October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”  A prophetic pearl of wisdom from Mark Twain who died April 21st 1910… October was the month for crashes – 1929, 1987 and 2008..If you’re like many people, the stock market can seem somewhat of a mystery – and if you’re particularly cautious, a mystery that’s best avoided. But when you consider that we’re currently experiencing the 9th year of the second-longest bull market in history, now is the time to get your head in the game. You don’t have to be a wolf to know Wall Street; there is huge potential for the savvy investor to make healthy gains through wise investments as John Lowe the Money Doctor now advises.

First things first: figure out what type of investor you want to be. In general, the higher the risk, the greater the return can be – but the opposite is also the case! If you are just starting out and want to take things easy, have less money to play with, or are naturally more risk averse, that doesn’t rule you out; in the long term, the stock market has actually shown greater return on investment than property and in fact than any other asset class. However, you must buy and sell shares, INDEX funds, Exchange Traded Funds etc through a stockbroker or buy via managed funds through financial adviser or insurance companies. Stockbroker fees incur a minimum cost of about €25; so unless you have a minimum of €1,000 to invest, you may be better off waiting to purchase shares. No matter how risk averse or bold you may be, I always recommend taking care of your pension, your emergency fund (i.e., six months’ expenditure in a rainy day fund) and buying your own home before getting into the stock market.

Plenty of managed investment portfolios are catered to more conservative investors. Plans like the Irish Life MAPS®, Zurich’s Prisma Funds or Standard Life’s My Active Folio funds do a lot of the groundwork for you, blending investment funds (otherwise known as ‘pooled investments’, through which your money is blended with that of other investors and then invested by seriously experienced fund managers) with others, including shares and bonds (life insurance policies). Most importantly, this type of portfolio diversifies your investment, ensuring that all your eggs are never in one basket. Because each portfolio is built and managed for you based on your risk preferences – usually 1 to 7 ratings, with the higher the number the higher the risk – you benefit from a level of security and knowledge that would be missing if you were simply to start buying stocks without expertise.

Of course, even without a fund manager, one of the great things about this type of investment is how easy it is to keep an eye on its performance: between the daily newspaper, internet and mobiles apps such as StocksLive (for iPhone) and Jstock Android – Stock Market, you can always know whether your shares are rising or falling.

Next, consider the type of shares you want to buy. Publicly quoted shares in companies like Apple or McDonalds are what people mostly think of: freely traded shares in a public company. Whether you want a piece of the action in technology, food, tourism or any other industry, you will find one open to investors. As well as the knowledge that you will then literally own part of the company is the fact that successful share ownership should bring a regular income: if the company is doing well, your investment will earn you dividends, or a share of the company profits, plus capital appreciation. Just remember that you will be liable to pay tax on both dividends (taxed as income) as well as capital gains (Capital Gains Tax is 33%)!

If your interest has been piqued, contact a registered Irish stockbroker through www.ise.ie; or email me to set up a consultation. Remember Warren Buffet’s wise words the stockmarket is a mechanism for transferring wealth from the impatient to the patient.

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