Category Archives: Financial wisdom

Learn how to investing money | Topmanagedportfolio.com

Learn how to investing money

Investing is actually pretty simple; you’re basically putting your money to work harder for you so that you don’t have to continually working for income or take on an extra freelance or work overtime hours to increase your take home pay. There are many ways people can invest in, you can learn make money from stock market, bonds, mutual funds, forex that usually don’t require a large sum of money to start.

Investing wisdom

How to get to financial freedom or grow money fast, you need to understand of the 3 money buckets.

Money buckets | Topmanagedportfolio.com
Usually everyone starts with Income bucket ❶ where the income is derived from wages, or extra income earned from doing additional freelance work. Out of the income received, part of it will be used to pay for bills, expenses, loans payments etc.

Next, you can block about 20% of your income and use it for investing purpose. This money should flow into your Investment bucket ❷

At this bucket, depend on your age, objective and investment sum, you can split the investment into two key categories

● for receiving income – this could be stock dividends, share splits, business profit distribution. This investment profits shall flow back to the income bucket to increase your total income pool. The objective is to allow the investment profits be big enough and replace your active income from wages and other work.

● for capital growth – this is the sum invested in the Capital growth bucket ❸. Typical investment in this category such as managed funds or portfolio are meant for capital compounding and growth.

Once your investment in the capital growth bucket reach a certain amount,

● 80% of the amount shall be withdraw for your big ticket financial goals. It could be down payment for a new home, renovation, or you could probably want to start working on paying off all of your debt. Pay off your credit card debt first, then follow by pay off your mortgage.

● Remaining 20% of the capital can be reinvested in your Investment bucket ❷ to build up your monthly profits i.e. your passive income stream.

After this was done, a good investing program would probably build up a series of cash reserves including an emergency cash reserve for you.

Finally, you would then begin to participate in other bigger investment like direct stock purchase plans, acquire real estate, and fund other opportunities.

What kind of investors are you ?

Your choice of investment product, duration of your holding, your time to monitor shall influence what type of investor you are. As different brokerage firm is suited for different investors, so determining your investment style before you start investing is usually a wise decision.

For easy understanding, investment here refers to product that can be easily traded like forex, options, futures, stocks etc.

  1. Short term Trader
    • Traders don’t hold onto investment for a long time. They aim to make quick returns based on short-term market movements and make many trade executions over a short time span. Many people in this category are involves in day trading. If you want to be a trader, then you should look for a broker company with low execution fees, as high trading fees could erode your returns. Also, please take time to gather enough experience first through trading on practice demo account first before investing your real money. Remember active trading takes experience, as the market is unpredictable at time.

2. Long term Buy-and-Hold Investor

    • A buy-and-hold investor, or passive investor, is someone who holds onto investments for the long term. The investment theme is capital appreciation i.e. letting their investing positions appreciate over longer periods of time and sell for higher gain a later date. If you see yourself to be a buy-and-hold investor, your main concern should look at monthly holding fees and rather than commissions per trade.

3. Hybrid Investor

    • Some investor style falls in between an active trader and a buy-and-hold investor. To fit into this category, some brokers make it easy to set up accounts and provide advice through use of artificial intelligence (AI) or Robo-advisor. The robo-advisor can eliminate human emotions and make the buy or sell decision more systematic. The fee structures is more affordable for the public, with the lower initial investment amount too.

3 stages of your investing success

Stage 1: PREPARE

Know your Finances

Examine your finances, like have some spare cash for emergency first before investing. Just like the income bucket, it should cover your expenses for bills, loans, expenses before jumping into the investment as it takes time to grow.

Set Goals

What is your investing goal like ? How long does it allowed for the investment to grow ? Safety of capital, income and capital appreciation are some factors to consider; are you using the investment to achieve your financial goal like settle off loan, or plan for your retirement ? what is best for you will depend on your age, position in life and personal circumstances.

Identify your Risk Tolerance

Before deciding on which investments are right for you, you need to know how much risk you are willing to take. Your risk tolerance will vary according to your age, income requirements and financial goals too.

Know Your Investing Style

Next is your investing style. Are you a trader or just a buy or hold type investor ? A typical way is to identify if you are conservative , balanced or aggressive investor.

Conservative investors will generally invest 70-80% of their money in low-risk, fixed-income securities such as Treasury bills, with 20% in blue chip equities. A balanced investor, will take 50% on low risk instrument, balance of 30% in medium cap companies, 20% in blue chip equities. On the other hand, aggressive investors will generally invest 80-100% of their money in equities, forex as well..

Stage 2: AIM

Learn some knowledge in investing

Learn the differences between forex, equities, fixed income, mutual funds, ETFs, and fixed deposits. Reading books written by successful investors such as Sir John Templeton, Benjamin Graham, Warren Buffett or others will be good start. You can find some good books at our education section for reading.

Select your Investments

Traditionally most people will select three asset classes: equities, fixed income and cash. But this has totally ignored the largest financial market, i.e. forex. When done properly, forex investing can provide better returns or gains together with your other asset classes. You can invest in forex either trading by yourself, use social trading or use a managed investment companies.

Research the Fees or Costs

It is important to study the costs of investing as it will impact your net investment returns. As a whole, passive investing tend to have lower fees than active investing.

Typically, any investment involves a broker will attract commission charges. Forex or Stock brokers, charge commissions. Mutual funds charges various management fees. If you are starting out with a small investment, get a broker with reduced or low fee.

Stage 3 : FIRE

Find your Broker

The type of broker or company that is right for you depends on the amount of time you are willing to spend on your investments and your risk tolerance. First question to ask is will you be actively or more towards passive investing. There are many brokers to choose from if you want to do active investing or trading, but you need to select a broker who can do robo-advisor or managed account if you like passive investing.

Managed your Emotions

Don’t let fear or greed control your investment decisions. While greed can lead an investor to hold on to a position too long in the hope of higher gain, fear can cause an investor to sell an investment too early or too fast. If your investment keeps you awake in the middle of the , it might be best to re balance your investment, look into your risk tolerance and adopt a more conservative approach.

Periodic review

When you situation changes, like your cash positions improve, you will need to review your investments. It is a good guide to review your portfolio every 3 months if you are active investing, or at least every 6 months if you are passive investing to make sure your investment return stays on track.

Factors to consider when select your broker

Before you can choose a broker, you have to know the difference between what constitutes one. There are regular full services brokers or  discount brokers. So, never judge a broker just by the fee, you need to consider more factors.

Reputation and Regulation

First thing first is to ask, which financial authority regulate the broker. This is the most important factor as your safety and segregation of funds are crucial in event the broker goes out of business. You need to have your funds protected and be rightly compensated by the regulatory compensation scheme.

Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation in US or Financial Conduct Authority (FCA) in UK, for example, are regulatory bodies that oversees the broker financial industry and safeguard investor interest.

Minimums

For forex brokers, there are minimum balances for starting a brokerage account. Typically, this number ranges between $250 to $1,000 with an online broker.

Margin

In forex trade, margin can be offered as 1:100 to 1:500, it means that for every 1000 dollar in your trading account, you can trade up to 500,000 dollars (for 1:500 margin)

While you might consider higher margin account, be aware of the interest that your broker may charge when you make a trade on margin. While margin give you leverage to increase your profit, there is also downside risk associate with it you need to know too.

Fee Structures

While most brokers have similar fee schedules, some brokers have complex fee structures embedded with hidden fees.

If you see a broker with unusual fee structure, first question you should ask is whether the broker is regulated. If the rates seem too good to be true, be sure to read carefully over your account agreement and fee summaries to spot for any hidden charges.

Withdrawal

Does the broker charge fees to make a withdrawal, or they will stop your withdrawal if  your balance drop below the minimum? If you have accept trade bonus from the broker, chances are you cannot withdraw your money before hitting the required turnover amount. These are the typical complaints when people cannot proceed with the withdrawal of their investment.

Make sure that you understand the terms and conditions involved in withdrawing money from with your prospective broker.

Conclusion

It is your money, so make sure invest them carefully. At the end of the day, you will need to make a decision to  choose a broker to proceed. While your first broker won’t necessarily be your broker for life, you have a much better chance of making money as an investor if you put the right amount of time and research into choosing a broker.

Done correctly over a long career, with the investments managed prudently, you can find it easier to be achieve your desired financial freedom and attaining the status of becoming a millionaire.


How to financial freedom | Topmanagedportfolio.com

How to financial freedom – with proper investing

Mastery of your Financial Freedom

Many average people work hard 8-10 hours a day with the hope to save enough money, and attain financial independence at end of the working life.

However, in today’s world of low or zero savings rate, the more realistic way to achieve financial freedom is to know proper investing. Financial freedom means that your get to make life decisions without being stressed or worry about money. You become the Master of your financial matters, and NOT being controlled by them.

What is Financial Freedom for You?

Financial freedom is a personal thing. When your are financially free and independent, your always have options.
What does financial freedom for your? It could be :

  • Freedom to retire 10 years early
  • Freedom to upgrade to a new home
  • Freedom to pay cash for a new car
  • Freedom to take holiday trip every year without worrying on your budget
  • Freedom to do charity for the needy with generosity

In a survey done by UBS and Spectrem, a question was asked what is “Financial Freedom” means to the millionaire clients, and the answer to that question bring out a profound apprehension of 4 key essence of financial freedom.

  1. Security – Financial independent people feel confident to confront what happens in life.
  2. Comfort – Not only for yourself, but also for generations to come.
  3. Time – One of the most important thing’s money can buy is more free time
  4. Freedom – It’s the freedom to quit your daily JOB to do something your enjoy and passionate about, even if it mean getting paid less.

In short, financial freedom means life satisfaction – the ability to live the kind of life that makes your happy !

Investing- Your How to Financial Freedom

We all have 2 major life milestones to save and accumulate money i.e. raising kids fund and old age retirement fund.

Retirement Savings

Start by working with your financial adviser to take advantage of the tax-favored retirement accounts that are available to your, typically your would save about 20% of your income, for 20 years before your retirement.

Tertiary Education Savings

The great thing about saving for your kids’ university education is that by helping them avoid student loan, your’re guiding them towards for financial freedom too !

Real Estate Investments

Your home should be part of your plan for financial freedom, and it should be settled before your retire.

It’s important to make wise decisions about the kind of home your purchase and how your choose to finance it. If your buy a home that is a good investment, it will continue to grow in value as the years go by.

Managed Investments

Another profitable way to open a brokerage account and invest in managed investments.

Many rich people have advisers or broker and invest some money in forex or binary options investments. Do your know that most money is not in share or equity market, but in forex market ?

When it is done properly through a regulated and legitimate broker firm, your can see your money grow and compounded at the rate faster than savings in bank !

Practical tips- How to Financial Freedom

1. Spend Less Than You Earn

This is very important. Part of what your earn your need to pay yourself first. Do not live on credit and it is a common sense your’re trying to make enough money to live the rest of your life on.

Live your life as your would if your were broke and stick to your plan. Your plan has worked thus far and continue focusing on it until your have achieved your end goal.

2. Train and Educate Yourself

Learn from those who are successful. And many successful people live on set of rules and principles. Learn how to set goal and have a financial plan. Have a reading habit. One of the good books your can read is Principles by Ray Dalio.

3. Stop Saving, Start Investing

We have been trained when young to save money and open a bank account. However, I learned that saving your money does absolutely nothing more than protect your for a few months, but not forever, as your savings return is so little, the inflation will eat all your return away !

The only real way to create massive wealth is to invest as much money as your can.

If your want to be financially free in less than 10 years, your have to diversify your investments. Find different thing’s that your’re passionate about that don’t require a ton of time and invest in them.

4. Take Calculated Risks

Most people who have achieved financial freedom will tell your that they do some investments that paid off big for them. Obviously, any investments involve risk and return, as long as your can risk the amount in exchange for handsome profit, your are taking a calculated risk.

5. Be Patient with your money

Be patient with your money. Give it a chance to compound and grow, but your need to monitor that as well. When your money goal reach certain milestone, reward yourself !

Reaching Financial Freedom

Financial freedom is about more than just being able to cover unexpected emergencies, and it is a blessing your have achieved abundance in life.

On your pursuit to financial freedom, it is good to plan for charitable givings as well. Remember the saying, “the more your give, the more your receive?”

The path to financial freedom isn’t a get-rich-quick strategy. And financial freedom doesn’t mean that your are free of the responsibility of handling your money well. After achieving financial freedom, your must learn how to preserve it as well. Having complete control over your finances is the fruit of hard work, sacrifice and time. And all of that effort is worth it!


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