Stock Market Simulation Games [market stock money]
A stock market simulation game is a great way to practice your investment skills before actually investing any "real" money in the stock market.
Simulation games are usually played on the internet, where people can experience the thrill of investing in the stock market without any risks, costs or any fear of losing money when and if they make a poor investment decision.
Many teachers and professors of banking and finance are now using stock market simulation games to teach their students about the rudiments of investing in stocks. Most stock market simulation games come with a fee to get started, but there are some that are free of any charge. One does not need have prior knowledge about the stock market to join.
This is how stock market simulation games usually work:
First, players must register. After registration, players are given an initial sum of "virtual" money to invest in companies of their choice. Players build a portfolio of stocks by buying and selling shares in companies. Most stock market simulation games use real-time market data.
The objective of most stock market simulation games is simple:
To increase the value of your portfolio of stocks so that it is greater than that of the other game players. [market stock money]
Below are some tips on choosing a stock market simulation game:
• Choose a stock market simulation game that is used and recommended by reputable colleges, high schools, middle school, investment clubs, brokers in training, corporate education courses and any other group of individuals studying markets in the U.S. and worldwide.
• Choose a stock market simulation game that is comprehensive and easy to implement in any Finance, Economics, or Investments class. A good stock market simulation game should feature trading of stocks, options, futures, mutual funds, bonds from the U.S. and many of the world's major markets.
• Choose a stock market simulation game that provides a valuable, reliable, and realistic trading simulation at a reasonable price to members and other individuals who are interested in learning more about investing and trading. The simulation game should also have some capability for testing a variety for investment strategies.
• Choose a stock market simulation game that has a toll-free customer service phone number and excellent e-mail support for members. The support function should be able to quickly answer any questions that members/players may have. [market stock money]
• Choose a stock market simulation game that is easy to use and easy to teach even to those who have never had any real hands-on investment experience.
by InfoGoRound Articles
Monday, December 10, 2007
Afraid to Invest? Try Cost Averaging...
| Afraid to Invest? Try Cost Averaging... [invest money market] The market goes UP...the market goes DOWN. For many of us the shape of the market day to day has about as much influence on our lives as the time of the tides that day. But for investors - especially first time investors - it can be a rollercoaster of heart racing highs and stomach churning lows. Every movement is being carefully reviewed and if it turns down then investors with itchy feet jump out. If you know the benefits of investing, how can you avoid the stress of putting your hard earned money into the market? Financial planners and investors are quite clear on the subject. New investors should not make an investment unless they are going to let it sit at least 5 to 7 years - the longer the better. Why? Well, the economy DOES move up and down, but we have never seen it bottom out (and if it did - well, you'd have much bigger concerns than your investment). By selecting a diversified portfolio, such as a mutual fund, you can usually base your prediction on past activity and you'll see that in any 7-15 year period the investor always came out with more than he put in. [invest money market] How do you take advantage of that? When should you invest? Well, if shares were being sold for $10 each and you had invested $100 you would have purchased 10 shares. Now, if that is your whole investment you would be very upset if the value went down to $5, wouldn't you? Now your stock is worth $50. What would you do? Sell before it goes lower and loose $50? Using the 'Cost Averaging' technique: Cost averaging means you continue to put the same amount of investment into the market regularly - preferably every month. Now if you did that you would have invested another $100. At $5 a share you would buy 20 shares. Right now you have invested $200 but only own $150 worth of shares. What happens when the price goes up? When the price goes back up (and it will) it may stop at $8 per share. Now what? Well, you invest your next $100 and buy 12 shares. [invest money market] You now have 42 shares valued at $8 each. That totals $336. Your investment was $300 so you just made 12% off of your investment. Combining the cost of averaging with the 10% recommended for us to set aside for savings or investment - what's stopping you from jumping in? by Shannon Emmanuel |
How to Magnify 401(k) Retirement Account Returns
How to Magnify 401(k) Retirement Account Returns [money market fund]
If you have ever cracked open a financial magazine, you have surely heard you should maximize your investment in the 401(k) retirement account if your employer offers one. There are four major reasons to do this: (1) employers normally match a portion of your contributions which means you immediately receive free money, (2) your earnings grow tax-deferred, (3) you reap the tremendous benefits of compounding over decades of reinvesting your earnings, and (4) the Government effectively subsidizes your contributions by reducing your taxable income for each dollar you contribute which reduces your tax bill. It's true; you will most likely never find a better investment for your future besides owning your own home. However, are you getting the full benefits of your 401(k) investments? This article will show you a simple technique you can use to increase your future wealth by tens of thousands of dollars or more.
The "magic of compounding" occurs when you invest money and reinvest the earnings from your investment each month, quarter, or year. By doing this, the next period you have a larger investment which generates higher income. Over the long term, your investment will compound and get larger and larger until you have an amazing balance. For example, if you invest $5,000 one time in an investment that yields 1% growth per month, the magic of compounding will turn your $5,000 into $98,942 in 25 years. [money market fund]
Another popular investment technique most people automatically use when investing in 401(k) accounts is called, "Dollar Cost Averaging". Dollar cost averaging is simply investing a fixed amount of money each paycheck, which generally occurs every two weeks or once per month. By investing a fixed amount each paycheck ... let's assume you invest $200 per paycheck ... your $200 investment will buy more shares of the investment when prices fall and fewer shares when prices rise. Thus, dollar cost averaging takes advantage of share price volatility. There have been numerous studies conducted revealing the net effects of dollar cost averaging. Without getting into the details, let's just say the net effect over 20 to 30 years based on the historical performance of the U.S. stock market; you will boost your average return on investment by around 1% o 2% per year.
Maybe 2% per year on average does not sound like much, but let's consider the example above. Assume you invest $5,000 one time and then add only $200 per month. At 12% returns per year (i.e., 1% per month), your balance would be $474,712 after 25 years. As you can see, simply adding $200 per month provides a tremendous boost over the one-time investment presented in paragraph two. However, if you boosted your average annual rate to 14% instead of 12%, your 25-year balance grows to $608,054. That's an extra $133,342 simply due to the increased effective return.
Clearly, dollar cost averaging adds tremendous value to your financial future, but what if there were another simple way to add another 1% to 2% to your average annual return? As it turns out, there is! It's called, "Asset Allocation", and this is how it works.
First, you should diversify your investments in your 401(k) simply for safety and lower risk. Let's assume your 401(k) offers three different mutual fund investments. For example, assume you have an S&P 500 index fund, a small growth stock fund, and an international fund we'll call the C fund, S fund, and I fund respectively. Let's also assume you are comfortable investing 40% of your 401(k) dollars in the C fund, 30% in the S fund, and 30% in the I fund. These percentages are your "allocation" between investment types. Over time, the growth and decline in share values will vary between the C fund, S fund, and I fund. [money market fund]
For example, over a six-month period, the C fund and S fund might rise by 4% and the I fund might decline by 2%. The end result is the value of your C fund investment and S fund investment will be higher, and the value of your I fund investment will be lower. At this time, the percent of your total cash in the C fund and S fund might be 32% each, and the portion of cash in the I fund might be 39%. If you simply adjust your allocation back to the original 30%, 30%, and 40%, you will sell some of the C fund and S fund and buy some of the I fund. Thus, you will "buy low" in the I fund and "sell high" in the C and S funds.
Six months later, the I fund and the S fund may be higher while the C fund has declined in value. Thus, you would adjust once again back to 30% C fund, 30% S fund, and 40% I fund. Once more, you would "sell high" and "buy low". The net result of re-allocating your cash every six months (or whatever period you choose) will be an effective increase in your average return.
The net increase in average return increases as the total time you invest increases and as the volatility of your investments increases. Furthermore, the more uncorrelated the investment choices in your 401(k) are, the stronger the impact asset allocation will offer. Regardless of these factors, however, you will actually lower your risk and boost your net returns simply by using asset allocation in your 401(k). If the net effect was simply another 2% increase in average annual returns, your new balance in the example above would be $1,048,478.
by Bryan Stoker
If you have ever cracked open a financial magazine, you have surely heard you should maximize your investment in the 401(k) retirement account if your employer offers one. There are four major reasons to do this: (1) employers normally match a portion of your contributions which means you immediately receive free money, (2) your earnings grow tax-deferred, (3) you reap the tremendous benefits of compounding over decades of reinvesting your earnings, and (4) the Government effectively subsidizes your contributions by reducing your taxable income for each dollar you contribute which reduces your tax bill. It's true; you will most likely never find a better investment for your future besides owning your own home. However, are you getting the full benefits of your 401(k) investments? This article will show you a simple technique you can use to increase your future wealth by tens of thousands of dollars or more.
The "magic of compounding" occurs when you invest money and reinvest the earnings from your investment each month, quarter, or year. By doing this, the next period you have a larger investment which generates higher income. Over the long term, your investment will compound and get larger and larger until you have an amazing balance. For example, if you invest $5,000 one time in an investment that yields 1% growth per month, the magic of compounding will turn your $5,000 into $98,942 in 25 years. [money market fund]
Another popular investment technique most people automatically use when investing in 401(k) accounts is called, "Dollar Cost Averaging". Dollar cost averaging is simply investing a fixed amount of money each paycheck, which generally occurs every two weeks or once per month. By investing a fixed amount each paycheck ... let's assume you invest $200 per paycheck ... your $200 investment will buy more shares of the investment when prices fall and fewer shares when prices rise. Thus, dollar cost averaging takes advantage of share price volatility. There have been numerous studies conducted revealing the net effects of dollar cost averaging. Without getting into the details, let's just say the net effect over 20 to 30 years based on the historical performance of the U.S. stock market; you will boost your average return on investment by around 1% o 2% per year.
Maybe 2% per year on average does not sound like much, but let's consider the example above. Assume you invest $5,000 one time and then add only $200 per month. At 12% returns per year (i.e., 1% per month), your balance would be $474,712 after 25 years. As you can see, simply adding $200 per month provides a tremendous boost over the one-time investment presented in paragraph two. However, if you boosted your average annual rate to 14% instead of 12%, your 25-year balance grows to $608,054. That's an extra $133,342 simply due to the increased effective return.
Clearly, dollar cost averaging adds tremendous value to your financial future, but what if there were another simple way to add another 1% to 2% to your average annual return? As it turns out, there is! It's called, "Asset Allocation", and this is how it works.
First, you should diversify your investments in your 401(k) simply for safety and lower risk. Let's assume your 401(k) offers three different mutual fund investments. For example, assume you have an S&P 500 index fund, a small growth stock fund, and an international fund we'll call the C fund, S fund, and I fund respectively. Let's also assume you are comfortable investing 40% of your 401(k) dollars in the C fund, 30% in the S fund, and 30% in the I fund. These percentages are your "allocation" between investment types. Over time, the growth and decline in share values will vary between the C fund, S fund, and I fund. [money market fund]
For example, over a six-month period, the C fund and S fund might rise by 4% and the I fund might decline by 2%. The end result is the value of your C fund investment and S fund investment will be higher, and the value of your I fund investment will be lower. At this time, the percent of your total cash in the C fund and S fund might be 32% each, and the portion of cash in the I fund might be 39%. If you simply adjust your allocation back to the original 30%, 30%, and 40%, you will sell some of the C fund and S fund and buy some of the I fund. Thus, you will "buy low" in the I fund and "sell high" in the C and S funds.
Six months later, the I fund and the S fund may be higher while the C fund has declined in value. Thus, you would adjust once again back to 30% C fund, 30% S fund, and 40% I fund. Once more, you would "sell high" and "buy low". The net result of re-allocating your cash every six months (or whatever period you choose) will be an effective increase in your average return.
The net increase in average return increases as the total time you invest increases and as the volatility of your investments increases. Furthermore, the more uncorrelated the investment choices in your 401(k) are, the stronger the impact asset allocation will offer. Regardless of these factors, however, you will actually lower your risk and boost your net returns simply by using asset allocation in your 401(k). If the net effect was simply another 2% increase in average annual returns, your new balance in the example above would be $1,048,478.
by Bryan Stoker
Tuesday, December 4, 2007
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