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Tips on Investing in the Stock Market

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Tips on Investing in the Stock Market

The stock market is like a gold mine for those who invest money in it. It is one of the best ways for an investor to become wealthy. Making money in the stock market is like mining a gold mine, it is both easy and difficult. It is easy if you know how to do it and know where to find the gold. It is difficult if you go in the wrong way, in which case you will end up only with mud and stone. The stock market can increase your wealth. However, if you do not invest wisely you can end up losing all your money.

It is essential to know how to invest in the right stock and profit from stock market. The following are some tips that you can get you started and help you achieve success.

  • Understand the market

Before investing in the stock market, you need to understand the market. You need to know how the stock market works and also understand past performance, present situation, and future prospects. Apart from understanding the market, you also need to learn about the industry sector and the company in which you are investing. Investing blindly without knowing anything is dangerous. It is therefore necessary that you understand the market well before you start investing.

  • Consider mutual funds

When one talks of investing in the stock market, the obvious reference is to buying stocks. You can also consider investing in mutual funds. This is suitable if you are a first time investor and are not ready to take too much of a risk. In a mutual fund, a professional fund manager would handle the investments. The fund manager would monitor the market and help you build wealth. This is a safer and less risky way of investing in the stock market. Once you begin to earn money and gain confidence, you can then start buying stocks on your own.

  • Do your research

After understanding the market, you need to do proper research about the company or mutual fund you want to invest in. This would necessitate reviewing the performance of the company/fund. You can refer to various websites, journals, newspapers, and also do your own study. You need to consider fundamental analysis (based on financial statements and publicly available sources) and also technical analysis (predicting stock movements based on past performance). If you are serious about making money in the stock market, you can even consider doing courses on fundamental and technical analysis. Research is the best tool to help you make an informed decision while investing in the stock market.

  • Don’t try to time the market

Buying low and selling high is the secret to making money in the stock market. The problem though is knowing what is low and what is high. If you try to time the market by waiting until the market reaches a low or high before investing, you may be waiting too long. Even veteran investors cannot predict how the market would behave. So don’t try to time the market. Instead, set goals for investment and invest in the market as per these goals.

  • Stay for the long-term

To succeed in the stock market, it is necessary to stay for the long-term. You cannot expect to make money overnight or in a few months. If you want to earn wealth, then you need to stay invested for many years. Think for 15, 20, 30 years. That’s the way to earn wealth in the stock market. In the short-term many developments take place in the stock market. This should neither excite you nor depress you. The market has its fluctuations, don’t worry about them. In the long run, the market can help you earn good returns on your investment.

  • Go for a systematic investment plan

Instead of investing a huge amount at one go, you can consider a systematic investment plan to invest in the stock market. Whether investing in stocks or mutual funds, you can invest a fixed amount every month. This helps you to slowly and steadily invest in the market. For example, once your research tells you that company X will give you good returns, then invest a fixed amount, maybe 500 every month to buy shares of company X. You need to do this month on month, and year on year. The power of compounding ensures that your investment will grow more in this way.

Assuming an average return of 9%, if you invest just 1000 every month, you can become a millionaire in 25 years. When you earn more, you can invest more money. This will help you accumulate more wealth over a period of time. The main advantage of a systematic investment plan is that if the market falls, then the value of the stock you want to buy falls, which means you can buy more of it. If the market rises, your overall investment rises. The benefits of a systematic investment plan make it ideal for those who want to earn money in the stock market.

  • Never get lured by tips

There are lot of tips and rumors circulating that would tempt you to invest your money to buy a particular stock. The tips would tell you that if you invest money in a particular stock, you can expect huge returns quickly. In most cases, these tips are meant to lure small investors into making someone else become wealthy. If you get a tip from a very reliable and knowledgeable source, you can consider it. Else, ignore all tips you get and focus on your strategy of investing.

  • Don’t let your emotions get the better of you

Most people who lose money in the stock market do so because they allow their emotions to override logic. Getting tempted to make a quick investment to earn money or refusing to sell a stock because you have some emotional connection with it are sure ways of losing money. You need to be logical and analytical while investing money in the stock market. Emotions have no place in the stock market. Emotions like fear and greed can make you lose your money. So put aside your emotions, stick to your investment strategy, and be disciplined in your approach. That’s the way to be successful.

  • Diversify your risk

The stock market has inherent risks. Don’t amplify your risks by putting all your money in one place. Instead of investing 1000 in one stock, you can invest 250 in 4 stocks. This spreads your risk across four different stocks. If one of them fails, the other three can still help you earn money. Whereas if all your money was in one stock and it failed, you lose everything. Also, avoid investing money in the same types of stocks. Invest in companies from different industry sectors.

While investing, you can invest in blue-chip companies (well-known companies with a good track record) or mid-cap companies (companies with a fair market size that are poised to take off), or small cap companies (new companies with a low market capitalization). Based on your market research, try to invest money in each of these types of companies. This is another way of diversifying risk and being safe. The blue-chip company can help you earn steady returns, the mid cap can help you get big profits, even if it fails you have the blue-chip to fall back on. The small caps can take off really big. Even if it fails, you would not have invested too much. Diversification is a must to reduce your risk in the stock market.

  •  Be realistic in your expectations

Most people enter the stock market after learning about how someone made millions in a few months. This could have happened due to luck or investing extremely wisely. In either case, you should not expect to get the same results. This is an unrealistic expectation that can cause you a lot of pain. Expecting to make a lot of money in a short time is highly unreasonable. You may do it if you are lucky. However, in most cases, it won’t happen. Look at the past record of the market. On average 9% to 12% returns is what you can expect. If you can get more, it is a bonus. Don’t set unrealistic expectations that can demoralize you and affect your investing.

  •  Don’t put everything in the stock market

You have worked hard to earn money. In the quest to be rich, you plan to invest all your savings into the stock market. This is the biggest mistake you can do. Never invest everything in the stock market. This can be extremely risky and if you lose money, you will be left with nothing. Invest only a part of your savings in the stock market. A thumb rule is to invest (100 – your age) in the stock market. So, if you are 30 years old, you can invest 70% of your savings in the stock market. The rest should be invested in safer options like bonds, bank deposits, etc. The logic here is when you are young, you can take more risks.

As you grow older, reduce your investment in the stock market. When you turn 40, you can have 60% of your savings in the stock market. This helps you reduce your risk gradually so that by the time you retire you have sufficient savings in safer places. This will help you overcome the risk of a stock market crash when you want to take out your earnings from the stock market.

  •  Book profits regularly

You may be in the market for a long-term and plan to stay invested for 20 or 30 years. This doesn’t mean that you shouldn’t sell some of the stocks to make a profit. When the market reaches an all-time high or the stock you have invest in has given you a windfall profit, don’t hesitate – book the profit. You can always reinvest some of the profit back into the company so that if it goes still higher, you can make money. You should not be placed in a situation wherein after you have a record profit on paper, you stand by and watch the stock fall to a low. You can sell stocks to earn profits but don’t spend it all. Put back the money into the stock market, so you can continue in your disciplined strategy of earning money.

  •  Get rid of deadwood

Deadwood refers to stocks, which are not earning you any money. Periodically review your investments. Use fundamental and technical analysis to understand how a stock is performing and how it is likely to perform. If you are clear that the stock is deadwood, then get rid of it. If you wait hoping to earn some money from it, you may lose more. Get rid of losing stocks periodically and re-invest the money in better stocks.

  •  Use the services of an investment advisor

Investing in the stock market to make money requires hours of research and follow-up. If you do not have the time or inclination to do this, you can simplify your job by using the services of an investment advisor. The investment advisor is a financial professional who understands the stock market well. The advisor can suggest stocks for you to invest and help you build a portfolio that can earn you money. The advisor would also monitor the performance of your stocks for you. For doing this, you would have to pay a fee. It would be worth paying a fee to a professional if it can help you build wealth. Make sure you select an advisor who is registered, is well-qualified, has plenty of experience, and has a good track record.

Investing

Reuters Events Launch Global Investment Summit Online Edition Uniting Institutional Investors, Asset Owners & Financial Institutions

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Reuters Events – today announced the agenda for their Global Investment Summit (Dec 3rd -4th). The 2-day strategic summit has been reimagined in the era of social distancing and will be broadcast free of charge to the public.

This Summit, with a diverse range of international voices and anchored by Reuters News-led sessions, is the only place for institutional investors, asset owners and financial institutions to come to terms with the events of 2020.

Click for more information and for complimentary registration to the online edition

The Energy Transition team report an industry leading speaker faculty for 2020, including:

  • Eileen Murray, Chair, Finra
  • Philip Lane, Chief Economist, European Central Bank
  • Gregory Davis, Chief Investment Officer, Vanguard
  • Hanneke Smits, CEO, BNY Mellon Investment Management
  • Pascal Blanque, Chief Investment Officer, Amundi
  • Desiree Fixler, Group Chief Sustainability Officer, DWS
  • Joe Lubin, CEO, Consensys
  • Bahren Shaari, CEO, Bank of Singapore
  • Mark Machin, CEO, Canada Pension Plan Investment Board

The agenda released by Reuters Events Investment is both ambitious and comprehensive, and will cover four key themes: Market Outlook, Asset Management Strategies, Industry Deep-Dives and the Future of Investment.

View the full agenda here

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Halliburton & Baker Hughes CEO’s join Reuters Events: Energy Transition 2020

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Reuters Events – today announced that CEO’s of two of the world’s leading energy service companies, Halliburton and Baker Hughes, will join the speaker faculties for their flagship Energy Transition Summit.

The event will explore the creation of the future energy ecosystem and offer companies, from across the asset spectrum, a definitive guide to their net-zero strategies. The alignment of the two biggest O&G global service companies, Halliburton and Baker Hughes, represents a significant step in the transition to low-carbon energy

More information on the Europe and North America editions can be found below. Registration for the LIVE stream is free.

Alongside their CEO speaker representation, Halliburton join as Platinum sponsors of the North American edition. Baker Hughes join as gold sponsors for the European edition of the flagship energy transition program.

The Energy Transition team report an industry leading speaker faculty for 2020, including:

  • Lorenzo Simonelli, Chairman & CEO, Baker Hughes
  • Jeff Miller, CEO & President, Jeff Miller
  • Tristan Grimbert, CEO, EDF Renewables
  • John Pettigrew, Chief Executive, National Grid
  • Pratima Rangarajan, CEO, OGCI Climate Investments
  • Alex Schneiter, CEO & President, Lundin Energy
  • Gretchen Watkins, President, Shell Oil Company
  • Calvin Butler Jr., CEO, Exelon Utilities
  • Francis Fannon, Assistant Secretary ERB, S. Department of State
  • David Lawler, Chairman & President, bp America
  • Andreas Schierenbeck, CEO, Uniper

More information on the Europe and North America editions can be found below. Registration for the LIVE stream is free.

Governance & Cooperation – Does the energy transition face a ‘governance deficit’? To understand how the energy transition will develop over the next decade, it is crucial to understand the driving governing forces behind it. Will the Green Deal provide the first domino, how can we ensure progress in the shadow of Aberdeen and ensure that we translate targets into action?

Financing Energy Transition – We must address the elephant in the room; who is going to pay for it all? An understanding of where the funds are likely to come from is key to staking claim to the infrastructural projects that will redefine the modern world in the 21st century.

New Energy Infrastructure – Low-carbon energy supply and consumption will need a radical overhaul of infrastructure. As well as revamping the old, we’ll need entirely new assets and new systems of energy delivery. It’s an unprecedented opportunity with estimated spending at $70 trillion over the next decade. Knowing which technologies are ready to be scaled first is the key to understanding opportunity

Business Model Innovation – Who will provide leadership through the age of transition and how do we want our future energy system to look? Speed and timing will be crucial if you are to stay on the right side of the transition. Join us in setting business led, evidence based, targets as industry drives towards net-zero

More information on the Europe and North America editions can be found below. Registration for the LIVE stream is free.

At Reuters Events, we’re committed to tackling the Energy Transition head on; to shed light on the defining issue of our time and help energy companies meet a uniquely difficult challenge. That is, to be both an energy company of today, and the energy companies of tomorrow. In a period that will be defined by uncertainty we can, together, lighten the way forward.” – Owen Rolt, Head of Energy Transition, Reuters Events

Contact

Owen Rolt

Head of Energy Transition

Reuters Events

UK: +44 (0) 207 375 7596

E: [email protected]

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COVID-19 is changing people’s preferences when it comes to BTL investments

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COVID-19 is changing people’s preferences when it comes to BTL investments 1

By Jamie Johnson, CEO of FJP Investment

Throughout 2020, investors have had to navigate increasingly treacherous and volatile market conditions as a consequence of the COVID-19 pandemic. No country has been immune to the coronavirus outbreak, particularly here in the UK.

Yet even as the country enters another phased lockdown of sorts, demand for UK property has remained strong. After a brief period of suppressed demand after initial lockdown measures were introduced in late March, the UK’s implementation of the stamp duty land tax (SDLT) holiday triggered a rush in demand for bricks and mortar. As a result, both house prices and transactional activity is rising.

With this new surge in demand resulting in an 18-year-high of UK house price growth, according to the Royal Institute of Charted Surveyors, buy-to-let (BTL) investments have also substantially increased in popularity.

It’s easy to understand why. BTL investments offer landlords both long-term capital growth and regular returns in the form of rental payments. And now, as the SDLT holiday deadline beckons closer, investors keen on taking advantage of the comparative discounts on offer must act quickly.

My advice to those considering a BTL investment in the UK is to understand and appreciate the longstanding market changes that have been brought about by COVID-19. Traditional BTL hotspots are being challenged by a rise in tenant demand for real estate in up-and-coming cities and regions.

For example, the COVID-19 pandemic has resulted in the majority of the workforce working remotely from home. Recent data from property listing site Rightmove makes clear the shift in demand away from central London and towards less densely populated regions; with areas like Cambridge and Oxford seeing 76% and 64% more rental searches respectively and searches in areas like Earl’s Court dropping by 40%.

This is the clear result of previously London-based professionals realising the benefits of working from home. As businesses identify the financial drawbacks and COVID contagion risks of having all their staff physically present five days a week, employers will seek out smaller commercial workspaces.

At the same time, we are also seeing workers looking to rent larger, cheaper properties that might be further away from their office. This is due to the fact that they are unlikely to need to commute every working day to their office, even once the COVID-19 outbreak has been contained.

But, where exactly are the best larger, cheaper properties to be found? Where are the UK’s emerging BTL hotspots that need to be on the radar of prospective investors? I explore these pertinent questions below.

Liverpool life

Those who have been closely following the UK’s housing market will know just how primed Liverpool is for BTL investment. As a key recipient of the UK Government’s Northern Powerhouse funding, and with massive developments like Liverpool Waters and Wirral Waters soon to be completed, the city’s housing supply is ready to meet the demands of those taking part in the aforementioned London professional exodus.

With Liverpool constantly ranking No.1 in rankings of UK cities for BTL investment, it’s evident why investors would be keen on completing purchases of Liverpool property before the end of the SDLT holiday. Though even after the SDLT holiday ends, there’re still plenty of reasons to be optimistic about Liverpudlian BTL investment. Prime Minister Boris Johnson’s government is firmly committed to ‘levelling up’ the North of England through regional regeneration, and planned high speed rail connections between Liverpool and other northern cities will only add to the investment potential of the city.

Leeds living

Although Liverpool boasts the highest rental yields for BTL landlords in real terms, Leeds was recently named the most profitable city to become a landlord in the whole of the UK by CIA landlord. By evaluating numerous metrics; including mortgage costs, average rent, average monthly landlord costs and average property prices, they determined that Leeds was the best city for potential buyers to make their first foray into BTL investment.

And, looking at recent trends, it’s easy to see why. Leeds may benefit more from the London exodus than other cities due to its unique position of being a brain gain city’, i.e. one where more students remain after graduation than move away. As a result, it boasts the largest financial services sector in the nation after London, making it an ideal locale for employers in the financial services sector who are seeking cheaper commercial rent outside of London; likely bringing investment and employees with them.

With its strong urban economy likely to be bolstered by its designation as a ‘Northern Powerhouse’ leading business hub, Leeds is ideally positioned for BTL investment over the long-term.

Cardiff’s regeneration

And finally, the capital of Wales brings much to the table when deciding between different BTL investment destinations. With a metropolitan area population of over 1.1 million residents, forecasted to grow by 20% by 2035, demand for property in the city is set to rapidly increase over the next decade. Those able to capitalise on this population growth will be able to access considerable long-term investment opportunities – as recent reports suggest.

Thankfully, it’s unlikely that there’ll be any shortage of housing supply in Cardiff for BTL investors to invest in. Cardiff Bay has emerged as Europe’s largest waterfront development, and the upcoming Central Quay and £500m coastal developments will assist in attracting further investment into the city.

BTL remains a sound investment opportunity

COVID-19 has made evident just how resilient British real estate is as an investment asset. By offering the best of both worlds, namely long-term capital growth and regular rental returns, BTL has successfully remained an attractive and popular investment choice. And, with demand for housing still outstripping supply, the market need for rental accommodation looks set to only grow.

COVID-19 has permanently changed the UK’s housing market and, as explained above, new BTL hotspots are surely due to emerge over the next year. With renters seeking out larger homes in cheaper areas, flexible working patterns will forever change the landscape of the UK’s residential real estate market, and those able to capitalise on it may benefit hugely as a result.

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