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  • Jun Wang
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  • Last Posted: 2017-07-20 09:09:43
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Beef Up Investments in Five Ways

2016-01-07 11:45:42

Finding a way to bolster your investments? Fortunately, it is possible. Let us enumerate the ways.


Gain it Slowly



Perhaps this is the oldest and classic way of doubling your investments. British actor John Houseman once said people earn money the old fashioned way. One of the tested and proven techniques to amplify returns is to invest in a firm, non-speculative portfolio which is diversified between investment grade bonds and blue-chip stocks. It may not double overnight or within a year, but as per rule of 72, it will eventually compound.


The rule of 72 is a shortcut to project the number of years required to boost your money at a particular annual rate of return. To compute, divide the expected annual rate of return into 72. The result will show the number of years it takes to multiply your earnings.


Consider Blood



When you see blood, buy it. Take it from Baron Rothschild and Sir John Templeton. Arguably, the most commonly used barometers to measure whether a stock is oversold is the company’s book value and price-to-earnings ratio. Both have created historical norms for the broad markets and for some industries. When stocks begin to slump for superficial or systemic reasons, this is the right time to double the capital.


Trust Bonds



If you wish to build up your investments the safe way, bond is the answer. Zero-coupon bonds can actually double your capital. Instead of buying a bond that simply renders a regular interest payment, you purchase a bond at a discount to its maturity amount. Its value slowly increases until the holder can pay the face amount as it inches closer to maturity.


Did we mention it has no reinvestment risk? Unlike standard coupon bonds, zero coupon bonds simply climbs toward maturity and you need not to inject smaller interest rate payments or worry about declining rates.


Speculate



You may want to supersize your portfolio by putting options, margin or penny stocks if you are after riskier investments. Stock options can be used to bet on any company’s stock. Options can beef up a portfolio’s performance as well. But if you do not want to learn the nuts and bolts of option but seeks to leverage their speculation, buy on margin or sell a stock short. Both methodologies enable you to borrow money from a brokerage company to purchase or sell more shares.


Match the Contributions



Match the contributions you receive in your retirement. Even though this is not a good idea, getting 50 cents for each deposit is not a bad thing after all. Also, the money that goes into your 401(k) or other retirement plan comes right off the top of what your company declares to the Internal Revenue Service. The government also matches a specific portion of the retirement contributions of taxpayers for those who earn less than a particular amount. As per Credit for Qualified Retirement Savings Contribution, a tax bill is cut by 10% to 50% of every contribution to several retirement accounts.


Learn from this old maxim: When in doubt, don’t. Some entities are out there to use you, not help you achieve your financial goals.