Options Trading—A Basic Overview for Beginners
Stock options trading is essentially a contract between two people or companies in which the buyer acquires the right to buy or sell shares of stocks at a particular price. The price for the rights is predetermined before the trading takes place. The great thing about options is that they are very versatile. If you own any, you can apply the stocks to your individual investing style
Sometimes the contract has an end date, by which time the buyer must make a decision about what to do with the stocks. You can choose to buy if you wish, or do nothing. You will not be obligated to do anything. However, if you do want to buy the stocks, then you will have to pay the predetermined price. If the cost of the stocks rises, you can still pay the set price, therefore you will make some profits!
This type of trading, despite its versatility, is not without risks. The best thing you can do is never invest what you can’t afford to lose. Only buy the stocks if the market is looking good. If you are given the option to buy a share of a certain company, do research about the company to determine whether or not buying the shares is worth the investment.
There are two types of options trading: call and put. The call option is a contract that gives the holder the right to buy the stock, and the put option is a contract that gives the holder the right to sell it. Make sure you know which type you have before you buy or sell. Also, look carefully over the contract to see if there is a premium price. A premium price is something that the holder must pay the options seller for carrying the risks that come with the contract. The price depends on the expiration date, strike price, and volatility of the market.
Stock options trading is something that really is not recommended for beginners, so if you are new to the stock market, you may be feeling somewhat confused. Do research on the company to find out if there is a lot of hope for its stocks. If so, then you may want to go ahead and buy them. If not, or if you are feeling uncertain, then you may want to sell the option to somebody else.
Filed under options trading | Comment (0)Investing Carnival: Some Great Sites to Visit!
So I thought I would share with all of you some great investing sites that i have come across on the web. When it comes to investing it’s always best to do as much research as possible and to try and see some different points of view!
If you’re a beginner in the stock market (or just looking for more experience), you can try buying and selling stocks without spending, or losing, your own money. Check out this free fantasy stock market game and you can get an understanding of what it takes to invest in the stock market.
For beginning investors, it can be hard to decide which resource to use, or which advice makes the most sense. If you want to know the right way to learn to invest money, the Saving Cash Tips blog has posted some ideas and useful resources. In this economy, it helps to know what to watch for, and this post has some suggestions you can put into action right away.
While a tough economy has many people thinking in terms of monthly bills, the folks at 401k Rollover Answers explain that it is never too early to save for retirement.
Stock market investing for beginners guide delves deep into the world of stock markets and lays out in simple terms the investing basics as well as the trading strategies that you should use as beginners. This is needed so as to make sure that you achieve good financial success in the stock market.
Ty Coon over at Stock Market Investing Today has started a unique Thirty Day Stock Market Investing Challenge. Each day, he’ll pick one stock and invest $1,000 in a stock simulator. Over the course of 30 trading days, he’ll pick 30 stocks and play them until he is either stopped out or reaches his target gain. Be sure and follow along.
When it comes to signing up for your 401k plan, you usually have a lot of questions. However, most people do not plan for nor think about what to do with your 401k when you decide to leave an employer. While you have options such as cashing out or leaving it where it is at for the time being, you’re best option is to do a direct rollover.
Check out all of these sites for great advice and drop us a line if you come across any others that we should add to our list!
Filed under Uncategorized | Comment (0)Budgeting for Your Retirement Dreams
Most people dream at least a little about retirement. Their retirement dreams are remarkably similar in some ways too. You know, living on the beach somewhere, travelling all over the country or world, sleeping in every morning – leisurely pursuits for sure. But how do you know if you’ll be able to afford those dreams when retirement comes knocking?
For instance, some of us have been saving regularly, even diligently for years. We’ve been trying to build that nest egg so that when the time came, we could pull the plug on the 9-to-5 job and kick back once and for all. We know how much we’ve saved so far and we have a rough idea of how much we’ll have down the road but how will we know for sure that it will be enough?
The thing to do is to build yourself a budget, a retirement budget. It will resemble greatly your normal monthly budget but with some differences. For instance your income will be from much different sources and your expense section will have some new lines in it and will be missing some of the old ones as well.
Gone will be the regular income line; it will be replaced by pension, annuity, and/or Social Security lines. Perhaps your housing mortgage line will be gone because you’re planning to have your house completely paid off by that time. And maybe you’ll have eliminated your credit cards (along with their interest) and replaced them with reloadable prepaid debit cards for your out-of-pocket expenses. In any case, once you have a realistic monthly budget built you’ll have a concrete idea of how much money you’ll need to make it through any given month. Then you turn to your retirement savings and do a little math.
A good rule-of-thumb is that you will only be able to withdraw approximately 4 or 5 percent of your retirement portfolio every year. If you withdraw more, you’ll probably run out of money because your nest egg won’t be able to generate enough interest income to replace it. Divide that 4 or 5 percent by the 12 months in a year and you’ll see just how much of your retirement you’ll truly be able to afford. When I did this exercise a few years ago, I found that I had exactly enough money to retire for one week out of every month. It was pretty eye-opening.
As a result, I adjusted my retirement savings plan and adjusted my thinking to stay in the work force a few years longer than I originally thought I’d have to. I also began planning (in the back of my mind) to start some kind of part-time business to supplement my income during my golden years. I even stopped using my credit cards, started paying them off, and switched over to reloadable debit cards to save a little faster.
Mentally, these weren’t easy adjustments to make but I’m comfortable with them now. I feel like I’m in control and moving down a real path to retirement. My retirement dreams are within my reach; I just have to execute my plan.
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