Lesson 2 Unrealistic Expectation

 

Children are often burdened by unrealistic academic expectations throughout their lives. However, parents, teachers and mentors must teach them that there is more life beyond the scorecard. All the work is worthwhile if they grow up and become kind, considerate, and helpful people to those in need. Because life is more than just numbers. What matters is the journey and the quality of the journey.

Similarly, when making an investment, return is not the only thing you need to consider. I hope something big is a good thing, but achieving financial goals based on unrealistic assumptions can make it go downhill.

In the past, many stocks may have performed very well. However, remember that your future performance does not depend on your historical temperament. Consider the following points to fully understand the investment situation with the following:

The trade-off between risk and return. In the past, sometimes you were attracted by investment products provided by account managers and investment agents only by considering the rate of return provided. However, as an investor, you should also evaluate many other factors. One of the most important factors is risk. You will see that everything has a price, including your return on investment. In order to obtain greater profits, you must have sufficient risk tolerance. In other words, the high return on your investment is the premium you get for taking high risks. This is the so-called risk-benefit trade-off. Almost all investment products face various risks, but at different levels. Therefore, before investing your hard-earned money, it is important to understand the risk-return tradeoffs of each asset class and the investment path in it to assess whether it is appropriate for your risk profile. It is not advisable to rely solely on rewards.

Properly allocation of assets. Pay attention to asset allocation. Define your asset allocation based on age, income and expenses, assets and liabilities, risk appetite, investment goals, investment scope and financial goals. Asset allocation refers to the allocation of investable surplus among asset classes (such as stocks, debt, gold, real estate or even holding cash). Therefore, when allocating assets, you are actually adopting an investment strategy that can balance the risks and returns of your portfolio, taking into account your risk profile, financial goals and investment time frame. As mentioned above, every asset has a certain degree of risk and expected return.

Investment time frame. Asset allocation varies with the time frame available before the financial goal occurs. For those who have a short-term investment period of less than 3 years, it is recommended to allocate them to fixed-income securities, and to avoid assigning them to asset classes such as stocks and gold due to their variable rate of return, so the risk is higher. Due to the short investment time. For the medium-term investment period like 5 years, you can allocate a portion of the investable surplus to stocks and gold to take advantage of the higher risk-return ratios provided by these categories, but you will not be enthusiastic.

For longer investment periods like 10 years above, you can allocate a larger proportion of the funds to higher-risk asset classes in order to use the power of compounding over a longer time frame. That is to say, maintain some (if not too high) exposure to bonds and gold so that the risk can be mitigated to some extent. For investors, it is crucial to recognize the risk-return trade-offs of any asset class, and to be realistic in the expected returns, and to wisely evaluate the performance of their investment portfolios.

"Time to market" instead of "timed market". Everyone wants to enter when the market is low and exit when the market reaches its peak. However, regardless of market research and analysis, it is impossible to always accurately predict the direction of market development. Take 2010 as an example Philippine Stock Exchange (PSE). When valuations were really cheap, many investors missed the stock market's reversal and missed buying opportunities. On the other hand, in 2011, when the market was in trouble, many retail investors left the market. I believes that you should focus on long-term financial goals and commit to a fund that continues to invest in order to optimize the level of risk return. Achieving your life goals requires a disciplined investment method and perseverance to ignore market momentum. Trading is meaningless, because it may endanger your wealth and health. Remember, traders are good commodities only before the last transaction. The bottom line to achieve your financial goals, first assesses your risk appetite. Once is determined, stable investment will begin. In addition, diversify your investment in all asset classes and monitor your investment portfolio every six months.

Lesson 1 Learn To Understand Trading and Investing

 

In life, we all make mistakes. When investing in, some beginners will take huge risks and learn difficult methods. Some people will take a thoughtful approach and learn simple methods. Although errors can help you learn as an investor, they can also jeopardize the future of your investment. It is important to know what not to do when you start investing. In order to make you a successful novice investor, please avoid the following five common investment mistakes.

Learn From The Mistakes of Newbies Investors

I Don't Understand Trading and Investing

Many new investors don't decide their investment strategy in advance. Beginning investors can be divided into two main categories: traders or investors. Although both trading in stocks and investing in stocks are common forms of investment in the stock market, their execution methods are different. Trader is an active investor, quickly buying and selling stock positions for profit. One way for traders to be successful is to earn a higher profit rate.

A trader who makes a profit on 60% of the trades does a better job than a trader who makes a profit on 30% of the trades. For traders, another important factor is the risk-reward ratio. If traders buy and sell positions with high potential gains and low potential losses, they can get higher returns on average. Long-term investors use different strategies than traders. First, investors cannot buy and sell stocks quickly. It is the long-term purchase and holding of shares, long-term investors will use more of the company's financial information to determine whether it is a good action. This includes looking for companies that increase profits over time and sell them at a favorable share price. Long-term investors will purchase a diversified portfolio of company stocks and seek to expand that portfolio in the coming years.

If you start investing without defining yourself as a long-term investor or trader, it is difficult to use established strategies to be successful. If you decide to trade stocks and make long-term investments at the same time, you can divide your funds into two categories and manage each part according to your strategy. Next we will be discussing Lesson No. 2. To be continued...

Theoretical Basis of Currencies

Currency Introduction, Major Currencies and Reasons For Conducting Foreign Exchange Transactions

Exchange Rate Definition

Forex (Forex) is currency trading between countries and is the largest and most liquid financial market in the world. There are an estimated 1.5 trillion US dollars worth of currency transactions in one day, dwarfing the transactions of other types of commodities. Unlike any other commodity transaction, there is no centralized transaction in foreign exchange and transactions are primarily conducted through banks, brokers, merchants, financial institutions, and individuals. Because financial institutions have this ability to trade currencies, the currency market is open 24 hours a day, 5 days a week (closed on Saturday mornings).

Before the late 1990s, currency trading was just a practice of institutional traders. Although retail traders were able to trade the forex market, it has only recently become popular, with individuals trading currencies for huge profits. Most currencies of different countries in the world float freely; this means that they retain personal value and will appreciate and depreciate relative to other currencies. Currencies are always listed in pairs because they require another currency to compare.

Reasons For Foreign Exchange Trading

There are many purposes for foreign exchange trading, and you will be surprised at the many trading levels that affect you without you even realizing it. For every purchase you make, the content, ingredients, by-products, parts or materials are not necessarily national. It can be purchased internationally, so foreign currency exchange must be carried out.

From a financial point of view, some people may trade in the foreign exchange market for huge profits. By using cross-currency pairs, they can exchange currencies for foreign currencies in the hope that the value of their own currency will depreciate, so when you exchange, you will get more income than the initial income.

A great opportunity for international importers or exporters of goods and services to enter the international market. However, with fluctuations in international exchange rates, payments can sometimes be difficult. Initially, the company sells at an agreed price, and then on the date of payment, the agreed value is significantly less than the agreed value, which is caused by currency fluctuations (called exchange rate risk).

You will find that all types of businesses, from large financial institutions to small retail freight forwarders, will conduct currency hedging. In short, these companies will take steps to ensure that the agreed payment value represents the same value on the day of payment, regardless of currency fluctuations.

Eight (8) major currencies Internationally, there are eight (8) currencies whose trading volume exceeds other currencies. They are often called professions. These coins are as follows:

USD - Unites States Dollar

JPY - Japanese Yen

GBP - British Pound

CAD - Canadian Dollar

EUR - European Currency Unit

CHF - Switzerland Dollar

AUD - Australian Dollar

NZD - New Zealand Dollar.

Some parts of the world trade on Saturday during part of the time, because other markets are still trading on Friday. The financial institutions in these countries/regions may deal with the foreign exchange market during working hours. Therefore, the foreign exchange market is open and operates 24 hours a day, 5 days a week. For people living on the east coast of Australia, the trading hours of the relevant market are summarized as follows:

New York session opens at 10:00pm and ends around 7:00am

Sydney session starts at 7:00am and ends around 4:00pm

Tokyo session begins at 9:00pm and ends around 6:00am

London opens at 5:00pm and ends around 2:00am.