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Tag Archive | "investing"

Not the Best Return on Investment and Risky | Bond Funds

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This is an introduction to bond funds.  Mind you that bonds won’t give you the best return on investment.  However, they will give you better returns than other asset classes.

Because bond funds usually follow plans that can lead to higher yields, they are typically higher risk investments than money market funds are.  The SEC’s rules are not the same for bond funds as they are for money markets.  Bond funds are not limited to short term or high quality investments.  But again, as any stock market for beginners investor knows, it’s safer that stocks in general.

There are such a variety of types of bonds that these funds also have huge differences in their potential rewards as well as risks.  There are several risks related to bond funds.  One type of risk is credit.  The fund owns bonds that are issued by different individuals or companies.

There is always the risk that some of those issuers might not pay what they owe, including what they owe to their bond holders.  It is safer to put your money into funds that invest in U.S. Treasury bonds or bonds that are insured.  On the flip side, it is riskier to buy into funds that contain companies with a bad credit rating.

Another type of risk is interest rate risk.  This is the risk of losing money if interest rates increase causing the value of the bonds to decrease.  Interest rate risk is higher for funds that contain more long term bonds.  A third type of risk is prepayment.  Sometimes a bond issuer may pay off the debt earlier than planned, perhaps because interest rates have gone down.  Then they issue new bonds but the new bonds pay at a lower rate.  When that occurs, it is possible that the fund might not have the ability to invest the proceeds for as high a return as before.

Although bonds don’t give you the best return on investment, they are still risks associated with it.  Talk to your financial advisor before moving forward with any investment strategy.

Avoiding the Pitfall and Making a Smart Investment in Penny Stocks

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Identifying the penny stock to watch is probably one of the methods that can provide you with high potential returns when it comes to these investments.  If you will look at the instrument, you will have a better means of understanding its movement and know if it will be the right option for you.  However, penny stock trading is a dangerous undertaking.  While many people who have tried this investment type is quite certain that losses are unavoidable, the reason for their failure can be more likely attributed to misinformation regarding the penny stock to look into.

The process of investing in penny stocks requires careful evaluation of your moves.  In order to make sure that you will not experience any major mishaps regarding these instruments, you have to make sure that you are doing the right thing whenever you watch the stocks.  Avoid free stock picks as much as you can.  While it may sound like a smart decision on one end, you will realize that the market can be easily manipulated by large investors.  Once they have achieved their objectives of making the transaction more profitable to them, they can easily dispose the stocks.  The tendency is that the prices of these stocks will drop and you will be at the losing end of the bargain.

But if you want to make some real money out of stock trading pennies, the only way to go is to be a testing machine yourself.  This means that you have to be equipped with the right information and retain it for future use in the trading floor.  Find a method that is reasonable enough for you to utilize in the business.  Test services and methods using a practice account to ensure that you will not be making any mistake once the real show comes.  With the right strategy and knowledge of the penny stocks to watch, you can avoid the excitement of jumping right into the pit of unconceivable mistakes and pursue a successful and possibly profitable venture in trading these instruments.