Dividend Stocks 101: A guide for Beginners

Just about everyone having some relationship with the stock market has watched Wall Street with great angst these last few years. Many have likely been left wondering if their stock portfolio will end up smelling like a rose or smelling more like the fertilizer in their gardens that help things grow.

Whether your stocks have bloomed or essentially wilted in recent years, there is always something to be learned from your investments.

For those investors, however, that are essentially newbies to the game, there can be quite a great deal to learn. Whether they be your everyday employee, starting their own small business or fresh out of college, many young investors essentially take a crash course in investing early on. By doing so, they run the risk of making some bad investments.

Those just starting their own small business are even at greater risk because there is a strong likelihood they invested a portion of their funds into getting the company going in the first place. If bad investments surface over a short period of time, it can be a financial blow to their hopes of supporting and growing their business.

So, what advice is out there for beginners in the stock market who are looking to come out on top when it comes to dividend stocks?

Look for Consistency in Dividend Stocks

First, scope out those high-paying dividend stocks that demonstrate a consistency to turn a profit.

One way to go about this is by reviewing a company’s performance history over the last decade, looking for any trends that appear noticeable. For those that have regularly earned profits at a strong pace and/or exceeded their targets, these are signs of a high dividend that will likely be around for some time to come. The company should have churned out positive earnings with no setbacks yearly for the past three years, at a minimum.

Secondly, give the company that perks your interest a thorough review, including any major debts, ratings, red flags, etc. If the company appears to be struggling, dealing with issues that could be drawn out over time, or has a lot of turnover within its ranks, then there is certainly reason on your end for financial concern.

Another feature to look for with strong dividend stocks is company performances indicating a history of growing dividends. You want to locate a company that seeks to return excess funds to the stockholder, not turn the company’s account fund into the size of a small country’s wealth.

Are You Dating the Right Dividend Stocks?

Finally, always keep in mind the dates that are of utmost importance for dividend holders.

The first is the declaration date, which is the day a company’s Board of Directors notes their plan to pay a dividend. At that time, the company forms a liability in its books, meaning it now owes the funds to the stockholders. As a result, the Board also puts forth a date of record and a date for payment.

Second is the date of record, the time whereby the stockholders of record are eligible for the ensuing dividend payment.

The third and last important date is the payment date, whereby the dividend will actually transfer to the company’s shareholders. In many cases, dividends are paid out four times yearly, on a quarterly schedule.

In the event that dividend stocks are new to you, taking the time to learn about them can certainly be seen as a wise investment. In today’s investment world, nothing is truly a sure bet; manage your investments wisely and always keep educating yourself on the latest happenings in the stock market.

What Affects the Price of Silver?

When trading precious metals, it’s important to be aware of the factors influencing their prices. Like all assets, Silver prices are mainly driven by supply and demand. If demand is higher than supply, prices will increase, and vice versa.

The global macroeconomic outlook also plays a vital role in determining price stability. When job markets are stable and employment rates are high, there tends to be an increase in Silver consumption, since people are more likely to buy jewellery. Conversely, when a country’s economic prospects are uncertain and unemployment rises, consumer spending inevitably drops, decreasing demand for Silver.

However, Silver has many other applications. Technological advances in the solar photovoltaic field have increased overall demand for this precious metal, which could push its price up over the long term. The commodity is also widely used in sectors such as medicine and electronics.

Most commodities are denominated in U.S. Dollars. Every movement in the value of the greenback, therefore, has a direct effect on the price of Silver. However, the 2 assets are negatively correlated. When the U.S. Dollar strengthens against other currencies, Silver prices tend to drop, while if the Dollar weakens, the price of Silver generally rises.

Online commodity trading brokers allow traders to invest in precious metals like Gold, Silver, Platinum, and Palladium. Advanced services like UFX’s online platform help traders achieve greater market exposure by investing in assets like commodities through leveraged CFD trading.


6 Investing Tips For Your 20’s

Investing in your 20’s is a sure fire way of setting yourself up for successful financial years and decades down the road.  Not only does it set you up financially in the future, but it also jump starts your education in the stock market by investing at a young age.

The financial markets can be daunting with many competing ideas, philosophies, and strategies.  I started investing in my 20’s, and if I could do it all over again, here would be the six tips I would tell myself.

1) Never Invest With Paper Money

One of the big misconceptions in the investing world is that anyone can learn and practice via trading paper money.  Paper money is the concept of having your own account and placing trades and investments with paper (fake) money.  This is a big recipe for disaster.

Investing with paper money is a completely different game when compared to the emotions that come into play when you make your first investment with your hard earned money.  Any best practices gained from investing and practicing with a paper money account do not transfer over to real money investments and real money investing is a completely different game.

This is why I recommend to never practice any investments or trades using anything but real money. It creates bad habits.  You have chosen, in your 20’s, to invest your money so that it can grow over time.  The best course of action is the start developing good habits that can be used to grow your money for the rest of your life.  Trading with paper money can only develop habits that are not tried and true best practices that are created when real money is in play.

2) Keep Your Size In Check

A big part about investing in your 20’s is the ability to add on to compounding positive returns year after year.  Taking a 10% loss in your 20’s requires an 11.11% profit just to get back to even.

Losses will happen, and if they have not happened yet for you, they certainly will.  In order to maintain the ability to make money and compound returns year after year, you must keep your size in check as an investor.

The more you keep our size in check, the more bad positions are able to be isolated from the total value of your portfolio.  If you have a portfolio with 5 positions, all with 20% of your total portfolio value allocated to them, a 40% drop in one of those positions creates a total portfolio drawdown of 8%.  However, if we have 10 positions, all with 10% allocated to them, a 40% drop in one of these positions only results in a 4% total portfolio drawdown.

Over time, I have found that keeping all of my positions at under 10% of the total portfolio allows my single position losses to be isolated from the rest of my portfolio.

3) Always Invest For The Long Term

Investing in your 20’s give you an enormous edge compared to those who begin in their 30’s or 40’s.  Investing as early as possible allows the power of compounding returns to be more in our favor when compared to starting later.

Wealth and portfolio appreciation happen over the course of many years and do not happen in days, weeks, or even months.  Understanding the length of time required to double or triple a portfolio is important as it can help us choose more solid and less risky investments.

Smarter, safer, and less risky investments not only allow us to stay in the game longer, but those kind of investments also allow us to have a long term view.  If we have a long term view of those less risky investments, we will be less concerned with daily ebbs and flows of stock prices and more concerned with the long term outlook of our positions.

I have found that taking a long term approach, especially at a young age, allows investors to be less concerned about the day to day price swings and more concerned with the long term outlook of their investments.

4) Always Be Diversified

At this point, you are making small, long term investments with real money.  The more of these investments you make in your 20’s, the more you need to be diversified.

Diversification is simple.  By spreading out your capital amongst various stocks, bonds, and other asset classes, you significantly reduce your risk.

As an example, investing in ETFs rather than stocks is a way to diversify your holdings.  Rather than holding stock in Facebook, Amazon, Netflix, and Google all at the same time, you could simply buy a FANG ETF that will give you exposure to all four of those popular tech stocks and reduce your risk at the same time.

I recommend diversification through the purchases of ETFs as an excellent way of spreading out your risk.  Spreading out risk will keep you in the game longer and reduce the size of your drawdowns.

5) Continuously Contribute

Continuously contributing to your account is also an example of investing for the future.  Rather than taking leftover money after bills, housing, and entertainment and putting it in the bank, taking that money and adding it to your portfolio is not only an investment in itself but a way to continue to grow your portfolio over time.

The best way to look at continuous contributions is as additional investments in yourself and your future.  

The best way to contribute to your account is to do so weekly.  Even if the contribution is small in nature, say $10, that adds up to $520 a year which can be compounded for years if not decades!

Remember, you are investing in your 20’s in the long game, with a long-term outlook.  Continuously adding fund to your account will allow your account to exponentially grow over time.

6) Never Use Leverage

We have already spoken about the importance of keep your trade size small and showed you the math behind it.

Leverage is the ability to borrow money from others to invest greater amounts of money than the current amount of capital you have.

We recommend never using leverage as it is virtually impossible to keep your trade size under 10%.

Wrapping Up

Here are the 6 investing tips for your 20’s:

  1. Never invest with paper money
  2. Keep your size in check
  3. Always invest for the long term
  4. Always be diversified
  5. Continuously contribute
  6. Never use leverage

Follow these rules and watch your account grow safely for the long term.  Do you have any other investing tips for those in their 20’s?

Why Owning Gold Matters for Family Finances

Gold is not a word that is ever seriously uttered in modern homes, much less when it’s time to calculate the household budget. Any good household budget should involve a significant amount of saving for a rainy day, low risk investments, and retirement savings. Families tend to own assets as property or cash. Even if you have invested in assets like stocks, these are considered cash assets because the value is based on the dollar. Gold is a different type of asset with a value that is related to the dollar, but is not dependent on it. That’s why it’s recommended for many families to buy gold in the form of coins or bars. Read ahead to find out why owning gold is important for average family finances:

Gold is the Best Hedge against Recessions

Gold is valued in a unique manner so that when the price of the dollar goes down, the price of gold goes up. If you check gold spot prices for any given day over a period of time, you will see a lot of fluctuation. No one invests in assets that fluctuate like gold does. However, buying gold is not an investment, it’s a hedge. Because gold prices go up when the dollar is down, the value of gold is truly felt during economic slumps.

For example, in 2008 following the recession, gold prices soared just as the dollar plummeted. Those who had assets in both stocks and bonds emerged from the crisis largely with their wealth intact. So, if you are investing in any type of cash asset for emergencies or retirement, buy gold to protect your cash assets against another recession. You can buy gold in small amounts from well-reviewed companies like LearCapital.com.

Gold has Intrinsic Value

Cash assets like stocks and bonds can always be worth nothing. If you owned Lehmann Brothers stocks in 2007, you probably made good money. But by 2009, these once lucrative stocks were worth exactly zero dollars. The same applies to assets like bonds, too. If you bought Argentinean, Greek or Venezuelan government bonds five years ago, you will find that the value of these stocks now are way below the original worth.  Gold, on the other hand, is never valued at zero. Gold always has a price, as a hedge against currency, as the main component of gold jewelry, and also for industrial use in things like electronic circuitry. That makes gold a rather lucrative asset with many advantages to own.

You Can Trade with Gold

If you buy gold coins, you can use these to trade with local credit unions, shop owners, and people who sell things like ammo. As mentioned before, gold is always valuable. Buy national mints, not collectible coins, to trade with if needed.

Gold is a Great Diversification Asset

Scared that you have put too many eggs in one basket? Not to worry; you can diversify your financial interests with gold. As mentioned above, it will act as a hedge and protect your cash assets in investment portfolios or retirement accounts.

You can store gold in a bank or put one in a self-directed IRA. For the security of your family’s long term finances, seriously consider buying a precious metal like gold.

Alternative Wealth Management Markets: The Stuff They Don’t Tell You

Conventional moneymaking activities work for many people. These include things like 401(k) investments, stocks, bonds, treasuries, commodities, savings accounts, fixed-income bearing investments, and the like. Equities markets have proven to be viable investment vehicles for generating long-term profits. Wall Street bourses, including the Dow Jones, NASDAQ, S&P 500, Russell 2000 etc., are at all-time highs, and 1-year returns in the region of 20% + are commonplace. As attractive as these options appear, they are not the norm for everyday investors. Provided you have the wherewithal to diversify your resources across as many different asset classes as possible, returns in the region of 20% – 30% may be possible. In conventional investments, positive returns stand to be gained but they are unlikely to be exceptional returns.

Contrarian Investment Options for Savvy Traders

One of the ways to break the mold and move into high-yield investments is through alternative or contrarian investment vehicles. These types of investments abound in the form of contracts for difference (CFDs), currencies (Forex), peer to peer lending, social trading, purchasing pre-IPO equities and the like. These investment vehicles are traditionally regarded as higher risk options, but they are associated with higher rewards. Contracts for difference are derivative financial trading instruments. Unlike stocks, the trader is not required to purchase the underlying asset (Forex, commodities, stocks etc.). Rather, the trader acts as a speculator and goes long or short on the future price of that asset. Derivatives trading is extremely popular in the United Kingdom, Europe, and North America. It is an unconventional investment, but healthy returns are commonplace.

The Social Trading Boom

Perhaps the biggest change to take place in the alternative investment universe is social trading. This has been going on for quite some time, but it remains as popular as ever. With social trading, the individual trader uses the wisdom of the crowd to make investment decisions. Since there is 100% transparency with other traders, it is easy to pinpoint traders who are successful and generating a profit. By following these traders, copying their trades, and collaborating with them, it is possible to piggyback off their success and generate profit accordingly. There are a myriad of high-quality social trading accounts available to traders nowadays.

It’s imperative to evaluate them based on their strengths, asset variety, transparency, credibility and client feedback. The social trading boom has dovetailed with mobile trading, and the disintegration of the institutional trading paradigm. In the days of old, traders relied on wealth management specialists, investment gurus and fund managers to handle their finances. Nowadays, anyone, anywhere can power up and trade at the click of a button.

Robo Advisors Making a Big Impression

Robo advisors are a new age investment resource that make it easy for traders to make smarter investment decisions. Now that Robo advisors are available to the global market, it’s possible for anyone to access these powerful trading resources to make the smartest investment decisions. Typically, Robo advisors are online resources that are geared towards automated management of your portfolio. They are available at a fraction of the cost of a traditional financial advisor or financial planner, and they offer useful information on things like rebalancing your financial portfolio, taxation-related issues, and wealth optimization strategies. For further information on this powerful contrarian resource option, take a look at Robo advisors explained. These tools should not be discounted in terms of their utility value, since they can dramatically enhance your financial net worth.

Pre-IPO Investments

It is a little-known fact that it is possible to invest in a company before it goes public with its IPO. Fortunately, many private companies are only too eager to have big investments lined up before they go public, with pre-IPO equity as part of a financial portfolio. Oftentimes it is said that the early bird catches the worm – and with a pre-IPO investment, this is precisely the benefit you will receive!

Start CFD Trading Today – Guide How To Begin To Trade CFDs

A CFD (or Contract for Difference) is a well known and popular way of trading. It allows the investor to speculate on the falling or rising prices of instruments like indices, shares, currencies, treasuries and commodities. In this article we look at the basics of CFD trading, how it works and how to start trading CFDs.

What is a Contract for Difference? – CFD Trading Explained

A CFD is, in essence, an agreement or contract between a broker and client to exchange the difference between an underlying asset’s opening and closing prices. These derivative products enable the investor to trade on the price movements of the live market without owning the instrument that the contract is based on. CFDs can be used to speculate on future market price movements, whether they are falling or rising. Traders can either sell (go short) which allows them to profit from a fall in price, or hedge their portfolio in order to offset potential losses in the value of their investments. There are more than 10,000 markets available for investors who wish to trade CFDs, with prices being offered on indices, commodities, shares and currencies. Many of the best brokers, like XTrade, now offer the possibility of CFD trading to their clients, and you can find out more about the services that this broker provides in this XTrade review.

Introduction to CFD Trading: How Does CFD Trading Work?

When a trader participates in CFD trading, they neither sell nor buy their chosen underlying asset. Instead, they sell or purchase a number of units for their chosen instrument depending on whether they believe the price will fall or rise. For each point that the instrument’s price moves in the investor’s favour, the trader gains multiples of the amount of CFD units they have purchased or sold. Conversely, for each point that the price of the instrument moves against them, they suffer a loss, with the possibility of the loss exceeding their deposit.

What are the Costs of CFD Trading?

When participating in CFD trading, the investor has to pay the difference between the purchase and sale price i.e. the spread. The investor uses the quoted Buy price to enter a Buy trade and exits using the Sell price. The less difference there is between the two, the price has to move less in the investor’s favour before they generate a profit, or a loss, should the price move against them. There are also holding costs to pay. At 17:00 EST, any open positions are usually subject to a holding cost charge which may be negative or positive depending on the position’s direction and the holding rate applied. In order to view the broker’s price data or trade in CFDs, a Market Data fee is also often charged, and a broker’s commission is also sometimes applied.

The Advantages

There are several advantages to opting for CFD trading. These include:

Higher Leverage
CFDs offer a higher level of leverage than other forms of trading, starting at as low a margin requirement as 2% right up to as much as 20%. A lower margin requirement results in the investor having to outlay less capital and enjoying larger potential returns, however it can also result in higher losses.

Access to the Global Market From a Single Platform
The majority of CFD brokers offer a choice of products across all of the major global markets, allowing investors to make trades on any market that they choose from the broker’s own trading platform.

No Short Selling Rules
While some markets have rules that place restrictions or limitations on short selling, CFD trading generally has no rules of this type. Instruments may be shorted without any shorting or borrowing cost as the trader does not actually own the asset.

No Fees
It is rare for fees to be charged on trading CFDs and many brokers charge no commissions on entering or exiting a CFD trade.

No Day Trading Requirement
Whereas some markets require a minimum amount of capital in order to day trade or limit the amount of day trading for certain account holders, there are no such restrictions on the CFD market

There are many types of CFDs available for trading including stocks, indices, treasuries, currencies, sectors and commodities.

24 Hour Dealing
CFD traders can access their account 24/7, trading wherever and whenever they choose, even if the underlying market is currently closed.

No Stamp Duty to Pay
Since CFDs are derivatives and the trader does not own the instrument, there is no need to pay stamp duty, allowing the investor a saving of 0.5% on each trade’s value.

Start Trading CFDs

According to the Financial Times newspaper, almost 100,000 investors in the UK participate in CFD trading and this goes to show just how popular this form of investment has become. It is easy to start trading CFDs. The first step is to open an account with a broker that offers this form of trading. It is simple to register for an account online, complete the verification process and then deposit funds into the new trading account, depositing at least the minimum required amount. Funds can usually be transferred via several methods including credit or debit cards, bank wire transfers or e-Wallets. Once the account is in credit, the trader can then access the broker’s trading platform which enables them to begin trading CFDs by choosing a market and selecting how much to invest. Trading can be done 24 hours a day, 7 days a week, and often brokers will offer a downloadable app which can be accessed from smartphones or mobile devices to allow for trading CFDs on the go.

High and Low-risk Investment Strategies: Which is Right for you?

canstockphoto9358088While there are numerous theoretical and technical elements associated with investment, the make-up of your portfolio will depend largely on your own philosophy as an individual. More specifically, it will hinge on your appetite for risk, and the balance that you want to strike between minimizing loss and pursuing optimal gains.

To this end, there are a host of low and high-risk investment strategies available to modern investors, as new assets and derivatives are launched on the financial market on a regular basis. Your task is to determine which is right for you, based on your outlook and the prevailing economic climate.

What are the Most Common, High-risk Investment Strategies?

If you have a healthy appetite for risk, you are likely to pursue investment strategies that promise marginal and optimal financial returns. The best example of this is currency trading in the forex market, as this is represents an option where investors are not encumbered with the burden of ownership. As a result, their returns are marginal, meaning that they can either lose or earn far more than their original investment.

The key with this type of strategy and derivative is to identify methods of lowering the initial level of risk, and this can achieved by determining how you want to trade currency. Options such as “spreadbetting” enable you to simplify the process of currency trading, for example, by speculating as to whether your preferred currency pair will decline or prosper within a specified period of time. This not only enables you to make a simple and informed decision, but it also enables you to generate income in a depreciating market.

So while the risk profile of currency as a derivative does not change, as an investor you can take strategic steps to minimizing loss and optimizing your returns over time.

What are the Most Common, Low-risk Investment Strategies?

In an ideal world, all traders would be able to pursue low-risk investment strategies that deliver high returns. The issues is that such investment vehicles are hard to find, as while the type of margin-based derivatives discussed earlier offer typically high returns they are usually vulnerable to volatile market conditions and sudden price movements. This is the type of trade-off that creates a precarious balance between risk and reward, although it is interesting to note that there are at least some lower-risk investment options that can drive consistent and significant returns.

One of the best examples is a preferred stock, which is a hybrid security that combines the best of traditional stocks and bonds. More specifically, it is traded like a stock option on the financial market, but it acts like a bond and offers a stated dividend that is typically 2% higher CD’s or treasuries. This creates a unique balance of reward and risk management, and it represents an excellent vehicle for risk-averse or novice investors.

Dividend investment options offer similar peace of mind, as they deal in blue-chip stocks (such as Coca-Cola) that have showcased consistent growth over a period of years. They therefore deliver consistent returns, and offer the type of security and financial reward that defines any popular, low-risk investment option.

The Bottom Line: Which Option is Right for you?

It is pivotal that you base your investment strategy on an underlying philosophy and your appetite for risk, as this ensures that you are comfortable and able to make informed trading decision. Of course, the ideal scenario is to create a diverse portfolio of options that includes both high and low-risk investment assets, as this should create a delicate balance between risk and reward. Such an approach also enables you to profit in variable market conditions, which is crucial if you are hoping to earn consistent gains.