Government shutdown to prudent investors

The most recent government shutdown took place in 1996 and there have been 17 of them before. These government shutdowns have shown terrible negative effects on the market. Stocks dropped during nine shutdowns among 17 and as soon as the shutdown ended, the market raised and gained an average of 13.3% over the next 12 months. These make one thing clear to us there will be volatility in the market which can never be predicted. So, in these cases it is advisable for you not to sell out because it will be a difficult job for you to decide when to buy back. Surveys say that the investors who got nervous because of the government shutdowns and sold out their shares, they could never enjoy profits in future when the situation became stable.

An investor should not get nervous in tough situations. If you have hired a financial planner, they should be able to motivate you and stick to the plans that you had made before investing. They should sit and discuss the ways by which you can maintain your game strategy and allocate your assets in such a way so that you can meet your long term goals. You should never sabotage your long term investment returns if there is volatility in the market.

It is an useless idea to check out the news and events that predict the market in future. This is because no one can say from before exactly what is going to happen in the market.

A proper financial planning is of utmost importance for an investor. If you are a retired person or you will soon be in that list, the necessary liquidity that you can easily earn to run the expenses of your household for a period of time should be included in your planning. Thus, if you are covered in liquid investments for five to seven years, you need not worry about the short term volatility in the market to run your expenses.

Investment in Bonds: an Overview

Investment market is a highly complex and risky market. If you are a beginner and have no knowledge about the different investment options you have then you must first make an effort to know the investment market better. Money can be invested in a number of things like bond, stock, currency, property and so on. Experts advise that you must enter the investment market for the very first time by investing in bonds as these are considered to be investment options that have low risks involved.

Bond is nothing but a loan that you give to a federal agency, corporation, municipality, government and any such organization which is called the issuer. The bond has a fixed rate of interest which is given to you periodically. When the bond becomes matured, the issuer will pay you the principal (original value) cost of that particular bond.

An investor should make it a point to invest in different things so that his/her investment portfolio becomes diversified and his/her risk exposure is reduced. Thus as an investor you must invest in bonds as these help diversify your investment portfolio and reduces your exposure to risk.

The major risk involved in investing in bonds is the unduly rise or fall of the rates of interest. The rates of interest fixed on the bonds you invest in, can either help you make lots of money or lose huge amounts of money. When the rates of interest will increase, the costs of the bonds will decrease and then you will have to sell those at a lower price. Some other risks involved in investing in bonds are currency risk, liquidity risk and credit risk.

Before investing in bonds, you must approach a reliable financial advisor for help so that you can ensure higher or risk free return on your investment.