Debt SolutionsIt feels like your debts are spiraling out of control. With each passing month you are robbing Peter to pay Paul and the heavy cloud of debt is always hovering above your head. When you sit down to work out your money the simple truth is you have more going out than you have coming in. If this carries on there`s a real chance that you won`t be able to make the mortgage payments a few months down the line and then goodness knows what you are going to do. It`d be wonderful if you could pay a fixed monthly fee that would be affordable and keep your creditors off your back. There`s a good chance this can happen if you have a chat with a company that can provide a number of
Debt Solutions. A debt management plan is just one of the options that the
Debt Solutionscompany can provide. The scheme calculates what you can afford to pay each month and this sum is paid to the
Debt Solutionsfirm. All it could take is one phone call to a trained advisor and you could be offered suitable solutions that will lift the burden of heavy debt from your shoulders.
Different investors have different investing styles. Some are aggressive some are not. But to me, the most important thing to do in investing is to minimize your risk. Why is it important? Simple. Because, we as a human, hate losing. Research has shown that investors tend to hold losing positions for too long and sell winning investments far too soon. The general consesus is that you have not lost when you do not sell your losing investments.
Aside from that, taking care of risk first is critical to your investment success. This is because it takes you to gain larger percentage in order to cover your loss. Look at the list below for clarification.
% loss: 25%, % gain to break even: 33%
% loss: 33%, % gain to break even: 50%
% loss: 50%, % gain to break even: 100%
% loss: 75%, % gain to break even: 400%
% loss: 90%, % gain to break even: 900%
Let`s use the following example; If stock A fell 50% from $ 100 to $ 50, A needs to rise 100% from $50 in order for investors to break even. If you go down the list, the climb gets harder. If you invested in stocks that lose 90% of its value, it needs to climb 900% for you to break even. Wow. This demonstrates the importance of controlling your risk.
Here are a few checklists to help you to reduce risk in stock investing:
Positive Net Cash. Companies having positive net cash has less chance of bankruptcy and hence, your risk of incurring large percentage of losses. In bad time, the company can use the extra cash to defend its position rather than selling off its valuable asset to cover debt payment.
Dividends. Companies giving out dividend is a sign of strength. Without strong cash flow generation, companies cannot pay generous dividend to its shareholders. Furthermore, companies giving out dividend has less room to fall since value investors will quickly snap it up if share price goes down too deep.
Modest Price Earning Ratio. Companies trading at modest P/E ratio implies modest expectation. Stock price will be less volatile to `beating the expectation` game. This protects you from volatile price swings. As a result, you reduce your risk of losing out huge amount of your investment.
You can get your free investing idea and publish your own commentary, both at Novice Investing.
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