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How to Make Money with Penny Stocks (Part IV)

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Using Scanners to Find Penny Stocks

To trade penny stocks effectively, you need to discover the stocks that have the greatest probability of going big. For numerous traders, scanners are the best way to accomplish that.

Traders use stock screeners to slim down a huge list of available stocks to a little list with the characteristics they’re searching for. By putting on a filter to the stock screener list, you’re left with just the stocks that fit your parameters. Accepted filters include price, patterns, performance, and volatility, all of which can assist you in finding the stocks with the maximum potential for a big run.

The news can give you some good information on stocks. 

Three specific parameters to find these stocks are:

Breaking news. Searching for stocks that are gapping up because of a news break that can be lucrative for the company. Avoid stocks that have media hype from a buyout or likewise, since that typically means a loss for the shares or breakeven.

Float. The float is the number of shares really available to trade, which is computed by subtracting the closely held shares from insiders, the company’s stock ownership plan, and employees. Preferably, you want the float to be under 100 million shares, but 50 million is way better. When a stock has fewer shares to trade, there’s more buying interest that could push the price up.

High relative volume. The relative volume is a sign that tells traders how the present volume compares to the former trading volumes over a certain period of time, which gives you a notion of how “in-play” a specific stock is. The greater the relative volume, the more traders are observing and trading it, giving it lots of liquidity for you to trade.

After you make your watchlist based on this criteria, you can wait for the market to open and see if there’s a breakout over pre-market highs for an entry point, or wait for a bullish flag pattern, which indicates a move higher.

How to Make Money with Penny Stocks (Part III)

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Our Favorite Strategy for Trading Penny Stocks

The only real way to make money trading penny stocks is by using the same rules as typical trading. Do your research, buy a reduced stock on the upswing, and be patient. Some companies just need time to get back on their feet.

Some companies are bought out. Some companies restructure and come back better. Some companies are underrated. In any case, these are the stocks that can produce money.

Sadly, these chances are hard and complex to predict, but they are real. Using value analysis and wisely deciding the businesses to buy will give you an opportunity to discover the hidden gems.

Finding an underrated stock is like discovering a hidden gem. 

How to Find Good Penny Stocks

Part of the challenge in deciding how to make money trading penny stocks is unearthing them. Finding an underrated stock is very hard to start with since numerous investors have the next big money-making stock on the radar. With penny stocks, you’ll also have to find the underrated stock that has strong financials, a positive value, and a promising outlook.

To make money selling the penny stocks, you first have to find someone to sell it at the bargain price. If a business turnaround is expected, a trader is going to hold on to shares to reap the rewards, which makes these shares harder for you to purchase.

Once you’ve bought the potentially lucrative penny stock, you also have to make sure you can turn around and sell it. You can always keep it and take a chance on it being hot in the future, but you got it for a bargain since it’s not hot right now. No one is wanting to purchase it.

Thinking about all of this, the best chance of making money with penny stocks is discovering the hidden gem, purchasing it at a bargain price, and holding on to it until the business rebuilds and gets back on a huge market exchange again.

How to Make Money with Penny Stocks (Part II)

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Just because shares of a major business drop under $1 doesn’t make them a penny stock.

Cheap Exchange-Listed Stocks

Technically speaking, stocks listed on traditional exchanges aren’t penny stocks, in spite of how low their price is.

If shares of a major business drop under a dollar, it wouldn’t spontaneously make them a penny stock. Lots of factors could lead to a downturn in share price, even for the shares of a business that is reputable, still sound, and satisfying the standards of the exchange.

As you’d expect, a business that has stock on the exchange provides certain confidence to investors, since they’re not usually viewed as volatile.

The NYSE and NASDAQ oblige a minimum market cap and share price to list, as well as yearly listing fees.

If a stock goes below the point where its capitalization or price per share is too low to satisfy these standards, the market has the option to delist the stock. If this occurs, the stock goes to the OTC market. If you own shares of a delisted company, you still own those shares, but they just won’t be worth as much.

How to Find the Best Penny Stocks

As we mentioned, trading penny stocks is risky. Many of these companies are very risky, leaving traders in a position to lose hugely. Though, you can still make money trading penny stocks if you trade intelligently.

What makes a penny stock a possible money-making stock? There are a couple of characteristics to look for:

A company must make money. A business that loses money will always be a horrible investment, regardless of how low the share price is.

A company needs substantial cash or assets. Strong businesses shouldn’t need to liquidate future viability to appease creditors, because they have enough cash to account for contingencies.

A company has to have a strategy in place. Penny stock companies don’t want to be penny stock companies, so the prosperous ones have a strategy in place to increase the business and get listed (or re-listed) on a major exchange. These objectives must include rebuilding a long-term business and paying back investors.

Best Ways to Invest in Foreign Markets (Part II)

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The world is a big place. Where will you invest?

Once the right type of fund is picked, the next step is deciding where in the world to invest. Most financial advisors advise that younger investors look for higher-risk funds with the probability of a huge return, while senior investors look for lower-risk funds that offer more stability. This typically translates to large emerging market exposure for younger investors and create market exposure for senior investors.

Lastly, finding certain mutual funds is as simple as using free online tools such as the Wall Street Journal Fund Screener or Yahoo! Finance Fund Screener. In the meantime, ETFs can be discovered by browsing through some of the biggest ETF providers such as iShares or SPDRs. Finally, investors must discover high-return, low-cost funds that satisfy their risk appetite and investment objectives.

Buy Individual Foreign Stocks Hassle-Free with ADRs

Investors that want a hands-on approach can simply buy numerous individual foreign stocks which are U.S.-traded securities that show ownership in the shares of foreign companies. Since they are denominated in dollars and traded on the AMEX, NYSE, or NASDAQ, ADRs don’t need any difficult currency conversion or foreign exchange transactions.

Sadly, there are several foreign stocks that aren’t available as ADRs and must be bought on foreign exchanges like the London Stock Exchange (LSE) in Europe or the Toronto Stock Exchange (TSE) in Canada. While some international brokerages provide a low-cost way to buy these stocks, like InteractiveBrokers, investors must carefully check their brokerage’s fee schedule before trading.

When your plan of selling and buying of ADRs happens in American dollars, any dividends presented to you will be denominated in the foreign currency and then changed into U.S. dollars upon distribution. As a result, there might be some currency exchange rate risk included in those situations.

Best Ways to Invest in Foreign Markets (Part I)

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Investing in foreign markets can be complicated but doing so can be in your best interests.

International investing can be a complex endeavor, from currency conversions and language barriers to foreign exchanges and regulations. Though, at the same time, many financial advisors suggest holding at least some foreign stocks in a diversified portfolio. Luckily, there are many simple ways to invest in foreign markets without learning a new language or exchanging dollars for euros. Below is how to diversify abroad with U.S.-traded stocks and funds, as well as some vital considerations for doing it correctly.

Easily Diversify Abroad with ETFs and Mutual Funds

The most common and easiest way to invest in foreign markets is by buying mutual funds or exchange-traded funds that hold a basket of international bonds and stocks. With foreign holdings across numerous industries and countries, these two fund types provide investors with a fast and highly diversified foreign component to their portfolio in just one simple transaction.

Also, investors can select between various types of mutual funds or ETFs such as:

  • Country Funds- invest in specific countries such as Russia or Spain.
  • International Funds- invest widely across several countries outside of America.
  • Regional Funds- invest in specific regions such as Asia, Europe or the Middle East.
  • Sector Funds- invest in specific sectors across several countries such as energy or gold.

How to Find the Best Fund for Your Portfolio

What fund type is best for you? Eventually, the answer to this question is contingent on the individual’s investment goals and appetite for risk. In general, mutual funds are actively handled by professional investors, while ETFs are passively managed with holdings based on a preexisting index. As a result, mutual funds typically are more costly than their passively managed counterparts.

The Bottom Line

ADRs and international funds are solid ways to create international exposure into any portfolio without having to worry about regulations or foreign stocks. By keeping these tips in mind, investors can be well on their way to getting proper diversification for their portfolios.

 

What is Equity?

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Equity is an asset that can be used in a few different ways.

What is Equity?

Equity is the amount of your home or vehicle that you own after calculating the debt. To get that figure, deduct your loan balance from the market value of your automobile or home.

If you get a negative number, your car or home is valued less than what you owe on it. You have negative equity.

Example: Your home is worth $250,000, and you owe $100,000 on your mortgage. $250,000 minus $100,000 equals $150,000 of equity in your home.

How You Can Use Your Equity

Equity is an asset. With it, you can:

  • Borrow against it with an auto or home equity loan.
  • Get cash after you sell your home and pay any associated costs.
  • Use it as a down payment or to purchase another house.

How to Build Equity

If you have a nice amount of equity, the better off you will be. There are a few ways to increase equity:

  • Your debt amount reduces.
  • Your property value increases.
  • You can take an active or passive approach to build equity, based on your goals and your resources.

When you get a job, the first two things you put on your to-get list is a car and a house. Though as life goes on and you find yourself in need of some cash because of a big expense such as fixing a leaky pipe in your house or a new the plumbing in your home or a new motor for your vehicle, an equity loan could be the solution you are seeking.

Though, before you go down this road, it’s critical to completely understand equity, what it is, how it works, what you can do with it, and where to get it.

Regardless if you’re interested in an auto or home equity loan, contact a professional banker to guide you through the process.

Affordable Places to Retire

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You’ve most likely have been dreaming about retirement since the day you began working. But will your budget let you make those dreams a reality? It has a better opportunity if you choose an affordable retirement destination.

To detect some of the cheapest places in the U.S. where you will really want to retire, we tried to pick a good place to retire in each state. We based our choices on factors crucial to retirees like safety, taxes, health care, cost of living, and lifestyle. Here are the appealing places left that really cheap for retirement. Decide for yourself if any of these destinations could be where you live out your American dreams.

Montgomery, AL

Annual expenditures: $37,000

Akron, OH

Annual expenditures: $36,000

Cleveland, OH

Annual expenditures: $36,000

Augusta, GA

Annual expenditures: $36,000

Brownsville, TX

Annual expenditures: $35,000

Toledo, OH

Annual expenditures: $35,000

Memphis, TN

Annual expenditures: $34,000

Jackson, MS

Annual expenditures: $34,000

Other Cities for Retirement

  • Winchester, VA
  • Portland, ME
  • Gainesville, GA
  • Wenatchee, WA
  • Tulsa, OK
  • Cheyenne, WY
  • Columbus, IN
  • Ithaca, NY
  • Harrisburg, PA
  • Midland, TX

 

If money doesn’t matter, there’d be lots of incredible places to spend your retirement. An all-glass contemporary on the Malibu beach, a small winery in Napa Valley. A house in Paris.

But money really does matter. Even as the financial markets gets out of its recession, many of us are redefining what our “dream” retirement is going to look like.

Absolutely, Honolulu has well-priced pineapples and beaches. But not many of us can afford its average home price of over a half million dollars. Chicago has lake views and first-class dining, though its way over the top, extremely high percent sales tax can put those niceties out of reach. Then again, not many retirees want to relocate, even if it is cheap, to a one-stoplight town either.

How to Choose A Stock

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So you finally decided to start stock investing. You realize that a low P/E ratio is usually better than a high P/E ratio. Your portfolio should be diversified across numerous sectors, a company with plenty of cash on its balance sheet is better than one greatly burdened with debt. Analysts’ suggestions must always be taken with a grain of salt. Now that you have all the basics of investing mastered, and perhaps even researched the more complex concepts of technical analysis, you are ready to choose your stocks.

But hold up! With thousands of stocks to pick from, how do you go about really picking an equity investment? Pouring over each income statement and balance sheet to see which companies have a favorable net debt position and are enhancing their net margins is an unreasonable feat. Moreover, picking an investment based just on the criteria inputs of a stock screener is prone to error and does not make a full representation of the company. Finally, simply coat tailing investors will typically not assist you in finding any ten baggers as fund managers tend to focus mainly on safe blue chip stocks.

The first step to actively picking out a stock from the sea of available alternatives is to decide what the purpose of your portfolio is. Investors concentrate on capital preservation, capital appreciation requirements, and income. Income-oriented investors will usually concentrate on low-growth businesses in sectors like the utilities.

Though other options like master limited partnerships are also available. Those who have a low risk tolerance and are primarily concerned with capital preservation tend to invest in solid blue chip corporations. Investors who are seeking capital appreciation should look at businesses of life cycle stages and ranging market caps. Whatever your goal is with

Choosing the Right Financial Advisor

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Planning is key!

You finally want to hire a financial advisor. You know this is a vital decision, but you have no idea where to begin. The amount of financial information available is endless and getting started can be frightening. But the process can be easy if you divide it into steps.

Selecting an advisor type:

Almost anybody can refer to themselves as a financial advisor. Let’s begin by reducing the field. There are three basic types of advisors according to how they are paid: commission, fee-only, and fee-based.

Commission: Commission-based advisors (insurance agents, registered representatives, brokers) sell financial products like mutual funds, annuities, insurance and mutual funds, getting commissions on those products. They are often working for big financial institutions and have their Series 6 or Series 7. Because what they are paid is based on what they sell, there is a huge conflict of interest. It’s critical to be aware that the temptation of commission is there and it can play a part in their recommendations for you.

Fee-based: These advisors are somewhat new to the financial industry. Fee-based advisors are usually associated with a broker/agent and like the commission-based advisors, usually hold a license to sell insurance or investments for a commission. Fee-based advising is complex because like the fee-only advisor, the fee-based advisor offers financial planning for a fee. However, the vital difference is they also sell products and get paid commissions. So, there is still that big conflict of interest, because their fee-based recommendations could, and typically do, include buying products they get commissions on.

Fee-only: This is the only type of advisor recommended for complete financial planning and/or asset management. Fee-only advisors possess a fiduciary duty to work in the best interest of their clients. They only make money through hourly rates, flat fees, or a % of the assets they manage.

What Happened to US Savings Bonds?

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There was a moment when billions of dollars in U.S. savings bonds were given for weddings, graduations, birthdays, or just because. Those days are over. After selling billions of dollars of saving bonds every year, the Treasury is selling less than $50 million right now.

An older style EE Bond

What happened to U.S. Savings bonds? The government messed with the interest rate formula, making them unattractive as an investment by fixing rates for the lifetime of the savings bond. Then in ‘12, the government no longer offered paper savings bonds, eliminating their attractiveness as gifts. Furthermore, the Treasury no longer marketed savings bonds, probably due to the fact that the government was getting a big debt by overspending. They didn’t want to bring attention to the fact that it needed to borrow money.

U.S. Savings bonds have had a long and detailed history, beginning with Series A-D bonds, provided in the depression to offer folks an enticement to save correctly. The Series E bond was started in April of 1941 by as a way of financing World War II. These bonds, offered as an American investment, had an initial 10-year maturity and were offered at a reduction of face value. They had an interest rate of 2.9%. During the war, over $35 billion worth of saving bonds were sold to the public, in amounts as small as $25.

When Series EE bonds were a Great Deal

Saving bonds were introduced in the early ‘80s. This was a period of rising interest rates, making buying them more striking. These saving bonds had a lifetime, fixed base rate that was put in place every six months for all bonds sold during that time.   The bonds had a “floating rate” portion of the interest, which altered every six months to stay with the established rate on Treasury notes.