Why In The World Would I Want To Trade Stocks?

That’s an excellent question. The quick answer is to make money but if we dig a little deeper we will see that the stock trader doesn’t just want to make money, he wants to make a lot of money. In fact, the stock trader is looking for larger returns that he would otherwise get by simply investing in a stock or a mutual fund.

It is true, however, that some people trade stocks for the action. These types of trades like the thrill of entering and exiting trades. Typically these traders trade frequently because they are more interested in the feeling they get from the action than the profits being made.

Profitable stock traders focus on profits. They are less interested in the action of stock trading itself and look at their trading as a business. These are typically the type of stock traders that continue to make money over the long haul.

In more traditional stock investing a big, long-term move is usually anticipated. Stock investors position themselves for this long-term move and look to make a profit.

Stock traders, on the other hand, look for profit opportunities within these long-term moves. In other words that stock trader realizes that there are numerous smaller moves that a stock will make during a long-term move. Stock trading looks to maximize profits by catching some of these smaller moves along the way.

The retirement income from these investments is also subject to differing income tax rules.

The reason any of us should want to trade stocks rather than just buy and hold is that we want to make larger returns than buy and hold will typically gives us. If we were not seeking larger returns then it would not make sense to trade stocks because there is extra effort involved in taking advantage of the increased number of trading opportunities. Remember also with these additional opportunities come additional trades. With additional trades there are also additional transaction costs. We must keep these increased costs in mind because left unchecked they can mean the difference between profitable and unprofitable stock trading.

Conclusion

The opportunities for profits in stock trading are vast as the universe of available stocks. Keep in mind that huge profits can be made but so can huge losses. Always carefully evaluate the risk versus reward prior to placing your trades. Do your homework and prepare yourself for stock trading success.

To Your Stock Trading Success!

Whether you're a beginner or a seasoned pro you'll discover the best Trading Stock tips, tricks, and techniques as well as valuable tools, resources, and information at http://www.stock-trading.tradingknowhow.com

Retirees Should Use Stocks as an Income Source

An issue that plagues many retirees is how to manage retirement income in the face of the increasing cost of living. Even with moderate inflation, costs of living tend to increase over time. This can reduce the retirement income retirees can obtain from fixed income investments, even while they must meet higher expenses. Where can you find a source of retirement income that can keep of with inflation, along with your expenses?

Our suggestion: consider putting some of your money into a portfolio of large capitalization dividend-paying stocks as an income generation alternative. This retirement investment could help to provide you with a retirement income that keeps pace with the rising costs of living. For the 30 years ending 12/31/04, the stream of dividends from an investment in a basket of stocks representing the S&P 500 index generated a growing stream of income. During that same period, interest rates from CDs fell 7.42% to 1.85% (the S&P 500 is an unmanaged group of securities considered to be representative of the stock market in general; it is not possible to invest directly in an index).

Data 1/1/75 through 12/31/04. Dividends based on a $10,000 investment 1/1/75 in a basket of stocks representing the S&P500 from American Funds Distributors. Interest rates from Federal Reserve year end rate on 6 month CDs. You cannot invest directly in an index. Past performance is not a guarantee of future results and an analysis of a different period may have revealed different results.

Although publicly traded stock can help you to manage inflationary risks, the dividends that these stocks pay out are highly dependant upon the overall profitability of the issuing company. Therefore, you will want to strongly consider the dividend payment history of the company prior to making such a retirement investment.

A few additional things should be considered about stocks and CDs. First publicly-traded stocks tend to be suited for investors that are seeking asset appreciation and are willing to take on the additional investment risk. On the other hand, CD's are suited for investors that are concerned about preserving their principal investment and are adverse to market risk. With this in mind, it should be remembered that CDs are FDIC insured while publicly-traded stocks are not. The values of publicly-traded stocks fluctuate in value and may result in either a gain or loss upon sale.

Stock dividends are generally subject to federal income tax of 15%, while CD interest is taxed as ordinary federal income tax rates, which can range anywhere from 10-35%. CDs may have an early withdrawal penalty if money is taken prior to maturity. On the other hand, the stock of most largely capitalized companies can typically be purchased and sold at any time when the market is open.

Larry Klein CPA/PFS, CFP®, Certified Retirement Financial Advisor™, Harvard MBA and one of the nations leading financial speakers on retirement investing provides one of the larger libraries of retirement investing articles at Retirement Investing

Categories of Stocks Based on Objectives

“Leaders need to be optimists. Their vision is beyond the present.” -Rudy Giuliani

Stocks are often categorized by the type of objective their companies are trying to achieve. Two of the most common goals are growth and income. In addition, stocks can also be distinguished from each other based on the type of payout their offer to their investors.

Growth Stocks. Companies which offer growth stocks do not offer dividends. They are characterized by an intense and aggressive rise in the value of their stocks. This allows investors to see a growth in their original capital extremely quickly. Growth stocks usually increase quicker then the stock market itself. This works great because the company and its investors can easily reinvest their profits to increase their rate of return. Reinvestment is an alternative to dividends which other types of stocks may pay out monthly or quarterly. A good example of growth stocks are those in the tech sector. Money made from investing is pushed back into the business to finance more research and hopefully development. Growth stocks are extremely popular because of their rapid increase in price.

Income Stocks. Income stocks belong to companies which are not growing but are extremely stable. They have reached the top end of their value and continue to maintain that value. These stocks to not fluctuate with the economy or the stock market and are extremely low risk. Income stocks pay monthly dividends to it's investors. This is a way in which investors can actually live off their investments. A good example of income stocks are REITs or real estate investment trusts. REITs offer a rate of return just under 5% yearly.

Slang Terms. There are several slang terms for stocks that all investors should know both for historical purposes and just for the fun of it.

Blue Chips is a term that refers to company stock that has a long history of producing a stable and regular increase in the value of their stock options. These companies have been through the ups and downs of the economic and stock markets – and survived. The term originates from poker where the blue chip represents the highest amount of money. Current Blue Chip companies include WalMart, Coca-Cola, and IBM.

Penny Stock is a reference to stocks which are worth less then a dollar. Most of these stocks fall under the heading of 'speculation'. Penny stocks usually belong to companies which are new, up and comers that financial speculators believe are going to be extremely successful. They can offer a great rate of return for investors but if things do not go well, investors can lose all their money they have invested

Visit the Global Investment Institute and signup for our free Investing For Beginners E-Course at http://www.Global-Investment-Institute.com

Investment webmasters or publishers, please feel free to use this article provided this reference is included and all links remain active.

The Latest Investment Stocks Online Articles

Low Risk Investing

Check the facts and you will see that land can offer you better growth in the right location with lower risk than almost any other investment. There are plenty of companies that will help you and the investment maybe small but the change to your finances could be big.

Forex Trading

Forex traders rely on several parameters to conduct their trade. The more successful or experienced traders follow their instincts based on years of experience of trading in the forex market.

More articles coming soon!

Investing Stock Online Resources

Yahoo Finance

CNN Money

Family Financial Planning Courses

Invest in Books