Test your money knowledge

Take the quiz below to see how you score in your knowledge of the world of money. Circle the answers that you think are correct for you and then check your scores. Be honest – it doesn’t matter how you do because even the score is low, we can also find ways to learn a whole lot more about money. Just have fun!

1.Banking is already part of your life.
a. Not yet because you have no bank account at all.
b. You have a bank account but you don’t really use it.
c. You have a bank account and use it sometimes but usually just to draw all the money out of it when you want to buy something.
d. You have a bank account that you manage carefully. You always make sure that you have some money saved and some money for spending.

2.You believe in saving up to buy things you really want and you set yourself savings goals.
a. Saving up is a waste of time when you can buy things on your mom’s clothing store cards or credit cards.
b. Saving up sometimes works but it is such fun to spend money when you have it.
c. Sometimes you save but have no real plan or goals.
d. You have savings goals that you work towards.

3.Getting into debt is….
a. part of life – everyone ends up in debt.
b. inevitable – that’s why we can borrow from banks.
c. a waste of money because you end up paying so much interest, but what can you do.
d. avoidable if you plan carefully and make your money work for you.

4.You know how a budget works
a. You don’t know how a budget works – that’s adult stuff.
b. You have some idea how a budget works from your Economic and Management Science class but are not really interested.
c. You know how a budget works but have never drawn up one and stuck to it.
d. Your family works out a budget every month and you get involved. You have your own budget for your own money.

5.Budgeting is…
a. a waste of time. Spend now and pay later.
b. boring and can be learnt later.
c. useful but not always necessary.
d. the only way to make your money work for you.

6.You know what banks do and the role they play in the economy
a. You have no idea how banks work and are not really interested.
b. You have some idea how banks work but don’t really know how this relates to the economy.
c. You think you know how banks work and how this relates to the economy.
d. You have a clear idea of how banks work and of the role they play in the economy.

7.Banking consumers have rights and responsibilities. These include:
a. The right to buy things on credit and pay for them when you can.
b. The right to borrow from a bank. It is the bank’s responsibility to get you to pay the loan back.
c. The right to buy things you need even if you cannot always afford them.
d. The right to use banking services and to expect good service and accurate advice; and the responsibility to check all contracts you sign, inform the bank of your financial status, inform the bank of stolen bank cards, pay any loans on time, plan and budget.

8.You know what saving and investment means.
a. No idea.
b. Some idea but little interest.
c. You know what investment means but are not sure whether it is a good idea or not.
d. You have a clear idea about investment and know that there are low- and high-risk investment schemes.

9.JSE is a name for…
a. the Johannesburg Sale Entity.
b. the Johannesburg Sale Exchange.
c. the South African Stock Exchange.
d. the securities exchange in South Africa.

10.You know what a unit trust is.
a. Have no idea.
b. Have some idea but not really sure.
c. Know a bit about it.
d. Yes, you know what it is.

How did you score?

Mostly a: You need to read more about investment to make money work for you! Remember that the earlier you learn how to manage your money, the longer it will work for you. Use related books and other resources like financial magazines, business newspapers and the JSE website at www.jse.co.za and consult with people working in the financial industry to learn more about banking, budgeting, the stock exchange and many more money matters. Have fun doing it!

Mostly b: There is a lot for you to learn about money matters! You have some idea that you should be thinking about money but have not done anything about it yet. Increase your knowledge by reading this column and other financial literature to help you to change your outlook on money.

Mostly c: You have some knowledge of money matters. Importantly, you recognise the importance of managing your money so that it works for you. Expand your knowledge by reading financial literature, it will help you to understand how to make money work for you.

Mostly d: Well done – you have good knowledge about money matters! Don’t stop, continue exploring by reading financial literature and consulting financial experts.


Develop an investment plan

While setting up an realistic investment expectations, it’s also important to develop an investment plan. An investment plan will reflect financial goals, personal circumstances, and anticipate future needs for income. When you develop your plan, you will want to consider your current age, the number of years until you plan to retire, current and anticipated income, provisions for emergencies, education of your children, care for aging family members, your investment goals, and your tolerance for risk.

Investment planning is more than a tool to ensure financial survival. It is essential to build and preserve wealth. Before taking action on your investment plan, be sure that the following are in place as a financially secure base on which to build your investment:

You have an emergency savings fund of easily accessible cash, earning interest, to cover three to six months living expenses.

You have adequate insurance -- life, health, homeowner's, disability, automobile, and comprehensive/liability -- to protect your assets.

You are managing your credit cards and loans carefully and living within your means. Less than 20 percent of your income goes for credit payments, other than your mortgage, and you pay each card in full, if possible, each month. It doesn't make sense to pay 18 percent interest on a credit card and receive only 6 percent on your investments.

You consider investing for your future a priority and are willing to make sacrifices to reach your goals. You are willing to pay yourself first and put some wants on hold.

Tax-sheltered retirement plan
You are participating in a tax-deferred savings pension plan -- 401(k), 403(b), Keogh, SEP or annuity -- where you work.
If you do not have a deferred savings pension plan available (or even if you do) you contribute the full $2,000 to an IRA each year.
Your tax-sheltered retirement plan focuses on investments that produce returns that would otherwise be taxable, and you reinvest the dividends to defer taxes. This is no place for low- or no-dividend investments or ones that are already tax-deferred.


China held the largest U.S. government bonds in the world as forex investment

Purchasing U.S. government bonds was one of the choices for China's huge foreign exchange reserves, which stood at nearly 2 trillion U.S. dollars, said Liu Mingkang, Chairman of China Banking Regulatory Commission Thursday.

China manages its foreign exchange reserves under the principle of maintaining safety, liquidity and profitability, Liu told a press conference on measures of banking system against financial crisis.

Premier Wen Jiabao said in an interview with the Financial Times during the Davos forum that the country was exploring more efficient ways to use its reserves to boost domestic development.

China's reserves hit a record 1.95 trillion U.S. dollars at the end of 2008, the largest in the world and far exceeding those of Japan, the second-largest foreign exchange holder with 1.03 trillion U.S. dollars.

According to the U.S. Treasury, China held 681.9 billion U.S. dollars worth of U.S. government bonds as of November, and it bought another 14.3 billion U.S. dollars worth in December.

Source from: http://news.xinhuanet.com/english


Set Realistic Investment Expectations

Someone once said, "If you don't know where you're going, how are you going to get there?" The first step as a potential investor should be to decide what you want to accomplish with your money, and when you want to accomplish it.

To establish investment objectives, one should understand investment basics. There are difference between investing and speculating. Once you realize that investing is not gambling and approach investing with discipline, your money can work for you.

Benjamin Graham, author of The Intelligent Investor, said: “The investor’s chief problem – and even his worst enemy – is likely to be himself.” A basic premise of investing is avoiding the tendency to make emotional decisions.

Step 1: Determine What's Most Important To You

The first step to investing is to determine which of the following results are most important to you:

The ideal investment would provide them all: it would be completely safe, it would provide you with a sufficient level of income to keep pace with inflation AND your principal would grow.

That “perfect investment” does not exist. Instead, the investment world looks like the triangle in the top right corner.

As you move toward one corner of the triangle you move away from the other two. If you want an investment that is safe, you have to be willing to accept less income and growth.

If you want an investment that produces consistent income, you have to understand that it will not grow as much. If you want an investment that grows, you have to be willing to accept less safety.

To avoid chasing returns, investors must realize they can't have it all. Different types of investments provide different results.

Step 2: Determine Your Time Horizon

•Short term: money you will potentially need within 1-2 years.
•Mid term: Money you will potentially need within 3-9 years.
•Long term: money you will not need for 10+ years.

For short term money, you should choose safe investments.

For mid term money, consider a balanced fund.

For long term money, choose growth investments, like index mutual funds.

Keep in mind, even if you will need income from your investments within a few years, your time horizon is your life expectancy, so a portion of your investments would still be allocated toward growth.

To invest with discipline, you must understand what investments provide which results, and combine them in the right proportions.

Like cooking, if you know what you are doing, when you put the ingredients together in the right proportion, you get an outcome that you are happy with. Once you have the recipe right, all you have to do is follow it.


Have you considered the global fixed income allocations?

As financial markets experience unprecedented volatility, investors increasingly are questioning which asset classes can offer genuine diversification with the potential for enhanced risk-adjusted returns. An actively managed global-fixed-income strategy has the potential to achieve these goals through its ability to search beyond the traditional capital markets of the Eurozone, the United Kingdom, the United States and Japan, offering investors new opportunities.

Investors should consider fixed-income allocations that reach beyond the United States for three principal reasons:

• The variety and liquidity of available instruments outside the United States has expanded substantially in recent years, and this evolution provides opportunities for broad diversification and enhanced alpha.

• Although future results cannot be guaranteed, international bonds have lower historical correlations to U.S. stocks than the correlations between U.S. bonds and U.S. stocks, and historically have had a low correlation with international stocks.

• Global bonds allow investors to take advantage of differing economic conditions and business cycles around the world.


The number of countries opening their capital markets in recent years has significantly broadened the global-fixed-income universe. There are more than 100 countries with fully or partially functioning bond and/or currency markets. This geographic expansion has coincided with a deepening of local markets, which now offer improved liquidity and new instruments that can provide specialized exposures. Whereas investors were once limited to the bond markets of developed countries and a narrow range of currencies, their options now include a broad range of currencies, credits and duration exposures that enable investors to capitalize on developments around the world. Current examples of these relatively new opportunities include:

• Long-dated Mexican bonds that have pushed the local yield curve out to 30-year maturities (as of Oct. 31).

• Corporate emerging-markets debt that offers extra yield over sovereign bonds (as of Oct. 31).

• Cross-currency swaps allowing investors to take a relative currency position that can benefit from deteriorating fundamentals in one country against strong conditions in another, independent of the strength of an investor's home currency.


Correlations are an important consideration when constructing a well-diversified portfolio. U.S. fixed-income assets traditionally have served as a defensive allocation, based on their historically low correlation to U.S. equities. However, international bonds have a record of even lower correlation to U.S. equities and also have the potential to hedge against U.S. interest rate cycles, economic conditions and other domestic sources of uncertainty. Such diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses but needs to be considered when developing a portfolio of different asset classes.

Further, the performance of global bonds during the recent period of financial market volatility has reinforced their value as a diversifier within a broader portfolio. This resiliency has been accomplished without the extreme volatility observed across most asset classes and doesn't sacrifice the potential for longer-term upside.

Active management of global fixed income's three primary sources of alpha — currency, duration and credit exposure — enables investors to exploit country-specific differences and position for global trends. When assessing investment opportunities, the expected return from each potential source of alpha can be isolated to ensure that only attractive risks are held. New investment opportunities play a useful role here, primarily as a risk management tool that can isolate particularly attractive risk components within securities. For example, a strategy for a given country may keep the duration element and hedge out the currency by using currency forwards. Alternatively, external sovereign bonds offer exposure to a government's credit without local currency or interest rate risk.

Before developing these positions, however, an in-depth understanding of the macroeconomic fundamentals is necessary. Top-down economic research is combined with bottom-up security-level analysis to uncover fundamental value and highlight potential catalysts that may drive a revaluation.

Two global trends that have been shaping our strategy recently are the accelerating global economic slowdown and financial-market deleveraging. We have been positioning our fund to take advantage of long-term opportunities brought about by a tough global growth environment through duration exposure in countries where markets are not yet pricing in the likely monetary policy response to the slowdown. The International Monetary Fund's most recent World Economic Outlook update, released in November, lowers the world growth forecast from 3.7% in 2008 to just 2.2% in 2009, (a rate below 3% is generally consistent with a global recession). This forecast expects outright contraction in advanced economies and more- moderate growth in emerging markets. While yields already have fallen dramatically in the United States in anticipation of prolonged loose monetary policy from the Federal Reserve, we are positioned for similar responses from central banks in Europe, Korea and Mexico. These economies are quite vulnerable to the U.S. recession and global credit crunch, in addition to domestic factors such as past interest rate tightening, an overvalued currency or a housing bubble. However, we believe bond prices do not yet reflect the likely interest rate cuts as the balance of risks continues to shift from inflation toward growth.

While deleveraging and slower growth in developed economies is expected to have a negative impact on growth everywhere, there is still likely to be considerable differentiation between economies on which investors can capitalize. The IMF forecast highlights the growth differential of Asian economies over the rest of emerging-markets and advanced economies. This growth differential should support Asian currencies over the medium term by continuing to attract capital to the region. Up to now, we have seen currencies fall against the U.S. dollar fairly indiscriminately, but we are beginning to see some differentiation in the performance of individual currencies. We expect this differentiation to become more marked in the next couple of years. In our view, this is likely to result in the currencies of Asian countries with sound fundamentals appreciating against the U.S. dollar but making more significant progress against the euro.

We are confronting the current financial-market turmoil by selectively adding to positions that have been hit by deleveraging and forced selling, despite their strong fundamentals.


Investing in sustainable companies to get competitive returns within a weak economic environment

Some investors mistakenly think that sustainable investing and competitive returns are mutually exclusive. But it’s not absolutely true.

For example, the Domini 400 Social Index, which measures the performance of sustainable companies, has outperformed the Standard & Poor's 500 stock index since its inception.

These companies have done well because they tend to approach their business with a long-term view, treat their customers, employees and shareholders with respect, and consider the environment as a vital stakeholder.

However, as with any successful investing approach, sustainable investing requires strict investment discipline to ensure success. For optimal investment results, we suggest looking for value and sustainability.

The definition of what constitutes a sustainable investment might vary, depending on the investor. Before investing, people review a blend of positive and negative factors, as well as qualitative and quantitative criteria.

To find value, we look for out-of-favor and under-followed companies whose shares are discounted heavily due to temporary factors. In today's market, forced selling has created many opportunities to buy sustainable companies at a significant discount.

Here comes the point, we exclude companies that make certain harmful products such as cigarettes, we measure each company's environmental performance and we avoid companies that operate in countries such as Myanmar and Sudan that have significant human rights violations.

We also look for companies offering products and services that promote better health, improve the economic well-being of impoverished populations and reduce their environmental impact.

We suggest investing in sustainable companies with strong balance sheets that can increase earnings within a weak economic environment.

Here are four examples:

• John B. Sanfilippo & Son Inc. (JBSS) of Elgin, Ill., owner of the Fisher Nuts brand and the largest U.S. private-label nut producer, is one of our favorite investments. From a sustainability perspective, the company represents a good holding due to the products it makes. Nuts are a high-quality source of vegetarian protein and researchers have found that people who eat nuts have lower risks of heart disease.

From a financial perspective, the company just moved its operations into a more efficient manufacturing facility and we think that gross margins could double, compared with fiscal year 2006 levels. The company is also trading at a price well below tangible book value and markedly below our estimate of liquidation value.

• Avon Products Inc. (AVP) of New York offers tremendous investment value to investors. While its business is declining domestically, Avon maintains an attractive growth profile internationally, particularly in emerging markets. Except for the most dire economic environments, women will continue to use cosmetic products. The stock has fallen considerably, though Avon has done well during past recessions. On the sustainability side, Avon maintains proactive workplace practices for women and minorities.

• Annaly Capital Management Inc. (NLY) of New York is a real estate investment trust that invests in agency mortgage-backed securities. In this recession, foreclosures are an important social issue because of the detrimental impact that foreclosures and falling home prices have on local communities.

An investment in agency mortgages through Annaly contributes to lower mortgage interest rates for homeowners, which will reduce foreclosure rates. From a value perspective, Annaly's earnings increase significantly when its cost of borrowing declines. Given the Federal Reserve Board's nearly zero interest rate policy, Annaly's borrowing costs are at rock-bottom level.

• Dell Inc. (DELL) of Round Rock, Texas, maintains the goal of becoming "the greenest technology company on the planet." Its recycling policy is innovative: Dell pays all shipping costs for any computers that are sent to it to be recycled. From a valuation viewpoint, Dell maintains a pristine balance sheet with $3.32 a share in cash, and its free cash flow yield exceeds 10%.

Its cash conversion cycle is negative, which means that customers pay Dell before the organization purchases the components it uses to manufacture computers.


Three Ways To Generate Lasting Investment Income

Investment income can be generated in many ways. Each of the three ways outlined below can be used on its own, or combined, to create either more investment income, or more capital preservation, depending on which is most important to you.

1.Build a Total Return Portfolio to Create Investment Income

The best way to create lasting investment income is to build an overall portfolio consisting of cash, fixed income and equities.

The cash and fixed income form the "safe" part of your portfolio. They will generate current investment income in the form of interest.

The equities form the growth portion of the portfolio, which allows your future investment income to increase with inflation.

There are capital preservation rules and withdrawal rules that need to be strictly followed when creating this type of portfolio.

For most people, creating an income producing portfolio, such as described above, is the best way to generate investment income that will last over a potentially long life expectancy.

This strategy is best for people:

• With long life expectancies.
• Who want to leave an inheritance.
• Who take a long term, unemotional approach to invest.

2.Investment Income Through Interest and Dividends

Another option would be to buy investments that pay consistent dividends or interest income.

Dividend income is paid by:
• Dividend Paying Stocks
• Closed End Funds

Interest income is paid by:
• Bonds and Bond Funds
• Certificates of Deposit
• Money Market Funds

Dividend and interest producing investments are best used as part of a total return portfolio outlined in section 1 above.

If used on their own, these investments are best for people:

• Who do not want to spend any of their principal.
• Who have shorter life expectancies.
• Who may not need their investment income to keep pace with inflation.

3.Use a Contractual Guarantee to Create Investment Income
When you put your money in an annuity, the insurance company gives you a contractual guarantee to pay you a specific amount of investment income, on a set date, for the rest of your life.

Annuities are best used for people:

• Who are not concerned with leaving an inheritance.
• Who are single, or couples with no children.
• Who are willing to take less income and are okay with less control of their money in exchange for a fixed, guaranteed income.
• As part of an overall strategy that also includes a total portfolio and interest and dividend paying investments as described in section 1.

Source from: moneyover55

Three Ways To Generate Lasting Investment Income

Investment income can be generated in many ways. Each of the three ways outlined below can be used on its own, or combined, to create either more investment income, or more capital preservation, depending on which is most important to you.

1.Build a Total Return Portfolio to Create Investment Income

The best way to create lasting investment income is to build an overall portfolio consisting of cash, fixed income and equities.

The cash and fixed income form the "safe" part of your portfolio. They will generate current investment income in the form of interest.

The equities form the growth portion of the portfolio, which allows your future investment income to increase with inflation.

There are capital preservation rules and withdrawal rules that need to be strictly followed when creating this type of portfolio.

For most people, creating an income producing portfolio, such as described above, is the best way to generate investment income that will last over a potentially long life expectancy.

This strategy is best for people:

• With long life expectancies.
• Who want to leave an inheritance.
• Who take a long term, unemotional approach to invest.

2.Investment Income Through Interest and Dividends

Another option would be to buy investments that pay consistent dividends or interest income.

Dividend income is paid by:
• Dividend Paying Stocks
• Closed End Funds

Interest income is paid by:
• Bonds and Bond Funds
• Certificates of Deposit
• Money Market Funds

Dividend and interest producing investments are best used as part of a total return portfolio outlined in section 1 above.

If used on their own, these investments are best for people:

• Who do not want to spend any of their principal.
• Who have shorter life expectancies.
• Who may not need their investment income to keep pace with inflation.

3.Use a Contractual Guarantee to Create Investment Income
When you put your money in an annuity, the insurance company gives you a contractual guarantee to pay you a specific amount of investment income, on a set date, for the rest of your life.

Annuities are best used for people:

• Who are not concerned with leaving an inheritance.
• Who are single, or couples with no children.
• Who are willing to take less income and are okay with less control of their money in exchange for a fixed, guaranteed income.
• As part of an overall strategy that also includes a total portfolio and interest and dividend paying investments as described in section 1.

Source from: moneyover55


How to invest in a down market

These days business newspapers filled with market crash news in a daily basis. But the business world is full with tips even in a down market. Can you invest at this time? The ultimate answer is “Yes”. Read below to get an exact idea to the right place to park your money.

Have you known what happened to Mr. Warren Buffett, the greatest investor, at this time? Yes, everybody losing in the market but he added another $500 Cr’s to his wealth. How?

Any one of us can do the same. This is NOT the time to invest in stock market but in the same time, this is the correct time to invest in stock market. These all depends on how your mind works and how much you are tied with your money. If you are dealing with money like a hen which is sitting on the eggs, you are not the right person to read this. Everyone has fear about money lose. But the truth is, intelligent action through well study and long term focus, stock market will never give you loses.

Remember, stock markets are at the bottom line and valuations are very attractive with all the companies. There are 2 major options in front of you to invest your money at this time of down market.

1. First option is very simple and it is secure. Park your money to bank FD’s for desired time and sits freely. Enjoy the interest what you are getting. Your money is safe. But what will do if the bank crash? That is your question to answer yourself.

2. Second available option is, you still have options to invest in stock market. It is not a joke. You can still invest in stock market if you think like Warren Buffett. You are well aware that stock prices touched the bottom line and valuations are very attractive. Yes it is. Financial turmoil or the stock market crash doesn’t mean that all companies are in lose. Why don’t you select large cap companies that have well established business as well as increasing earnings at these times too?

Yes. Invest at this time on the blue chip stocks of carefully selected companies. Don’t go behind any mid or small cap companies at least at this time. Blue chips are your best friends at this time. They have well establish business and it is impossible to close down such business to give you lose. So select such companies and invest on that. This was the method what Buffet was practically doing.

Valuations are very attractive and price of the blue chip stocks are in bottom line because of the financial turmoil. You can see there will not be any affect to there business and that is the best point you have to keep in mind to invest on that stocks.

Don’t panic after investing to well established companies or blue chip companies. Let it be there. Every down has an up. It will take time but, certainly the market it will go up. The only point to remember is, this is not the time to trade or invest your money for short time. If you decided to invest in stock at this time, invest with blue chip stocks and for long term.

Besides, there are some tips on investing in a down stock market. When things look their worst, and you really want to sell and get out, that is probably the time to buy! But always keep in mind that know your limitations.

It is a bad idea at this time, if you planning to invest bulk amount to mutual funds. Better, wait and see for some time before mutual fund investing. You can select good mutual funds to invest money in a SIP basis. If economic growth is intact, then there is nothing to bother.

Be a prudent investor. Keep your new investments only to the stocks of blue chip companies. Invest in good mutual funds ONLY in sip basis or park your money to the bank Fixed deposits. Never panic, be patient, the market will most likely come back over the long run.


How to be an informed investor

While investing, information is just like money. More precise information and knowledge you have, more successful you could be. How to be an informed investor, getting exact information you just need? There are some factors and homework an investor must do himself. This article pointing out some must required actions. Read the entire article below:

Read, read, read

Consider to read maximum. Reading great books, articles and newsletters will give you enough knowledge to select the right path at tight time. Not only that but, it will also give you enough knowledge on various aspects on investment instrument selections and valuations. A successful investor should spend enough time to find and read most useful books and articles to gain all required knowledge.

Acquire knowledge on available products to invest

Investment world is not small with one or two products. It is very vast and the success of an investor laying on the selection and combination of these products at the right time. To have a successful financial plan, an investor should aware about the advantages and disadvantages of all the investment products around him. He should be able to identify the right one and compare the same with all other similar products available in the market to identify the winner or the loser. A successful investor not only should have good knowledge about the products he deals with presently but, he should be able to understand and explain the features of various products available around him.

Watch business channels

Television especially business channels are necessary part to investors day to day life. This is a very good source to get updated information on latest trends and changes. I am not saying to believe and act as per what they are saying but, through business channels, an investor will get enough opportunity to identify best investment products to do own research to understand the investment suitability. Make this as a regular practice.

Usage of internet

Internet is the excellent source to get instant access to well written articles, valuable information, real time data and other similar information. Utilize the maximum and get enough knowledge about all the areas of investment practices.

Grouping and social networking sites

Social networking sites are a best source to share and take ideas. It is very helpful to identify whether your plan has any loopholes or chance of failure. You can also receive very good reviews on your ideas as well as winning ideas from experts who are also in the part of the group where you are in.

Don't believe everything blindly

A careful approach to the research reports and the words from self acting investment gurus required your own research and study to believe or avoid. Always have practical approach. Don’t believe anything without your own research. Research reports might have hidden traps to investors if blindly follow them. Through study and digging to the truth will help you to identify the fact and act as per that.

Chat with experts

Chat rooms are an excellent source to get real time information from experience people. Care should be taken about the person in the other end and don’t blindly believe him without your own study on what they are suggesting or recommending.

Participate to events

Participating events related to the subject is a good idea to get helpful information and knowledge. In my opinion, an investor should take the advantage from all the events happening around him. It can be an investor meets or an awareness section or a company general meeting. Whatever it is, participating to such events help an investor to meet people with similar thoughts as well as chance to contact experts. It is also helpful to clear any doubts and get prompt answer to your questions. It can also be used for building good friendships with other investors.

Passion on investing

This is the most important factor. Be passionate. Without passion, you can’t achieve anything. Learn from the real life of legend investors. They have enough passion to the profession and that lead them to great success. So be passionate or leave such profession immediately.

However, an informed investor doesn’t mean a successful investor. In addition, you have to learn to analyze and research the information you get, and make the right decision.

How to Choose an Investment

We have lots of investment options, which one is the best? Not the most highly benefited one, but the most suitable one. Remember, when you choose to invest your money, the final decision is yours alone. The risk of the investment is also yours.

Before you invest, consider your complete financial situation, looking at both your current and future needs. In general, investors should avoid higher-risk investments unless they have a steady income, adequate insurance, and readily available cash reserves in case of a loss. There are three investment basics

Rule One:
No matter how you choose to invest your money, there will always be a degree of risk involved.

Rule Two:
Risk and return go hand-in-hand. Higher returns mean greater risk, while lower returns promise greater safety.

Rule Three:
Do not invest in anything you do not fully understand.

Setting your investment goals

Ask yourself, “What do I want to accomplish through my investments?” For most investors, the following investment goals or objectives, or some combination of these, provide an initial answer to that question:

This objective reflects a conservative investment philosophy with minimal risk of loss of the original investment (the “principal”).

An “income” objective is achieved by purchasing investments that provide a stream of income through regular payments, which may or may not decrease the invested principal.

This category refers to investing for long-term growth or appreciation in market value. Growth investments carry a higher risk than either safety- or income-oriented investments. Growth investments generally provide little or no dividend income.

Speculative investments carry a higher-than-average possibility of loss. This strategy often includes short-term trading of new or unproven companies’ stocks or options. Although there is the possibility of higher and faster rewards, speculative investments also are high-risk, meaning there is also the possibility of larger and faster losses of some of, or your entire principal.

Balancing “risk” and “return” to meet your goals

As an investor, you choose your investment goals with an emphasis on one or more of the above categories. You may also wish to allocate portions of your investment portfolio to more accurately express your investment goals.

For example, if you have $10,000 to invest, you may choose to invest 70 percent ($7,000) in income securities, 20 percent ($2,000) in growth securities, and 10 percent ($1,000) in speculative securities.

Of course, setting a goal and reaching it are two very different things. You may need professional assistance to realize your investment goals and to achieve your financial objectives.

If you choose to work with a broker, communicate your investment goals and financial objectives clearly. Put it in writing and keep a copy for your own records.

Remember, the more money you want to make from your investment, the more risk you must be willing to take. Risk means that you may lose all or part of your principal. If a high level of risk makes you uncomfortable, select your investments accordingly.

Get more information

There are many sources of information about a company in which you are interested in investing. If you do not know where to look, start by contacting the Texas State Securities Board. In most cases, securities must be registered with the securities regulator in each state where they are sold. Information about the company may be available to the public. You should also ask your brokerage firm or investment adviser to assist you in gathering information about the company in which you may invest.

Pay close attention to business and financial newspapers in your area. Often, these periodicals provide in-depth coverage about a specific company or segment of the industry. Check with your local reference librarian for assistance in identifying appropriate investment-related materials.

Things to consider

U. S. Treasury Bills (“T-bills”) are the benchmark of minimal-risk investments. If an investment is presented as a very low-risk, it should produce a rate of return similar to the rates paid on T-bills.

If anyone guarantees your investment against loss, you should immediately contact the Texas State Securities Board, Enforcement Division.

Additional Considerations

Always set aside some of your money for emergencies before you invest.
Ask for advice from a trained and licensed professional.
Be selective in your investment choices. Exercise your right to say “No.”
Develop a sensible investment plan and follow it.
Judge each company on its own merits. Do not invest in a company just because it is part of a fast-growing and successful industry.
Never invest based on information obtained from an unsolicited telephone call.
Check the credentials of anyone you do not know who offers to sell you an investment.


Shanghai to be a right place to set up regional headquarters for foreign companies

Shanghai is one of the business centers of China, having a perfect investment environment. Foreign companies which establish regional headquarters in Shanghai can enjoy extensive financial aid, encouragement and convenience in various areas including finance, capital management, entry and exit management, human resources and customs clearance.

According to the latest statistics from the Shanghai Municipal Commission of Commerce, foreign companies set up 83 new economic institution headquarters in Shanghai in 2008. As of the end of 2008, foreign companies had set up a total of 676 economic institution headquarters in Shanghai, comprised of 224 regional headquarters, 178 investment-oriented companies and 274 research and development centers.

Sha Hailin, Chairman of the Shanghai Municipal Commission of Commerce, said Shanghai will continue to vigorously develop the headquarters economy in 2009 and carry out all incentives and preferential policies designed to encourage.

Regional headquarters of multinational corporations in Shanghai are the only head offices invested in or authorized by offshore-registered parent companies to perform management and service functions for an industry in regions of more than one country.

According to the Shanghai Municipal Commission of Commerce, by the end of 2008, 17 investment-oriented companies in Shanghai had already been verified by the Ministry of Commerce as national regional headquarters, accounting for nearly half of the total number of national regional headquarters in China. Sixty companies included in the Fortune 500 list have established their regional headquarters in Shanghai.


Five basic steps in investing

Investment is important in life. Before investing, there’s a lot to figure out and we have to prepare well. If you have a plan to follow, you’ll know better what to do with your money and you’ll worry less. Generally, there are five steps to plan your investments

1. Set your goals
Figure out:
What are my top financial goals?
When do I hope to reach those goals?
How much money do I want to save?

2. Find out what kind of investor you are
Figure out:
How do I want to approach investing?
How important is it to me to keep my money safe?
How comfortable am I with the idea that I may sometimes lose money if I want to grow my savings faster?
How important it is to me to make a good return on my investments?

3. Pick a mix of investment types
Figure out:
What types of investments do I understand and want to buy? Some types of investments may grow faster than others. A good mix of different investments (your asset mix) will help you get enough growth, while keeping losses in balance.
Am I comfortable choosing my own asset mix? If not, get some expert advice.

4. Choose specific investments
Once you know your asset mix, you can choose specific investments of each type.
Do a lot of research before you decide. Look at how an investment has done in the past and how well it may do in the future.
Again, many people get expert advice.

5. Keep track of your investments
Keep good records of your investments so you will know how well each one does.
If you have an adviser, check that he or she is following your investment instructions.


three reasons why China will be the first to recover from the financial crisis

Which country will be the first to recover from the financial crisis? This clearly is a question that has greatly attracted the world’s attention. Zuo Xiaolei, chief economist at Galaxy Securities, recently wrote an article for People’s Daily explaining three reasons why she chose China.

Zuo said that three aspects support the fact that China will take the lead in achieving economic recovery in front of the developed countries of Europe and the Americas.

The first reason lies in China having the foundation of a strong real economy. Restoration of the economy lies in the recovery of the "real economy" rather than in the development of a "virtual economy." Over the past years, China has been committed to the development of the most traditional real economy, and has already become the "manufacturing center" of the world as well as the "world’s workshop.” Moreover, China's manufacturing sector possesses the most fundamental portion of the international division of labor, producing medium and low-end products.

More importantly, after undergoing this round of economic “mutation,” China now has a deeper understanding of the vulnerability of its development model, which is excessively dependent on external demand. It is now agreed that boosting overall domestic demand, preventing drastic economic downturn and promoting economic recovery and growth are essential measures to be followed.

The second reason is China’s comparatively solid financial strength in terms of its economic aggregate. The rapid growth of the Chinese economy in recent years has led to a steady growth in its fiscal revenue, resulting in the continuous strengthening of China’s economic power. It has provided guaranteed economic strength for the government’s efforts to increase investments to solve problems concerning people’s livelihoods, stimulate consumption and boost economic growth.

In addition, China has abundant private resources due to the high savings rate of its people. China's savings rate has always maintained a high level at over 40 percent. Huge savings make it possible for China to mobilize sufficient private investment funding. The huge amounts of private savings may become the largest strength and support for promoting economic recovery.

The third reason lies in China’s stable financial system. A few years ago, China carried out a round of large-scale rectifications and restructurings in its financial system. While providing stable financial services, the country's stable financial environment has also provided favorable and immense space for implementing monetary policies to support economic recovery during crisis, and has created room for great flexibility in macroeconomic control policies.


China's online shopping totals breaking 100 billion yuan in 2008

The global financial crisis bring great damage to China’s economy, influence the entire business environment. But still there is some good news. The online shopping market is growing. Maybe we can find some investment opportunity in this area.

The annual trade volume of China's online shopping market in 2008 surpassed the amount of 100 billion yuan for the first time, totaling 120 billion yuan, up by 128.5 percent year on year. Compared with the previous year, the growth rate rose by nearly 40 percentage points.

The data come from the "2008 China Online Shopping Research Report," jointly published by iResearch Consulting Group, a domestic polling organization, and taobao.com.

The report also shows that, in 2008, the number of registered online shoppers in China increased by 185 percent from the previous year, reaching 120 million customers.

Analysts say that China's online shopping market breaking the 100 billion yuan threshold is the sign that online shopping has already become an important component of the nation's retail market.


China stresses higher investment and better investment structures

The Chinese government will inject more funds for investment and improve investment structures to better cope with adverse global economic conditions, the State Council (Cabinet) decided at an executive meeting presided over by Premier Wen Jiabao on Nov 11, 2008.

To achieve "steady and relative fast" economic growth and prevent "economic ups and downs" amid global and domestic economic challenges was on top of the country's agenda, said Wen.

The government announced it would launch a stimulus package estimated at 4 trillion yuan (570 billion U.S. dollars) to be spent over the next two years to finance programs in 10 major areas, such as low-income housing, rural infrastructure, water, electricity, transport, the environment and technological innovation.

"The country should strengthen management of large-scale investment projects, conduct feasibility studies in an earnest manner and increase investment efficiencies and profits," said a statement from the meeting, in which provincial leaders and Cabinet ministers participated.

Wen said the stimulus package was crucial to tiding over the difficulties and maintaining long-term economic growth momentum.

He urged local governments to be "quick" and "effective" in carrying out these measures with "large-scale" investment programs launched to boost domestic demand.

The meeting participants called for more efforts to increase incomes and consumption capabilities, raising low-income earnings, promoting the "stable and healthy" development of the property sector and maintaining steady export growth.

The country should endeavor to enhance competitiveness, improve financial macro-management and facilitate the steady and healthy development of the stock market.

China announced that it would adopt "active" fiscal and "moderately active" monetary policies to expand domestic demand and speed up construction of public facilities.

The meeting also decided to push forward a series of key reforms, including restructuring the value-added tax regime, which could cut the tax burden on enterprises by 120 billion yuan in 2009.

Source from: http://english.people.com.cn/90001/90776/90884/6530884.html


Investment highlights of China to focus on five areas in 2009

What’s the investment highlights in China in 2009?

Investments from Chinese central government will focus on five major areas in 2009, reporters recently learned from the National Development and Reform Work Conference.

These issues include: agriculture, rural areas and farmers; welfare housing projects; infrastructure construction in areas including transportation; energy conservation and emissions reduction; and social undertakings.

Several principles must be upheld when expanding investments in 2009. The investment projects must integrate well with one another and must be able to effectively trigger social investment. Well-organized specialized planning with precise execution of the preliminary stages of work is required. At the same time, the goods orders must be placed and payments made as quickly as possible in order to strictly control capital and quality.

FedEx’s Asia-Pacific hub is moving to China

According to the report, the United States-based logistics giant Federal Express (FedEx) is closing down its Asia-Pacific airtrans-shipment hub in the northern Philippines and moving it to China's southern city of Guangzhou.

"The market in China is bigger than the entire market of Southeast Asia. China also gave FedEx rights to handle its domestic cargo, which is huge," a governor of Philippines said. It’s estimated that the operations will be completely moved to China till May.

Philippine became the regional hub of FedEx's Asia-Pacific operations in 1995 after the closure of the U.S. naval base in 1992. The authority collects around 150 million pesos (3.2 millionU.S. dollars) annually from the company for landing, parking and warehousing. About 500 workers would lose their jobs after the closure of the hub.

FedEx announced the transfer as early as in July 2005, expecting to open the new hub at Guangzhou Baiyun International Airport by the end of 2008. Later, it pushed back the opening to the first half of this year to provide FedEx with "the necessary time to fully test all systems and processes, as well as work closely with the Guangzhou authorities to ensure all necessary approvals are in place."

According to its company profile, FedEx provides services for more than 3.3 million packages daily to over 220 countries and regions. It has a workforce of more than 140,000 employees worldwide.

Steps to establish enterprises in China for overseas investment

Do you want to expand your business in China? Do you want to enlarge your scale? Do you want to outsource your business? The following info will be useful:

In accordance with the existing laws of China, the establishment of enterprises with foreign investment is subject to project-by-project examination, approval and registration by the government. In general, the following steps should be followed for the establishment of Chinese-foreign equity joint ventures and Chinese-foreign contractual joint ventures:

l). Submit the project proposal to the relevant department (planning department or technological renovation administration) and get approval before investors can proceed with various jobs centered round the feasibility study of the project.

2). Submit the feasibility study report to the planning department or technological renovation administration and get approval before investors can sign legal documents, such as the contract and articles of corporation of the enterprise.

3). Submit the contract and articles of corporation of the enterprise to the examination and ratification department, who shall issue the Approval Certificate for Enterprises with Foreign Investment after approval by the Ministry of Foreign Trade and Economic Cooperation.

4). With the Approval Certificate issued by the examination and ratification authorities, the investors can go through registration procedures with the administration of industry and commerce.

The procedures for the establishment of enterprises with foreign investment are quite simple. After the initial project application is approved in writing by the examination and ratification authorities, the investors may submit a formal application, with articles of corporation and other required documents. On receipt of the Approval Certificate, they can proceed with the registration formalities by presenting the Approval Certificate.

In accordance with China's existing laws, the state adopts a classification administrative system for foreign investment. The provinces, municipalities, autonomous regions and cities listed as independent units in state plans have the authority to examine and approve investment of less than US $30 million in areas encouraged and permitted by the state. When an investment exceeds this amount, the project application and feasibility study report shall be examined and approved by the State Development Planning Commission or the State Economic and Trade Commission, while the contract and articles of corporation shall be examined and approved by the Ministry of Foreign Trade and Economic Cooperation.

Many provinces, autonomous regions and municipalities directly under the central government have established foreign investment service centers, which offer foreign investors with a one-stop service, ranging from legal consultation to procurement of project approval. With the improvement of China's social services system, intermediary service agents, including consultation companies, lawyers, and accountants, are all expected to provide investors with efficient and qualified services.

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