Investment
Bullish Technical analysis of STZ (Constellation Brands, Inc)Constellation Brands, Inc. (STZ) is a leading producer and marketer of premium wine, beer, and spirits in the United States, Canada, Mexico, and other international markets. The company has a diversified portfolio of alcoholic beverage brands, including Corona, Modelo, Robert Mondavi, and Svedka Vodka.
From a financial perspective, STZ has a solid track record of revenue growth and profitability. In the fiscal year 2021, the company reported net sales of $9.2 billion, representing a 3% increase from the prior year. The company's net income also increased by 15% to $2.2 billion. The company has consistently generated positive free cash flow, which allows it to invest in growth initiatives, pay dividends, and repurchase shares.
In terms of profitability ratios, STZ has a strong gross margin of 47%, indicating that the company generates significant profits on the products it sells. The company's operating margin is also healthy at 30%, indicating that it is efficient in managing its operating expenses.
STZ has a strong balance sheet, with a current ratio of 1.4 as of September 2021, indicating that it has sufficient short-term assets to cover its liabilities. The company has a moderate debt-to-equity ratio of 0.77, which is lower than the industry average, indicating that it has a conservative debt profile.
From a valuation perspective, STZ's stock price appeared to be trading at a premium valuation as of September 2021, with a price-to-earnings (P/E) ratio of 25.5, which is higher than the industry average. However, investors may be willing to pay a premium for STZ's strong financial performance, growth prospects, and market leadership.
In conclusion, based on the fundamental analysis, STZ appears to be a solid company with a strong financial position, consistent revenue growth, and healthy profitability ratios. However, it is important to note that market conditions and other factors can impact a stock's performance, and investors should conduct their own research and analysis before making any investment decisions.
IYR, or the iShares U.S. Real Estate ETF (Bullish)IYR, or the iShares U.S. Real Estate ETF, is an investment fund that seeks to track the performance of the Dow Jones U.S. Real Estate Index. The fund is designed to provide exposure to the real estate sector in the United States by investing in companies that own and manage real estate, such as real estate investment trusts (REITs) and other real estate companies.
IYR was launched on June 12, 2000, and is managed by BlackRock Fund Advisors. It is traded on the NYSE Arca exchange under the ticker symbol IYR.
Investment Objective and Strategy:
The investment objective of IYR is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Real Estate Index. The index is comprised of companies that are primarily engaged in the ownership, development, and management of real estate located in the United States.
IYR seeks to achieve its investment objective by investing at least 90% of its assets in the securities included in the Dow Jones U.S. Real Estate Index. The fund may also invest in futures contracts, options on futures contracts, and other derivatives, as well as in cash and cash equivalents.
Index Composition and Rebalancing:
The Dow Jones U.S. Real Estate Index consists of companies that are classified as real estate companies according to the Global Industry Classification Standard (GICS). The index is weighted based on market capitalization, with larger companies representing a higher percentage of the index.
The index is reviewed annually in September, with any changes taking effect at the end of that month. The index is also rebalanced quarterly to ensure that it continues to accurately represent the real estate sector.
Fees and Expenses:
IYR charges an expense ratio of 0.41%, which is relatively low compared to other real estate ETFs. This means that investors will pay $4.10 in fees for every $1,000 invested in the fund.
Risks and Considerations:
As with any investment, there are risks associated with investing in IYR. These risks include market risk, interest rate risk, and liquidity risk. Additionally, because IYR is a passively managed fund, it may not perform as well as actively managed funds that have the ability to make investment decisions based on market conditions and other factors.
Investors should carefully consider these risks before investing in IYR, and should consult with a financial advisor if they have any questions or concerns.
Conclusion:
IYR is an investment fund that seeks to provide exposure to the real estate sector in the United States. It invests in companies that own and manage real estate, and seeks to track the performance of the Dow Jones U.S. Real Estate Index. Investors should carefully consider the risks and expenses associated with IYR before investing, and should consult with a financial advisor if they have any questions or concerns.
Education: Why is backtesting necessary for trading indicators?
Backtesting of trading indicators is necessary because the results displayed by indicators may not match real-life situations.
Although Tradingview is one of the widely used trading platforms with a rich library of technical indicators, some of these indicators may have issues with "peeking into the future." Conducting backtesting is also essential to avoid "future function" problems.
Two common problems related to "peeking into the future" include:
1. Using future data in the calculation of indicators, such as using the opening price.
2. Setting parameters incorrectly during backtesting and testing, may cause the buy signal to be moved by one candlestick.
Therefore, through backtesting, we can ensure that our trading strategies and indicators are reliable.
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Below is a case that illustrates the importance of backtesting trading indicators. The chart shows a strategy I created based on the trendy indicator called "Machine Learning: Lorentzian Classification" on Tradingview.
As seen in the chart, the backtesting results and the signals provided by the indicator have significant differences. The indicator may display a green or red signal to indicate buy or sell, respectively, but it is only valid for the next candlestick, which could be due to problem 2.
Key takeaway - Backtesting of trading indicators is necessary to verify their reliability and avoid future function problems.
#educational #trading #investing #presentTrading #dyor
Ref:
"Machine Learning: Lorentzian Classification — Indicator by jdehorty." TradingView, 13 Mar. 2023
Ref: "Machine Learning: Lorentzian Classification — Indicator by jdehorty." TradingView, 13 Mar. 2023
MATIC {POLYGON} CRYPTOMatic (polygon) taking support at this level, he's moving in a channel and after taking support from there it will be happen to take best rally almost 50% before you taking your positions please get your own researches.
LANDSHARE HAS THE STRONGEST AND THE BEST POTENTIAL.This is my technical analysis for this great project called LANDSHARE where a real asset are tokenized specifically real estate.
The project offers an investment into the real estate " TOKENIZED ASSET " for only 50$ .
This project has a great potential to reach 600$ based on the technical analysis and on the other hand the fundamental analysis say it has the potential to reach 1000$ .
Also the crypto space may get involved in the real estate businesses where LANDSHARE will be the face of it.
The team behind LANDSHARE project are doing amazing things to improve the project and developing it in the right way.
Not financial advice.
Johnson & Johnson (JNJ) | Inside an Optimal Buying Zone!Hi,
The market has made some pretty good moves up and the current slight correction is bringing prices back to technically good levels and Johnson & Johnson is one of them.
Johnson & Johnson (J&J) is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer goods.
Technically, it has been quite difficult to get it (when there has been such a clear and strong trend, you don't have to be smart to understand that the fundamentals are fine with JNJ), because there have not been such sharp reversals, from which to find a support level and etc, but as you can see from the picture, it has not been impossible. Namely, the price of JNJ has respected a trendline for almost 10 years.
The trend line is drawn from the closing prices (you can do it easily on the line chart) to eliminate the noise and the wicks that the various waves of panic have brought. JNJ has always been bought up very quickly and the growth has been steady.
Also, the price has respected the 50-month moving average (50EMA) almost flawlessly, and at the moment the trend line and the EMA50 form a single punch and are together in one price zone.
Technical criteria for a significant level of support:
1. Trendline, clearly proven in the long term.
2. The Monthly EMA50 has held nicely.
3. The resistance level that worked for three years in 2017-2020, around $150, will start working as a support level.
4. Short-term channel projection
5. Short-term equal waves from the top: AB=CD
The optimal entry point should stay between $147-$160.
Good luck!
Trident LTDLargest Manufacturer of terry towels in the world. World’s largest wheat straw-based paper manufacturer, and one of the major bath linen providers in the US Forward & Backward integration of operation.
Trident is the second-largest player in home textiles and the third-largest yarn manufacturer in India.
The company has a presence in over 150 countries around the world, with marketing offices in Chandigarh, Bhopal, Gurugram, New Delhi, and Mumbai, and overseas operations in New York, USA, Dubai, and UK.
The company launched ‘Vision 2025’, a plan for coordinating Group efforts to improve the company's positioning across all business verticals. Its goal is to reach Rs 25,000 crore by 2025 with a 12% increase in the bottom line. It also aims to establish Trident as a national brand and digitalise it by completing the smart manufacturing or Industry 4.0 journey
Geographical Split FY22
India: 32%
USA: 44%
Rest of World:24%
DISCLAIMER - IT'S MY STUDY PONTS NOT ANY RECOMMENDATION. THIS IS ONLY FOR STUDY PURPOSE.
TARGET REACHED R1.25 Purple Group and now new analysisTarget reached and hit our target at R1.25
Rectangle box showed to be bearish and the price dropped hot and quickly.
We now can have some sideways jumpiness which should form the next formation.
We will wait for the structure before the next post.
ABOUT:
Purple Group is a financial services company listed on the “Financials – General Financial” sector of the JSE. It has subsidiaries that operate in trading, investing and asset management.
USINTR - still in a upside trend ( wth 30yr backtesting)
*High winning rate with backtesting by my strategy
Right now ECONOMICS:USINTR is still in the upside trend.
This means that it has been consistently performing poorly and may not be a good investment opportunity in the short term.
🔔 Be prepared for reversals.
It's advisable to be patient and wait for the downward trend to occur before the risk market confirms a bullish market again.
Good luck!
Funds and money in cryptoFunds and money in crypto
First, let's determine why money are required for the project.
Money . The first and most evident thought that occurs to mind. A startup exchanges a portion of its stock or tokens (often a soul) for digital evergreen paper. Is it feasible to grow your business without these funds? Certainly, you can, but why? When a team has operational cash flow, it can stop pursuing profits from day one and instead focus on developing a high-quality product that will bring a lot more profit for everyone in the long run.
Expertise . Every big VC has a whole team of specialists that can assist a new or not-so-young startup with a variety of difficulties, including business model development, tokenomics, marketing, and cost reduction. Even if a developer is a talented coder, this does not guarantee that he or she can create a lucrative firm.
Connections . The fact that funds invest in dozens of initiatives necessitates communication with hundreds of thousands of professionals worldwide. There may be an intriguing project in the investor's portfolio with which one might form a relationship or attract customers.
Quality rating . When a cool fund invests in a firm, the rest of the market receives a signal to keep an eye on them. If stock experts who evaluate hundreds of companies every month opt to invest in the team, then the startup's concept and potential are rather strong. While this does not alter the fact that even market experts occasionally miss the mark.
We have therefore determined why we require a financial investment and will proceed. The following important question is how much was invested in the project.
It would appear that more is better. However, this is not always the case, at least not in our experience as bold speculators.
When 100-200 million dollars are invested in a token, this indicates that the minimum FDV is already trying for a billion dollars, making it considerably more difficult for early investors to obtain Xs with sensible prices on the listing. Therefore, purchasing such enormous items at the beginning of the market is a mediocre idea, however participation in their activities is an excellent idea.
On the other hand, if they invest too little ($100-$300k), this may indicate that they don't trust much in the progress just yet; other funds invested three kopecks just in case. With this alternative, however, there is a substantial potential for X, as was the case with My Neighbor Alice, who, after privately accumulating two lyams, moved to binance and made their early investors and players wealthy. I should emphasize, however, that this is a relatively unusual occurrence, which occurred owing to the bull market's enthusiasm.
Ideally, we are interested in anything that falls between the preceding two criteria. A $5-$20k investment gives ample room for X's on the listing, and is sufficient to form a really cool team and develop the product.
Bank of America (BAC) A great potential for the mid-term
Bank of America is one of the largest banks in the United States, with more than 4,000 branches and 16,000 ATMs located across the country.
In 2008-2009, the bank was among the many banks that required a government bailout during the financial crisis.
Despite these controversies, Bank of America remains a major force in the banking industry and continues to be a trusted financial institution for millions of customers.
⛓Technical analysis
We may see a drop of up to 5% in the coming weeks before the recovery that should take place in the first 2 quarters of the year.
Trade safe!
TAP Global ($XTP) 100x Gem - read descriptionKey Points / BIG news:
- TAP Global to have stock market listing via SPAC merger, $XTP will see some parabolic moves north IMO.
- Quetzal Capital injects £1.5 million with an additional £500 000 option before May 31 2022 - this funding will stimulate growth aggressively.
- TAP has partnered with leading companies in the industry including Fireblocks, BitGo, Chainalysis, Kraken and Bittrex.
Acquisition explained:
Quetzal Capital has agreed to subscribe for Convertible Loan Notes (“CLNs”) of £1 each in TAP Global Limited (“TAP Global”), for an aggregate amount of £1,500,000. Under the terms of the CLNs, Quetzal has the right to subscribe for addition CLNs up to a further 500,000 CLNs of £1 each at any point before 31 May 2022. Should the CLNs convert they will do so at a 50% discount to the valuation of TAP at a conversion event which would involve the acquisition of the entire issued share capital of TAP Global by Quetzal. The CLN is secured over assets in TAP Global and its wholly owned subsidiary. The funding will assist TAP Global’s continued rapid expansion.
TAP Global has also signed a call option in favour of Quetzal (“Call Option”), that gives Quetzal the right to acquire 100% of the issued share capital of TAP Global, subject to certain terms being agreed on a Sale and Purchase Agreement (“SPA”). One such term will be the achievement of a minimum valuation for TAP Global of £26.5m as a result of any conversion event. Should the Call Option be exercised by Quetzal and the SPA is agreed, such a transaction would constitute a Reverse Takeover under the AQSE Access Growth Market Rules.
What is TAP Global:
3 December 2021·8-min read
3 December 2021
Quetzal Capital Plc
(“Quetzal” or the "Company")
£1,500,000 convertible loan investment into TAP Global Limited Regulated Crypto Exchange
Quetzal Call Option to acquire 100% of TAP Global Limited
Quetzal is pleased to announce that it has agreed to subscribe for Convertible Loan Notes (“CLNs”) of £1 each in TAP Global Limited (“TAP Global”), for an aggregate amount of £1,500,000. Under the terms of the CLNs, Quetzal has the right to subscribe for addition CLNs up to a further 500,000 CLNs of £1 each at any point before 31 May 2022. Should the CLNs convert they will do so at a 50% discount to the valuation of TAP at a conversion event which would involve the acquisition of the entire issued share capital of TAP Global by Quetzal. The CLN is secured over assets in TAP Global and its wholly owned subsidiary. The funding will assist TAP Global’s continued rapid expansion.
TAP Global has also signed a call option in favour of Quetzal (“Call Option”), that gives Quetzal the right to acquire 100% of the issued share capital of TAP Global, subject to certain terms being agreed on a Sale and Purchase Agreement (“SPA”). One such term will be the achievement of a minimum valuation for TAP Global of £26.5m as a result of any conversion event. Should the Call Option be exercised by Quetzal and the SPA is agreed, such a transaction would constitute a Reverse Takeover under the AQSE Access Growth Market Rules. There is no guarantee that the Call Option will be exercised, nor that terms of a subsequent SPA will be agreed.
Background on TAP Global
TAP Global is a leading regulated fully integrated Crypto-Fiat exchange service provider with and associated neo banking platform. TAP Global’s mission is to create a seamless and fully regulated bridge that links fiat banking, traditional assets and crypto markets (including mainstream crypto currencies such as Bitcoin , ETH, NFTs and other upcoming Defi protocols). Built on its exchange foundation, TAP Global also offers consumer and corporate crypto-fiat banking services and Defi Yield products. Tap Global is one of only a handful of operators which are fully regulated.
Since launching to the public in February 2020, TAP Global has grown to now having over 58,000 registered users and is a revenue and cash flow generating business that currently operates in 28 countries across the globe. TAP Global accepts major cryptocurrencies including Bitcoin , Ethereum , Litecoin and others. TAP Global is actively working on integrating other cryptocurrencies including NFTs and Defi projects.
TAP Global is fully regulated under the DLT framework by the Gibraltar Financial Securities Commission crypto trading activities and as an agent for eMoney and operates on a B2B as well as a B2C offering. EEA , UK and Gibraltar B2C and B2B users are assigned individual and named bank accounts and consumers have the option to be issued a physical or virtual TAP Prepaid Mastercard on which purchases can be made. All deposits in fiat or crypto can be made free of charge by the user. A $100m cold storage insurance cover is in place for crypto held by Tap users in segregated and protected accounts. TAP has partnered with leading companies in the industry including Fireblocks, BitGo, Chainalysis, Kraken and Bittrex.
TAP Global is licensed and regulated by the Gibraltar Financial Services Commission under the Distributed Ledger Technology ( DLT ) with license No. 25532. It is an innovative and fully integrated provider of fiat banking and crypto settlement. TAP has positioned itself differently to most other providers as it offers full fiat banking for both B2B and B2C and crypto services to its clients and offers the best execution on crypto side based on proprietary developed Artificial Intelligence middleware that allows users to obtain the best execution and pricing in real time. This allows TAP Global to offer competitive pricing for trades and instant crypto or cash settlement, a distinct advantage to many peer competitors The B2B and B2C users can operate their TAP Global fiat bank account for any ordinary business activities – such as paying suppliers and receiving monies from customers in a number of fiat currencies (currently EUR, GBP with more fiat currencies in development).
TAP Global provides named bank accounts to all its users in the UK, EEA and EU through its banking partner, LHV . Users can also initiate 3rd party transfers out due to its compliance with ‘Open Banking’ regulations.
TAP Global has developed the capability to offer “interest bearing” Earn Wallets which will support both Fiat and crypto deposits. This capability is in trial mode and once activated more widely will give TAP Global a significant further revenue stream from funds held in custody. It will also offer users a way to earn revenue on their deposits.
TAP Global is cash flow and revenue generative and has been fully funded by the founders and management team. The introduction of the capital from the CLNs is to be used by TAP Global to expand its operations and accelerate its existing growth strategy. At its last published accounts from 30th of June 2021 TAP Global had revenues of £761,222, assets of £2,114,901.
People behind the team:
TAP Global was founded by Arsen Torosian, a serial fintech entrepreneur and David Carr who has launched numerous fintech products over the last 17 years.
Arsen founded a crypto OTC desk in London in 2014 in which he acquired over £70m in trading volume . Prior to this he founded a game development company at the age of 17 in 2010 when the iPhone 3G and the Appstore was introduced to the market. Seeing the demand of the phones and the lack of game selection, he saw the opportunity to get into game development industry. Over the next 3 years, he managed to create multiple games that reached the top charts before eventually entering the crypto market in 2014.
David Carr co-founded TAP Global and initially took on the role of Chief Operating Officer. He assumed the role of Chief Executive Officer from July 2021. David has very deep experience in the fintech world including working on the first prepaid Mastercard in Europe in 2004 with Cashplus. He then launched the first ever Travel Money FX card in 2005, CaxtonFX. He has consulted on the launch of over 65 e-money projects including Tesco Travel Money and designed and delivered the first Mobile Money associated Mastercard with LycaMoney. David has been an Ambassador for the Payments Association for over 10 years and was a judge at the 2021 Emerging Payments Awards, at which TAP Global was nominated for several awards.
Christopher Wawn is the Chief Compliance Officer of TAP Global. He has established several Gibraltar based regulated businesses and has been instrumental in the incorporation of two DLT GFSC licenced companies.
Daniel Rudich is a Non-Executive Director of TAP Global and a partner at Hassans Law Firm, the largest law partnership in Gibraltar. He is a member of the firm’s FinTech and Private Clients team and also holds board positions in other fintech companies that he has helped grow from start-ups to unicorn status.
John Taylor, Chairman of Quetzal Capital Plc said,
‘We are delighted to have concluded this investment in to TAP Global by way of a Convertible Loan Note, and to have agreed an option for Quetzal to consider the acquisition of TAP Global on what we believe would be very favourable terms for our shareholders. We have followed the development of TAP Global over the last few months and have been impressed by the constant innovation being progressed, the growth in user numbers and the very positive relationships evident with the Gibraltar regulatory community. Both David and Arsen have enormous ambition to grow TAP Global into a very large player in the crypto trading sector and have already identified a number of further enhancements that can be achieved both organically and through acquisition and merger opportunities. We look forward to monitoring these developments further as the proceeds of our investment are put to use realising some of this ambition. We also look forward to updating the market regularly on progress which we believe can be both transformational and material in the short term. The Board believes that TAP is very well positioned compared to other opportunities arising in the De-Fi and crypto settlement space.’
David Carr, CEO of TAP Global Limited said,
‘We founded TAP Global on the simple principle of ‘one app, one tap’, with the intention to build a fully integrated application connecting B2B and B2C users with the wide array of crypto and fiat settlement tools at the best available price. The tools that TAP Global has produced are exceptionally powerful and we are delighted to offer them through our fully regulated practice. We look forward to working with Quetzal whilst using the funds to accelerate our growth plans and tap into the new global markets’.
TAP’s Website can be accessed at the following link:
www.tap.global
Content: uk.finance.yahoo.com
Bitcoin surprise moveIt might not make much sense in the current mood because the majority of market participants expect either more downside or sideways price action for the next 12/18 months, but I feel the real surprise would be an upside move.
A strong move, forcing the many in disbelief to rush in mid-to-late on the way to an early top somewhere in the low 6 figures range.
I give this idea a 60% confidence rate.
✅ THE ULTIMATE BEGINNER'S GUIDE TO INVESTING 👊There are a lot of myths surrounding investing. Some say that it is too complicated for a beginner, and you can't figure it out on your own. Others portray the image of a successful investor who travels all the time and does almost nothing. So, let's find out how things really are.
What Is Investing?
Investment is the long-term investment of funds, finances and other capitals in a variety of instruments in order to generate income in the future. Furthermore, there are two types of investments in relation to objects of investment. The first type is investment in the real sector (real investments). However, the subject of today's article is related to the second type of investment - financial investments, not investments in the real sector. Let's dot all the i's and and cross the t's to define with you what we mean by financial investments.
Financial investments are long-term investments of finances in securities, shares, bonds, mutual funds, precious metals and other derivative instruments of securities.
Financial investments are also called portfolio investments. Portfolio investing means that an investor can invest in several financial instruments at once, thus forming a specific "portfolio of investments. A portfolio helps an investor to diversify his risks, that is, even if there is a completely failed investment, the investor is able to offset his losses at the expense of more successful instruments from his portfolio.
Structure Of The Financial Investment Market
Before considering investing and financial instruments, it is necessary to understand how this market is structured. The structure of the financial market can be divided into three main segments:
-Stock market
-Debt market
-Foreign exchange market
The stock market is where shares of various issuers and other derivatives that give the right of ownership are traded. The debt market, also called credit market, is characterized by investments in debt instruments, such as government and corporate bonds. It is generally believed that the debt market is the most risk-free and conservative, but low-yielding way of investing, the yield on which will not exceed, and often coincide with the yield on a bank deposit. Here much depends on whose bonds you invest in and at what point. The third and extreme segment in this classification is the foreign exchange market, where it is possible to purchase contracts (both options and futures) for the purchase of currency in the forex market.
In addition, in recent years, a new market is beginning to take shape - the cryptocurrency market. Due to the popularity and rise in the value of Bitcoin, this market has expanded significantly in 2016-2017 and more and more types of cryptocurrencies are coming to the market.
Why Should You Invest Money?
The question of why to invest in various financial assets often arises in people who are just beginning to become interested in ways of making passive income. One could say that this skill belongs to the obligatory skills of a person who wants to come to success, just as one used to need to know how to speak French or ride a horse.
Another thing is that the vast majority of people spend almost all of their money on daily expenses - food, clothes, rent, and often credit as well. This is a kind of dependence on the bank, the state, and the place of work. And professionalism in one area or another is not yet a guarantee of good profits.
Everyone in the modern world just needs to learn how to manage their finances and how to multiply them. Almost everyone periodically thinks about saving and achieving financial freedom, providing a peaceful old age, and investing in the future of their children.
A certain role is played by the state, allocating pensions to elderly people from the pension fund, in which accumulated amounts of deductions from wages for a lifetime. However, the size of pensions is known to all - it is simply impossible to provide a decent old age for them. Many pensioners who have worked all their lives live on the brink of poverty.
Why is the situation different in developed countries? Older people travel around the world and live life to the fullest. And these are not celebrities or oligarchs - they are ordinary average people.
The answer lies in the fact that investments play a huge role in people's lives in developed countries. Up to 80% of Americans invest in shares of large companies and receive dividends on them.
The question of why they need to invest does not arise there - they start investing at a young age. It is enough to look at the figures:
In the US the volume of investments in investment funds is twice as much as the volume of bank deposits;
In Europe, the volume of investments in investment funds is five times less than the volume of bank deposits.
Moreover, do not forget that the investor gets an opportunity to receive dividends from shares - investment income, which in the long run may exceed salaries by several times.
Investing For Beginners: The Power Of Compound Returns
In simple terms, compound return is the re-investment of profits earned during previous successful investments. The process can be represented as the use of dividends, interest paid, and other income distribution options.
Depending on the share of reinvested funds from the total amount of profits, a distinction is made between full or partial reinvestment. It is impossible to predict in advance the profitability of reinvestment, but the investor can control the process by adjusting the timing, amount, selected instruments, and external circumstances.
Reinvestment is the practice of using dividends, interest, or any other form of income received as a result of investments, to obtain new profits through the purchase of shares, units, or other assets, instead of just spending what is earned.
Let's take a closer look at the principles of reinvestment and the factors that affect its result.
If you're planning to reinvest profits to increase your overall income, consider how to do so with minimal risk of loss while earning a steady income. To increase the chances of successful reinvestment, stick to three basic principles:
Use only available funds to invest. If you're not sure you'll need some or all of the money you're investing shortly, don't reinvest profits. For reinvesting, take as much money as you can set aside for the long term.
Diversify your investments. The golden rule for investors is to diversify their capital by diversifying their financial instruments. A balanced portfolio is the best protection against sudden market movements and losses. While one asset falls in value, the rest grow and generate income.
Make sure that investments generate income without exposing your entire capital to excessive risk. A professional investment manager can help with the selection of tools and investment strategies if there is no possibility to study the intricacies of stock trading independently.
As in the case of initial investment, reinvestment should be made competently, choosing the safest and most promising assets, and avoiding excessively risky transactions.
Any action by an investor must produce an ultimate return. You can receive dividends and spend them on your personal needs, or use the extra profits to multiply your invested capital.
Sometimes the external conditions for investments are not so favorable, and an investor prefers to wait out a dangerous period, withdrawing all assets into currency. Such behavior was demonstrated by Warren Buffett, 89, who decided in 2020 to get rid of assets, including investment bank Goldman Sachs, American carriers, and go into "cash", despite positive market dynamics and a relatively weak dollar. This decision analysts explain the preparation of the guru of investments to the stock crash, incomparable even with 2008 when Buffett has maintained an optimistic view of U.S. assets.
The decision on the advisability of reinvestment is based on some factors:
Inflation rate. If money is depreciating rapidly, reinvesting means trying to catch up with inflation while trying to maintain the same capital value. In a hyperinflationary environment, it makes no sense to wait for an investment to yield a limited return or to result in a loss due to the loss of value of the money invested.
Affordable financial instruments. The recent top assets for reinvestment include real estate, currency, and deposits. As the stock market develops, the center of attention has shifted toward stocks, bonds, and indices. U.S. stocks are growing in popularity, with different stock exchanges providing access to them.
Risk appetite. Some companies prefer to close their positions or limit investments to reduce possible negative consequences. Others are prepared to keep risking for the sake of profitability.
Every financial instrument has its profitability and risk limits. The higher the projected return on reinvestment, the more justified this step is.
The situation in the economy can facilitate or limit opportunities for investing and reinvesting. The worse things are in the country's economic sector, the less reason to reinvest profits.
In addition to objective factors that influence the decision to reinvest income, there are subjective features of a person and his circumstances that make him agree or refuse to make further investments.
A person invests his earnings where he can earn the most profit. As a rule, the decision to reinvest is made based on an analysis of alternative returns. If a person buys a car for $100,000 instead of opening a bank deposit with the profits he earns, it means that in addition to that amount over the 5 years the car will lose the amount of unaccrued interest - for example, 5% for each year. And instead of owning a car worth $100,000, one could earn $128,000.
Timing The Market: What Investment Returns Can You Expect?
On the whole, we can say that the world economy is growing at about five percent a year. Of course, in dollars.
Slightly lower should be the currency yield from investments in bonds, but their use is assumed only as a reserve, not strategic growth.
Is it possible to earn more? Yes, if something important happens: technological advances, breakthroughs in new industries - and the investor is at the root of it. Those who first appreciated the prospects of switching from coal to oil in the past are some of the richest clans on the planet today, such as the Rothschild clan. You do not have to go far, it was enough to assess the prospects for the development of electronics and, in particular, computer technology thirty years ago - and we can say a billion is already in the pocket.
Let's look at examples, of how much could be earned on different types of investments. The average annual return on the S&P 500 over the past ten years is about 13.6%. Thus, if an investor were to put into his portfolio the same securities that make up the index, he would get a much higher return than on a deposit in a bank.
During the same period, credit institutions attracted deposits at 4-5 percent. And in the bond market for government securities, the yield was, as we see from the previous example, 5.2 percent per annum. The yield on corporate bonds was even higher - 6-10 percent, depending on the reliability of the companies.
Thus, having placed money through a broker at the exchange, the investor could count on the bond market, if not twice, but one and a half times more than in the bank. At the same time, of course, such investments are not subject to deposit guarantees.
But, on the other hand, if you buy bonds from major companies, their existence is ensured at least access to raw materials. Behind them, unlike credit institutions, there are usually real production assets that generate stable revenues.
And what about other types of investments? Analysts of the real estate market say that properties have risen in price by more than 16% over the year. But these figures should be treated with extreme caution:
Firstly, realtors always, under all circumstances, claim that prices are going up, even if the trend is the opposite.
Secondly, the posted proposals - it is not the real price of an object, to sell something, the cost must be discounted, which remains at the level of non-public agreement between the seller and the buyer. The real estate market is much less transparent and not as liquid as the stock market.
In addition, the cost of admission varies significantly. Investments in real estate most often require at least a few hundred thousand, if it is not a collective scheme, while for the purchase of the same bond on the New York Stock Exchange just a thousand dollars is enough.
It must be said that one of the most profitable types of investment in 2021 was simply buying foreign currency. The dollars rose by more than 20% and the euro by almost 30%.
This suggests that those who invested money in instruments denominated in foreign currencies managed to make the most money on investments. Even though the interest initially looked more than modest.
How Much Money Should Beginners Invest?
The fact is that any investment activity involves a certain risk. Therefore, before engaging in investment activities, it is necessary to create the proverbial financial safety cushion.
This should include all mandatory payments, medicine, food, and even entertainment. Otherwise, an unsuccessful start in investing and the difficulties you will encounter in the absence of a "cushion" will most likely discourage you from continuing to learn to be an investor, and it rarely works out well for anyone the first time.
So, you already have a financial safety cushion. Now you need to invest the first sum of money. But the size of that amount will predetermine the type of instruments available to you. If the bonds have a face value of 50 dollars (please note that we will not take into account brokerage commissions, because our discussion is about the principle of approach to the first investment), then having this very $50, you can go and buy bonds? No, not really! The minimum investment required to purchase a single bond is about $1,000, though bonds are generally sold in $5,000 increments.
You can buy shares for $500 since their prices can start from $10. However, it would be rather unethical of us to recommend to a beginning investor to start investing in such a risky instrument as stocks. The dividend yield on them is not guaranteed, and no one can promise an increase in the price.
This is why our logic leads us to believe that one should begin investing with an amount of about $1000-$3000. Moreover, we advise such a trick. Put every "extra" amount of money on a separate account, not a brokerage account, but a time deposit account with the ability to deposit and withdraw partially, you can even do it on the same account where you "lay" a safety cushion. As soon as you manage to accumulate "extra" $3000, i.e. you don't need them for other vital necessities, you have to withdraw them, transfer them to the brokerage account and buy the next portion of the securities.
Yes, stocks are cheaper and sometimes sold by the lot, but we wouldn't recommend starting with them. Start filling your portfolio with corporate bonds, and try investing some in stocks, let's say 10% of your capital. 10% is an insignificant amount in case of loss, but in case of high returns, can significantly raise the average return of your portfolio.
How Can You Start Investing?
When you finally decide to start investing, you might be wondering what steps you should take. Here are our recommendations:
Decide on an investment horizon. When it comes to bonds, the stock market has a conventional division into short-term securities and long-term securities. For example, Federal Loan Bonds are limited to a specific term (3, 5, 7, and even 10 years). Shares, on the other hand, are considered indefinite assets. They exist as long as the company operates and remains public.
Choose an investment instrument. Decide where best to invest your money. An investor decides which securities he will buy, whether he will invest in business development, entrust his savings to a mutual fund and management company or simply open a deposit in a bank.
Be guided by risk and return. Fixed-income securities (like federal bonds) are considered less risky than stocks and bonds issued by businesses.
To make it easier for you to choose the right investment instrument, first determine your risk profile. This is the type of behavior you have in the financial market. It will take into account your goals, desired returns, investment horizon, and risk tolerance. Depending on your risk attitude, your risk profile may be conservative, rational, or aggressive. Conservative investors prefer low-risk instruments with small returns, aggressive investors are willing to risk capital for the sake of high potential returns, and rational investors choose the golden mean.
The Beginner's Guide To Where To Invest Your Money
By definition, it is necessary to invest in something. There are a great many options where you can invest your capital. Among the most common instruments, we should note the following:
-shares
-bonds
-investment funds
-real estate
-own business
Let us consider different ways to invest your capital according to the risk appetite.
Instruments for the conservative investor
A conservative investor who is not prepared for possible losses can include low-risk instruments in his investment portfolio: bonds, bond exchange traded funds (ETFs), real estate investment funds, deposits, as well as structured products with full capital protection and ISH.
Most often, it is recommended that beginning investors work with conservative instruments at first, and then add other instruments to their portfolios over time.
Instruments for the aggressive investor
Aggressive investors, i.e. investors who are ready to risk a considerable part of their capital for the sake of high potential profitability, invest their entire portfolio in stocks, derivatives (futures, options) and structured products without capital protection.
Such investors often have extensive experience in the stock market, a large amount of capital and will be able to survive a failure painlessly.
Instruments for the moderate risk investor
An investor with a moderate risk profile combines high-risk instruments with conservative ones. Adding conservative instruments to the portfolio reduces risks, while high-risk instruments allow for higher returns. The classic scheme: 50% of the portfolio in conservative instruments, 50% in high-risk instruments.
In addition to the above, the portfolio may also include precious metals in an investor-friendly form, equity ETFs (due to the greater number of shares in one ETF, equity funds are less risky), structured products and ISMs with partial capital protection.
With knowledge of all available financial instruments, each investor can choose the most appropriate ones for his level of expertise and experience, as well as for the comfortable riskiness. The main thing is to approach investments consciously, correlating each instrument to your financial plan and investment objective.
Potential Risks Of Investing
Risks can have an internal or external nature and are not always predictable. Their main types are:
Liquidity risk - the risk that interest in an asset will plummet and the value will be well below the purchase price;
Inflation - decrease in purchasing power and loss of liquidity of all assets;
Currency risk - decrease in the value of assets that are related to foreign currency;
Legal risk - change of risks as a result of changes in the regulatory framework.
There is also the possibility of force majeure, for example, man-made or natural factors. As a rule, they are stipulated in the contract with the investor as separate clauses. Other risks can be adjusted if you constantly monitor changes in the global and domestic financial markets. Another rule that can help reduce the likelihood of losses is the creation of an investment portfolio and its timely adjustment.
Still, there are some ways to reduce the possible risks.
It is easier to manage risks at the planning stage of a portfolio. It's impossible to reduce risks to zero, but a few simple principles will keep your investors and their capital as safe as possible:
Invest evenly in different types of assets. If you choose to invest in securities, invest in different areas.
Don't invest the last of your money. Always leave savings-a "safety cushion." If your assets depreciate, no one will pay you insurance.
Examine projects and assets carefully before investing. Invest in projects that have positive feedback from past investors.
Do not work with those who promise you huge earnings with no risk.
Do not give in to emotions. Act decisively and sensibly, without panicking at the slightest price movement.
Set yourself a limit on the maximum losses. Let's say you choose 25%. If your assets fall in price by 25%, you will sell them to avoid even greater losses.
The key to successful investing is to choose quality assets (reliable stable securities). You should not give in to gambling and invest all of your capital in risky projects.
What To Look For When Choosing An Investment Broker
Before deciding which broker will provide you with services, decide on your investment objectives: have you already decided what markets you are going to enter, and what assets would you like to trade? Before taking any step in investing, it is better to define your goals precisely. Now let's see what to consider when choosing a broker.
Step 1: Check the license
You need to start by checking if your broker has a license. Central banks regularly check the compliance of brokers and can revoke the license if any violations are found. If the license is revoked, the broker will suspend its work and must return the invested funds to the clients.
Step 2: Gather information from open sources
Familiarize yourself with the broker's website. It will be good to check the organization's data on financial performance. A little dive into the history of the company will not be superfluous. Check if there have been any legal proceedings, malfunctions, license suspensions - and for what reasons.
Check what has been written about the broker in the industry media, but do not forget to do fact-checking, i.e. pay attention to the reliability of the source and double-check the data.
Step 3: Check the fees and commissions
Brokers receive a commission on the amount of a transaction. Study the rates on the websites of different brokers. Large organizations usually offer several rate plans. To choose the most appropriate one, determine in advance what markets you plan to trade (stock, futures, over-the-counter) and how often.
Brokers may charge not only transaction fees, but also commissions for depositing and withdrawing funds, using a trading platform, submitting phone orders, and other fees. In addition, it is important to remember the existence of a subscription fee - if there is one, the broker will earn even in the absence of transactions. Consider custody services, which may be fixed and included in the brokerage fee or may vary depending on the number of securities.
Step 4 . Evaluate the convenience of the service
If you are planning to use a trading terminal, i.e. software for making transactions at the exchange - look at what kinds there are and how they work, which one is offered by the broker and whether you understand its interface.
Brokers now have mobile applications for trading. If they are available in the demo version - download and try it, in this way you will understand if the interface is convenient and if you feel comfortable working with the application.
Step 5: Check out the education and analytics sections
Training materials, investment ideas, analysis, and research articles and forecasts are useful for beginners and more advanced investors alike. Many brokers now offer articles, webinars, podcasts, video courses, and more to clients. This can be another factor that will make you pay attention to this particular organization.
Beginner's Tips To Get Started With Investing
It is impossible to completely avoid risk while investing in the financial market. Therefore, the investor is faced with the task - to minimize possible losses, at an optimal level of profitability concerning the goals and horizons of their achievement. For this purpose, studying the experience of famous investors and financiers is suitable. Here are a few tips to help avoid unnecessary mistakes.
Discipline
Even with minimal investments, a sequence of steps, analysis of the situation, and regular additions to the portfolio will lead to the desired income. Do not relax when you get the first earnings - it is better to reinvest them to achieve the goal as soon as possible.
Persistence and calmness
Everyone's journey is a series of ups and downs. Investors are no exception. A cool mind and control of emotions will not allow you to make mistakes in a critical situation. And the accumulated experience will help to avoid their repetition in the future.
The right environment
Communication with like-minded people will put you in the right mood, and monitoring market information and not only - will help you to navigate faster in the situation and make the right decisions. Reading professional literature, visiting topical forums and social networking pages - all will form your thinking.
Constant learning
The world does not stand still, and the world of investments is no exception. Self-education, observations of experienced colleagues, and reading financial literature will expand opportunities and open new promising directions.
Mistakes of beginning investors
It is not possible to avoid mistakes altogether - as in any business in which you are just starting. However, they can be minimized.
Lack of a safety cushion.
No one can guarantee your success in investing. If unforeseen circumstances arise, you must have a safety cushion of 3-6 months' salary.
Lack of funds for the beginning
Often brokers offer to begin from the minimum amount, say 300 dollars, however, such investments without additional permanent deposits will not be effective.
Lack of basic education
After studying, say, three books on the securities market and an economics textbook, many people start to feel self-confidence in the market. This is where the first serious errors begin, such as underestimating the risks or choosing sub-optimal instruments. Remember - knowledge must be gained, updated, and constantly expanded.
The desire to get rich quickly
In the search for super-profits, private investors can often meet crooks and all sorts of fraudsters on their way. A reasonable assessment of the prospects of income and the choice of well-known intermediary companies will reduce the risks as much as possible.
Using substandard sources
Sources of quality information are not difficult to find - to date has written many useful books and created a huge number of training materials.