Make a Financial Plan Towards Financial Freedom

Sit down and take an honest look at your entire financial situation. You can never take a journey without knowing where you’re starting from, and a journey to financial security is no different.

You’ll need to figure out on paper your current situation— what you own and what you owe. You’ll be creating a “net worth statement.” On one side of the page, list what you own. These are your “assets.” And on the other side list what you owe other people, your “liabilities” or debts.

Subtract your liabilities from your assets. If your assets are larger than your liabilities, you have a “positive” net worth. If your liabilities are greater than your assets, you have a “negative” net worth. You’ll want to update your “net worth statement” every year to keep track of how you are doing. Don’t be discouraged if you have a negative net worth. If you follow a plan to get into a positive position, you’re doing the right thing.

KNOW YOUR INCOME AND EXPENSES

The next step is to keep track of your income and your expenses for every month. Write down what you and others in your family earn, and then your monthly expenses. Include a category for savings and investing. What are you paying yourself every month? Many people get into the habit of saving and investing by following this advice: always pay yourself or your family first. Many people find it easier to pay themselves first if they allow their bank to automatically remove money from their paycheck and deposit it into a savings or investment account. Likely even better, for tax purposes, is to participate in an employer sponsored retirement plan such as a 401(k), 403(b), or 457(b). These plans will typically not only automatically deduct money from your paycheck, but will immediately reduce the taxes you are paying. Additionally, in many plans the employer matches some or all of your contribution. When your employer does that, it’s offering “free money.” Any time you have automatic deductions made from your paycheck or bank account, you’ll increase the chances of being able to stick to your plan and to realize your goals.

“But I Spend Everything I Make.”

If you are spending all your income, and never have money to save or invest, you’ll need to look for ways to cut back on your expenses. When you watch where you spend your money, you will be surprised how small everyday expenses that you can do without add up over a year.

Small Savings Add Up to Big Money

How much does a cup of coffee cost you?

Would you believe $465.84? Or more?

If you buy a cup of coffee every day for $1.00 (an awfully good price for a decent cup of coffee, nowadays), that adds up to $365.00 a year. If you saved that $365.00 for just one year, and put it into a savings account or investment that earns 5% a year, it would grow to $465.84 by the end of 5 years, and by the end of 30 years, to $1,577.50.

That’s the power of “compounding.” With compound interest, you earn interest on the money you save and on the interest that money earns. Over time, even a small amount saved can add up to big money.

If you are willing to watch what you spend and look for little ways to save on a regular schedule, you can make money grow. You just did it with one cup of coffee.

If a small cup of coffee can make such a huge difference, start looking at how you could make your money grow if you decided to spend less on other things and save those extra dollars.

If you buy on impulse, make a rule that you’ll always wait 24 hours to buy anything. You may lose your desire to buy it after a day. And try emptying your pockets and wallet of spare change at the end of each day. You’ll be surprised how quickly those nickels and dimes add up!

Pay Off Credit Card or Other High Interest Debt

Speaking of things adding up, there is no investment strategy anywhere that pays off as well as, or with less risk than, merely paying off all high interest debt you may have. Many people have wallets filled with credit cards, some of which they’ve “maxed out” (meaning they’ve spent up to their credit limit). Credit cards can make it seem easy to buy expensive things when you don’t have the cash in your pocket—or in the bank. But credit cards aren’t free money.

Most credit cards charge high interest rates—as much as 18 percent or more—if you don’t pay off your balance in full each month. If you owe money on your credit cards, the wisest thing you can do is pay off the balance in full as quickly as possible. Virtually no investment will give you the high returns you’ll need to keep pace with an 18 percent interest charge. That’s why you’re better off eliminating all credit card debt before investing savings. Once you’ve paid off your credit cards, you can budget your money and begin to save and invest. Here are some tips for avoiding credit card debt:

• Put Away the Plastic

Don’t use a credit card unless your debt is at a manageable level and you know you’ll have the money to pay the bill when it arrives.

• Know What You Owe

It’s easy to forget how much you’ve charged on your credit card. Every time you use a credit card, write down how much you have spent and figure out how much you’ll have to pay that month. If you know you won’t be able to pay your balance in full, try to figure out how much you can pay each month and how long it’ll take to pay the balance in full.

• Pay Off the Card with the Highest Rate

If you’ve got unpaid balances on several credit cards, you should first pay down the card that charges the highest rate. Pay as much as you can toward that debt each month until your balance is once again zero, while still paying the minimum on your other cards.

The same advice goes for any other high interest debt (about 8% or above) which does not offer the tax advantages of, for example, a mortgage.

Once you have paid off those credit cards and begun to set aside some money to save and invest, you’re in the savings habit! Now that you are freeing up some money to save and invest, it’s time to move ahead to the next stop in your journey.

Pick & Find Your Best Growth Stocks

For over a century growth stocks have been a part of the financial concept. The defining characteristics of the growth stocks have changed with time, like, the 70s were signified by the tough and bearish stocks while the 80s happened to be the bullish boom period. Apart from the basic logical analyzing, one can always refer to the financial history to obtain the formula of successful stock investing. 

Zeroing down on a company with strong fundamentals, which include rising sales and earnings and low debt. This apart, one needs to take notice of a few points. They are:

·      The company should belong to a growing industry.

·      As an investor, you should be completely investing in growth stocks both during the bullish period when there is massive price rise in the stock market and also in the general economy.

·      You should switch most of its funds out of the growth stocks, like the technology field and pour them into defensive stocks during the bear market.

·      You must regularly monitor your stocks. Immediately sell off those stocks that are declining and hold on to the stocks which continue to grow.  

Evaluate the management of the company

Management of the company is the fundamental criteria for its success. Before investing one need to ensure that the company management is functioning well. There is a certain way in which you can check this out. They are given below but the ultimate evidence on this aspect is the rising stock price.

1. Return on equity

A quick shot to gauge the company’s competence is to check the company’s return on equity (ROE). ROE is calculated by dividing the earning by equity. The resultant percentage will give you a clear idea as to whether it is utilizing its equity or net assets resourcefully and advantageously. More the percentage is higher, the better it is. The company’s earnings can be obtained from its ‘income statement’. This financial statement reveals the equation – sales less expenses equal net earnings (or net income or net profit). The company’s balance sheet will reveal its equity. It is the total assets minus total liabilities which is equal to the net equity.

1. Insider buying

It is also advisable to check out whether the company management too is buying the company stock. After all, it is the management who best knows whether the company is really balanced for growth. If they are found buying the company stock en masse then you can rest assure regarding the stock’s potential.

Best Growth Stock Market Report provides you with the best stock picks and market advices 

Penny Stock Investing Is A Risk Not Worth Your Money

You hear it quite often: penny stocks are the route to go because you do not have to invest much and that means penny stocks are lower in risk.  While they are this inexpensive, they are not, by any means, without risk.  As an investor it is up to you to determine how much money you should put into any investment strategy and when it comes to penny stocks, mind those pennies!  Understanding the risk behind them helps you see whether these stocks are the route for you to take.

What is a Penny Stock?

There are various definitions and determinations out there in regards to what a penny stock is, but in short, it is any type of stock that is traded at less than a dollar.  They come from companies that have a small amount of market capitalization. You may hear them called small cap stocks, micro cap stocks or even nano-cap stocks, too.  There is no doubt that you can trade for these stocks with less of an investment, because the stocks are so lowly priced individually. 

One of the problems with penny stocks is that you have very little information about the investment you are making.  You know very little about the company.  Unlike the standard stocks, the penny stock companies do not provide you with SEC reports to do your homework on the company.  This does not mean you cannot invest in these stocks, but you will need to do more homework to get to the information you need.

The cost to get into penny stocks is relatively low and if you know the company well enough, you may be able to get in on the ground floor and make a considerable investment in the long term.  Yet, the problem with penny stock investing is the increased risk of not knowing who the company is, what their background is, what their past investments have been and therefore you will not know how well the company plays into your investment strategy.

Penny stocks are not an option for smart investors. Growth stocks are a better investment decision you can make.  Additionally, be sure that these stocks fit well into your investment strategy.  They really must be marked as an unknown unless you have carefully done your homework to exam the risk involved with them. While you can make money on these, it really is not the best route for many people.

International Stock Scams

Whether it’s foreign currency trading, “prime European bank” securities or fictitious coconut plantations in Costa Rica, you should be skeptical about exotic-sounding international investment “opportunities” offering returns that sound too good to be true. They usually are. In the past, con artists have used the names of well-known European banks or the International Chamber of Commerce — without their knowledge or permission — to convince unsophisticated investors to part with their money.

Some promoters based in the United States try to make their investment schemes sound more enticing by giving them an international flavor. Other promoters actually operate from outside the United States and use the Internet to reach potential investors around the globe. Remember that when you invest abroad and something goes wrong, it’s more difficult to find out what happened and locate your money. As with any investment opportunity that promises quick profits or a high rate of return, you should stop, ask questions, and investigate before you invest!

Analyzing Recommendations

Stock market analysts study publicly traded companies and make recommendations on the securities of those companies. Most specialize in a particular industry or sector of the stock market. Jointly they exert significant pressure in today’s stock market. Analysts’ recommendations or reports can influence the price of a company’s stock—especially when the recommendations are widely circulated through television appearances or through other electronic and print media. The mere mention of a company by a popular analyst can temporarily cause its stock to rise or fall—even when nothing about the company’s prospects or fundamentals has recently changed.

Rather than make conclusions and assumptions, investors should carefully read each section of the stock market analysis. They should also consider the firm’s disclosures regarding what percentage of all ratings fall into either “buy,” “hold/neutral,” and “sell” categories. Also in a very volatile stock market you should make an investment plan that fits your level of risk. Do not wait for someone to say sell if you have accumulated a substantial profit in a particular stock. Use common sense and discipline investment.

Analysts historically have served an important element, promoting the efficiency of our markets by searching out facts and offering important insights on companies and industry trends. While analysts present an important source of information in today’s stock market, investors must understand the potential conflicts of interest analysts might face. For example, some analysts work for firms that underwrite or own the securities of the companies the analysts cover. Analysts themselves sometimes own stocks in the companies they cover—either directly or indirectly, such as through employee stock-purchase pools in which they and their colleagues participate. It is very important to get opinions that are unbiased. Look for stock market advice and analysis from companies that never invest in companies they recommend or report as worth investing.

As a general matter, investors should not rely solely on an analyst’s recommendation when deciding whether to buy, hold, or sell a stock. Instead, they should also do their own research—such as reading the prospectus for new companies or for public companies, the quarterly and annual reports filed with the SEC—to confirm whether a particular investment is appropriate for them in light of their individual financial circumstances. Look for a product that will actually deliver all that information on one source making you work easier to gather all the information.

The Investment Decision

Most investors learn from their mistakes and almost always the most successful investors follows one simple rule. Never invest in a product that you don’t fully understand! On a daily basis investors are gathering information from different sources such as investment newsletter and business publications. Information regarding the fundamentals of investing and basic financial terminology can be obtained through stock market reports and stock picks services. But not all the companies are created equally.

First you have to read and understand them. If you have questions, talk with your sales representative before investing. Send an email and communicate your worries. You also may want to check with a brokerage firm, an accountant, or a trusted business adviser to get a second opinion about a particular investment you are considering.

It is a fact. Nobody invests to lose money. However, investments always entail some degree of risk. Be aware that:

The higher the expected rate of return, the greater the risk;depending on market developments, you could lose some or all of your initial investment. With some investments, such as options, you can lose more than the amount of your investment.

Some investments cannot easily be sold or converted to cash.

Investments in securities issued by a company with little or no operating history or published information involve greater risk.

Securities investments, including mutual funds, are NOT federally insured against a loss in market value.

Securities you own may be subject to tender offers, mergers,reorganizations, or third party actions that can affect the value of your ownership interest. Pay careful attention to public announcements and information sent to you about such transactions. They involve complex investment decisions. Be sure you fully understand the terms of any offer to exchange or sell your shares before you act. In some cases, such as partial or two-tier tender offers, failure to act can have detrimental effects on your investment.

The past success of a particular investment is no guarantee of future performance.

Increase your protection

A high-pressure sales pitch more than likely mean trouble. Be highly suspicious of anyone who tells you, “Invest quickly or you will miss out on a once in a lifetime opportunity.”

Remember:

Never send money to purchase an investment based simply on a telephone sales pitch.

Never send checks to an address different from the business address of the brokerage firm or a designated address listed in the prospectus.