Tag: investor

Risk Matrix

Posted by Winflow – July 11, 2011

For those who feel overwhelmed by identifying risks and crunching the data, there is help for you. A risk matrix is a project management tool that evaluates probable risks in terms of likelihood. It comes in the form of a grid which makes it easy to visually identify risks associated with an investment or business endeavour.

Are you an investor looking for an easier way to identify risk? At Winflow Financial, our Risk Tool™ does all the necessary analysis for you. Just register on the site, upload a .csv file statement and sit back and wait for the risk results to be displayed.

Consider the following when using a risk matrix:

  • You should use a risk matrix if your having trouble identifying risks and need data so you can make a decision.
  • Know your own appetite for risk. This will help you determine if an investment is too risky for your liking.
  • A risk matrix is also ideal for making quick decisions. If you need to make a quick investment decision, using a risk matrix is your best option.
  • If you take on an investment with too little risk, you could be wasting money. If you take on an investment with too much risk, you could lose money.

Valuation Risk

Posted by Winflow – July 11, 2011

Many investors may not realize that the bulk of their portfolio losses are from valuation issues. Valuation risk is the risk that comes with putting  value on an investment. To minimize valuation risk, when investing, it is important to understand the value of the investment and the sources of the value. As an investor, you want to avoid paying more than an investment is worth.

Are you currently in the process of acquiring a business? Do you need assistance determining if the valuation is suitable? If so, contact the Winflow Financial Group. Our trained consultants offer entrepreneurial services to investors interested in acquiring existing businesses.

Consider the following when determining the valuation risk of an investment:

  • Remember than valuations can contain biases. For example, a self-valuation by a firm is likely to have a more positive spin on the financials so be skeptical when considering the valuation.
  • The valuation process involves making a lot of assumptions about the future of a company. There is no absolute certainty in a valuation.
  • As the market changes, so will a valuation. Valuation is affected by supply and demand meaning it will change as new market information becomes available.
  • Valuations should not be based on investors’ perspective alone.

Foreign Investment Risk

Posted by Winflow – July 7, 2011

If you are looking to improve your portfolio, you may consider making a foreign investment. Investing in foreign countries can benefit your investment portfolio but often come with risks not typically found with domestic shares. Foreign investment risk includes:

Cultural Risk

Cultural risk is when you have the chance to lose in a foreign market because of different consumer preferences.

Currency Risk

Currency risk has to do with fluctuating currency rates. International currency rates can either work with or against you. If you have a declining domestic dollar you may find you actually make more when converting your profits. However, if your domestic dollar is strong and the foreign markets are in decline you may find yourself losing money when you exchange your profits.

Government Policy Risk

In less stable foreign nations, you may have to worry about government policy risk. This when you could experience loss due to a change in policy brought into effect by foreign government.

Portfolio Risk

The political climate of a particular country can cause portfolio risk. Unsteady political climates can create fluctuations in the economy and in business sectors.

Taxation Risk

Foreign investors are taxed on foreign securities. In fact, an investor usually can’t determine his gains until the source country taxes the foreign investment. Profits are then taxed again when the investor repatriates the funds.

How to Start an Investment Business

Posted by WFG – July 7, 2011

Starting an investment business can be a tricky process with several steps to lead you along the right path. Some will require large investments, while others will involve the smaller shoestring possibilities. Taking the correct steps is significant in starting off well.

  • The first move is to get licensed. You have to be individually licensed to begin an investment firm, but the contract will depend on the type of investments you plan to deal with. In addition to this you will also need to acquire a series 6, or series 7 securities license. These securities tests will include exams.
  • Register your company.  When you have passed the necessary exams you’ll need to register your company. This process varies depending on which country you live in, so be sure to check your government website for more details.
  • Raise money. At the beginning you’ll be spending more money than you expected. With license fees, offices and workers there will be a large outgoing. So be sure to make the money, or look for funding.
  • Choose the product. Most companies have a market which they aim to work in. As you are starting out make sure to begin with your look into small ventures, then expand as you grow.
  • Find and office and workers. As you grow you’ll need an office and workers to help with the natural progression of the investment business. Hire managers first and get them to help you with the arrangements.
  • Start by being an independent contractor. This way you can use your own office using a large firm’s name. You may have to split commission but it’s a good way to gain experience without as much risk.

For more information on how to start an investment firm, contact the Winflow Financial Group.

Malpractice Insurance

Posted by WFG – July 6, 2011

Whether you’re a lawyer, doctor or investor, you’ll know there is always a level of risk involved in your career. Despite being the best at what you do, some problems are out of your control. For example, if you’re an investment trader and the market crashes, you don’t have control. This is why having malpractice insurance is important.

By following some simple steps you’ll be on your way to purchasing the malpractice insurance needed for your career.

  • Firstly you’ll need to know your needs. If you don’t know what you want from your insurance agent, they can’t help you to their full potential. Knowing your needs will also point you in the right direction for picking an agent.
  • When you meet your potential insurance agent, make sure you are comfortable and can communicate well. You’ll be giving this person important information so a level of trust is needed.
  • Also check the agent’s background. This can be done online and by reading reviews and client opinions.
  • When a broker recommends a certain style of coverage, be sure to read the finer details. If you don’t fully understand then ask questions. There’s a possibility that you could be settling for the wrong coverage.
  • Don’t buy the coverage just because it’s cheap, because it probably means it’s not right. There’s no reason why you can’t get the insurance you need to cover every situation.

For more information on malpractice contact the Winflow Financial Group and discuss the finer details with professional consultants.

How to Avoid Huge Losses in a Falling Market

Posted by WFG – July 6, 2011

Despite having a successful investment portfolio, and managing you risk strategies, there’s always a chance of the market failing. But this has happened before and certain people react better than others. By following some golden rules you can avoid disaster and, over time, climb back to a stable position.

  • Don’t panic. It’s easy to get caught up in the moment and if you sell in haste, you may regret it later. Falls in share prices will level out over time.
  • Take a long term view of the situation. Around 5 years is a good minimum, unless you are dealing with short term stocks.
  • Balance your portfolio. If your investment portfolio is balanced with stocks in companies from different sectors, the chances are you won’t be hit as hard. Maybe include foreign companies that aren’t directly impacted by the crash of a specific market.
  • Try to adopt a drip feed method. By adding stocks at regular intervals you will pay a price somewhere in the middle. This avoids a large lump sum which may be lost quickly.
  • Follow the people you respect. These investors should be experienced with this type of scenario and following them may improve your chances of less damage. Pick up advice from these traders and in the future you will be able to make your own decisions.

For more information on investment portfolios and managing risk contact the Winflow Financial Group.

Selling Stocks from Your Investment Portfolio

Posted by WFG – July 4, 2011

If you’ve built an investment portfolio over a long period of time, selling the assets can be a tough task no matter where you are in your career. There are two human emotions that make the decision harder, and these are fear of regret and greed. But the ability to control these makes a better trader.

When profits rise most investors don’t want to sell, because they could lose out on the chances of it going further. This is much the same as falling prices, and traders cautious of selling due to a rebound. So when should you sell the stocks in your investment portfolio? You could try opportunity cost sell.

This is when you constantly monitor the condition of your stocks. Use research and analysis on both your investment portfolio, and future additions. When a new stock has been found to be performing better than a stock already in the portfolio, you replace the stock, maintaining an even balance.

There is also the strategy of valuation-level selling. This is when a trader has a specific target that the price will reach. When it reaches this price the trader will sell, no matter what is happening on the market. It helps with keeping portfolio management in order, though it can sometimes be tricky when there’s the potential to make more money.

For more information on selling stocks contact the Winflow Financial Group.

The Silent Investor

Posted by WFG – June 28, 2011

If your small business is looking for funding there maybe one type of investor you haven’t heard of, the silent investor. These investors will put money into your company but stay silent from the daily management tasks. They still aim to make money on their investment, but they aren’t necessarily interested in the management side of the position.

Despite that, they still share the profits and loss and a good silent investor will also pass on contacts that can help the small business move forward. They are different from the silent partners though. Where silent investors remain out of the limelight, silent partners still have a voice on the actions of the company.

All money from a silent investor will need to be repaid, and there is no limit to how much they may invest. This will come down to the needs of the company. The silent investor may not work with the daily management of the company but you can be sure they will have a say if they see something not right. These investors will generally have experience and know where a company needs to change.

Finding the silent investor may be the hardest job. They are usually found through contacts or local business associations.

The Investment Trader

Posted by WFG – June 27, 2011

As we know, the stock market is a complicated area of the finance industry. Not only are there theories on portfolio management, there’s also a countless array of risk factors and company strategies out of your control. But despite risk analysis and portfolio assessments there’s also the issue of emotions and traders following the crowds.

We have all seen the TV programs with one trader that shouts sell, and everyone around them goes crazy. It’s a common mistake for someone to follow a crowd, but we have all down it now and again. Seeing someone buy a chocolate bar, or wearing something you like makes you want to do the same. But where it’s easy to get caught up in this, investors must stick to an individual plan and avoid following those around them. There are moments when the system seems to fall into place, leaving you in a state of bliss. But more often than not you will need to push away the doubts and fears from the influences around you.

Because in reality, everyone trading has a different thought process on how things should work. Each trader will have their own fears and aspirations regarding their own personal investment portfolio. They know how to accomplish the portfolio management and they do it in their own style. So if you believe that your investment will work, maybe get some guidance, but put your plan into action and stick by it.

Practice Building Your Investment Portfolio

Posted by WFG – June 27, 2011

For those of you that think you can play the investment market, there is a way of finding out before you jump in at the deep end. The website on investing at Investopedia has a simulator, which is designed to test your skills on the market and help you build a real investment portfolio. Of course it doesn’t cost anything, you will just need to sign up to the website.

Once you have signed up they give you $100,000.00 in fake dollars. This can be used on any company you find on the website which sounds easy enough, until you actually start playing. Remember, every company that is on the game is real, all their stats are real and the only thing that isn’t is you investing. This makes the game feel more professional, but also makes the stats and company history that bit more complicated.

After working out how the layout of the website works you begin to look into which companies are doing well, and which aren’t. You can look at recent history of the company and its progress in the last couple of years. At first it can be quite overwhelming, but when you sit and understand what’s going on you begin to work out how theories and portfolio management can be used to make you money.

This is a perfect way to help ease you into the world of investing. You can read all the articles you want, but playing the game and using professional advice will help you feel more comfortable when you invest with real money.