regarding the strategies therein, if ever it is possible.

It is also important not to forget to have access to current world currency market news on the fly. It should ideally be situated in the same page as where the chart is located to let you see a live or streaming view as a quick reference or guide. Most systems have this function already available and which can be tailored to fit your liking.

When you eventually decide with what Forex trading system to purchase, just make sure there is ample service and support from the provider, and that you feel secure and safe with their system. - 23200

About the Author:

Succeeding in the forex market takes a desire to learn and a drive to become a great trader. Furthermoreforex capital markets take dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.

ETF Trend Trading Strategies That Have Proven Effective

By Patrick Deaton

These days, when people are looking to the markets with a renewed sense of what could be possible, it's good to know that ETF trend trading can be an effective investment activity that promises good rates of return. These exchange traded funds are similar to mutual funds and how they act when traded in a stock exchange. Think of them as being similar to stocks themselves.

Trend trading is exactly the name implies; you will be trying to monitor trends in narrow or very broad markets in order to maximize your trading opportunities such that you have "timed, " to use a phrase, the markets correctly. A smart trend trading program really takes no more than 10 to 20 minutes of evening trading to increase the odds of steady income from the trading activity.

Out on the Internet there are several good exchange traded fund trading systems that operate on the principle of trend following or trend trading. One is always advised to study each system's requirements and rules relating to trend trading before investing any starting capital. However, if you're smart, you can actually pull a decent return on investment over time.

Many industry experts who monitor exchange traded funds will tell you that there are three main strategies for investing in ETF's that involve trend trading. In the first, which is called a fundamental strategy, an investor in an ETF -- and small investors generally use exchange traded funds trading systems -- will track trading trends that go on for a long period of time within the ETF.

With fundamental strategy trend trading, one can keep control over costs quite well and also can keep track of taxes in a fairly simple manner. Those who believe in fundamental strategies have invested in portfolios that aren't exactly active -- meaning they are traded infrequently -- though these same portfolios provide an excellent and broad exposure to the markets.

Another good strategy when it comes to trend trading is to follow one based on sector tracking. When using a sector strategy, it's necessary to follow trends in a market very actively and with an eye towards being able to react extremely quickly to those trends or changes. Sector strategy investors have portfolios that are traded and monitored quite frequently.

Sector strategists are always on the lookout for the best ways to get into and out of the fund very quickly. They usually employ what experts call a "momentum-based" strategy for doing so. This strategy tells them when the best times for jumping into or jumping out of the market will be. However, beginners in ETF trading are advised to use more of a blended strategy.

This means that the trader or investor will use ETF trend trading in such a way that a 200 day moving average will tell them which areas in the market are moving and in which direction. Blend strategies require the use of set signals that allow you to stay in the market during long uptrends. Also, blend strategies require the use of a stop loss in order to put a cap on any losses. - 23200

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Learn how it's very possible to make 6% per month in your investment accounts using etf trading! "Big A" is a recognized expert in the world of etf trading system and reveals etf secrets that have been kept under wraps by hedge traders for years. Give him your email and get a free report and webinar today!