I have produced quite a bit of content in the past few weeks, explaining how one can benefit from an investment club economically, socially, and personally. Now, I want to illustrate an example of a solid business plan for a club, but in order to do that I will need to explain the principles behind a solid plan. Regardless of what your club focuses on for methods of investing, if this principle of true diversification is implemented you can feel better assured that consistent growth is possible.
We've learned how investments clubs help folks, even those with just a small amount of cash, gain financial leverage through strength in numbers. This act of synergy and collective contributions create opportunities for all the club members to build a portfolio of assets that they wouldn’t have had access to on their own and/or in much less time. Each member of the investment club could have their own personal reasons for contributing. The club as a whole, on the other hand, only has one function, and that is to increase the value of each member’s equitable stake within the club by trading/acquiring assets, and increasing dividends. What separates one club from the next is what/how assets are traded or acquired and dividends are earned. A successful club is comprised of members who share the vision behind the business club's investment plan.
Part one explained how mutual investing uses strength in numbers to create financial leverage. People utilize the synergy of an investment club for the purpose of building a portfolio in less time. This collective effort also allows individuals, with only a small amount of money to invest, the opportunity to own a piece of several assets that they would have never had access to on their own. How does an investment club operate? The portfolio’s investment focus vary, making each club’s operation unique from the next, but each club’s set up is similar in standards.
An investment club is a group of individuals who share a common interest in achieving their financial goals. A number of contributors pool their money together in order to create investing leverage with a larger lump sum of capital than if they were to invest individually. This creates the opportunity for a number of individuals to add assets and net worth to a portfolio in a short amount of time. There is a lot of room for creativity in developing a business plan for a club, and by the end of this series you will have an example of a plan you could incorporate with prospective partners.
If you have any interest with investing in commodities, more specifically precious metals, like gold and silver, then you are probably wondering whether or not it is really a solid investment to hedge against inflation. I will start by saying yes, any time in which you take paper, fiat currency, and exchange it for a tangible item that others value or would desire to own, than you have created a hedge against inflation, to a degree. In regard to precious metals I say to a degree, because there is still the debate of whether or not they will have any real value in the event of a total fiat currency collapse, after inflation has taken a nose dive.
I believe, what separated successful families from families that struggled from generation to generation from the Great Depression onward, was and still is an applicable knowledge and understanding of compounding interest and the value of investing in/for the next generation. The stock market continues to be a vehicle for many wealthy families/individuals to build and compound wealth for generations to come, but with today’s quick/easy access to stock quotes and dirt cheap broker fees, this makes the stock exchange available for virtually anyone at any income level. There are several online brokers to choose from, and the rules and guidelines set forth by the Securities and Exchange Commission are not as complex as you may think.
How to Practice Trading Without Losing a Dime: Learn to Trade in the Stock Exchange Part 510/21/2013
I am going to share exactly how I have been testing, practicing, and perfecting my personal method for trading stocks without putting a dime of my capital at risk! You will need a Gmail account in order to use Google finance, and save your portfolio. A portfolio will help you learn how to trade by letting you perform paper trades with full control over your account, and keeping track of each transaction you make for your record. Paper trading is when you trade without using actual cash (think of it like a video game version of trading).
How Do I know when it’s Time to Buy and When to Sell: Learn to Trade in the Stock Exchange Part 410/14/2013
After you have found some active stocks, it’s time to start doing a little homework before taking a trade position. It starts with fundamentals (most of which is done during the screening process), then comes chart reading and your technical analysis. Candlestick charts will indicate whether a stock is bullish or bearish at a glance. You want to find a set-up on the chart, which will act as a timing trigger to take a trade position in the stock.
In part 2, I identified key terms you will need to know to screen for active stocks in the market. I also discussed how to narrow your search down to stocks that make sense towards reaching your goals. Now, I want to give you a full example of where, how, and why I search for active stocks in the market. I will share the criteria I use to find active small/mid cap stocks. This is an in depth approach to finding active stocks to trade. Another, method I use to find active stocks is to sign on to Yahoo! Finance and check out the “top Gainers” section on the main page.
In part one I shared how you can add short term trading to your paper income stream, no matter how busy your personal schedule. As long as you have access to the internet you can manage a trading account around your schedule. Finding the right stocks to trade is easy if you simply understand the vocabulary used in the stock market. Once you understand the vocabulary, then you can filter through all the inactive stocks to find the right ones to fit your trading strategy. Understanding the vocabulary of the stock trade should be your first step towards understanding the mechanics of fundamental analysis.
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