Investing the right way. How to do it well

Billionaire Warren Buffett is a good example for value investing. Buffett gives a good example of value investing that other people should pay attention to. Buffett recommends that we buy low and sell high. Sadly, many investors tend to let emotion handle their financial decisions. This causes them to buy when others are buying, and sell when others are selling. When we buy when others are buying, we get a high priced Apple stock that is not really a good deal. When we sell when others are selling, we get a trashy Kodak stock that just went bankrupt. The key to becoming the investor that succeeds is being a shareholder in Apple before they became successful. It is selling Kodak stock before the rise of the digital camera. All of these things are what the biggest investors do well.

If you do not know how to begin stock investing, think about something practical in your life that you can try this principle with. A good example is food purchases. Most people are eagerly buying sweet and popular premade meat products. They are eagerly ignoring bitter and unpopular raw vegetable products. A smart investor would buy mostly raw vegetables and sell sweet popular meat products during the day.

The best investment models buy something unpopular, and then they convert it into something very popular. The worst investment models take something popular, and then they convert it into something very unpopular. Evaluating your personal financial practices to see how you are doing in this area can show you the things that need to improve. A person who is smart will take a job that others do not want, and give others exactly what they want. A person who is foolish will take a job that others desperately want, and give others exactly what they do not want.

If you do not know what is popular, look at the universals of marketing. The universals of marketing include survival, protection, freedom, pleasure, relationships, and likability. These are the things we should be selling to be a great investor. We should also be buying danger, slavery, suffering, enemies, and unpopularity to be a great investor. Why? These things have a low purchase price because no one wants them.

There are different great companies to try stock investing cheaply. One of the recent ones is Robinhood. Robinhood lets you place trades from the convenience of your smartphone without having high fees bothering you.

Robinhood puts the investing market in the hands of the common person. If you are curious about how to begin with stock trading, remembering the buy low and sell high principle can go a long way toward removing the issues you are having.

How to be an Innovative Advisor

Financial advisors who are innovative in their approach are the ones who makes the biggest impact for their clients. The reason being is that creative solutions often make for greater returns and a more efficient way of working. Staying ahead of the curve is also refreshing for clients. Keep your business growing by learning how to implement these innovative practices.

Adapt to Current Technology

More financial advisors are integrating the newest technology into their firms. It’s important to keep up with technology because consumers are have come to expect it. New technology is also a way to increase how efficient the business is overall.

Stay on Top of Changes

It’s one thing to come up with innovative solutions, but it’s a whole different ball game to actually implement them. Stay on top of the changes you commit to because your clients will thank you. All the good ideas in the world won’t bring in more clients and reduce churn unless they are acted on.

Restructure Messaging

The market and consumers will be the ones to signal a need to restructure the messaging of your company. For instance, a few years ago when the market was in a different place, clients needed to be reassured of the safety of investments and the importance of protecting wealth. Today, it’s not the same way. Customers would rather hear about how a firm can secure and grow their wealth.

Prepare for the Future

Being innovative means you’re always looking forward. If you can do that, you’ll be able to prepare for the future much easier. The financial world is at the beginning of a major transfer in wealth across two very different generations. In order to keep up with the changing landscape, it requires you to prepare for the future before it’s here.

Wealth Management Terms to Know

raoulfraser-wealthmanagement-imageIf you are new to the world of wealth management, or want a better understanding, there is a large list of terms you will need to have a grasp of. The following list will give you an understanding of some of the more prominent terms you may expect to hear. Knowing these terms will also give you the knowledge to ask your wealth advisor questions based on your understanding.

Asset Allocation

Asset allocation is an overall portfolio strategy. This strategy is focused on balancing risk and reward. The delicate balance is achieved by assessing the client’s goals, their tolerance for risky investments, and what they see on the investment horizon.

Capital Appreciation

Capital Appreciation refers to an investment objective. The object signals that a particular client seeks to grow the value of investments over time and are willing to invest in securities that have demonstrated a fair amount of risk. The client has an appreciation for the market and a willingness to take some risk to receive bigger returns.

Consumer Price Index

The consumer price index, or CPI, “is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care.” The CPI can be calculated by taking the price changes for each individual item and averaging them. The goods are then weighted on their importance. CPI is used to understand price changes affiliated with the cost of living.

Equity

Equity is represented by a stock or security with an ownership interest. A client may have equity in a company if they possess a large amount of shares.

Liquidity

Liquidity is used to describe the measure of how much time it will take to turn an investment into cash. A mutual fund would be considered a liquid investment because shares can be traded in at any time. A house or car would be considered an illiquid investment because it takes time to turn that asset around into cash.

Municipal Bonds

Municipal bonds are a debt security issued by any level of state government to finance large scaled projects or renovations. Municipal bonds are often exempt from federal, state, and local taxes.

Preservation of Capital

Preservation of Capital is another investment objective. Preservation of Capital is on the opposite side of the scale opposed to capital appreciation. Preservation of Capital refers to an initiative to maintain the principal value of a client’s investments. The objective is achieved by investing in low risk venture that almost guarantee security.

Risk Tolerance

Risk tolerance refers to a client’s specific tolerance for risky investments. A high risk tolerance, for example, would be willing or able to withstand declines or even loses in an investment. On the other hand, someone with a low risk tolerance would not be interested in taking risk resulting in losses or declines.

Risk can also change depending on a client’s investment timeline. An individual investing for the long term may be willing to see ups and downs.

Share Buyback

Share buybacks are executed by the company in an attempt to reduce the number of shares in the market. Companies can choose to do this for many reasons. The most common are for reducing supply to increase the value of available stocks or even to keep investors from gaining a controlling stake in the company.