
Evaluate Your Portfolio. DEVELOP YOUR FINANCIAL PLAN
You should evaluate your portfolio periodically because a change
in your circumstances might necessitate a change in your asset
allocation plan. In addition, fluctuating economic and market conditions
might affect your asset allocation plan. Similarly, a change
in a company’s business will have a direct bearing on the valuation
of that company’s stock in your investment portfolio.
WHAT INVESTING IN STOCKS CAN DO FOR YOU
If you have a long investment time horizon and you can sleep well
at night when there is a decline in the stock market, you should
consider investing in stocks because
* Stocks provide returns in the form of dividends and capital
appreciation. Historically, returns from stocks have been
greater than the returns received from bonds and money
market securities over long time horizons (seven-plus
years). Investing in stocks provides growth to an investment
portfolio in addition to any dividend income.
* Stocks provide a store of value. Buying and holding appreciated
stocks in a portfolio is a tax-efficient way to increase
wealth in that if the holding period is longer than a year before
selling a stock, the capital gain is taxed at a maximum
of 15 percent at the federal level. Gains from stocks held for
less than a year are taxed at your marginal tax bracket,
which could be as high as 35 percent. Check with your
accountant that Congress has not made any changes to the
Tax Code for the taxation of capital gains.
* Dividend income from qualified stocks is taxed at lower
rates than interest from bonds and money market securities.
The following chapters outline the characteristics of the different
types of stocks and the process of choosing stocks that are
appropriate for your circumstances. Not all stocks are winners, and
even the stocks of good companies decline in value. Understanding
the factors that drive stock prices will steer you to assembling stocks
for your portfolio that will achieve your financial objectives.
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Categories in Trading Mistakes
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Lack of Trading Plan Planning plays a key role in the success or failure of any endeavor
Using too much Leverage Determining the proper capital requirements for trading is a difficult task
Failure to control Risk Refusing to employ effective risk control measures can ensure your long-term failure
Lack of Discipline A lack of discipline can destroy even the most talented and best prepared trader
Useful Advices to Beginning Trader You can control your success or failure
All about Stocks Encyclopedia about Stocks. That you should know about Stocks before starting
Forex Glossary All terms about Forex market
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