Is Forex Trading Safe?

Due to the rather poor performance of many open markets this year, countless investors have been turning their attention to the exciting world of the Forex industry. Considering that a massive $5.3 trillion dollars is said to change hands every day, this should come as no surprise. Words such as profit, liquidity, movement and fluctuation are often associated with currency pairs and such concepts have left many wondering if Forex trading is considered to be a safe form of investment. To answer this question, it is wise to examine a few concepts in more detail.

Appreciating Liquidity

The Forex markets are currently the most liquid investment field in the world. Liquidity naturally equates to higher potential profits within a short period of time. However, it is also wise to appreciate that such movements can likewise lead to substantial losses if the correct strategies (and electronic platforms) are not chosen. Prudence is therefore a key strategic concern before investing and the mechanics should be studied carefully. This can be likened to sailing across an ocean. Navigation and understanding nautical principles are critical to avoid capsizing.

Risk Versus Reward

The majority of traders who eventually lose money do so as a result of greed superseding pragmatism. In other words, quick profits can cause a blind eye to be turned to what may be just around the corner. Trading and gambling are two entirely different concepts and the two cannot exist together. The most successful Forex investors will therefore leave their emotions at the door. Once a certain profit margin is reached, they will simply walk away and trade another day. The same strategy holds true in terms of a loss. It can even be said that successful trading is just as much of a discipline as it is a science and an art form.

The Platforms Employed

Perhaps the most critical aspect of Forex investing revolves around choosing the most applicable trading platform. There is no room for second-best brokers for those who wish to enjoy sustainable wealth over time. Some of the key aspects of any system should always include:

  • Access to real-time data and news feeds.
  • Intuitive trading platforms.
  • Numerous trading tools and instruments.
  • An ability to invest in a number of categories and underlying currency pairs.
  • The utilisation of dedicated smartphone applications.

 

These are only a handful of the available tools. Such vehicles are essential to stay on top of the latest news and immediately execute a position. Traders who do not have access to these vital amenities will almost certainly miss lucrative opportunities and in a worst-case scenario, they could lose a significant amount of money.

Forex trading is ultimately as safe as the strategies which are employed (much like any other market investment). Through the bespoke platforms offered at CMC Markets, any trader can be certain that they are aligning themselves towards a rewarding and lucrative financial future.

Copyright 2015 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

What Might We Do With Our Extra Money?

Looking at our money and our budget, there are a few things that have changed over the recent months, and it will require some change in planning on how we approach our money.  One of the things we’ll have to look at it how we allocate ‘extra’ money.

Where Is This Money Coming From?

Everybody will define this differently, but for us the extra money boils down to a few different areas.

  • Credit card rewards – Most of our spending is done on cash back rewards.  As such, we’ll have a few mb-201312billscoinshundred dollars in rewards after cashing in all of our rewards.
  • Tax refund – Last year we had to pay on our 2014 taxes.  This was largely because of a few things: I switched employers and our witholding didn’t cover us as well as I’d anticipated due to some changes in insurance coverages and such. We also realized some stock gains, and also cashed in some savings bonds that had fully matured.  In 2015, we should get a refund, as our withholding was adjusted, we didn’t do so great in the markets, and didn’t cash in any rewards. Our taxes are still out to our CPA, but a back-of-the-envelope estimate shows that we should get a couple of thousand dollars.
  • My wife’s side hustle – My wife runs a really cool shop on Etsy where she designs custom invites, thank yous, wall arts, and similar products.  Up until recently, pretty much everything went to funding our recent Disney World trip.
  • Pet expenses – Our cat recently passed.  We are going to give ourselves some time before even considering whether to get another pet, but expenses will definitely be reduced, as his food, medicine, vet, and boarding costs definitely were not cheap.

So, these are the four areas that we see working in our favor in terms of cash flow.  Some are one-time things and others will be more ongoing.

So, what to do? What to do?

A Couple of Needs, Some Wants, and Looking Toward The Future

Honestly, there are a few things that we will probably do with the money.  Not all of it is flashy, but it’s all (OK, mostly) helping us strive toward goals like saving for retirement, saving for big purchases, and being able to do enjoyable things without taking on debt.

Here are a few ideas.  The splurge type stuff first:

  • New wireless router – Typically our credit card rewards money has funded our purchase of new electronics .  All flat screen TVs and my wife’s laptop have been funded by money our credit cards have given us.  As we now have replaced them all and don’t have any real electronics needs, the entire amount won’t go there this time, but we do want to buy a new wireless router.  The one we have now is at least 7 years old, doesn’t provide the latest security, and the coverage kind of stinks compared to what’s available today.
  • Vacations – Even though we aren’t piling as much into our travel fund as we did to fund our Disney trip, we’d still like to take a family trip every couple of years.  We liked Florida and have never taken our kids to the beach, and so we’re considering saving a smaller portion of my wife’s business toward a trip to the Tampa / St. John’s Pass area.
  • Other travel – Most of our other traveling is done with our RV trailer, but we do like to do a trip to a water park during the winter months, and every couple of years, my wife and I like to consider a small anniversary trip in the fall.  These aren’t extravagent or largely expensive, but stashing a few hundred bucks goes a long way to making sure we can jump on a deal should one arise.
  • Entertainment – We both used to be pretty frequent concert-goers but kind of stopped once we had the family.  We have done a few concerts and really enjoyed it, so we’ve decided to try to do 1-2 concerts per year.  Putting some money toward a specialized entertainment fund is a good goal that will let us buy tickets and a night out without guilt.
  • Furnace Fund – Last year we found that our furnace is starting to fail. We’ve taken some measures to slow this and are very carefully monitoring the device, but it will have to be replaced at some point in the next several years.  Continuing to save for this or other big purchases that might come up is important to us.
  • Retirement – Being able to add a percent or two to our 401(k) contribution or a chunk toward our Roth IRA is never a bad idea.
  • Kids Activities – We set aside money for some of the big things that our kids like to do.  Summer camps, swim lessons, dance lessons, etc.
  • Replacement Car / RV – We are proud that our two cars and our RV are from model years 2006, 2007, and 2004 respectively. However, the bottom line is that eventually they may hit the end of their useful life.  We save for this and could likely replace one without having to take on a loan, but with all three at that age, it could be that more than one would need to be looked at in a shorter period of time.  We will definitely be upping the allocation here, as we want to be prepared.

So, that’s really about it.

Readers, I’m curious what you think of our plans or if you have any other ideas or feedback?  Have you had any favorable (or unfavorable) budget changes over the past months, and how have you worked to incorporate them into your spending plans?

Copyright 2015 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Real Estate Investing: Avoiding the Most Common and Lethal Mistakes

Many investors get into the real estate game because they believe they can get rich quickly — they buy property, collect great amounts of rent for a couple of years, and then sell when prices appreciate. This is not how real estate works, however.

It takes time, even decades, to see significant returns. It also takes care, learning, and a willingness to put in years of effort to make the most of such an investment. When one is willing to invest all this in a real estate venture, returns can be far better than can be realized in the stock market. However, investors who believe they only need to throw money at a property and do little else usually do not do well. This is only one of several cardinal rules of successful real estate investment.

If you’re interested in real estate investing, you need to make sure you understand the way the world of property investment works. Here are the mistakes that you should stay clear of.

Taking on more than you can manage

A number of things go wrong when you take on far more property management than you have time for. You can take in tenants to fill up your rental units, but you aren’t able to pay attention to them to make sure they comply with the rules.

It also can be hard for you to comply with your end of the bargain too. Keeping up with calls for maintenance, and finding the cash to deal with maintenance needs, can take work. You can even find it hard to find new tenants when people move out.

The answer to some of these problems, of course, is to sign on with a qualified lettings agent to manage your properties for you. This will free you to do what you do best — find the resources to manage and maintain your investment. Specific tasks are usually best done by dedicated professionals.

According to RussellRes.com, the prominent professional lettings agency, the problem of inadequate management comes about when people get into real estate investment without giving adequate thought to the responsibilities involved.

Not creating a proper accounting system

Whether an investor owns one property or several, it’s a business, and it needs to be treated as such. Investors need accounting, record-keeping, and management systems. Without these in place, there’s likely to be much trouble during tax time; money will be lost to missed potential deductions and penalties for underpayment.

Not understanding cash flow

Many people believe that all they need to succeed at business is a great product, that “if you build it, they will come,” and if paying customers come, there’s no way to get into trouble. This is hardly true, though. Dozens of businesses with successful products and full order books file for bankruptcy each year, simply because they are unable to understand the distinction between ensuring income and ensuring cash flow.

A full order book and plenty of sales will ensure that there is enough money coming into the business when income is averaged over a period of time. General accounting deals in averages. Cash flow accounting, on the other hand, deals with the availability of cash to pay bills and other obligations at specific moments when those obligations come due. If a businessman is unable to pay a supplier because he had been looking only at average cash inflow and not at whether he would have cash at a given time, he will be sued or will at least lose his reputation.

This is the problem that many inexperienced real estate investors face. If they have a couple of empty rental units in a given month, they may not have enough cash for maintenance or property tax when such needs come up. Any investor who hasn’t budgeted for enough savings to manage such lean periods can get into serious trouble.

Refusing to get advice

Many first-time investors get into real estate hoping to be the strong, silent, and independent type, who doesn’t need help. But no matter what appearances may suggest, it isn’t possible to do well in any kind of business, let alone real estate, without the help and intervention of advisers who have had success in the business. Advisers are needed for the business aspects of investment and property management, as well as for information on how the physical work of maintaining property is done. The more advice you get, and the more you pay heed to it, the more successful you will be.

The best way to avoid serious mistakes in real estate investment is to do your homework. Not only do you need to read up, you need to work in a successful real estate investment firm to see how they deal with things. It’s hard to go wrong when you observe those who are successful.

Lauren Khan works as part of a property investment team and is always pleased to share her experiences and suggestions with an online audience. She writes for a variety of investment and property websites on a regular basis.

Copyright 2015 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

4 Reasons You Should Ignore The Stock Market Doomsday Preachers

The stock market has not been pretty as of late.  All three major US indexes are in or have at some point recently dropped into correction territory, which is noted as a 10% drop.

The bulls that drove the stock market to more than double over the last few years have taken a break, and the bears have been more than happy to step in and finally be right.  However, I think that there are some who are way off the mark.

Is This 2008-2009 All Over Again?

There are many out there who will happily tell you that the stock market is headed for another crash like the one that happened in 2008-2009 when the markets lost over half their value in about an 18 month period.

They claim that the Fed artificially propped up stock prices over the past few years, and that their effect is over, and we will now return to those levels (and some claim lower)!

They claim that the global economy is so dire that the entire world is going to crash and burn any day!

They claim that just about anything and everything is a bubble and they’re all going to burst!

To all of that and any related thesis about an imminent market crash, I am very skeptical. Let me explain why.

Here are four reasons that I don’t think the market is headed for a crash.

There are no signs of a foreclosure crisis on the horizon

Remember the early 2000’s, when prices in just about every neighborhood were skyrocketing?  10% increases in mb-201312billscoinshome values a year?  No problem.  People could buy a home and be comfortable that they’d turn a profit in as little as a couple of months.  However, as we now know this was all built on a house of cards caused by bankers giving out loans that they should never have been doing.

Look around today.  While home prices have largely recovered, the volume isn’t there.  There’s less houses being sold.  This is a good thing.  It means people are actually buying and selling because they need to, which removes most of the speculation that drove the previous rise and fall.  While there are flippers out there, the practice is much less common and you have to actually know what you’re doing to make it work.

In other words, this is a fairly normal housing market that has solid footing, and while values could flatten or even decline, the crash in prices and spike in foreclosures seems very low risk.

Banks aren’t built on a muddy foundation

Remember the images of Lehman Brothers closing?  People walking out carrying boxes.  A giant building suddenly with no purpose.  A company that had handled and been responsible for trillions of dollars and in business for well over a century suddenly….gone?  We all saw the images and they hit home.  The fact is, while Lehman was the only major casualty of the giant banks, it could have gone further.

Luckily it didn’t.

When it all shook out, it turns out that very few banks were in great shape.  Most had gotten so consumed with the housing mess that it could have all come tumbling down.  Lehman wasn’t fortunate enough to get another chance, but many still did.

And the results show today.

Banks now must routinely go through stress tests, where a simulated economic disaster takes place, and banks must show that they have the liquidity and the financial strength to weather the storms.  When these stress tests first rolled out, very few banks passed.  Now, all the major banks have showed strength and routinely passed stress tests.

Is every bank guaranteed to survive some economic event that might happen? Of course not.  But, the industry as a whole is now must stronger and is not at risk of collapsing at any moment.

Unemployment numbers are solid

One argument that the mega-bears use is to point out that economic recovery is slowing.  This is true, but when you compare it to a few years ago, is this really a big surprise? We were just coming out of the biggest economic catstrophe in 80 years, so when things started going in the right direction, it was no surprise that things started picking up quickly.

Unemployment stands at just over 5% today.  That’s the lowest in years, and while employment gains are shrinking, I believe that it’s because of what the numbers show, that many people have jobs.

Many people will counter that argument by stating that the unemployment number is flawed, because many people simply dropped out of the workforce.  I can’t prove that’s wrong, but to me, just by emperical evidence, it’s pretty clear that more people are back to work these days.  I just don’t see the Facebook posts of people sitting at home looking for work.  I have automatic alerts about jobs in my area for my profession, and I see the number of opportunities getting bigger in number.  I just don’t see that unemployment numbers are a reason to predict a crash.

On top of that, I also think that the fact that unemployment has grown slowly and steadily over the last few years is a reason for strength right now.  Many past recoveries saw job numbers grow very quickly after a recession, only to see the large gains get undone at the first sign of trouble.  I believe in our current economy, employers have added jobs as they are truly needed, and the risk of them quickly unwinding the hires of the past few years is low.

Other countries do not drive us (though they can ride shotgun)

But….but…..China….and….Greece……yeah….they go down, we go down.

Isn’t that what many fear mongers have been preaching over the last year?  Every time China slows or Greece slows, the market goes into panic mode and the perma-bears pat themselves on the back in satisfaction.

Whatever.

The fact is that while we now have a global economy where things in other countries will impact us from a financial perspective, we still drive our own economy.

Let’s think about this?  The last time the situation in Greece came about, the stock market lost more value than the entire annual GDP of Greece!  Again, I understand the situation was no laughing matter, but perspective sometimes gets lost, and those who want to see doom and gloom will latch onto any little bit of news and make it seem like the entire country was going to basically fall into the ocean and all economic activity would cease.

Greece, China, and other countries will all have issues.  Will they impact us?  Sure.  But are they going to blow our economy out of the water?

Not likely.

So what does it all mean?

Am I here to tell you that the stock market shouldn’t have fallen?  No.  Am I hear to tell you that it won’t fall more?  No.  In fact, I could be completely wrong about everything I’ve said.  Maybe the market will tank.

But, I don’t think it will.  I’m keeping my portfolio aligned with that opinion (and that’s all it is).

I don’t see the perma-bulls getting hold anytime soon.  Will the Dow hit 20,000 this year?  Probably not (though wouldn’t that be nice!).  But will it go under 10,000 like many seem to love to call for?  I just don’t see it happening.

I think that there will be a lot of volatility.  I think right now this is caused more by the market sensing fear and trying to shake out the weak hands.  Unfortunately, if this is true, a lot of people will get shaken out, suffering losses, and then they’ll miss out on the upside again.

That’s what the fat cats on Wall Street loves to do to the retail investor.

So before you make a big move in the market, whatever it is, make sure you look past whoever it is that’s telling you that things are going to go way down (or way up) and make sure you understand for yourself the things that are going on and that you have your own belief in what’s next.

You might be right and you might be wrong, but at least you won’t be trusting someone else.  Because let’s face it, all those ‘someone elses’ don’t have the best interests in mind for your money despite what they say.

Readers, what do you think? Is the market headed for a crash or a rise or somewhere in between?  I’d love to hear your predictions and thoughts on what’s driving the market these days.

Copyright 2015 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.