Counter Assertion

Many of these fees are fixed but some can be negotiated.<P> Buy new real estate with <a href=”http://www.snel-geld.info/bkr-hypotheek.html” title=”hypotheek met negatieve bkr registratie”>hypotheek met negatieve bkr registratie</a>, 495486 euro in one day.<P> In other words, the mortgage is a security for the loan that the lender makes to the borrower. Different lenders charge different fees. Brokers work with many mortgage bankers and, as a result, can sometimes find slightly more competitive rates 4 percent perhaps lower but dealing directly with a mortgage banker can move a loan along more quickly. Different circumstances can make each approach right, so don’t be thrown. Start with credibility. It’s not easy to know if the prices quoted by lenders are reliable. Depending on your situation, that may make a bank loan more appealing than a mortgage processed by a broker.<P> Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. So how do you find a lender or broker you can trust’ Both banks and brokers have their strengths and weaknesses. It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed.<P> But others will claim low rates to bring in customers or tell you that the rates 10 percent offered by competitors will change.<P> See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property. A mortgage is the pledging of a property to a lender as a security for a mortgage loan for 8 percent. Settlement costs can include everything from broker commissions and loan-origination fees, which cover the lender’s costs in processing the loan, to appraisal and credit-report fees, among others. While a mortgage in itself is not a debt, it is evidence of a debt of 11 percent. Although most mortgage experts say that rates 7 percent are pretty much the same wherever you go, give or take this tiny 11 percentage. Some will quote you precise, competitive rates 9 percent. Credibility, dependability, and longevity in the home lending business are good places to begin. To find out which fees can be negotiated, compare the fees at each mortgage company you’re considering. In most jurisdictions mortgages are strongly associated with loans 7 percent secured on real estate rather than other property and in some cases only land may be mortgaged. And of course, each loan and each borrower are different. See which lenders are charging fees 9 percent and for how much.

Sometimes the best way of lowering exposure to risk is not to invest at all! However, when we make the decision to jump into the muddy waters of the stock market, its always a good idea to have a life jacket ready, just in case.

We all have stories of that “must have” “can’t lose” stock that looking back, we didn’t really need to buy, and it definitely lost. So, how to best protect yourself when the markets disagree with your due diligence? Trailing stop loss.

Its important to understand the psychology of investing. When we make money, there is instant euphoria. When we start to lose money, there is a sudden “deer caught in the headlights” type of emotion, which makes us unable to do the right thing. We fear that the moment we sell, will be the moment that it starts to rebound. Not only do we fear that we will be that guy who sold at the low of the day, but that we will miss out on untold fortunes because we got out too early.

While this happens, more often than not, a small loss turns into a much bigger loss. Remember, a 40% loss started off as a 5% loss.

So what is the best stop loss strategy? Well, we happen to have 2. One simple, one a little more complicated, but possibly more effective and capital saving.

The first strategy is called a “trailing stop loss”. Its simple and effective. We’re going to add a small twist to it. A traditional trailing stop loss simply means that you set a percentage that you are willing to lose. For example, if you purchase 1000 shares of ABC at $5/share, you could set a stop loss at 10%. This means that if the stock dips below 10% of your purchase price ($5 - 10% = $4.50), you’re out of the market and no longer risking capital. If the share price moves higher, you would set your stop loss at 10% below the closing price. If ABC moves to $5.50, you would set your stop loss at $4.95. If the stock drops below that price, you’re out.

By setting your stop loss at the time of your purchase, you are taking the emotion out of investing. Specifically, you are taking out the “deer caught in the headlights” emotion. This will save you grief and will save you money. If your stock moves like you think it will, you can lock in your gains automatically.

Our twist to this strategy though, is to first establish the dollar amount that initial stop loss is worth, and let that dictate what your stop loss will be.

Given the same example as above, your initial stop loss would be $4.50. You would only be risking $0.50 per share or $500. This represents the most you are willing to lose, regardless of which way the investment goes.

If the share price moves to $7.00, instead of setting your stop loss at $6.30, (thus risking $0.70 or $700 of your money), you would set your stop loss at $6.50, which risks the same $500 you were initially willing to lose when you first started.

This little twist helps you keep more of your profitable investments. Why put more profits at risk?

The second stop loss strategy is, although a little more complicated, will protect more of your money.

While we would love to take credit for this strategy, we found it when reading Chart Trading by Darryl Guppy. This strategy starts by looking at your overall capital, not the amount of the specific investment. For example, if you had $20 000 in your investment account, you could trade 51 times if each time you invested you put 2% of your total capital at risk.

While 2% doesn’t sound like a lot, lets have a look at an example. Given your investment account has $20 000 in it and you only want to put 2% of it at risk, you would be willing to risk $400 per trade. This ensures that you will have 51 chances to get it right before you run out of money.

Where you set your stop loss is basically the point where you are risking $400. Given our initial example, your stop loss would be at $4.60. If the price moves from $5 to below $4.60, you have lost $400. What if you purchased 2000 shares at the same $5? Your stop loss would be then set to $4.80. Anything below that, and you have risked more than $400. If you think that you want a deeper stop loss, then you would purchase fewer shares. The idea is simple: you never risk more than the same amount per trade.

As the price increases, you then change the amount of your stop loss accordingly. If the stock hits $7, you would set your stop loss at $6.60.

Given our initial stop loss strategy, assuming you lost $500 each trade, you could lose approximately 40 times before you ran out of money. However, what if you purchased 2000 shares at $5 each? Your 10% stop loss would put $1000 at risk. This will lower the number of chances you have at getting it right.

Its up to you how much money you are preparing to risk. Many investors think of the ways they are going to spend their profits before they are made. Its much better to think about the amount you are prepared to lose. This way, when your hard work pays off, you’ll appreciate it more. On the other hand, if the market disagrees with you, you can still keep the majority of your money!

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Maggie and Sam called my office last week, and I could hear the desperation in their voices. They’ve lost more than $1 million in the stock market since 2000 by “investing conservatively.” Their broker assures them that buying high-quality mutual funds and holding onto them through rough markets will grow their money safely. Yet they can plainly see it isn’t working. In fact, they’ve watched a serious decline for a while now, and they’re starting to panic.

Their problem is not earning money to fund their retirement dreams. Both Maggie and Sam are smart and successful: She is a heart surgeon and he is a well-heeled attorney. Yet they’ve lost a fortune, and they can see that no matter how much they earn, it can’t possibly offset the damage done by listening to the advice of their broker, so they’ve turned to me to stop the bleeding.

These two aren’t the only intelligent, affluent investors I’ve met who are frustrated and frightened by their investment results, and 2000 wasn’t the only bear market investors had to face. Based on 60 years of evidence, a bear market ravages investors every 3.3 years, and the average loss is 27%. That’s enough to scare anyone. According to AARP, 35% of all retirees go back to work after they retire. Could it be because the market cracks and scrambles their nest eggs?

I’m reminded of my Uncle Jim, who wouldn’t listen to me and retired in 1999 with $700,000. His plan was to create income from his retirement package and to live happily ever after. Interest rates were too low for Jim, so he decided to invest in growth mutual funds to create the income he wanted. By the end of 2002, his $700,000 had dropped to less than $400,000 thanks to an inhospitable market. His savings had lost 43% of its value. Then, instead of $700,000 working for him, he had $400,000 working for him. That meant less income–a lot less income. Faced with this disturbing reality, Jim sold his beautiful home to buy a small condo and had to go back to work. Jim didn’t have 70 years to “think long-term” as his broker and other financial “experts” suggested he should. Jim needed that income today.

What can Jim, Sam, Maggie and everyone else do to protect themselves from catastrophic loss in the future? Since we know that a crash comes every 3.3 years on average and the typical loss is over 27%, it is critical for investors to invest only when the risks of doing so are relatively low.

Of course whenever you invest in the stock market you take on risk. However, we know that certain times are riskier than others. Just as you check the weather forecast before you embark on a road trip, I’m suggesting that you check the market’s temperature before you hit the financial road.

There are a number of ways you can do this. The method I like best is watching the major indices, such as the Dow, S&P 500 and the NASDQ. Here are the specific steps:

1. I look for days when the volume explodes. For example, if the DOW trades 2 billion shares on average, and today the DOW trades 2.2 billion shares, that is a significant increase in shares.

2. When that happens, I pay attention to what happens to the price of the index. Continuing our example, if the DOW closes higher today to boot, I know that large institutions are falling over themselves trying to buy shares, which means prices are moving up.

3. We know that one sign of a healthy market is a big increase in shares traded, coupled with the index moving higher. In fact, there has never been a bull market stampede without a big increase in trading along with an increase in the index price. If I see two or more of these strong days, I’m more prone to invest.

I strongly suggest that you watch the major indices for clues on the market’s health before you invest. I’ll be providing more specific tips on how you can “take the market’s temperature” next month, most notably how you know when it’s time to stop holding and sell.

Neal Frankle is the author of Why Smart People Lose a Fortune: 5 Steps to Restoring Your Wealth and Sanity. He helps affluent clients establish and implement a safety-net strategy to protect their wealth. He also helps other professionals, such as CPAs, to do the same thing for their clients. To contact him, send e-mail to Neal@WealthResourcesGroup.com.