Invest In Yourself With A College Education

How would you like to invest $21,964 and have it turn into $2 million? Thousands of people do it. Their investment strategy involves a four-year commitment to education. The payoff begins with the receipt of a college degree, which opens the door to a lifetime of earnings that otherwise might not have been possible to obtain. In this article, we'll show you the million-dollar benefits of choosing to pursue an education.

The Math Is Simple

According to information released by the U.S. Census Bureau in February 2012, workers with a college degree earn nearly twice as much as those without one in 2009. Census data indicates that the earnings of the average worker between the ages of 25 and 34 with a high school diploma was $27,511. The average earnings of a similar worker armed with a bachelor's degree was $45,692. Taking these earnings into account, spread over the course of a 40-year career and not accounting for inflation and salary increases, results in roughly $1.1 million for the high school graduate and $1.8 million for the college graduate.

Watch Wages Increase by Degrees

While just about any degree will help your earnings prospects, more education generally equates to more money. Over the course of a working career across all persons, an associate's degree is worth about $1.6 million, a bachelor's degree is worth $2.3 million, a master's degree is worth $2.9 million, a doctorate is worth $4.1 million, and a professional degree is worth $5.1 million.

Of course, like any investment, some are better than others. A degree in basket weaving, Renaissance art or golf is likely to result in significantly lower earnings than a degree in information technology, business or the health sciences. Choosing your major wisely is a lot like selecting an appropriate investment for your long-term portfolio. In other words, you need to choose something that dovetails with your goals and has a realistic opportunity to provide the return on investment that you are anticipating.

See the True Cost of College

Of course, getting a degree is easier said than done. The cost of a college education is high, and it's only getting higher. In fact, the cost of education has risen faster than inflation over the past decade, and tuition at a four-year public university is estimated at $8,240 dollars per year for the 2011 - 2012 school year, according to the College Board, a non-profit higher education association. Tuition at a private school will cost even more - about $28,500 per year. 

Costs are also higher for students who live on campus. Because learning financial responsibility is just one of the many lessons that we all must face, choosing to commute rather than live on campus is a financially prudent decision that can save tens of thousands of dollars.

For four years on campus, the final bill at 2011 rates was $21,447 at a public school for in-state students, $33,973 for on-campus, and $42,224 at a private institution. To put that into perspective, a public school education for an in-state student costs about as much as a 2011 MINI Cooper, while the cost at a private schools costs about as much as a 2012 BMW 3 Series Sedan 335i, according to Yahoo! Autos. Considering that the average American buys two cars over the course of four years, a college education looks very cheap indeed. It also provides a far better return on investment.

Focus on the Future

The focus on the cost of college is misplaced. While the cost of a single year, particularly at a private school, can be significant, most college graduates will earn back the amount spent in a single year of working. In some cases, such as graduates from public education institutions, their first year's salary will cover the cost of all four years in college.

Learn to Look Beyond the Money

The significant earnings that a college graduate can expect provide the opportunity to enjoy material comforts. A nice car, a nice home and some spending money in your pocket are the traditional rewards for financial success. Likewise, increased earnings provide an opportunity to save and invest. College graduates have the opportunity to not to only enjoy a comfortable lifestyle during their working years, but their increased earnings provide an opportunity to save and invest to ensure a financially secure retirement.

While there's no doubt the paychecks are nice, attending college has additional financial and intangible benefits too. A number of studies suggest that higher education leads to better health consciousness, which translates into time spent at the gym or engaging in other forms of exercise. Healthier eating habits often go hand-in-hand with a good exercise regimen, and exercise and healthy eating habits lead to healthier lifestyles, overall.

A college education also provides greater opportunities for promotion and upward social mobility, not only for the recipient of the degree but for non-working spouses and children, as well. An increase in job security and a decrease in unemployment are also associated with a college education, as college graduates tend to have transferable skills. Therefore, if the widget factory closes down, a college-educated accountant or human resources professional can often transfer their skills to another employer with relative ease.

Make an Investment in You

The Census Bureau reports that, as of 2006, about 27% of the U.S. population had least a bachelor's degree. Although income for this demographic fell for the first time in 30 years for the period between 2001 and 2004, a college degree is still likely to be one of the best investments you will ever make. 

Popular Trading Styles

There are numerous methods and styles used by traders to trade. The classification of these trading styles can be done using various measures such as the products trading, buying and selling interval and methods/schemes used for trading. According to the products traded, the major trading types include stock trading, options trading, forex trading, commodity trading, futures trading, etc. 

Stock trading involves the trading of equities or shares of companies via specific stock markets. Option trading involves trading of options, which is the right to buy or sell a share/contract at precise time periods under specific market levels. Online forex trading involves the trading of currencies in pairs; that is buying one currency and selling another one according to currency exchange rate changes. Online commodity trading and online futures trading involve the trading of contracts; either for products like crude oil and natural gas or for money investments like bonds and treasury notes. 

Based on the time between purchasing and selling of products online trading can be generally divided in to long-term investing and short-term trading. Usually trades with buying and selling gap below one year are called short-term trades and those with buying and selling interval over one year are called long-term investing. The majority of online traders are short-term traders, trade equities/contracts in relation to short-term changes in value. 

Long-term traders trade according to company/industry growth rates. They are generally company/industry specialists, trade in large quantities with long-term goals. Short-term trading can be divided in to day trading, swing trading and position trading.

Day trading is regarded as the most active trading style. In Day trading the buying and selling period does not exceeds one day. Day traders buy and sell stocks/contracts with in seconds, minutes or hours for generally small gains. Day trading avoids overnight risks as the trader holds no stock/option.

Day traders include: 

(1) Scalpers – traders who buy and sell large number of contracts/shares with in seconds or minutes for very little per share gain, and 

(2) Momentum traders – traders who trade based on the trend patterns with in a day. 

Online swing trading, like day trading, is an active process. But here the buying and selling period may range from a few hours to 4 days. Swing traders trade options/contracts in relation to minor variations in price for little more profit than day trading. 

Swing trading includes overnight risks of holding stocks/contracts. In position trading the buying and selling gap can range any where from a few days to weeks or months. Online position traders trades on long-term trends and company/industry performances. They have higher risks and higher gain percentage per share to swing traders and day traders. 

Based on the schemes followed, trading can be divided in to 

(1) Brother-in-law style of trading – trading in accordance with the advice from brokers or other traders, 

(2) Technical trading style– trading by using advanced systems to find out historical as well as latest trends, 

(3) Economist style of trading – trading according to the economic predictions,

(4) Scuttlebutt style of trading – trading based on the information extracted from brokers or other sources, 

(5) Value trading style – trading according to merits of single share/contract not to whole market, and 

(6) Conscious style of trading – trading by combining two or more of above styles to finding right opportunity.

The Advantages Of Mutual Funds

Since their creation, mutual funds have been a popular investment vehicle for investors. Their simplicity along with other attributes provide great benefit to investors with limited knowledge, time or money. To help you decide whether mutual funds are best for you and your situation, we are going to look at some reasons why you might want to consider investing in mutual funds. 

Diversification 

One rule of investing, for both large and small investors, is asset diversification. Diversification involves the mixing of investments within a portfolio and is used to manage risk. For example, by choosing to buy stocks in the retail sector and offsetting them with stocks in the industrial sector, you can reduce the impact of the performance of any one security on your entire portfolio. To achieve a truly diversified portfolio, you may have to buy stocks with different capitalizations from different industries and bonds with varying maturities from different issuers. For the individual investor, this can be quite costly. 

By purchasing mutual funds, you are provided with the immediate benefit of instant diversification and asset allocation without the large amounts of cash needed to create individual portfolios. One caveat, however, is that simply purchasing one mutual fund might not give you adequate diversification - check to see if the fund is sector or industry specific. For example, investing in an oil and energy mutual fund might spread your money over fifty companies, but if energy prices fall, your portfolio will likely suffer. 

Economies of Scale 

The easiest way to understand economies of scale is by thinking about volume discounts; in many stores, the more of one product you buy, the cheaper that product becomes. For example, when you buy a dozen donuts, the price per donut is usually cheaper than buying a single one. This also occurs in the purchase and sale of securities. If you buy only one security at a time, the transaction fees will be relatively large. 

Mutual funds are able to take advantage of their buying and selling size and thereby reduce transaction costs for investors. When you buy a mutual fund, you are able to diversify without the numerous commission charges. Imagine if you had to buy the 10-20 stocks needed for diversification. The commission charges alone would eat up a good chunk of your savings. Add to this the fact that you would have to pay more transaction fees every time you wanted to modify your portfolio - as you can see the costs begin to add up. With mutual funds, you can make transactions on a much larger scale for less money. 

Divisibility 

Many investors don't have the exact sums of money to buy round lots of securities. One to two hundred dollars is usually not enough to buy a round lot of a stock, especially after deducting commissions. Investors can purchase mutual funds in smaller denominations, ranging from $100 to $1,000 minimums. Smaller denominations of mutual funds provide mutual fund investors the ability to make periodic investments through monthly purchase plans while taking advantage of dollar-cost averaging. So, rather than having to wait until you have enough money to buy higher-cost investments, you can get in right away with mutual funds. This provides an additional advantage - liquidity. 

Liquidity 

Another advantage of mutual funds is the ability to get in and out with relative ease. In general, you are able to sell your mutual funds in a short period of time without there being much difference between the sale price and the most current market value. However, it is important to watch out for any fees associated with selling, including back-end load fees. Also, unlike stocks and exchange-traded funds (ETFs), which trade any time during market hours, mutual funds transact only once per day after the fund's net asset value (NAV) is calculated. 

Professional Management 

When you buy a mutual fund, you are also choosing a professional money manager. This manager will use the money that you invest to buy and sell stocks that he or she has carefully researched. Therefore, rather than having to thoroughly research every investment before you decide to buy or sell, you have a mutual fund's money manager to handle it for you. 

The Bottom Line

As with any investment, there are risks involved in buying mutual funds. These investment vehicles can experience market fluctuations and sometimes provide returns below the overall market. Also, the advantages gained from mutual funds are not free: many of them carry loads, annual expense fees and penalties for early withdrawal. 

Using an economic calendar

Whether or not you decide to trade around news events, it is vital that you know when they are coming.

In this blog we will look at how you can use an economic calendar to help you identify in advance which events in an upcoming day or week are most likely to affect the markets you are trading.

This may help you find new trading opportunities, flag up the need to protect or adjust existing trades, or simply alert you to times when you should stay out of the market altogether.

How to use the economic calendar

Step 1: Set the calendar time

To work best, the economic calendar should be set to your local time – the time in the place where you are based. This means that you can instantly see at what time during your own trading day an event will occur. This saves you wasting time – and possibly making expensive mistakes – trying to calculate time differences.

To set the calendar time, click on the 'current time' link and select your time zone, as shown below:

Step 2: Check the daily schedule

To find out what news events are scheduled for a particular trading day, open the economic calendar and then scroll down to the date you are interested in.

Click on that date and a list of news events will open beneath it, as below:

Note that the number of news events included will vary from day to day.

Step 3: Interpret the economic calendar

At the top of the calendar you will see a number of headings – Time, Cur, Imp, Event, Actual, Forecast and Previous – which give you information about what kinds of events you are dealing with.

To find out what each of these headings refers to, look at the screenshot below and refer to the key underneath it:

Time: This tells you what time the news event is scheduled to occur. This will be in your local time zone if you have already changed the settings, as previously discussed. In the highlighted example, you can see that the news release was scheduled for 09:00.

Cur: This is short for 'currency' and tells you which currency will probably be affected by the news event as well as which country it will occur in or relate to. You will also see a country flag here. In the highlighted example, the Italian flag tells you that the news release will come from Italy and is likely to affect the euro.

Imp: This is short for 'importance' and tells you how much impact the event is expected to have on the market. You will see one, two or three images of a bull. The more bulls, the more important the event is considered. In the highlighted example, only one bull is visible, meaning this event is not expected to have much effect on the market.

Event: This shows you the name of the event that is scheduled. In the highlighted example, the month-on-month (MoM) Italian Industrial Production figures are due to be released.

Actual: This tells you the actual result of the event once it has occurred. If the event was the release of figures, it will appear as a number. It also uses colour-coding to tell you whether the figure was better (green) or worse (red) than the market expected. In the highlighted example, 0.2% means Italian industrial production grew 0.2% month-on-month. The number appears in red, meaning it was worse than expected.

Forecast: This tells you what number or results analysts had on average predicted before the event. By comparing this figure with the 'Actual' result, you can form a view of how the market will react. If the 'Actual' result is worse than the 'Forecast' number, the currency involved will probably react negatively. In this example, the 0.2% growth that was announced was worse than the forecast 0.3%.

Previous: This tells you the outcome the last time this particular event occurred. By comparing previous results with the latest result, you can form a view on whether a country's economy or a specific industry is improving or worsening. In the highlighted example, the previous number was -0.2%, indicating that Italy's industrial production is now improving.

Step 4: Find out more about an event

To gather even more information about a specific news event, click on it. You will then see an expanded view.

Look at the screenshot below and then read the key underneath to find out what each section of the expanded view will tell you:

The name of the event.

Overview: this gives you a definition of the news event as well as what the actual number would probably mean for the currency or market in question.

Details at a glance: this highlights the actual, forecast and previous numbers, as well as the importance of the event and the currency affected. It also gives you an external web link to the source of the report.

To see previous results for the news event in graph form, click on the 'Chart' tab (marked on the screenshot below as):

To see more detailed data for past news events, hover your mouse over the chart. In the example above, you can see that on October 10th 2012, the actual number came in at 1.7% and the forecast number was -0.4%.

To see the previous news events by date, click on the 'History' tab (next to the 'Chart' tab). This will show you the actual, forecast and previous numbers, as shown on the screenshot below:

News trading - an introduction

News releases can have a big impact on the financial markets, often increasing volatility dramatically within seconds and sometimes changing the price direction entirely.

Trading the news: a different discipline

Trading the news is an entirely separate discipline to everyday trading. Even if you decide that this is not for you, news is not something that you can ignore completely.

You still need to be aware of when they are due and how they could affect existing positions in the market.

Different kinds of news

There are three main categories of new, scheduled events, anticipated but unscheduled events and unforeseen events.

Scheduled events

These are news events that have a pre-scheduled publication times that you are aware of in advance. This includes economic figures such as interest rate announcements that are published on a regular basis.

This type of news is relatively easy to prepare for when planning your daily schedule.

Anticipated but unscheduled events

These are news events that you know are coming soon, but you are not sure exactly when to expect the details that will affect market prices.

These include political meetings, such as summits attended by heads of state. Traders are usually aware of when these meetings will be held, but cannot be sure exactly when any decisions from the meeting, that would affect the markets, will be announced.

This type of news event is more difficult to trade than pre-scheduled news, especially for short-term traders, because, it is more difficult to decide where and when to enter positions and any trades you make carry a higher risk.

There is of course the option of staying out of the market entirely until any such news is eventually released.

Unforeseen events

These are news events that are completely unexpected, such as out-of-the-blue announcements from central banks or news of natural disasters or acts of terrorism.

These are by far the most difficult news events to trade, as it is impossible for you to actively prepare for their publication or impact. All you can do is react following the announcement.

Some news has more impact than others

You can also categorise news in terms of how much impact it has on the markets.

For example, big macroeconomic indicators that give you a general view of the health of an economy – for example the monthly US non farm payroll report – can have a huge impact on market prices.

The release of data on new housing starts or house prices, or government announcements of new initiatives for the market also have a big impact.

However, industrial production, while important enough to move prices, will not have as much of an impact as unemployment or housing figures.

To a certain extent the impact of the news on the market will depend on which asset class you are trading.

Guide to Investing in Gold Coins

One of the easiest way to begin investing in gold is to invest in gold coins.  In this guide to gold investing, we are only going to discuss so-called gold bullion coins, which have little to no numismatic value and instead trade based almost entirely on the value that could be received if the gold were melted down and sold at the current spot prices.  

1. Investing in Gold Krugerrand Coins

The gold Krugerrand is a gold coin minted by the government of South Africa. Production began in 1967, making it the first available gold coin in an era when bullion ownership had been effectively outlawed in the United States for decades with the exceptions of coins that had numismatic value. In the nation of South Africa, the gold Krugerrand is actually legal tender but, like all bullion coins, the value of the underlying metal far exceeds the face value if used as currency so this is largely symbolic.

2. American Eagle Gold Bullion Coins

With the dollar declining as a result of the twin deficits and constant talk of possible inflation risk, many readers have been asking about the place of gold in their portfolio. One simple and easy way to diversify into this “metal of the kings” is to purchase American Eagle gold bullion coins. Since they were first offered, American Eagle gold bullion coins have been a great choice for those who want to add precious metals to their portfolio a few thousand dollars at a time.

3. Canadian Maple Leaf Gold Bullion Coins

Introduced to the world markets in 1979, Canadian gold maple leaf coins are guaranteed in purity by the Canadian Government and serve as the official gold bullion coin of the nation. Canadian gold maple leaf coins were introduced as a result of the efforts of a man named Walter Ott, who wanted to provide a gold bullion coin alternative to the South African Krugerrand, which was relatively scarce as civilized countries had enacted boycotts against the apartheid policies of the time.

10 Steps To Building A Winning Trading Plan

There is an old saying in business: "Fail to plan and you plan to fail." It may sound glib, but those who are serious about being successful, including traders, should follow these eight words as if they were written in stone. Ask any trader who makes money on a consistent basis and they will tell you, "You have two choices: you can either methodically follow a written plan, or fail."

If you have a written trading or investment plan, congratulations! You are in the minority. While it is still no absolute guarantee of success, you have eliminated one major roadblock. If your plan uses flawed techniques or lacks preparation, your success won't come immediately, but at least you are in a position to chart and modify your course. By documenting the process, you learn what works and how to avoid repeating costly mistakes. 

Whether or not you have a plan now, here are some ideas to help with the process. 

Disaster Avoidance 101

Trading is a business, so you have to treat it as such if you want to succeed. Reading some books, buying a charting program, opening a brokerage account and starting to trade are not a business plan - it is a recipe for disaster. "If you don't follow a written trading plan, you court disaster every time you enter the market," says John Novak, an experienced trader and developer of the T-3 Fibs Protrader Program. 

Once a trader knows where the market has the potential to pause or reverse, they must then determine which one it will be and act accordingly. A plan should be written in stone while you are trading, but subject to re-evaluation once the market has closed. It changes with market conditions and adjusts as the trader's skill level improves. Each trader should write their own plan, taking into account personal trading styles and goals. Using someone else's plan does not reflect your trading characteristics. 

Building the Perfect Master Plan

What are the components of a good trading plan? Here are 10 essentials that every plan should include: 

• Skill Assessment

Are you ready to trade? Have you tested your system by paper trading it and do you have confidence that it works? Can you follow your signals without hesitation? Trading in the markets is a battle of give and take. The real pros are prepared and they take their profits from the rest of the crowd who, lacking a plan, give their money away through costly mistakes. 

• Mental Preparation

How do you feel? Did you get a good night's sleep? Do you feel up to the challenge ahead? If you are not emotionally and psychologically ready to do battle in the markets, it is better to take the day off - otherwise, you risk losing your shirt. This is guaranteed to happen if you are angry, hungover, preoccupied or otherwise distracted from the task at hand. Many traders have a market mantra they repeat before the day begins to get them ready. Create one that puts you in the trading zone. 

• Set Risk Level

How much of your portfolio should you risk on any one trade? It can range anywhere from around 1% to as much as 5% of your portfolio on a given trading day. That means if you lose that amount at any point in the day, you get out and stay out. This will depend on your trading style and risk tolerance. Better to keep powder dry to fight another day if things aren't going your way. 

• Set Goals

Before you enter a trade, set realistic profit targets and risk/reward ratios. What is the minimum risk/reward you will accept? Many traders will not take a trade unless the potential profit is at least three times greater than the risk. For example, if your stop loss is a dollar loss per share, your goal should be a $3 profit. Set weekly, monthly and annual profit goals in dollars or as a percentage of your portfolio, and re-assess them regularly. 

• Do Your Homework

Before the market opens, what is going on around the world? Are overseas markets up or down? Are index futures such as the S&P 500 or Nasdaq 100 exchange-traded funds up or down in pre-market? Index futures are a good way of gauging market mood before the market opens. What economic or earnings data is due out and when? Post a list on the wall in front of you and decide whether you want to trade ahead of an important economic report. For most traders, it is better to wait until the report is released than take unnecessary risk. Pros trade based on probabilities. They don't gamble. 

• Trade Preparation

Before the trading day, reboot your computer(s) to clear the resident memory (RAM). Whatever trading system and program you use, label major and minor support and resistance levels, set alerts for entry and exit signals and make sure all signals can be easily seen or detected with a clear visual or auditory signal. Your trading area should not offer distractions. Remember, this is a business, and distractions can be costly. 

• Set Exit Rules

Most traders make the mistake of concentrating 90% or more of their efforts in looking for buy signals, but pay very little attention to when and where to exit. Many traders cannot sell if they are down because they don't want to take a loss. Get over it or you will not make it as a trader. If your stop gets hit, it means you were wrong. Don't take it personally. Professional traders lose more trades than they win, but by managing money and limiting losses, they still end up making profits.

Before you enter a trade, you should know where your exits are. There are at least two for every trade. First, what is your stop loss if the trade goes against you? It must be written down. Mental stops don't count. Second, each trade should have a profit target. Once you get there, sell a portion of your position and you can move your stop loss on the rest of your position to break even if you wish. As discussed above, never risk more than a set percentage of your portfolio on any trade. 

• Set Entry Rules

This comes after the tips for exit rules for a reason: exits are far more important than entries. A typical entry rule could be worded like this: "If signal A fires and there is a minimum target at least three times as great as my stop loss and we are at support, then buy X contracts or shares here." Your system should be complicated enough to be effective, but simple enough to facilitate snap decisions. If you have 20 conditions that must be met and many are subjective, you will find it difficult if not impossible to actually make trades. Computers often make better traders than people, which may explain why nearly 50% of all trades that now occur on the New York Stock Exchange are computer-program generated. Computers don't have to think or feel good to make a trade. If conditions are met, they enter. When the trade goes the wrong way or hits a profit target, they exit. They don't get angry at the market or feel invincible after making a few good trades. Each decision is based on probabilities. (To learn more, see The NYSE And Nasdaq: How They Work.)

• Keep Excellent Records

All good traders are also good record keepers. If they win a trade, they want to know exactly why and how. More importantly, they want to know the same when they lose, so they don't repeat unnecessary mistakes. Write down details such as targets, the entry and exit of each trade, the time, support and resistance levels, daily opening range, market open and close for the day and record comments about why you made the trade and lessons learned. Also, you should save your trading records so that you can go back and analyze the profit or loss for a particular system, draw-downs (which are amounts lost per trade using a trading system), average time per trade (which is necessary to calculate trade efficiency) and other important factors, and also compare them to a buy-and-hold strategy. Remember, this is a business and you are the accountant. 

• Perform a Post-Mortem

After each trading day, adding up the profit or loss is secondary to knowing the why and how. Write down your conclusions in your trading journal so that you can reference them again later. 

The Bottom Line

Successful paper trading does not guarantee that you will have success when you begin trading real money and emotions come into play. But successful paper trading does give the trader confidence that the system they are going to use actually works. Deciding on a system is less important than gaining enough skill so that you are able to make trades without second guessing or doubting the decision. 

There is no way to guarantee that a trade will make money. The trader's chances are based on their skill and system of winning and losing. There is no such thing as winning without losing. Professional traders know before they enter a trade that the odds are in their favor or they wouldn't be there. By letting their profits ride and cutting losses short, a trader may lose some battles, but they will win the war. Most traders and investors do the opposite, which is why they never make money. 

Traders who win consistently treat trading as a business. While it's not a guarantee that you will make money, having a plan is crucial if you want to become consistently successful and survive in the trading game.