Conservative Investors Are Losers

Written by William Cate


Conservative Investors Are Losers By William Cate

It isn't your money that counts. It's what that money will buy that matters. To preserve your savings, your money must earn an income that offsetsrepparttar ravages of inflation. If your interest income is subject to taxation,repparttar 112163 interest level must equalize inflation after taxation.

It's 1952. You're a 12-year-old conservative investor planning to retire in 2005. You decide that after you retire, you will want to mail 1,000 postcards overrepparttar 112164 remainder of your life. You put $10 in a bank savings account, which representsrepparttar 112165 cost ofrepparttar 112166 1,000 post cards in 1952. The bank pays you 3% annual interest and after you pay State and Federal Tax onrepparttar 112167 interest, you are earning 1.8% on your postcard retirement investment. In 1992, your postcard fund has grown to $20. In January 2005, your postcard fund will have $27.50 in it for your retirement postcards. Meanwhilerepparttar 112168 price of 1,000 postcards has risen to $230. The cost of a postcard will rise again before you die.

If you had a middle class income and retired on a fixed income that equaled your salary in 1993, you are finding it nearly impossible to maintain your lifestyle today. The reason isrepparttar 112169 cost of everything has nearly doubled since 1993. Today, your fixed income buys about half of what it did in 1993. This pattern of certain poverty forrepparttar 112170 elderly has existed sincerepparttar 112171 Depression.

What'srepparttar 112172 current inflation rate? If you askrepparttar 112173 US Government, they will tell you that it has hovered around 3%/year forrepparttar 112174 past decade or more. Their statistical data is calledrepparttar 112175 Consumer Price Index (CPI). Unfortunately,repparttar 112176 Government uses statistics that intentionally report a percentage that is far belowrepparttar 112177 real inflation rate forrepparttar 112178 average family. Most economists and business people doublerepparttar 112179 CPI to get a figure closer to economic reality. Economic Conservatives tend to triplerepparttar 112180 CPI to suggestrepparttar 112181 annual US inflation rate to be around 9%. I'm withrepparttar 112182 majority who believe thatrepparttar 112183 inflation rate for years has hovered around 6%/year.

What's inflation? The simply answer is that it's any increase inrepparttar 112184 money supply. Governments increaserepparttar 112185 money supply to buy more than they earn from taxation. The increased currency supply depressesrepparttar 112186 value ofrepparttar 112187 existing dollars and thus allows Governments to borrow money and repayrepparttar 112188 loan in devalued dollars that offsetrepparttar 112189 interest onrepparttar 112190 loan. In essence,repparttar 112191 Government borrows money and repays it in dollars that buy less than didrepparttar 112192 originally loaned dollars.

Day Trading Checklist

Written by Trader Jack


Here's a bunch of important things you should know about day trading before you start. First off, can you daytrade if you don't haverepparttar requisite $25,000 plus? Yes. You can start Day Trading with as little as $750 if you decide to trade using a spreadbetting account rather than a standard broker, allowing you to ignore most day trading regulations about trading frequency. To day trade stocks using a standard brokerage account (8 round trips or more per week) you will typically need more than $25,000 in your account as per Uncle Sam's regulations designed to stop newbies blowing up. You don't necessarily need a 'mega PC' and a direct access account either. The average spread betting firm will give you access to a day trading system that runs happily inrepparttar 112162 browser of any low end PC on a dial-up internet account. Just remember thatrepparttar 112163 better your initial setup is,repparttar 112164 easier you will find it. You will NOT enjoy seeing your internet connection crash just as you try to pull off a perfectly timed exit, so it pays to have alternatives for everything you use in trading. For a list ofrepparttar 112165 best spreadbetting firms, consult www.traders101.com .

Is day tradingrepparttar 112166 most dangerous form of trading? No. The press is full of stories about how dangerous day trading is. This is pure scaremongering byrepparttar 112167 misinformed, because day trading simply means not holding any position beyondrepparttar 112168 current trading day; i.e. closing all outstanding positions byrepparttar 112169 end ofrepparttar 112170 session putting you 100% into cash overnight. In reality, day trading can be one ofrepparttar 112171 SAFEST form of trading, because you are not exposed to unforeseen events that happen out of hours (likerepparttar 112172 fall of Enron, Tsunamis inrepparttar 112173 Far East etc) andrepparttar 112174 accompanying gigantic losses that can happen duringrepparttar 112175 hours when you cannot trade. Many day traders only hold positions for a few minutes - andrepparttar 112176 less time your cash is in play inrepparttar 112177 market,repparttar 112178 less chance something will go wrong. Anyone claiming to be day trading who holds positions overnight is fooling themselves - remember this.

Build up your day trading skills with training - practise paper trading till it is second nature to you (for more on paper trading, head on over to www.traders101.com)! Day trading is like running any other kind of business. Adequate training, experience, capital and dedication is always required. Over time, you may find that day trading becomes relatively easy, but you will still have to 'put in your time'. Day trading is a full time job - you need to be ready to trade wheneverrepparttar 112179 market shows you a great opportunity. If you have limited time to trade, you should consider swing trading instead of day trading.

Preserve your capital at ALL costs. Limiting your losses when day trading is by far more important than making big profits. Day traders go bankrupt because they lose money, not because they don't make enough ofrepparttar 112180 green. When day trading, set yourself a limit on how much you are prepared to lose on any particular trade, and set your stoploss at that level. NEVER move your stoprepparttar 112181 wrong way (i.e. if you are long, and price starts to fall, NEVER lowerrepparttar 112182 stop). Ifrepparttar 112183 stop is hit, takerepparttar 112184 containable loss onrepparttar 112185 chin (rather than a bankroll-busting loss later!). Over time you will get better at placing stops on your trades. Remember that you can make a fortune day trading being right only 30% ofrepparttar 112186 time, as long as you cutrepparttar 112187 losses on your 70% losers so thatrepparttar 112188 profits on your 30% winners outweighs them. If you reach 50-50, you should be making money, and if you get above 50% winners, well... welcome torepparttar 112189 club! It is also wise to set yourself a daily limit - if you lose this much in a day, quit trading tillrepparttar 112190 next session. It really isn't possible to 'force' profits fromrepparttar 112191 market.

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