Tools, Hacks, and Facts for Investors

In a year when the markets are as volatile as ever, why not use a few time-tested tools, tactics, and techniques to get the most out of your investments? There are two types of assets that perform just as well when prices are rising or falling. Many people use them every day to hedge their bets and earn from swings in either direction. What about factors that affect your credit score?

Some financial moves can impact a person’s ability to borrow money for investing or other purposes. Other hacks include knowing how to nullify the pattern day trading regulations, manage money effectively, identify shares that pay consistent dividends, find a reputable broker, specialize in a particular asset class, and navigate precious metal purchases. Explore the following ideas to see which ones are most suitable for your style of trading and investing.

Stock options and forex currency pairs could be the two safest assets to trade in whipsaw conditions and generally down-trending markets. The feature that makes both attractive is that risk-averse traders can play either side of the swing, down or up. Options are contracts to either buy or sell a designated number of shares, while forex trading gives users a chance to speculate on upward or downward trends in a specific currency.

Parents and others are sometimes tempted to assist a young student, coworker, or friend who needs to gain approval on a college loan. They do it by adding their name to the application document as cosigners. The tactic is effective in most cases, particularly where the main applicant has no or thin credit history. From an investor’s point of view, however, it’s imperative to review a complete, informative guide that shows the possible ways in which cosigning can impact your credit scores. Be on solid ground and get all the facts before signing alongside someone else on a loan obligation of any kind.

The PDT rule can be harsh for frequent traders who like the idea of using margin accounts to buy and sell various types of securities. Those who do more than four round trips in each five-business day period can get hit with a frozen account and a warning to bring their balances up to $25,000 before being allowed to resume trading. A round trip is the purchase and sale of a security within one market session.

The single most effective hack for avoiding a surprise PDT warning from your broker is to operate without using margin, which means transacting all purchases in cash from your account. It’s often forgotten that the rule only applies to margin, not cash, account holders. Even if you do wish to use margin, consider setting up several brokerage accounts and making the legal number of round-trips in each one without triggering the PDT warning.

What’s the top money management strategy among experienced trading enthusiasts? It’s called the 2% rule, and it’s been around for decades. While it can limit activity in certain fast-moving markets, its uniform application can save you thousands of dollars in losses. Use it by setting a 2% of account-balance limit on all purchases. So, someone whose balance is $5,000 would not make any buys more than $100, which is 2% of $5,000.

Dividend reinvestment programs let subscribers automatically place all earned dividends directly back into their accounts. Depending on the brokerage firm, purchasing fractional shares with even small dividend payouts can be possible. DRIPs have been popular since the 1980s, when millions of retail investors and traders discovered the financial power of declining cash payouts in favor of reinvesting the money. Aristocrat stocks are the ones issued by corporations that have paid consistent dividends for 25 years or more without missing a single payout. Most are blue-chip companies, but they all represent a relatively conservative asset for long-term investing horizons.

There are several rules people use to keep from over investing in precious metals. One is the 5% rule, which limits a portfolio’s metal holdings to that amount. The same guideline applies to placing gold in an IRA or another kind of retirement account. Finally, gold, and silver enthusiasts frequently use dollar-cost averaging to acquire metals on a regular basis. They buy a designated monetary amount of gold or silver monthly or annually, regardless of the per-ounce price at the time of the purchase.

Finding a reputable broker that meets your needs can be daunting. Use a simple three-step process. One, read as many verified online customer reviews as possible. Two, find brokers who offer the assets and trading platforms you want. Finally, perform a customer service dry run on your top picks by calling or emailing them and asking a few basic questions.