In days long past life was a lot simpler, though much harder I suppose. Man was concerned only with immediate needs like food and shelter. Hunting was the primary activity, until wandering tribes settled down into communities and started working the land.



Until the industrial revolution. A very apt name, as it was indeed a revolution, bringing wide and sweeping changes to economic activity and re-arranging the economic landscape. Entrepreneurs became skilled at linking land, labor and capital to conceptualize business entities based on large scale output.

And with this, the importance of money (in whatever form used during the period) grew tremendously in importance as a means of exchange for goods and services.

Society members today are certainly not self-sufficient and cannot afford to be concerned only with quotidian needs. Provisions need to be made for the future, to ensure continued economic well-being and a decent standard of living.

Money and Investing.

Money, in itself, has no intrinsic value. If you were stranded on some deserted island and had a billion dollars, it would serve more purpose as fuel on a cold night. But while it has no intrinsic value, it has tremendous perceived value and power.

So what exactly is money? In whatever form, money satisfies 3 basic purposes:

1. Money serves as a convenient medium of exchange

2. Money is a standard of value

3. Money is a store of value.

Money and Investing.

"The poor and the middle class work for money; the rich have money work for them." ...Robert T. Kiyosaki, author of Rich Dad, Poor Dad

Finances may be built in two ways - savings and investments. The risk-reward ratio for these vary widely, but savings with its low risk and very moderate reward is a crucial first step. Savings accounts, fixed or time-based deposits (or certificates of deposit or CDs) and stakes in money market funds are relatively safe savings avenues .

Investment instruments include b equity funds, bonds, high-dividend yielding stocks, real estate investment trusts (REITs), and rental property.

Money, finances and investing - a brief overview.

On an average a wage-earner devotes about 2000 hours per year to generate income, primarily to:

Support a current lifestyle

Pay off liabilities

Provide for retirement

fund future legacies

To meet the last two objectives savings and investing are crucial.

There are many investment strategies, and each individual will need to determine the most suitable option that is compatible with his or her risk appetite and other personal circumstances. In this article we take a brief look at stock market investing, and focus briefly on one strategy:

Swing Trading:

This involves capturing the profits realized through short, quick moves in the market, using technical analysis tools to make the right decision. This quick entry-exit method can yield substantially more profit than the buy-and-hold method.

When technical indicators warn that the market or particular counter is at a top, liquidate holdings and wait for fresh opportunities. This method allows investors to avoid downswing losses while capturing a fair share of the upswing.

However, to use swing trading effectively, we need a reliable method to find profitable transactions, and have a precise entry/exit point. Technical indicators include candlesticks, moving averages, volume, trend lines, support and resistance levels.

It is best to apply simple analysis methods. The more complex the method the less chance for success.

Before entering the market it is crucial to first determine initial stop-loss, trailing stops and exit points. Failing to do this can result in avoidable and unnecessary losses.

Software such as Metastock, with filtering options, can be used quite effectively to identify shares that are in an up trend mode, and which have been subject to corrections recently. These counters offer a low risk entry level, with high profit potential.

One common mistake in stock market investing is buying based on tips, rumors, media news, reports, and because everyone you know is. This does not imply that you should totally discount these sources, but remember the key to profiting from stock market investment is in knowing when to sell and how to limit losses. A clear entry-exit point must be set before entering the market. And you must be willing to cut losses at your pre-determined exit point.

Copyright Dan Jeremiah: www.vmsbonline.com This article may be reproduced provided the author's name and all links are included unedited.