I was at the ATIC (Asia Trader & Investor Convention) today. There were about 33 exhibitors promoting their various products and systems. Then I realised, there are so many products available for the investor! You have never invested or traded, I guess you would be overwhelmed at the fair.
Although I am an advocate of futures trading, I shall give a brief summary of what products you can trade to grow your wealth. It is important to choose a product that is liquid and transparent to trade in, therefore I shall not touch on non-regulated products like wine and land investments.
Stocks – the most commonly traded financial product, also known as shares, you are buying a share of the listed company. When you buy a share, you become a part owner of the company and will have voting rights. Other than capital appreciation (which is when the price goes up) you can also gain dividends and bonus issues if the company do well. For shares, you can only buy and need to settle (ie pay up) within 3-5 working days, if you sell your shares within this period, you do not have to put up any cash upfront and only need to settle the difference (known as contra).
Forex – forex are traded in pairs, say, if u buy Eur/Usd, you are effectively buying Eur & selling Usd. Factors like economic conditions, news, data and interest rates differences will affect the movement of currencies. Other than the price fluctuations, investors also have to consider the ’swaps’ which is the difference in interest rates of the 2 currencies, as u are long one & short the other, you will receive or pay the difference on a daily basis. The market is highly liquid and traded 24 hours Monday to Friday. Read more…