Improving your investment results is no easy task. The stock market is not for the faint-hearted and emotions can get the better of us as investors. As 2017 comes to an end, you may have noticed that your investment portfolio doesn’t look as healthy as it originally did. However, there are tools in which you can use to your advantage and boost your stock returns to the numbers you want to achieve. These are three strategies to receive more financial gain.

Value vs growth method

With the use of index tracking, value companies have outperformed growth companies in the U.S. and international stock markets. Focusing your investments on value instead of growth companies will increase your chances of receiving higher returns.

By doing this and using financial tools such as a covered call screener, you are more guaranteed to get an increase of returns in 2018. Even though value companies have lower stock prices than growth companies, several value firms will offer stock brokers an annual dividend payout. Dividends are particularly useful if the price of a stock has slow appreciation during a time period.

Rebalancing strategy

Inevitably, your investment portfolio will decrease from its original asset class percentages and won’t appear as healthy as it first did. The method of adjusting the portfolio back to its original allocation is known as ‘rebalancing’.

There are a couple of ways in which this can be accomplished. These are: adding money to the under-weighted section of the portfolio, selling a portion of the over-weighted section and adding this to the under-weighted piece, or, taking withdrawals from the over-weighted assets.

By rebalancing, you are enhancing your portfolio performance and making it look more financially appealing to potential sellers. Not only does it do this, but it puts your investments back to the original level of risk tolerance. Keeping an eye on your portfolio and ensuring that each investment is being efficient with beneficial results is key to selling high and buying low. This means that you’re more likely to make profits than losses.

Prioritising equities and bonds

Before we go into detail over this strategy, let’s first establish the difference between an equity and a bond. Equity is essentially another name for a stock, where investors buy them to generate growth. The ideal equity is one which increases in price over time which allows the investor to sell their share for a large profit. However, a bond doesn’t give much opportunity to grow in value and instead, provide regular portfolio income.

Even though investing in equities can be more volatile and risky, the stock market has consistently outperformed the bond markets over the past decade. But, by carrying out a manageable combination between the two within your portfolio, this can offer better stock returns.

Let’s round it up

As an investor, you can see just by reading these simple strategies how boosting your stock returns and improving your portfolio can be easily done. The key rule is to prioritise your portfolio by keeping it balanced and consistent. Don’t get carried away with the influx of money and lose your main financial vision.

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Making profits in the equity market is not based on your luck. With a disciplined and research-based investment approach, you may be able to earn high returns. In addition, using some basic thumb rules based on the experience of other successful investors will help you earn profits.

Here are five thumb rules for investing in stocks

1. Do not try to time the market

Predicting the tops and bottoms in the equity market consistently over several cycles is almost impossible for seasoned investors. In reality, most people who try to time the market lose money.

2. Take a disciplined investment approach

Historically, great bull runs have also had their moments of panic. The volatility in the equity market has resulted in people losing money even during bull runs. However, if you follow a disciplined investment approach with long-term goals, it is most likely that you may avoid losses.

3. Invest in a broader portfolio

It is recommended you invest in different stocks across various sectors. Furthermore, you must include several asset classes to reduce your risk exposure. The different types of instruments that may be included in your investment portfolio primarily depends on your risk appetite and financial goals.

4. Monitor your portfolio regularly

The stock market is not only affected by domestic happenings. International occurrences also affect the equity market today. Therefore, it is very important that you monitor the performance of your portfolio regularly and make modifications as required. In case you are unable to track your portfolio at periodic intervals due to lack of knowledge or time, taking the help of an experienced financial advisor is recommended.

5. Avoid leverage

To ensure you do not face financial difficulties, you must invest the money that you can afford to lose. It is vital that you do not take on debt for stock market investing. In case the stocks do not perform as expected, there is a huge risk of losing the borrowed money and repaying the same may have adverse results.

Stock market investing may be highly profitable. However, you must do your research and make informed decisions. Furthermore, you must never let your emotions control your decisions and be realistic in your expectations.

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In the often confusing world of the stock market – and its fondness for acronyms – an IPO is an initial public offering – simply meaning when a company sells shares of its stock to the public for the first time. Before it becomes an IPO, a company is said to be privately held, meaning its ownership falls into the hands of a select few, and it isn’t listed on any Stock Exchange or traded by brokers such as CMC markets, you can look but you won’t find.

So how and why does a company decide to become an IPO? The reason is usually a financial one – a large company stands to make a lot of money from the sale of its shares, although many smaller companies also issue IPOs. The company will try to anticipate exactly how much profit and what the capital will be used for – for example to fund expansion or development. The company’s management decides on a particular day that the shares will be made available, and of course the anticipated asking price, with guidance from at least one investment firm. The 1990s saw many small start-up companies selling large amounts of stock through usually well-publicized and successful ventures, which has made the IPO popular among small and large investors alike.

Investing in IPOs can be risky and unpredictable though, and many investors advise against it unless you are particularly experienced and knowledgeable. One of the difficulties is that there is no existing track record as to how the shares will perform over time. Much of the profit and risk potential of buying shares in an IPO depends also upon the state of the market that particular time, the level of interest and even the general economy.

So how does one try to make a profit from these investments? Sometimes it depends on who you know as well as what you know. If you are lucky enough to work for the company in question, you may be offered a number of shares at a substantial discount or even have them given to you. Many IPOs are heavily oversubscribed, meaning there are more offers to purchase shares than there are available shares; in this situation, an employee or client would be given preference. This is one of the drawbacks of IPO’s – the majority of the shares may be allocated or offered first to employees, retirees, clients, etc. rather than the general public.

Do some research on the company that is intending to put out an IPO. There are many different financial newspapers, journals and web-sites that provide information and forecasts. The company is also required by Federal law to put out a prospectus detailing the offer, although this can be a lengthy and confusing document. Pay particular attention to the most recent earnings of the company as well as their projected earnings. Is the company you are planning to invest in solvent? Do they borrow money heavily to repay debts? Find out what the company’s product or service is, who its competitors are and what percentage of market share it has. A company whose product or service is seasonal or temporary might not be a profitable long-term investment.

One of the most attractive features of IPOs is that the shares offered are usually priced very low. In fact, the stock price of many companies can increase significantly during the day that the shares are offered, occasionally as much as 500 %. If you are fortunate enough to move quickly and buy the shares as soon as they are offered, you can sell them again that same day for at least a small profit. Many ‘speculative’ investors are more interested in this short term profit potential rather than any long term gains. If you are what is known as an ‘income’ investor, you are more concerned with the company’s long term profits and dividend potential.

Some serious investors advise that rather than buy shares when the company is first launched, you should wait a while – say a period of several months – even years – to get a better feel for how the company is doing financially. The share price usually ‘settles down’ after the initial excitement, and you can get a better idea whether it’s a good buy or not. In the long term, this can be a safer way to make a profit rather than buying at once.

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I’m sure you’ll agree that the internet is one of the most revolutionary leaps forward in history. How many times have you used an internet connection today? How much harder would your life be without that? Pretty much every facet of our lives has been influenced by the world wide web, and investing is no exception. In this post, we’ll take a look at how the dawn of the information age has changed the way we invest.

With the sheer size of the internet these days, it’s pretty tough to explain exactly what it is. At the core of it, it’s one giant bank of information. The internet has made information more accessible than ever before, and stock traders have benefited from it exponentially. Before the internet, an investor’s job was incredibly long-winded. Every time you wanted to find out about a company, you’d have to head to a library and sort through stacks of financial journals. Lengthy files on the history of stocks and bonds would have to have been leafed through until you found what you were looking for. The only alternative would have been calling up a company and asking directly for a financial report. This would not only cost a lot in the way of postage, but would also take a lot of time to gain any benefit from. You would have to wait for the report to be printed and posted. After that, you’d start again with the process of sorting through all the information yourself!

The internet immediately sped up this entire process. These days, you can get onto the SEC website in a matter of seconds, and view company reports in detail as soon as they’re updated. Lengthy, detailed documents on financial histories can also be downloaded in an instant. Then, you can easily search for keywords, figures and specific topics. With the erratic nature of the stock market, these quick updates became an essential for any successful investor. Many modern companies also keep up investor relations web pages. Here, you can find all the same files, presented in a clear, simple way. This created a pretty significant shift of power in the world of investing. Before the information age, investment managers and brokers had a huge advantage over investors like you and me. They had immediate access to detailed financial reports, without having to go through the same trials as investors. This has completely been turned on its head now! Some online resources will provide information for an affordable fee. Others even offer their valuable information for free! Perhaps the biggest change technology has had on investment is lowering investor’s fees. This has been seen in precious metals, FOREX and everywhere else in the world of investing. Retail investors have benefitted the most from this however. These days, it’s completely common for online brokers to charge a mere £6.00 for a trade.

As the internet has become more widely used, the power has gradually transferred to the little guys. Let’s hope that future technology continues to do so!

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When you see the stock market in movies, it looks easy. It looks like nothing but fun and quick cash (and sometimes illegal substances). And, for sure, the real stock market can offer those things. But the films you’ve been watching often leave out the unsexy details. One of those unsexy details is capital gains tax.

Many people have heard the term capital gains tax. Many know what it is but don’t think it applies to stocks. Well, they do! Here’s a quick rundown of what you need to know about these taxes on your stock sales.

Capital gains tax: a quick explanation

A capital asset is something you own that you use outside of business. The money you’ve sunk into the initial price and subsequent costs are combined and called the basis. When you sell a capital asset, you either make a gain or a loss. If the price at which you sell the capital asset is more than the basis, then you’ve made a profit. And in the government’s book, that means you’ve made a taxable capital gain. The capital gain minus the basis is the total profit. That value is what is going to be taxed via a capital gains tax. When filing your taxes, you need to get yourself a Schedule D (form 1040).

So this applies to stocks?

Yes. Capital assets include land, vehicles, real estate and securities, among other things. Securities include bonds and stocks. If you own stock for personal investment purposes, then it’s a capital asset. The profit you make from the sale of a stock can be taxed by your national revenue agency. So if you want to work out the total money you’re going to pocket after an exchange, you need to calculate capital gains tax.

Are there different types of gains?

There are indeed. There are what we call long-term gains and short-term gains. Short-term gains are the taxable profits you made from the sale of stock you held for less than a year. They don’t benefit from any special tax rate. The value, minus the basis, is usually taxed depending on your income. Long-term gains are the taxable profits you made from the sale of a stock that you held for over a year. The tax rates on these are much cheaper. In fact, if your ordinary income tax is less than 15%, there’s a chance you’ll pay no capital gains tax at all.

Keeping a record

When it comes time to file your taxes, you need to have everything in order. You’re not going to be taxed for every single stock; that’s unreasonable and will hurt the IRS’s calculator fingers. What you need to do throughout the year is work with your stock broker to record all of your gains and losses. These should be arranged into short-term and long-term. Oddly enough, this is when you find out whether or not you actually made a short-term gain or loss in the long run. If all your short-term losses outweigh all your short-term gains, then you’ve made a short-term loss. Whatever the result, put the calculation on Schedule D when you’re filing your taxes.

A loss isn’t a total loss

Revenue agencies aren’t completely heartless. Keep a record of your losses. You can use these losses to offset any future capital gains tax you incur!

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