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THE ECONOMIC INVESTMENT by THE EXPERTS


WHAT IS THE INVESTMENT ?

We know about what investment is in general, which is an activity done by individual / group with the purpose of "medium and long term" in order to get results that match what is expected by the investor (increase in profit). The size of the profits derived depends on the strategy that is on the way when planning or making an investment.

However, there are some things that must be understood in terms of understanding the investment itself. Understanding the investment (so far as I understand), there are 2 of which are economic investment and investment financially.

Then there is the question about"What is the Economic Investment ?"


According to the experts like Haming and Basalamah who stated that "investment is the current expenditure to buy real assets (land, house, car, etc.) or also financial assets have a goal to earn greater income in the future" .

Furthermore, it is also stated that investment is a form of activity related to the business of withdrawal of resources (money / profit) used to hold capital goods at the present time, and then from the capital goods will be obtained a new product flow in the future.

This is also in line with the opinion of Sadono Sukirno stating that "Investment is the expenditure or expenditure or planting a capital of a company to buy goods that also belong to the capital and also other equipment for production that has the ability to produce goods as well as the services available in the economy ".

But basically the thinking of people who will invest is to buy stocks when the stock price is cheap and sell when the stock price rises, but it is not said to be an investment. But the real investment is in line with what the experts have described.

Investment can also be interpreted in the economic sphere which can be categorized as follows :
  1. There are purchases of types of capital goods such as equipment and machinery to foster various types of companies and industries. Why is that? Simple model, if you aspire to build a company of four-wheeled tires, then you should make purchases of artificial equipment and other machines, making the purchase of equipment that is mentioned investment.

  2. The existence of expenditure to build shelter, factory and office buildings and other supporting buildings. The investment is to build the factory, so the factory can operate and make more capital.

  3. The addition of merchandise inventory scores is still unsold, at the end of the year there is a calculation of national income on raw materials and goods that are still in production progress. Well, if the above three are added up then gross investment is gross investment which includes investment that aims to improve the artificial results in the economy and the role of changing capital goods that have been depreciated.
December 21, 2017
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5 GOLD INVESTMENT RISKS THAT MUST BE KNOWN

Investingkia readers should understand and recognize what kind of gold investment risks before deciding to invest. Gold investment commonly referred to as safe haven currency is inseparable from the name of risk. Risk can hardly be avoided but we can manage the risk.

Before you learning about the main strategy of gold investment, it's worth to know about 5 Gold Investment Risks That Must Be Known.

As we know that everything activity has its own risk. Big or small risk is dependent of who runs, not from the activity it originated. Basically an activity is the spot that can not moved, in the sense if we do not want to run the activity then we will not get the risk (the activity itself could mean is any  of investments).

HERE WE GO !

5 GOLD INVESTMENT RISKS THAT MUST BE KNOWN


Number One : WATCH OUT FOR THE FAKE GOLD


This risk is regarded most commonly encountered by the layman because very many of them do not understand exactly what the real gold and what kind of the fake gold is. They further see that the offered gold has a better sparkle "shiny" and have affordable price.

There are various forged gold such as gold coins, gold bars, to gold securities (gold certificates). Not only that, fake gold is very often used as one of the weapons to launch a fake gold investment to the layman and its main target is the people who live in areas where income levels are not high and education is not high. So it is very likely that fake gold investment activity occurs.

But now you do not have to worry, if you are one of those people who do not understand correctly about the quality or content of a gold, it is better to buy or invest gold in official registered and supervised by the government. So it can be ascertained that the gold traded or in other words gold that you will make the investment has a trusted quality.

Number Two : THE SAFE GOLD STORAGE ROOM


One of the most important things to consider in gold investment is to get a safe gold storage space because the risk of losing physical goods or gold in investments can be very detrimental to the investor.

You need to know that at this time many providers of gold storage space is safe, one of which is a deposit box. But you need to pay attention also about who or what agency or company and what kind of credibility in handling gold storage that they have. The best solution is that you do the gold storage of proceeds or for your investment in agencies that are trusted by the public and supervised by the government, in this case could be a bank that has a gold storage facility.

In addition to the level of security, of course you have to make sure that the cost necessary to hire a safe gold storage does not have a high cost because if you only think about the security without the comfort for your finances, then your gold investment becomes useless and you may suffered losses because the cost you need for storage is very large.

Number Three : INVESTMENT FRAUD / COUNTERFEIT INVESTMENT

This risk relates to the first point about the 5 Gold Investment Risks That Must Be Known, in which the perpetrators who make or offer false investments of any kind investments (gold, money, stock, property, etc.) always put great promises, such as by using the slogan that "instant profits and without risk "or there is also an appointment to double gold in a very short time (in a matter of months or even just one month).

This fraudulent investment / investment scam is often offered to people who are struggling to make money, need a lot of money in an instant, and who is definitely a very lazy person.

Again, the right solution to any investment is to ensure that the one who offers the investment has a legal entity (officially registered and supervised by the government), and has a legal investment product / obtained / obtained in a legal way ( according to the applicable law).

Number Four : ALWAYS WATCH FOR GOLD PRICE FLUCTUATIONS


For example, on October 6, 2017 you bought gold at a cost of $ 46 and by chance on this day of December 10, 2017 you want to sell it. Current price is $ 36.

There is a loss of $ 10 from the first purchase price. Approximately if such a profit or loss? The second condition, for example on January 3, 2016 you buy gold at a cost of $ 42. Then on July 10, 2016 you sell at a rate of $ 70. So there is a difference of $ 28. In the first case you incur a loss of $10 while in the second case gain of $ 28.

Always remember that gold is not always experiencing continuous price increases and not as long as its gold continues to decline. In essence you should have understood and noticed the pattern of increase and decrease in gold prices.

Number Five : NO FAST INCREASED PROFIT


If you want to invest in gold, you need to understand that in gold investments there is no quick results compared to other investments, because gold investments have a level of fluctuation in the increase or decrease that is not far each position. In contrast to property investments that have increased soaring when influenced by local government policies and even the price or value of the property will not fall back.


December 19, 2017
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THE STOCK TECHNICAL ANALYSIS

Interaction on stock price analysis, in fact, the basic analysis is not the sole analysis tool used only by investors and analysts. Many people embrace another way called Stock Technical Analysis. For them, compared to basic analysis, stock technical analysis is considered more accurate to generate investment recommendations. Some say that technical analysis is more than science.

In principle, technical analysis is a way of investing in investment instruments, which uses historical data on other market indicators to increase stock prices and other devices, volume and investment decisions. happens. This analysis can be applied to stock exchange, foreign exchange market, alien exchange or any market whose prices influence and demand movements.

Differences in Basic and Technical Analysis of Stock Investing

If the basic analysis uses more corporate indicators to analyze the stock value of a company, unlike, stock market analysis and other devices use more market data. Since market data is usually presented in graphics, it is more likely to engage in such graphics than in comparison to financial statements issued by technical analysts. Therefore fans of this flow often receive charity as a charity.

In the past, the purpose of stock technical analysis, using prices, supplies and demanding figures, is how the future demand and supply are done, and analyze stock prices that can be created by it. This is why the stock price movements have to be identified once again or identifiable and then exploited for springs. Technical analysts also believe that due to the existence of new information in the market, the process of changing stock prices will have to follow a specific trend. After finishing these things, technical analysis is used when availing profit (profit), reducing damages (cut loss), starting stocking or starting positioning (wait and see) .

Basic analysis and technical analysis, which is a better? Technical analysis error rate is relatively high compared to basic analysis. But, if we are administrators and use the right tools, stock technical analysis may be equal to basic stock analysis. Buying less sales in principle, buy cheap sales expensive.

Analysis of stock prices and trade volume is the main source of stock analysis of stocks and graphics are a source of data to show. The volume of the commercial volume will be used to evaluate the market conditions and predict future pricing trends. Stock prices change or decrease will usually be associated with the increase or decrease in the commercial volume. After a very large volume of sales, a specific pattern reduction in the pattern will usually be translated, which will experience the market (stock deficit).

Technical analysis of stock market use more. Therefore, technical analysts prefer to pay attention to the movement of stock in stock instead of seeing financial statements or instead of reading newsletters about issuing news stories. Their job is to discuss the changes in stock prices, to learn how to think or think of other parties involved in the exchange. Analyzing the stock price, they expect hearing price movements through the data presented in Form graphical (charts).

Pattern identification of a tendency or stock value movement is the main objective of a technical analyst, with the hope to buy, hold or sell signals. There are only a large number of stocks to analyze the technical analysis, i.e. the value of transaction (or other devices) in the stock and value of transaction. Technical analysts prices are in four categories: opening price, highest price, low price and closing price.

We all believe that stock prices can grow slowly or slowly and slowly slow down so that these peaks can be formed or flat on the chart. In the attempt to analyze stock prices and the trend of change in stock price, charts are directed by two important ideas. First of all, prices run on a particular trend and others, the trend will continue until the trend changes.

To give you an idea about ​​how to work a job of The Stock Technical Analysis with the most commonly used and easy to understand, such as  :

Moving Average (MA)


Moving Average (MA) or by other name it is an increasing average, which is often one of the stock price analysis methods in the technical analysis of the stock. Moving Average (MA) is the average stock price in the previous average period and then the market has been plotted in the chart with the actual stock price. During the five business days, the MA obtained from the average stock price, for example, is written as MA-5. MA, who has proved that the 15-day average price was written as MA 15. Therefore, the average average of the stock indicates the rising average. The usage value data is generally the closing price (the end price).

Create an X graph (Horizontal) and Y (Vertical). X axis represents the day (date) and Y axis represent the value. Then calculate the average stock price for 10 days, including today (MA 10). Contact average price points in the MA line. At the same time, the price-closing price points (the original price) every day depends on the same graph as long as you want. For long time MA curry and original curve curry will make 2 pieces.

The way to analyze this is that the actual curve enters the MA curve with a higher level of trading volume, giving it the correct signal signal to buy the stock. On the contrary, if the original curve enters the MA curve with the top commercial volume, it indicates selling. After the price of stock stock, the higher trading volume is interpreted as the market will improve the signal signal. Market signals will worsen (change) as a result of change in prices change after the price trading follow-up volume decreases.

The Double Bottom and Top


The next method of stock analysis of the stock is "Double Bottom and Top" method. Double-head, this pattern is formed when the value of the stock changes to a certain level, then down and then (with small trading volume) is the same as the previous highest cost level and then re-declining. If the event repeats itself again, its curve which will be two peaks (such as letter M). Stock exchange analysis shows that the market has failed to break the upper level limit twice. If the price reduces to break the previous low level (before the second peak), it shows that the trend of movement of stock movement continues to decrease. This dual-top pattern provides a signal to sell instantly.

Contrary to the double-head pattern is the double-down pattern (such as W). With that logic, this pattern gives a hint to action because it is predicted that the price will continue to grow.

The Ascending and Descending Triangle


The technical analysis method of stock triangle (triangle curve pattern) is divided into two, i.e. the Ascending triangle and the analysis of descending triangle (lower triangle). Analysis Triangle is set when there are several canals which are less than some peaks which are equal to the same. In other words, there is a lack of change in stock prices between the horizontal lower border that lacks a decline. If the trading volume increases the price by lower border, it provides a signal to sell because the stock price analysis is predicted that the price deficit continues.

When synchronous triangles are made, stock pattern movement follows contrast pattern of the nesting triangle. This pattern provides a signal to buy stock because it expects the price to continue.

There are some examples of simple technical analysis methods in stock, there are many other ways in which stock prices analyze more parameters with multiple parameters. Usually analysts use many methods at the same time so that the stock price analysis and the investment decision results take more accurately. There are many computer applications to calculate stock formula's fastest technological analysis, you simply enter database stocks and are ready to analyze some graphical ways of stock-pricing movement.
December 15, 2017
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HOW TO STOCK INVESTING

Shares are owned by the business. If you buy or sell a portion of the company's shares, then your company and you have a claim on the revenue of the wealth and company. Owning business shares at this time, you will have the opportunity to become one of the biggest companies and big auctions in Indonesia, such as PT. Indosat, P.T. Gudang Garam, PT. Astra International, and others. As a boss, you have the right to vote in the meetings of shareholders. So you have the right to participate in the company's policies / commissioners / commissioners, and to share in the company's share of profit known as distribution or distribution.

There are still many people who are very dangerous in investing shares in stock. Fear to choose a wrong stock, they prefer investments that they are safe to think. Understanding the stock and insurance of stock companies, such as financial statements, corporate conditions and others, is important for your successful investment. Any information about your shares that you choose from security institutions, you choose or know the information in newspapers or magazines.

When you buy one of the shares listed in the stock exchange, you become one of the company's owners. When the company's performance gets good, you will get the benefits of profits like profits and your share of shares. But the company's performance is bad, the cost of your investment will be reduced.

How to Contact a Brokerage Company

As described above, the way you invest your parts should contact any of the security institutions that are members of the stock exchange. Before you decide which security company will become your broker, you should first contact several securities companies and compare the services and fees they offer. Your choice on a security company is on a lot of service you want. Do you expect Securities Company to process / execute your security only, or you expect investment advice, or you also expect Securities Company to manage your portfolio.

If you have chosen a securities company, some of them are able to talk:
Opening account Usually a securities company will be asked to you as a potential customer to sign a new account agreement. For this, you should study the information contained in this document because it contains your rights and responsibilities that have an account holder. You will be honest with your investment goals and your personal financial situation, your income, overall wealth and investment experience; Sales representative will provide investment recommendations based on this information.

Who is the judge who will control your account? Whether you own an investment decision or you submit your securities company (Optional Authority) decision. In Optional Option, the security company will make an investment decision according to your consultation, without prior consultation about the price, stock type, amount and sale / time of time.
December 15, 2017
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REGIONAL BOND INSURANCE

Local bond owners can buy insurance for them. Despite the fact that municipal bonds are considered very safe, some investors are easier to sleep if they know that their investments are also protected against losses. A competent investor should understand the mechanisms of insuring municipal bonds, knowing their advantages and disadvantages, to get the right choice: to buy municipal bond insurance or not.

Why Do You Need Municipal Bond Insurance

Municipal bonds are debts incurred by states, municipalities or municipalities to provide financing for public projects and services, such as schools, hospitals and housing. Regional bond insurance is an insurance policy, the subject of insurance is a bond, and the insurance company (the person selling the policy) is a private insurance company.

Like other bonds, municipal bonds have certain risks. The main risk is the risk of default - the issuer's refusal to pay. The default means that municipal governments that issue bonds do not have enough funds to ensure timely payment of all bond payments.

When issuing regional bonds, future project revenue that finance the issuance of bonds can also be used as collateral. Thus, the added risk of such bonds is the possibility that this particular project will not work and can not provide sufficient revenue streams for timely payment of bonds. Insurance gives investors confidence that no matter what happens, interest and principal debt on the bonds will be paid in full and on time.

If a bond has a low risk of failure, then it is given a high credit rating, which positively affects its market price. In addition, a higher credit rating will receive bonds, where there is insurance. As a rule, the insured bonds get the highest possible credit rating: AAA. A higher credit rating allows the local government to issue lower interest on the bond when issuing it. 

There are four major institutions that assign credit ratings to bonds:
  • Moody's Investors Service
  • Standard & Poor's Corporation
  • Fitch IBCA, Inc.
  • Duff & Phelps Credit Rating Co.


Regional bond insurers also increase their market appeal. In addition, insurance helps investors to seriously look at small municipal issuers that are unknown to the market or do not issue bonds quite often.

What is Covered in Municipal Bond Insurance?

The guarantor company guarantees investors in local bonds that the interest and principal payments on the bonds will be paid in full and on time, if the issuer can not do so. In the event of a failure, the insurer makes all necessary payments to ensure that the investor receives all such amounts due to them. This warranty usually applies to all periods of the circulation of the bond and can not be canceled by the insurance company. Exceptions to this rule apply only to investment trust. In the case of investment trusts, bonds can be insured for the entire period of their circulation or for the life of the trust itself. Insurance companies usually insure local government bonds with only BBB or higher rating. Insurance policies can be written off to municipal bond funds.

On the initial placement of the local bonds, there may be a condition known as "demand for depreciation funds". To settle the bonds payable, the local government must make regular payments to the holders of special depreciation funds. Regional bond insurers also include these depreciation deductions, ensuring that the funds remain up to date and no payments are missed.

How are Municipal Bonds Insured?

Before issuing insurance to municipal bonds and offering them to investors, the bonds are bought by an underwriter, who in turn collects insurance and sells it to investors. Underwriting is the process of assessing the risks associated with bonds made by insurance companies. In the underwriting process, the insurance company decides whether to provide insurance for the issuance of these bonds and on what terms. Most of the companies that include local bonds are mono-food companies. This means that the company only issues insurance only on debt instruments, thus eliminating risks arising when insuring other products or services. This insurance company gets a careful analysis by the same rating agency that gives credit ratings on the bond itself.

Once the bonds are insured, their indicators are carefully monitored by the insurance company. This process is known as "observation". Under scrutiny, the insurance company carefully examines the bond issuer's financial statements and tries to ensure that the issuer's credit worthiness will be considered stable.

After underwriting, which takes about a month, the bonds are rated new. They are also given a special identification number, known as CUSIP. CUSIP is used to identify security when traded on the market or paid off.

Lack of Local Bond Insurance

Issuers of regional bonds must pay insurance premiums for insurance companies to issue insurance on their bonds. Despite the fact that investors do not pay these premiums directly, the fact that investment companies and issuers pay them, means these fees are transferred to investors. Transfer mechanisms usually lower the interest rate on bonds. Issuers are reducing interest rates, taking advantage of the fact that insured bonds now have AAA ratings. As you know, for the bond with the highest rating, the interest rate is slightly lower than the bond with the lower rank. The higher the risk of bonds, the lower the credit rating, the more investors who want to take this risk when buying this bond. In order for the insurance process to make sense for the issuer of this bond, the amount of savings from the interest rate reduction should be higher than the amount of insurance premium paid to the insurance company.

Insurance from municipal bonds does not in any way guarantee that bond market prices will reach current or future levels, because even insured bonds remain exposed to the effect of changes in interest rates on the market. Thus, the bonds sold before redemption may be worth less than the purchase price or the value.

Regional Bond Insurance Company

Most municipal bonds are insured by several large insurance companies. The largest insurer of government bonds in the world is the Association of Municipal Bond Insurance (MBIA). MBIA provides financial guarantees, provides investment management services and a host of other financial services to the population, private and nonprofit organizations.

The other major players in this market are the American Corporation for the Insurance of Municipal Bonds (AMBAC). AMBAC guarantees local government bonds and structured debt products. He is also the legal successor of the oldest government bond insurer, which first insured the first problem in 1971. AMBAC became a subsidiary of Citibank in 1985 and made an initial public offering in 1991. In 1995, AMBAC and MBIA established an international joint venture called MBIA-AMBAC International.

Since 1984, the Financial Guarantee Insurance Company (FGIC) has issued insurance for more than 13,500 local government bonds. The FGIC also provides the necessary public authorities of financial services, such as provision of credit resources and direct investment in projects. Municipalities can also ensure their bonds in a number of small insurance companies specializing in this market.

Should You Buy Insurance?

Insured country's bonds have a higher credit rating. They are one of the most reliable investments. If the issuer of the bonds defaults, the main debt under the payment of bonds and interest will be given by the insurer. However, this insurance has a price - lower interest payments. The decision to buy or not guarantee municipal bonds depends on your risk appetite - are you ready to forgo future profits in exchange for additional coverage? If so, then you should definitely consider buying exactly the insured municipal bonds.
December 05, 2017
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UNDERSTANDING THE PORTFOLIO OF THE BASIC INVESTMENT

Husband exchanged Saturday dinner with his wife's family to watch the quiet football on Sunday. Children exchange TV shows for throwing garbage and washing dishes, because they need pocket money. Parents allow you to go home on Friday nights, if their children behave well throughout the week.

Trade-off in investment is a choice between risk and income. Getting a profit for your investment means taking a risk. At least to some degree. But what is the risk? And how much risk can you pay?

In this section, we'll look at the different types of investment-related risks, and show how to develop your own approach to risk taking.

Two Types of Risks are Common

First, there is the risk of losing money in the short term. Over the past 85 years, the American stock market of investment has generated an average of 10% per year. However, if you look closely at certain years, you can see that every fourth year is not profitable.

If we consider a shorter period of time - weeks or months - the results of financial investments can be even more volatile.

Investors tend to focus exclusively on this type of risk. Because it's so easy. Every day you hear on the radio and television about the behavior of the stock market. If you do not have enough of this information - you can check your stock prices more often, even online.

But do not let market volatility take over. If you allow me, you will completely ignore the second and perhaps far more important risk associated with the investment process: the risk that you can not achieve your financial goals.

How does obsession with market volatility hinder our financial goals? Maybe you will invest too conservatively. Volatility can also force you to decide on the sale or purchase of shares based on their recent short-term price dynamics, rather than how these purchases or sales enable you to achieve your financial goals. In short, due to market volatility, you may not see the forest behind the trees.

Always link the importance of achieving your financial goals to the magnitude of the risk of market volatility you can receive.

What Contributes to Market Volatility

The primary way to reduce daily and weekly market volatility is to diversify your portfolio by combining different types of securities into it. By incorporating multiple investment instruments into a single portfolio, you can reduce the impact of individual risk factors and thereby reduce short-term market volatility.

Market risk. Market risk arises when you invest in asset classes or in the economic sector. For example, - in US stocks or bonds of developing countries. Market risk is the risk that the entire market segment will lose its value. For example, US stocks may come down on price if investors decide that US stock markets have gone up too high for the current rate of economic growth. Alternatively, emerging-market bond markets might collapse if investors decide that high inflation is on the way, which will require higher interest rates and, as a result, lower bond prices.

To minimize market risk, it is necessary to diversify its assets, by allocating investment among different market sectors behaving differently under different economic conditions. Thus, you reduce your portfolio dependence on a single market segment. For example, high-quality US bonds usually feel good when investors are worried about the outlook for the global economy. That is why, US bonds can act as a good counterweight to stocks. Similarly, high-yield securities, such as shares in utility companies or real estate trusts, usually feel bad in the face of an increase in interest rates. This investment class should be offset by securities with low coupon income or without it at all.

Specific risks for the company. Operational and price risks are two sets of factors that affect the volatility of individual stock markets in the short run.

Operational risk is the risk associated with the company as a business, and covers everything that can affect the profitability of the company. Price risk is a risk that is more related to the company's stock price than its business. How expensive are stocks in relation to corporate earnings? For the cash flow? For the sale?

To limit the risks directly related to the company, the portfolio must include stocks instead of one company, but immediately the entire series of shares. A good way to achieve this is to include mutual funds, or ETF funds, in mutual fund portfolios, which are inherently diverse stock packages established by predetermined rules.

Country risks Whether you invest only in the US or place your funds outside their borders, you expose your portfolio to insurance risk. There is a political risk, or the risk that the current regime will turn out to be bad, there are economic risks, or the risk that the country's economic development conditions will be replaced by the worst, which will negatively impact the prospects for enterprise development. In addition, if you invest in securities in currencies other than US dollars (and usually when investing outside the US), there is a risk that foreign currency will lose some of your currency, and your investment will depreciate accordingly.

To eliminate risk in the country, you can do several things. If you invest in US and overseas markets - invest in the whole market, not just one or two. If you invest only in US stocks, make sure that the company you invest is not totally dependent on the state of the American economy. For example, make sure you include a portfolio of shares of such companies that participate successfully in global markets, even if they retain their US headquarters. Most likely, such companies will be more stable if the US economy slows down.

How Much Risk Can You Pay?

The impact of market volatility in the short term can be reduced by including stock portfolios, bonds and fund units, each of which will behave differently at different times. It's also worth remembering that planning the distribution of funds in your portfolio will allow you to prevent the greatest possible risk - a lack of money in your portfolio when you have to start withdrawing funds from it. You should be aware that in the ideal world of the planning horizon and your financial goals determine the level of risk you can afford.

But you are not an emotionless robot that can not react to market volatility. You are human and as a person, try to assess how market variability can prevent you from achieving your financial goals. Then try doing everything to eliminate the factors that are causing the increased risk. In other words, reduce your risk by allocating funds between different sets of markets, economic sectors and companies.

Finally, answer yourself the questions that will help you develop your investment philosophy in relation to market volatility and risk, and also to understanding the portfolio of the basic investment :

  • What are the year-end losses on your financially and psychologically acceptable portfolio ?
  • What kind of loss do you want to receive as a result of a five-year period ?
  • How much risk do you want to take from your investment ?
  • How do you plan to diversify various investment risks (market risk, corporate risk, country risk, etc.) ?
  • Passing what tests of risk will enable the investment to get a place in your portfolio ?
December 05, 2017
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WHAT AND WHY IS INVESTMENT NEEDED ?

Larger organizations create it for the placement of their pension funds. Financial advisors create it for their clients. To create it, you need a bit of complicated philosophy and calculation. If they are wise and sophisticated, they can reach 15 sheets of size.

Who is this "them"? Declaration of investment They are needed not only for rich people, prone to writing. They are a must-have for all investors. Their strength lies in the fact that when writing an investment declaration, you are forced to declare your investment strategy in writing and make a mandatory investment plan. These are schemes and report forms.

We will not be able to cover one part of everything you need to include in your investment declaration. But as a seed, we can offer you to download, print and fill in blank investment declarations.

The Summary of Investment

The Summary of investment provides an overview of your current financial situation and what you expect from your investment portfolio. It's like an instant picture of the current situation. Update the investment summary every time you balance your portfolio.

Here is the question to be answered :
  • What is the asset value in my current portfolio?
  • How much money will I invest each month?
  • How many years I plan to invest?
  • What will my portfolio show after inflation reductions?
  • What is the maximum amount of loss I can transfer for a period of three months, one year and five years?
  • What is my target asset allocation?
  • What will be the reference for my portfolio?
  • To answer this question better, it's worth reading the "Portfolio Risk: how much risk can you take on yourself?" And "What is asset allocation"?

When it comes to the last question - select your reference carefully. Suppose you have a portfolio that invests 40% of a large company's shares, 10% of small companies, 30% of bonds, and 10% of shares of foreign companies. No need to use the S & P 500 index as a benchmark for such a portfolio. This is totally incompatible with her. This index is created to track the dynamics of stocks of American companies with large market capitalization. It would be suitable to track only 40% of your portfolio, which consists of relevant stocks, but not for the entire portfolio.

In most cases, you need a standard combination to correlate your overall portfolio success and the success of individual components.

You must also decide the period in which you will assess your portfolio and the investments that make up it. Will you compare with the annual portfolio return benchmark? Results of three or five years? The combination of this period? The best period for most portfolios will be one year, taking into account long-term profitability.

Investment Objectives

The "Investment target" section of your investment declaration is dedicated to detailing what you want to accomplish with your portfolio and for how long.

Answer the following questions:
  • What is my financial goal?
  • How long will it take me to reach this goal?
  • How much should I spend each year to achieve my goals?
  • To understand more specifically these issues in more detail, review the "Investment portfolio purpose portion of the cost of living in retirement."

Investment Philosophy

In the "Investment philosophy" section you define yourself everything that is important to you as an investor. This is the theory you believe in and which you will obey.

Here are some questions, answers to be formulated:
  • What is my vision of risk?
  • What is my vision of the role of basic investment and other investments?
  • What is my diversified vision?
  • What is my perception of trading?
  • What is my perception of cost?
  • What is my attitude towards taxes?
Before buying or selling securities, make sure the decisions you make are in line with your investment philosophy principles. If they do not match - ask yourself why. Maybe you should not buy or sell this security? Perhaps your decision is based on the short-term dynamics of this paper? Maybe you are influenced by someone's words or thoughts about the future of the market? Remember that all your decisions are based solely on your investment philosophy.

Criteria for Choosing an Investment

This section contains the rules you choose for your investment. This rule is very different from investors with investors, based on their personal investment philosophy. You can consider this criterion as a numerical expression of your investment philosophy.

Here are some criteria for choosing a shared investment fund:
  • Minimum rating for fund category
  • Minimum refund amount for fund category for certain period
  • The maximum rate of decline in the bear market
  • The maximum percentage of the 10 largest companies in the fund
  • The maximum percentage of each economic sector is included in the fund
  • The maximum factor is the overhead cost of funds
  • Minimum amount of fund assets
  • The current minimum management management period
  • The minimum coefficient of the tax efficiency of funds (the ratio of income of investment funds after paying taxes on income before tax)
  • Here are some criteria for selecting individual stocks:
  • Maximum price for each stock
  • Minimum return on equity
  • Minimum free cash flow
  • Estimated minimum five-year profit growth
  • Maximum rate of loan funds
  • Minimum dividend yield
  • Minimum market capitalization
  • Maximum value of P / E coefficient
  • Minimum income growth rate
Each newspaper you will include in your portfolio must match the criteria you have selected. If it does not match anything, ask yourself why. Do you need to change your criteria or is this investment not a place in your portfolio built on the principles of your investment philosophy?

Monitoring Procedures

The "Portfolio Monitoring" section describes the procedures that will be used to monitor the results of your portfolio. Here are your instructions to balance your portfolio and to sell investments that do not fit anymore.

Answer the following questions:
  • How often will you track your portfolio?
  • How will you determine the return on investment for each asset?
  • How will you determine the outcome of the investment in the portfolio as a whole?
  • How will you determine whether your portfolio achieves planned profitability?
  • How will you determine whether the loss is actually in the range you had planned before?
To determine how well your portfolio performs the task set, use a pre-selected benchmark to evaluate your portfolio. If you know that your portfolio did not achieve planned results on profitability, or that the actual loss is greater than what you set for your own acceptable, your portfolio may need to be adjusted.

However, do not focus only on profitability. First of all, make sure that the reason for choosing one other investment is still there. To do this, check each investment to meet the selection criteria you have set. If each stock or unit of mutual fund investment funds does not meet these criteria more than these criteria, you may have a candidate for sale in your hands. We will discuss portfolio monitoring procedures in more detail in the following sections.

Revised Investment Declaration

Once you've drafted your investment declaration, sign, place the date and return there within a year. Your investment statement is not just an instruction, but also a form of report that will evaluate the effectiveness of your portfolio.

So some basic things to understand about what and why is investment needed, such as :
  • You must to know about  The Summary of Investment itself
  • You must to know about what is your Investment Objectives
  • Investment Philosophy is no less important to learn
  • You must to know about Criteria for Choosing an Investment
  • If you want to run the investment then you must to know Monitoring Procedures
  • and the last is Revised Investment Declaration
December 05, 2017

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