Different kinds of Stock

The classification of stocks are either preferred or common. The potentials is measured when company liquidates assts and is reflected through the given of reference o preferred stock over common stock in the market. The shareholders income is based on mixed dividends and redemption date rather than corporate earning of sorts. The owner of convertible preferred stock has the option to convert preferred into common stocks, if he/she so desire.

Most investors prefer common stock, because with that, the owner is entitle to vote on the selection of directors and other important corporate concerns and discussions. Owners equally have a right to a share in the assets after all debts and prior claims have been satisfied, should the company is forced to liquidate.

Below are some of the categories of stock to consider;

(a)Foreign: these are international companies stocks, where the prices of foreign stock, affected by all the market concerns drives the prices of domestic stock are vulnerable to currency exchange rates, different laws and regulatory oversight, political challenges and other numerous issues regarding government policies and programs arising in individual countries of the world.

(b)Speculative: companies without proven track record or dividend history have these kind of stocks. Another name used interchangeably are penny stocks, which sells at a very low price with a high risk attached.

(c)Income: for income stocks, it pay fairly reliable dividends quarterly. The power companies are the most commonly held income stocks, prominently, because it tends to be relatively stable, given the high level of income produced with more competitive climate coupled with the overall market decline that causes drops in price movements.

(d)growth: some companies have a track records of faster risen than average in earnings have these stocks. The strategy behind this growth is the method of reinvesting profits in the business to maintain a competitive edge almost all the time needed. They did that on the investor’s premise and hope that in the long term the prices will rise simultaneously with company growth, and so will reap a bumper harvest, ignoring the short term partially, knowing well that price swings can be more dramatically with stocks that pay dividends to them when fully matured.

(e)Small cap: these are smaller companies stocks, where the word ‘cap’ tag stands for capitalization, calculated as the prices of a share multiplied by the total number of shares on the market. Ideally, though, the stocks subject to fluctuate significantly in the short term. Record has it that on the long term, small caps as a whole have outperformed every other types of stock in the market.

(f)Blue chips: the large companies with well established records of profitability, dividend and payment have these stocks, and tends to be more expensive than other stocks, and more because their value is considered more stable to invest in. How do you analyze stocks

The provision of window on the health and profitability of any company is known through the financial statement if a computer or the SEC reports, where investors carefully review the documents and give their judgment and conclusion or whether to invest or not, based on the advise of the expert; various stock indices, especially the economic indicators of overall stock market performance are worthy f consideration. This method is adopted through the tracking of the price changes of a specific selection of paper assets, where an index provides a benchmark for evaluation of the performance of the individual stock by investors to help invest right. In the U.S.A., Dow Jones Industrial Average tracks, the stock prices of 30 companies that it considers to be the bedrock of America business and the most widely used indices are standard and poor. Composite Index-known as the SAP500,NASDAQcomposite respectively. Having a reputable broker as member of an investor’s team is very crucial, because the stock brokers are trained to evaluate the financial history of a firm, and to help make an informed ‘guesstimate’ about how an Industrial stock performs in any given market at any point in time.

What is mutual fund

The portfolio paper assets purchased by a professional manager with the pooled resources of many private investors is called, Mutual funds with each mutual funds share represents a particular share of every bond or stock in the same portfolio of choice. The cost of mutual-fund shares is cumulative in the sense that investors pays fees for services, charge commission when fund is either bought-called front-end load, or sold-called; back-end load, for the Load funds sold through them. Invariably, no-load funds are sold directly to the public without additional charge in the market. Percentages of one to five of load and no-load funds charge for management fees, which individual market fees is applicable that can most a times reduce potential profit for any investment in question.

The goal of mutual fund is to make money available through in major two ways-one, to record capital gain or profit when a fund manger sells bonds or stocks for more than the purchase price in the mark, where the money is distributed to share holders, which sometimes come in form of a check, but almost always as additional shares or stocks. Although, when the fund is a tax-deferred account, taxes are owed the year the gain is achieved and actualized .

retirees which form past of investors may want to receive regular cash payments at times. Shares in corporate profits emanates from Mutual funds originally designed to generate income invested in companies of bonds with high dividends pay. Point to note about mutual fund is that unless the fund is held to a tax-sheltered account, the cash distribution are taxable with time.

The Types of Mutual Funds available

An average investor stick their neck for open-end and closed-end mutual funds, which is the two major or basic types, because it issues a fixed number of shares, as part of trade on stock, dependants on both value of the assets held and on the demand for the shares as the stock. Hence, an open-end funds are directly bought according to customer demand from the fund and trade in the market.

Major types of Funds

(a)Sector funds: It is otherwise known as single-industry funds characterized by investment in specific market sectors, like telecommunications, Agriculture, Energy, health care etc. These appears to be more risky than an average investment portfolio, because there is nothing to buffer them from downward trend in their particular sector, should anything go wrong.

(b)Bond funds: the main objective of these is to generate income with little or no long-term growth to offer, though relatively stable associated with price fluctuations, occasioned by changes in interest rates over time.

(c)International equity funds: The IEF concentrates their interest mainly and primarily on foreign securities to invest in these, one must take into cognizance the economic, political factors and indeed the entire foreign policies of that country to be sure you don’t gamble with your investment .

(d)Index funds: this is when you invest in the same paper assets that is tracked by stock indices that usually attracts lower management fees. A good examples of such are the standard and poor’s and Dow Jones.

(e)Growth funds: The type of investment where more established companies whose stocks offer long-term growth is considered rather than income and with reinvested dividends is called, growth funds.

(f)Income funds: these deliver interest on bonds and treasures, but have the same goal as equity income funds to its functionality.

(g)Equity income funds: When you invest in this type of the stock, other wise known as equities of well-established companies, that pays dividends, which is an alternative to bond funds for those in need of steady income, then you have invested in equity income funds.

(h)Balanced funds; If you want to invest in a conglomeration of stocks and bonds that come in form of a set proportion with your intentions to accept modest growth in exchange for stability in the market, then consider to invest in balanced funds. How do you analyze mutual funds:

The importance of the gain is achieved and actualized through the comparing the relationship between the short and long term performance. This is done by the investors and the up and down of market movement, and acquiring the knowledge is the key, because the knowledge helps to invest right. Some times, you just need to use the indices like volatility ran kings to measure the variations in the fund’s total return over the last three years or more, compared to those of similar funds in the market, simultaneously. You then use a scale of one to ten to measure, because ten is considered the most volatile so far. Now, after your findings, if the swing is wider, then it is assumed more risky or volatile to invest.

The overall decision of an investor is based on the premise that marketing session management fees and funds loads are toxically and carefully assessed within the context of fund performance too. The reason for the above careful observation is that no matter how poor the fund performs, these fees are always charged against it. Although, findings have it that some fees are not always stated outright, but may take some investigation to process it. Have this point in your mind that the potential profit is negatively affected, the reduction in computation-process of mutual fund fees ,significantly, of course .

If you have invested in mutual funds already, you will agree with me that the law instructs or directs that all customers must be furnished with, or given a prospectus, document, which outlines the fund is objectives, and procedures for buying and selling shares, the loads land fees, and finally the annual operating expenses of the company under review. The law equally specifies that bond funds should have total operating costs of no less than one percent of assets, stock funds, 1.5 percent respectively.

Conclusively, people that are too busy to oversee their investment are found of investing in mutual fund, because they rely heavily on fund manger to oversee the funds on their behalf. The sharp losses often incurred by individual stocks is a result of a bunds’ collective of diversified stocks that might buffer investors. The liquidity nature of stocks makes it available for potential investor to purchase at low price, relatively most of the time.

For obvious reasons, and the fear of being hulled into complacency and to neglect to track the performance of their funds, the investors now take extra care before investing in mutual fund, which are solely over-seen by mangers, who capitalize the fund automatic drop in value. Especially during a general market decline in the movement.

Logically, the very buffers that protects against loss can equally limit gain, even in a good market, while investors can actually fund themselves with taxable capital gains in a down market even though the value of their holding has dropped reasonably, usually when the fund is forced to sell its holdings.

In most cases with built-in capital gains so as to meet the demands of selling share holders of the company.

The Retirement Plan and Account

The term retirement plan are process by an employee, a company or both, done in advance to protect future occurrences. It is an investment portfolio where contributions are deposited in an individual account or a company-sponsored plan that accumulates in earnings. Benefits are paid to employee in regular installments or a lump-sum distribution when he or she reaches retirement age, with the advantage of tax-deferred earnings, while some even shelter income or earnings are effected. Although, the limit of contribution differs on who can contribute, and at what age, when benefits begin, probably, fees charged, and the number of years it takes to be vested etc.

What is vesting in Retirement funds

The term vesting simply means to grant control or possession to something. It all depends n the schedule your employer adopts. If for instance, after a maximum of six or seven years of service, you are fully vested or entitled to all of the company’s contributions, which from the on set you’ve being in control of the money that you contributed to a pension fund that your employer deposited on your behalf.

Different types of Retirement plans and Account.

It is a traditional practice by employers to reward employees with a guaranteed pension for life for years of loyal services. The company concerned funds fully the Defined-benefit plans in the case of government pension fund, where it is funded by taxpayers money. Although, this is dependant on the level of benefit determined by the employee’s salary and the years of service at the time of retirement by the retiree. The free money that employer plants and grow for employees is called defined-benefit contribution (DBC).

Various types of employee-contribution plan is gradually taking over and replacing the almost old model defined-benefit plans used to be sponsored by private companies for retirees.

The Current Employee-Contribution Plans

(a)The Keogh plans: this is a plan model that cover small business owners and the self-employed in the society, which is similar to IRAs. The difference is that it allows more pre-tax earnings to be invested in a tax-differed account during computation.

(b)The Individual Retirement Accounts(IRAs): this plan allows an investor with no retirement plan at work, and which falls below a certain salary level to make annual contributions to a tax-deferred account with the aim to withdraw it when matured, where the required age is pegged at 59 ½. However, there are exceptions to the rule. More over, the IRAs funds are said to be limited to manual funds, individual stocks and binds, certificate of deposit, paper assets which includes money-market accounts.

Although the self-directed IRAs may allow for additional investment opportunities such as real estate and Gold/silver. The next is the both IRAs that form part of traditional IRAs, where the initial taxes are paid and the balance is allowed to grow tax-free for the investor.

No wonder then did a renown founder and former chief executive of the Vanguard Group, John Bongle cautioned in his book that ‘The Battle for the soul of capitalism where the excessive are often hidden to the extend that Lads, management fees and marketing fees though sizeable, are charged even when funds lose money, called for review ‘. He stressed further to say that ‘even though investors put up to 100 percent of the money and the 100 percent of risk, they only take home about 20 percent of the profits, while the mutual fund company pocket the other 80 percent’. In his advise, he said, that it is wise for the investor to know how the system works before they start.

The Self-employed consist of two branches, namely: SEP and SIMPLE IRAs respectively.

(3) the Deferred-contribution plans: As the name implies, it defines the amount of contribution an employee can make to a retirement fund, especially as a percentage of salary of workers. But the plans are sponsored by the company under review and the employers don’t have to contribute any amount. What an employees benefit depends on how much has been deposited and how well the investment have done well or not over the year. Your earnings are taxed only at withdrawal period/time. A good example of a defined-contribution plan is ‘A 401 (k)s

The Retirement Plans for small business owners and the self-employed people

(a)The simple IRA: Contribution is done annually without income ceiling or percentage basis in the case of simple IRA-Self-employed

(B)SEP-IRA : As the self-employed, you can contribute up to an IRS-defined ceiling set out.

The defined-benefit Keogh with older and highly compensated workers can define their own benefit by themselves and within the set by the IRS, then contribute unlimited amounts of pre-tax earned income to achieve it. However, if assets throw off too much income, the excess of the limit is taxed at much higher rate to make up for the time not taxed.

The defined-contribution Keogh limits the amount that self-employed workers can contribute, then offers a choice of investment strategies to follow.

Annuities: These are contracts which guarantee steady income in retirement plan.

Annuities are purchased with a lump-sum payment, which means that a service of payment, especially to a ‘life insurance company’ of your choice that in turn invests the money back. However, contributions are not tax deductible as with IRAs and 401 (k)s . Greater flexibility in establishing the starting date and duration of distribution are characterized by annuities.

Different types of annuities: Two options are available to an investor. A prospective investor must decide between annuities with fixed or variable returns, then chose how and when benefits were paid out.

a)The deferred annuities : the deferred annuities begins distributions at a future date specified by the owners them-selves, which can be either be variable or fixed. The variable specification is the most common, and still offer the same benefit as that of immediate annuities with time.

(b)Immediate annuities: The first thing these does is first of all to start the distributions within a year of a lump-sum payment if you have ready cash from an Inheritance, sale of a property. There is an automatic and immediate annuity guarantees income for. The responsibility of management investment is off your shoulders-With an additional advantage of fixed immediate annuities.

(c)Variable annuities: Variables, as the name implies offers a number of different securities for investors. Prominent among others are mutual funds that attracts earnings in league of stock indexes for measurement.

(d)Fixed annuities: the interest rate of these is that established and designed to help protect you from the risk arising from my your income contributed over time. On maturity, the purchase payment are carefully converted into periodic payments able to take you for life if fully maintained.

How to secure Loan from the Bank for your business

Logically speaking, taking a loan from the bank to finance your business automatically pair the bank as your partner in progress, to making sure you succeed in the business of your choice. Although, at this point, the bank position in your business is seen and regarded as passive, on the ground that you are sure to make payments as at when due, and at the same time maintain a periodic communication to your bank loan officer on how steady progress you are going in your business

Bank serves as the reservoir where the pool of funds come from. It lends you money for a specific period of time, then charge interest where the lender gets or receives his profit as at when agreed upon, and subsequently the repayment of the principal amount borrowed from the bank. Many sources are responsible for the provision of loan, which includes community, regional and national banks, investment banks, financing companies, financing arms of equipment manufacturers, credit unions, micro lenders and what have you. There is a peculiar case where angels investors provide loans as a bridge to equity funding in the real sense of it.

Bank as the financial institution has its own process for granting bank loan to start-up small business, especially the commercial banks.

How to set up a meeting with a loan officer.

It is the primary duty of a person who want a small business loan to meet with a small business loan officer of choice. Sometimes, it is advisable to first of all visit the bank’s website to see what they say about small business lending , which is usually in-fused in the website’s terms and condition page, before you make decision on an appointment, which will go a long way to demonstrate that you are a serious applicant, rather than just walk into the baking hall un-announced when you are not sure to meet all appropriate bank officers.

Your appointment will help you find who is the best person to contact and from which bank to approach for your loan. A good research will point or direct you to the right resources to start with. The characteristic of the good resources is not hidden. The features are comprises of the maintenance of list often conspicuously displays on the website of the bank that participate in the loan programs, the number of loans with the value of the loans made out each month etc. with each loan program constitutes a small percentage or potion of a bank’s overall loan portfolio, though, at least ir has given a picture and maximum representation of which area banks are interested in the small business loan market and you have as an indicator so to say. In addition to the above pointer, business centers usually have a published booklet called, ‘Small Business Researches’, where lists of banks per area with small business loan officer contacts information are displayed too. You can take a further stepo to visit the district noffice for detailed information.

Do not take a written materials to the first session. Alternatively, you can relate to the loan officer the type of business you are considering starting or the one you are nurturing or growing at present, as well as the amount of funding you are looking for to boost your business. Ask if the bank is interested in the opportunity, then insist on knowing the information they would like you to come with when else you have session with them so that you can start the business, such that when you are done generating cash flow and must have built a track record, then convert to conventional loan, it is another way of fund sources. Need a lease, obtain from dealer, leasing company and bank, though subject to procedure.

Whenever source of fund you want to obtain, it is better to attend any crucial meeting for your funding with your accountant which is a significant sign of seriousness about your business.

Documents and documentation required for meeting with your Bank

Oh yes! This is your day at the meeting with the bank loan officer. It is necessary for you to go the venue of the meeting with the right documents to prove your preparedness. Are you sure you are worth the money that you requested for? Here are the necessary document you should go with.

(a) You r Business Plan. You are going to accompany the above with the assumptions and financial forecasts for at least three years into the future of the business life time.

(b) Another three years of financial statements, which comprises of income statement, cash flow statement, and balance sheet, well prepared and balanced to date by your accountant and duly signed by you, the Chairman or the CEO. Of course, the statement must state clearly if prepared using the cash basis, restate using accrual accounting method.

(c) Prepare your business and personal tax returns for the past three years concurrently, including all schedule of three years of each if they are available, and up to date. (d) The next is your personal net worth statement, containing the details of any assets, which of course can be used as collateral come in form of saving account, car, house, or even any joint assets with your spouse together with the attached evidence.

(e) Printed or written documentation of how much money you will want to invest in the business . You will have to show the rationale for the loan size being requested in detail and the main purposes for which the fund be used, then tell the bank a plan structure for repaying the loan taken.

(f) You must outline your experience and on how it relates to the business you are seeking a loan for, all perfectly and neatly stated in your resume.

(g) Give details to the bank if you have any other loan outstanding.

(h) If you have any account receivable and/or inventory, it is a good instrument, so to say, to the loan officer by have a binder/Folder of printout in case you used a computerized record-keeping system, such as QuickBooks as the your back-up software.