The Difference Between Being a Systematic and Reactive Investor

The way you address your portfolio to accommodate losses and gains during economic changes, stock market drops or gains and other factors affecting the value of your items show if you’re a systematic or reactive investor. 

A systematic investor is one who has a well-balanced set of stocks, bonds, equities and other financial instruments that have a predicted amount of loss and predicted amount of gain that endures the worst economic situations. Systematic investors rarely need to adjust their portfolios and only address issues when they go out of hand.

A reactive investor is one who tries to maximize gains while cutting losses by buying and selling financial instruments at the proper time. For every economic, industrial and financial trouble, reactive investors will try to cut their losses by selling stocks and bonds, getting futures contracts, and buying lower stock which they predict would increase in value over time.

There is no better kind of investor than the two listed above except that each one of them offers advantages and disadvantages. Systematic investors tend to get lower gains but they ensure stability when offered long positions for futures contracts and they meet long term objectives, specifically stocks and bonds that hold 20 years. Reactive investors tend to maximize their income by short term deals and goals.

Preparing For Your Child’s College Education

Parents could only save so much for their child’s elementary, middle and high school education, but college, with its whopping £75,000 price tag (just for public colleges), is something that will be difficult to save without proper financial planning. Here are a few ways you could save up for your child’s college education.

1.     Public Vs. Private

Many differences in the quality of education, courses, specialities and teaching mechanisms exist between both public and private colleges and universities. Public colleges might cost around £75,000 to £90,000 in total for four years; private colleges can cost around £145,000 to £160,000 for the same span of time. Choose carefully while considering the other items as well.

2.     Estimate the Total Costs

While you know the numbers for public colleges are five digits and private ones six digits, you should not let it scare you; it is possible that your child could gain scholarships for excelling in certain fields that make them a college or university’s asset. You could also get financial aid and student loans. You’ll need a separate financial plan for student loans (like we did with my son).

3.     Don’t Save, Invest

One thing most households today do is save money and leave it in a bank. That is not a viable option. The best way to finance four years of your child’s college education is through investing in financial instruments. Invest aggressively. Stock funds historically have exceeded other investments over long periods of 10 to 15 years. With enough money, you could cash in and have everything, including your debts, settled at once.

Should I Get Stock Market and Brokering Classes?

At my age of 34, probably, taking a college undergraduate degree in stock trading would help me in my retirement age. I plan to invest in stocks and bonds once I reach my retirement age. But I often asked myself, “do colleges really have courses designed to help graduates know more about the stock market?” I’ve asked around the Internet and discovered the following truths.

In reality, no college or university actually offers a course in stock trading. You and I can learn about stock trading by reading books about the stock market, looking at the daily Wall Street Journal and Barrons and knowing the terminologies they use in the magazine. Stock trading is like a foreign language.

However, based on my research, experts say that if you want to learn a thing or two about stock market investing in college, I should probably take economics courses and audited accounting classes.

Understanding a company financial report, knowing how to calculate risk analysis, probability and statistics are great knowledge that can help future investors know where to put their money to minimize losses and increase gains. 

Many experts also say that many beginners in the field will ultimately lose so much in the first year. Inevitable as it is, according to them, the stock market is a lesson on trial-and-error. Some patterns, no matter how predictable, still have a tail risk that is highly improbable, yet they can still happen.

So, should I take classes or no? I think I’d rather trust my experience on this one. Besides, online courses for the mathematical side of things are available online.

How I Keep My Credit Cards Free

In my opinion, credit cards are double-edged swords. They can help you raise your credit scores when you are a bit short, or they can drive you a debt hole that could be difficult to climb back out. However, if you use your credit card carefully, you could avoid great debt because of high interest rates and keep your credit card free. Here are a few ways to do such.

1.     Pay in Full

In my opinion, the convenience of a credit card is not because you could afford to have payment plans for expensive items and services instantly. A credit card is a tool to raise your credit limit and avail for yourself better financial deals with lenders in the future. I always make sure to pay my credit card bills in full. Not only do you avoid debt and raise your credit score, you also avoid the stress of having to worry about your bills later.

2.     Pay on Time

The number one reason I ended up with great debt in the past is because I always skipped the deadline payment date for my credit card. My card had a 5% interest rate at that time. Even for just three months of an additional 5% of my previous bill, it could create a hole in the budget. So pay on time and in full always.

3.     Limit your Purchases

If you apply for a credit card, you will need to use it at least once monthly. I use my credit card to purchase groceries or things that my family only needs. I don’t go overboard and purchase things that I want, such as a new television. Limiting your purchases allows you to fulfil tip number 1 and 2. You could do this more effectively if you write your purchases in a notebook to keep an eye on them.

Where to Invest Money in 2013?

If you failed to meet your investment expectations in the first half of 2013, you might just get lucky in the second half. The economy literally fluctuated worldwide and many investors found themselves having great losses. However, don’t fret; here are a few more things that could get you the investment returns you need from your diversified portfolios.

1.     Technology

The mobile device and technology developers today have not stopped developing new ways to entice their customers to place high value on their products and services and more and more start-up software developers continue to join the scene. Sticking with strong competitors in this arena that had proven for years to grow increasingly is a good way to invest your money in the 2^nd half of 2013, especially with the 3^rd Quarter technology expos already nearing.

2.     New Ground

Southeast Asian countries report well on their finance and economy for the 2^nd quarter of 2013. With most Asian countries now increasing their credit ratings, more entrepreneurs continue to lay their businesses into these new grounds. Look for these companies trying to tread on new ground and stick with them because according to experts, it is greatly possible these businesses can grow enormously the following year.

3.     Bank Woes

Coming out of terrible financial scandals, heavy losses and backlogs, investing in banks is not an option this year. With many financial companies involved in insurance and investment frauds, you could only expect lacking confidences from investors. Growth can be minimal with banks or at best, greatly fluctuating.