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A Stock Market Investment Plan that never lets you down
by: James Marriott
The bulls and bears of the stock market are both tempting and scary to the investors. Speculators are enchanted by the stock market’s potential to help them in making quick money with a big M. While those who tread with care and caution, often shy away for fear of losing. However, the stock market is not all about speculative gains or black Tuesdays. It is a place where committed companies look for raising money to fund their activities. Serious investors can actually create wealth not only for themselves, but also for the companies and the nation. A wise way to invest in the stock market is to empower your self with information. You have to know and learn about the company you invest in, from past records and future plans.

Irrespective of what the Wall Street Gurus predict or what the economic indicators like Dow Jones Average say, a simple and foolproof way of knowing that a company is doing well is to keep a track of how much dividend income does it pay to its share holders every year. If the dividend rates have been rising steadily every year, you know you have a safe bet. To benefit from the future prospects of such companies, it is a good idea to rollback the returns into the company. Which means, instead of adding the dividends to your savings, you can invest them in the shares of the same company. That way, you can ensure that the dividends you receive are always higher than what you got last, with a larger number of shares getting added to your investment portfolio every time.

With this kind of an assured investment plan in place, investors with a gambling streak begin to think beyond making a quick gain. While those who were afraid to take risks get wiser.

Let us find out why companies that give ever-increasing cash dividend income are a good choice for investment:

Your Share Holding Goes Up And So does Your Dividend Income.
Your income begins to escalate with your owning more shares every year and the dividend income rising correspondingly.

Your Dividend Income Increases Even If Stock Prices don’t.
You are no more at the mercy of the market. Irrespective of what your shares are worth, you keep earning additional cash dividends. In fact, even if the market price dips, you are still at an advantage, as that allows you to reinvest to purchase more shares.

You are not hit by Inflation.
With the dividend income rising every year, you offset the effects of a rising inflation. This particularly provides relief to people who have retired and depend on a regular cash inflow to help them meet their expenses. At this stage one need not rollback the investment into further shares, instead, the cash dividend can be used as a kind of regular pension money.

Start Young
The ingenuity behind this investment strategy is that it protects you from the fluctuations that generally occur in the market. A lower stock market rate only means you buy more to increase your dividends more. It is advisable to start this strategy early in life while you are still working, so that your wealth builds up gradually and constantly over the years. And you are assured of a regular income, as you grow older.

Remember, the success of this proven investment plan depends significantly on the track record of the company you invest in. It should be one that declares a higher dividend at the end of each financial period. A simple way to find that out would be to calculate the dividend yield. You can do that by dividing the annual dividend per share by the price per share. Of course, no investment can be totally free of risks, neither is this one. Keep an eye on the dividend yield, and if that dips, it’s a signal for you to opt out of the investment.


About the author:
James Marriott is a finance writer with more than 15 years of experience in writing financial content, including those related to credit cards, mortgages, stocks, investments, and funds. He has been with RNCOS, a premier financial writing services company, for 2 years as head of financial writing. He is also a regular financial columnist with renowned business journals. For your comments on the article and further financial assistance, please contact our staff writer at info@rncos.com


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 How Investment Plans Work
 by: John Mussi

More people are choosing investment plans than ever before. With the rising cost of living and the growing insecurity about the availability of many retirement funds, many individuals are looking to investment plans to begin a nest egg or to make some additional money via investment without having to spend a lot of time purchasing stocks and bonds.

Investment plans allow individuals to simply purchase a specific amount of stocks, bonds, or indices on a regular repeating basis, cutting out a large part of the hassle while allowing for some of the main advantages of investment.

If you've been considering an investment plan but aren't completely sure what they might entail, the following information might help you to decide whether or not an investment plan is the right investment option for you.

The Mechanics of an Investment Plan

Basically, an investment plan is a method of making multiple investments over time at regular set intervals. The funds for the investment are taken from a cheque, savings, or money market account automatically, and are used to purchase stocks or bonds that you have decided upon beforehand. In most cases you can change the amount, frequency, or purchased stocks or bonds of the automatic investments at any time, though depending upon the broker through whom you're doing the investments you may be subject to fees or penalties especially if changing details relatively close to the next investment date. Most online investment firms offer investment plans that you can change at any time free of charge.

Deciding How Much to Invest

When deciding how much to invest each cycle with an investment plan, you should take care not to overextend your funds and bring yourself up short. Make sure that the amount that you choose is available and that you'll have it to spare each time your investment comes up… it can be difficult to plan for events in the future, and just because you have a surplus now doesn't mean that you won't find money running tight a few investment cycles from now.

If you feel that you're reaching a point where you won't be able to afford your regular investment, go ahead and reduce the investment amount or put a hold on the next scheduled investment… better to put less in than short yourself afterwards.

Choosing What to Invest In

Making the decision of which stocks and bonds to invest in can take some time, but it's worth it… this is your money that you're dealing with, and you shouldn't invest it without putting some thought and research into your decisions. Find stocks or bonds that have performed well over time, and that are likely to continue doing so… they may be expensive at times, but you aren't making your total investment all at once so it doesn't matter as much.

Don't be afraid to add new stocks or bonds to your plan later, either… this can help to diversify your portfolio.

Deciding On an Investment Interval

You also need to decide how often you wish to make your investments… this will largely depend upon the cycle of your paycheques and your monthly bills and expenses. You may decide to invest once per month, after everything has been paid, or you might want to invest a little from every paycheque.

The more often you invest, the lower the amount of each investment can be… after all, two or four small investments per month might end up purchasing more than one larger one.

Decide on what works best for your lifestyle, and modify it as needed later if it doesn't seem to work out for you.

 

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