10 Practical Tips For A Good Start On The Stock Market When You Have A Family

10 Practical Tips For A Good Start On The Stock Market When You Have A Family

Today, I welcome Sogan, founder of the blog Upside.  He will explain how to start investing in the stock market. An interesting subject, because after learning how to save and having created savings, it is important to make them grow. The stock market is one of the possible investment options. I’ll let Sogan tell you all about it.

You have a family and mouths to feed. Your primary concern is keeping them out of financial need. Which is understandable, of course.

Your concern is to gradually build financial wealth after creating precautionary savings. This makes sense, but you don’t know where to start.

The principal residence is not an asset but rather a liability. At the time of sale, you are not sure that you will make a significant capital gain taking into account the taxes and the loan you have to pay.

As for life insurance policies in euros, their returns are on a downward slope.

Why not start on the stock market?

This solution may scare you with the stock market crashes of the 2000s. At that time, I think that the people who took the slaps were poorly supported and did not know how to make their money work efficiently. Then it was the time when online brokers were taking their place in the financial sector.

When you talk about the stock market, you often refer to stocks. At some point, you must know what you are talking about.

Stocks are, by definition, shares in companies like L’Oréal, Danone or Coca Cola. Basically, you don’t feel that this is so speculative.

In truth, what bothers you the most are the constant price variations during the day. Honestly, it’s the system that hasn’t taught you how to take charge of your financial education.

Now you want to know how to do it with peace of mind. You and your spouse can do it together.

Yes. I say two people or a family even though investing in the stock market is not usually a solitary act. On the other hand, it will save you from being left to your own devices.

Since I don’t want to play with your impatience, here are 10 practical tips to get off to a good start on the stock market if you have a family to manage.

Tip 1: Take the time to analyze your needs and constraints

When you have a family, building and managing a stock portfolio can be a challenging journey. Rest assured! It’s not insurmountable if you take the time to think about it.

You need to ask yourself the right questions. Why do you want to invest in the stock market? What are the constraints you will face? These simple questions at first glance are not so easy to answer.

Isolate yourself in a quiet place. Then take a pen and paper and think about your needs and constraints. You can discuss this with your spouse.

Let’s start with needs.

Each case is different. If you want a precise idea of your needs, you must take into account several parameters that remain subjective:

  • Income level
  • Your age
  • Your children
  • Your current financial assets
  • Your professional career

As for constraints, I know you’re going to point out the lack of time, especially when you have children. It’s up to you to find the right balance.

The other constraint that comes to mind is whether you own real estate. Why am I telling you this? Because it can influence your investor profile.

If you have a loan to repay in addition to providing for your children’s needs, it’s worth thinking about it because your margin of error in your investment decisions will be narrow.

Tip 2: Divide up the tasks for a good start on the stock market with your family.

You intend to manage your stock portfolio as a couple. The hardest part in this type of situation is being on the same page.

Define your roles to avoid domestic scenes. Buying or selling a stock is not done lightly. It’s a long process.

If you follow these steps to the letter, you will have less apprehension to start in the stock market:

  • Make a list of stocks to buy on the condition that you understand the industry.
  • Find the right sources of information about the stock in question. This is what we’ll see in tip #4.
  • Financially analyze the stock and its sector environment. Some industries are highly sensitive to the business cycle.
  • Don’t attach importance to macroeconomic events when making your investment decisions on a stock. Otherwise, take advantage of them when the markets decline.
  • Do not hesitate to use technical analysis to determine your entry and exit price. That said, you don’t have to.
  • Set yourself an acceptable level of loss so you don’t put yourself in a complicated relationship situation.

You can follow most of the steps in pairs. Where it might be tense, it’s your responsibility to push the buy or sell button. Your likelihood of hesitating will be high. The best thing you can do is to play fair to make your family’s stock market debut a success.

Tip 3: Read books and stock market blogs

Most of you may have been a little hasty in your learning. Reading books and stock market blogs will be indispensable to you.

Why is that?

You will need to acquire the basics on the main pillars of the stock market: fundamental analysis and technical analysis.

I’m not telling you that you’re going to be investment experts. A minimum of preparation is necessary so that you don’t go off on a tangent.

However, you want to know what are the best books and stock market blogs to get a good start in the stock market.

Here is a list of 10 books to perfect your learning. You don’t have to read them all.

Finally, I’ll let you discover the 32 best stock market blogs that could be worth their weight in gold, on Trading Attitude. However, there will be many that do not suit your needs.

Tip 4: Look for the right financial sites to inform yourself

You have a value in mind. You have agreed with your spouse to include it in your stock portfolio.

Have you taken the time to inform yourself and analyze it?

Rushing usually causes fatal errors. Afterwards, you may feel remorse.

Keep in mind that the stock market is an endless marathon. At some point, you will have an opportunity that will open up if you are patient and disciplined.

With the Web, the abundance of information can lead you to disperse in your decisions. You have to sort it out.

The sites of listed companies

What surprises me is that few individual investors visit the websites of listed companies.

Yet that’s where you’ll find the best sources of information. Knowing that they have an official character. Moreover, listed companies have a duty of transparency towards shareholders.

You have a global overview of the site. Click on “Investors / Shareholders” at the top left. You get the elements that interest you to analyse L’Oréal at a fundamental level.

Stock exchange sites

You’ve got plenty of choice with mobile apps on Android and Apple Store.

I’ll be honest with you. They all look the same in terms of the amount of information.

What will make the difference between a good stock market site and a bad one is the services you get. If possible, free.

You want to invest only in French stocks on the long term.

Investing in Les Echos and Le Revenu is more than enough.

To find information on the stock of your choice on Investir Les Echos, type its name on the search bar at the top of the window. Then click on “Company” and scroll down by clicking “View all financial data”.

You will finally get a summary of its results in the form of graphs and tables.

If you are interested in foreign securities, I recommend these 3 sites:

  • Stock Exchange Zone
  • com
  • MSN

The first 2 offer you technical analysis tools. This is not negligible to take care of your timing of purchase or sale.

As for the stock exchange forums, you can find answers to your problems. From there to say that they are often good tips, be on your guard.

Tip 5: Choose stocks that have weathered financial crises with resilience.

Juggling family life and professional life is not so easy. This leaves you with little free time to devote to managing your stock market portfolio.

In phases of market stress in addition to the above, you can lose your footing. For fear of seeing your capital decrease significantly, you make inconsistent decisions that will cost you a lot of money in the near future.

How can you control your emotions?

This is a matter for me alone. But it’s up to you.

The ideal is to restrict your investment choices to stocks that have withstood the various financial crises. As a general rule, these are multinationals operating in sectors that are less sensitive to the economic cycle.

In terms of price fluctuations, they are less volatile because their financial results rarely disappoint. If they do, their problems are temporary.

Take an example like L’Oréal.

What I have learned to start well in the stock market is to think like the real rich. Multinationals are a perfect example of this. Why is that?

They are financially stronger than SMEs by taking care of their cash flow. Their international reputation will be difficult to dislodge by new competitors.

Icing on the cake. Multinationals regularly distribute stable or growing dividends, even in times of crisis. Owning a few of them will allow you to manage your stock portfolio more serenely.

They’re not that hard to find. Take a look at my investor portfolio and the monthly follow-up. You will notice that the majority of my stocks are very well known worldwide.

Tip 6: Place your stock market orders at home

Starting out on the stock market alone or with your family requires a minimum of concentration. Your home seems to be the ideal place to place your stock market orders.

Indeed, you have everything you need with a quality broadband connection. You are at your ease.

Nevertheless, you surely have rooms with sources of distraction that can disturb your analysis and decision making.

The living room with the TV on is not the room where your level of concentration will be the best. I consider it a place to relax.

The kitchen isn’t great with the clatter from the refrigerator.

You still have the bedroom. If you live in an apartment, I think it’s the best place.

If you live in a house, don’t hesitate to set up a personal office to free yourself from outside noise. You are more likely to be in control of your environment as long as it is clean and organized.

Tip 7: Think about taxes

Taxation of investment. You think about it. Why blame yourself? I think it’s commendable of you, especially in a family with dependent children.

Whatever your tax bracket (14% to 45%), you give enough to the IRS.

All the more reason not to overdo it.

In the good old days, you could find your tax account to start out on the stock market with a PEA or a securities account.

After the financial crisis of 2008, the tax advantages of a securities account were abolished. You can still benefit from capital gains tax deductions depending on how long you have held your shares.

Fortunately, the PEA did not suffer the same fate as the securities account. You are exempt from dividend and income tax without making withdrawals from the PEA’s liquidity for 5 years.

As a couple, you can increase your payment ceiling to €300,000 as of January 1, 2014. However, you won’t have the luxury of buying North American shares offering the best market conditions when buying or selling.

That said, you have the right to combine the two.

In any case, it is in your interest to have a long-term investment objective to really optimize your stock market tax situation.

Tip 8: Learn how to lose so you can bounce back better

The best way to win on the stock market in the long term is to make mistakes. Of course, you don’t have to make the same mistakes again.

Why are mistakes beneficial?

You gain experience, perseverance, wisdom and tenacity. You learn a lot about the specifics of the stock market.

Question yourself. Be brave. Keep your enthusiasm. Mistakes serve to move you forward in your goal to become a good investor.

When you have children, you think a little bit more about your investment decisions. You take care to analyze value both financially and by sector. This is a mark of wisdom.

Making mistakes has another virtue. You will learn to recognize your limits.

Tip 9: Don’t put all your strength into French equities

Building up a stock market portfolio with only French stocks is not necessarily the best way to go.

I know that it may surprise you. On the other hand, I understand you.

You want to favour familiarity and proximity in your investments because you have better access to information about the Paris stock market.

You have a portfolio of French stocks in different sectors. They have international exposure. You feel you have done the job in terms of diversification.

Wrong, your diversification is biased.

Imagine a major event on French soil such as the victory of Marine Le Pen in the presidential elections (unlikely for the moment) with the bonus of France’s exit from the euro, your French portfolio could suffer the consequences in the short term.

We are not there yet. But it deserves some thought. Obviously, this is not my wish.

Playing the real international card by investing in North American and European stocks with a strong global reputation is not a silly solution. You will have a balanced distribution of risk at the geographical and sector level.

For information with the euro, you can invest without the exchange rate risk, on several European stock exchanges such as Amsterdam, Brussels, Frankfurt, Madrid or Rome.

Tip 10: Buy shares in times of pessimism

You understand that the stock market operates in cycles with the formation of speculative bubbles.

When everything looks rosy on the financial markets, you and individual investors (the weakest link) have an unfortunate tendency to get carried away and think that tomorrow will be eternally better.

A few months later, the stock market crash arrives. You’re stuck taking your losses. You finally decide to sell when it drops again. Then that’s when seasoned investors make their sales on good quality stocks like Air Liquide, L’Oréal, etc.

Alone, you withdraw into yourself in a difficult moment of solitude. You prefer to keep your family away from your problems on the stock market. That’s why it’s a good idea to take your time to learn the workings of the stock market.

Forget the sad side by giving you a tip on how to buy shares at reasonable prices.

You and your spouse want to prosper seriously. I suggest you buy during times of panic, fear and despair. If the media and the press make the stock market the front page of the red and black newspapers, it’s an excellent buying indicator.

Here’s a proof with my investment in SEB :

At that time, we were in the midst of the euro zone crisis since August 2011. Stock market indices were suffering.

I had this value in my sights for my investor portfolio. I felt that its decline was unjustified in relation to its fundamentals. To equate the eurozone crisis with SEB was surrealistic.

After re-analysing the company and taking into account the mood of the financial markets, I bought twice to have a solid line in my portfolio. My patience and courage were rewarded.

For most of you, I know that it is counter-intuitive to do this on a behavioural level. But the stock market has this ability to take bad news and go up again with something else in mind.

You seem lost. Well, take this proverb and write it down on a piece of paper:

“Bull markets are born pessimistic, grow skeptical, mature optimistic and die euphoric. ” by Sir John Templeton, founder of the Templeton Funds…

Investing well in the stock market through stocks takes work, but it’s not Everest.

Don’t give up. With your partner, you will make rapid progress in your learning. Encourage yourself and take your time to lay the right foundations.

In a country that swears by real estate and life insurance in euros, it’s hard for stocks to make a place for themselves in the sun. Everyone will say that investing in them over the long term is impossible because you have to be an expert in the field.

Do not give in to this blackmail. You don’t need to know everything. Just the basics.

With the Web, things have really changed. You can train yourself.

But you can still get someone to go with you. Plan a training budget in case you want to take the next step.

Do you want to become a good stock market investor and seriously help your family with future projects?

You are going to make mistakes. Take care to set a loss level so as not to dilute your capital. You must test to learn. Inaction never brings positive results.

When the financial markets are in a bad period, you must have an iron mind to cope.

When you’re interested in a stock, avoid acting on instinct and follow the steps outlined in tip #2.

Now that you have these tips for a good start in the stock market, make it a point to prove people with a poor opinion of this investment wrong.

How To Earn Extra Income With Dropshipping

How To Earn Extra Income With Dropshipping

Are you looking for a business idea to create in order to earn extra income, or to change your life and “fire” your boss?

Creating a small (or big!) business to earn more money, or to stop working as an employee, is the dream of many people. But few do it, discouraged in advance by the formalities, the management of a stock, customers, etc..

Yet there is at least one business that is not difficult to create, nor to manage, and that is accessible even to beginners. Are you thinking about blogging? 😉 No, it’s not blogging that I want to talk to you about today, besides it requires a lot of work. There are even simpler things to do!

Dropshipping to link brands and e-merchants

This easy business is dropshipping: a very special way to sell items on the internet.

Because in this business, the seller has nothing else to do but to create a website on which his customers will order products, which will be sent directly to them by the supplier.

The seller acts as an intermediary between the customer and the supplier, without managing any stock.  It is not he who sends the products, but the manufacturer himself.

By the way, of course, the seller is paid by taking a margin on the sale.

How to find products for sale on his website?  For example on platforms such as AliExpress, which brings together a multitude of products offered for sale at very low prices by suppliers.

Once the site has been created, all you have to do is wait for sales and make sure that customers have received their packages.

I confess that I have not tested this form of business, but I hear about it more and more often.  I think it’s very interesting, because it’s within the reach of anyone who’s a little bit motivated.

The last few years have seen the development of dropshipping in France thanks to internet platforms on which even a beginner can create his sales site in a few clicks.

Create a logo with letters or a simple image

I told you that dropshipping was accessible to everyone, thanks to these platforms.  They make the creation of an online store ultra simple.

This is the magic of the internet: allowing everyone to earn extra income, or even change their life, by earning money through their online activities.  You can sell your business on Leboncoin, offer your services in DIY or gardening on other sites, and you can also become a dropshipper.

These famous platforms allow you to create your online shop from A to Z.

You will just have to create your logo, which you can do very simply with a word processor like Word, or even on the platforms I was talking about.  There is no need to know how to handle complex images.

So, if you want to be a little more financially independent, and you’re wondering how to do it, here’s a business idea that’s easy to create and manage.

Selling other people’s products, without having to build up a huge stock in your garage, or having to go to the post office every day, that’s the whole point of this new way of selling items on the internet.

In my opinion, it is for these practical reasons that the dropshipping business has developed so much in France lately.  Thank you internet !

Update :  Like any business creation, dropshipping requires at least two qualities: motivation and professionalism.  As a reader pointed out to me in the comments, you should not forget to accomplish some legal formalities (micro-business, payment of charges and taxes…) and to respect the French legislation concerning consumer protection.  Yes, I know, the heaviness of our country discourages a little bit individual initiative, what do you want… Not to mention that you will, of course, have to make your shop known if you want to have customers, and sell products of acceptable quality.  Like any shopkeeper who doesn’t want to close down.

But nothing stops motivated people 

I hope I’ve given you a new business idea with this article.  Feel free to tell me what kind of small or big business you have developed to earn more money besides your salaried work.  That would be very interesting.

Finding An Investor For Your Business Idea – How To Start A Company Even Without Equity

Finding An Investor For Your Business Idea – How To Start A Company Even Without Equity

Today, more and more people are venturing into professional self-employment, through which they hope to achieve financial independence and freedom for their own business projects. However, starting up a business is an important new start, for which the founders have to prepare themselves very well in order to start successfully and to assert themselves against the competition. Many of them can find an investor and profit to a large extent from his supporting hand. Here are a few tips on how this can be achieved in practice.

What is a business start-up?

Starting up a business is a step towards professional independence. This can either be a

  • freelance or
  • trade activity

trade. There are various legal forms available to the founders for entrepreneurial activities. Freelancers and sole proprietors usually opt for the trade or the partnership under civil law (PuCL). In contrast, the founders of start-ups prefer the limited liability company (LLC) or the entrepreneurial company (EC).

There are various motives for becoming self-employed. Young people in particular often talk about their disappointment at work and no possibility for self-realisation, which today is an important factor alongside wages and financial benefits. Older people see a worthwhile alternative to employment because they can offer customers real added value through their many years of professional experience and their professional know-how. Last but not least, the founders hope for more income.

How can an investor be found?

Only rarely can the founders finance their business idea with their own capital. In most cases, they are dependent on outside capital, which is provided in a certain proportion. Here the rule applies: the higher the financing requirement, the more cautious the investors are. However, their willingness to finance depends not only on the percentage of equity capital, but also on the respective business idea and the current market development. There are many ways to finance the start-up of a business. This is how an investor can be found:

  1. Credit: Many founders first think of a company loan when they want to find an investor. Primarily cooperative and private banks are suitable here. PCL is also a possible alternative. It is advisable to contact primarily cooperative banks such as savings banks and Volksbanken, because they are active in the public sector and attach great importance to local economic development.
  2. Subsidies: A good option for the financing of business start-ups are the subsidy programmes. Their primary aim is to promote the entrepreneurial spirit among certain social and age groups and thus to counteract unemployment. The subsidies include the start-up subsidy from the Federal Employment Agency and the subsidy check for founders and the self-employed. The funding database is a good source of information.
  3. Partnership: If you are thinking of starting a larger start-up and have a business partner at your side, you may consider a partnership. This business partnership, which is more likely to be long-term, can be either an active or a silent partnership. In the first case, the partners become involved in the company, while in the second case they only acquire shares in the company through their investment. Promising high-tech start-ups can quickly find an investor.
  4. Crowdfunding: Some founders see great financing opportunities in crowdfunding, which is becoming increasingly popular. Although the publication of a business project on a crowdfunding platform seems simple and straightforward, there are a number of legal aspects that need to be taken into account in this form of financing. It must be clarified whether it is an investment or a gift and how liability with private assets is regulated.

Business plan as a success factor for the search for investors

A creative business idea alone is not enough to start successfully as a founder. If you want to find and convince an investor, you must have a well-designed business plan. A carefully worked out business plan is an integral part of every business venture. Very often it decides on success or failure by pointing out both strengths over the competition and potential market risks. The business plan is prepared at the beginning of the planning process and provides a valuable overview.

It starts with an executive summary. It then goes into detail about the business idea and strategic priorities. A great deal of attention is also paid to the sales offer, i.e. the product or service. The business plan should also not underestimate the organizational structure and the regulation of competencies. Just as important are marketing and sales as well as market and competition. The business plan must also include the legal framework. Founders who want to find an investor have to announce budget and process flows.

How you can convince investors

Finding an investor sounds difficult for many founders, especially if they want to start their first business and have no practical experience of self-employment. Although a well-designed business plan is half the battle, reality shows that its implementation is not so easy. Every investor who is anxious to finance only the business idea with the best potential for economic success and competitive advantage knows this. So how can an investor be convinced and won over for his own project?

A bankable business plan is an absolute must for a personal meeting with the investor. For this reason, it is worth taking sufficient time to prepare a complete business plan. But that’s not all: every founder should have a solid knowledge of the market potential and an anticipated market development. Market size is also relevant for the assessment of business opportunities. In addition to customer and partner relationships, the competition analysis can be an important point of discussion.

How to find successful investors

Convincing an investor is a great challenge for all founders who are taking the step into self-employment for the first time. This is because they are faced with the unknown and are uncertain whether they will be able to master operative business and counteract possible financial bottlenecks in time. An unstable market situation and rapidly growing customer expectations also cause feelings of anxiety. Quite unnecessarily, because the founders can find an investor with a promising business plan and finance their business project.

Determining Company Value – How Much Is Your Company Worth?

Determining Company Value – How Much Is Your Company Worth?

If a company is acquired against payment, the goodwill of the purchased company must be shown in the balance sheet of the purchaser. The goodwill, also known as goodwill or enterprise value, is not a physical object. The balance sheet item is one of the intangible assets of a company. It is reported on the assets side of the balance sheet under fixed assets. For this reason, forecasts are also largely used, which ultimately represent goodwill. Why it is important to know your own goodwill is explained in this article.

How is goodwill defined?

The definition of goodwill (DoG) is derived from the provision of § 246 paragraph 1 sentence 4 of the UK Commercial Code. According to this provision, the GoF represents the difference between the total value of the company and the sum of the individual assets minus the debts at the time of the takeover. If there is original goodwill, the own company has created it itself. In this case, the goodwill is represented by the customer base and the brand of the company. Derivative goodwill was acquired for a consideration.

The relevant factors for determining goodwill are the value of the entire company and all assets and liabilities. If the calculation results in a positive value, this is called goodwill. If the enterprise value is negative, it is badwill.

Goodwill plays an important role when selling the company

Goodwill is only determined if a company is sold in its entirety. When parts of the company are sold, goodwill is often used to determine a purchase price. In addition to the value of the company and all assets and liabilities, a company value is influenced by the following factors:

  • What are the future prospects for the company?
  • Which competitors must be kept in mind?
  • Which technological changes must be reacted to?
  • What does the company’s product range look like?
  • Can the company stand out from the competition? If these questions are answered in the negative, the company’s valuation is worse.
  • What does the company’s customer structure look like? Is there a broad customer base with which the company is well positioned?

Answering these questions can be decisive for the sale and can play an important role in determining the company’s value.

The determination of goodwill

Goodwill can be determined in various ways. The capitalized earnings value method and the Ebit method are presented.

The capitalized earnings value method

If the capitalised earnings value method is applied, goodwill is measured according to what an investor can earn from the purchase of the company. The average of the earnings from the last three years and the forecast earnings for the next three years form the basis of the calculation. The total income is divided by the capitalization interest rate. The capitalization interest rate is made up of the base interest rate and a premium for the entrepreneurial risk. If a small business is to be sold, the interest rate is between ten and fifteen percent. If the average proceeds amount to 1 million GBP and the entrepreneurial risk is ten percent, the enterprise value is 1.1 million GBP.

If the business value is determined in this way, there are two disadvantages. Future earnings are difficult to predict. The interest rate cannot be determined objectively.

The Ebit method

In the Ebit procedure, the profit of the company to be sold plays a decisive role. To determine the goodwill, the profit is multiplied by a factor. A profit of 200,000 GBP and a factor of 4 results in a goodwill (Ebit) of 800,000 GBP.

The applied factor depends on the industry. It is recalculated at regular intervals.

The amortization of goodwill

Positive goodwill can be amortized between five and ten years in accordance with the provisions of commercial law. How long the actual amortization period runs is at the discretion of the company. If there is a permanent reduction in value – the purchased company proves to be unprofitable – the strict lower of cost or market principle must be observed. This means that the DoG is to be written off unscheduled.

What is the relevance of goodwill for entrepreneurs and investors?

Every entrepreneur wants to know what his company is worth. Especially if you as a self-employed person want to sell your company, what you get for your company. There are different ways to look for a buyer.

Databases and networks provide information about solvent managers who are looking to run their own business. The entrepreneur can also look around at his competitors. For the acquirer, the offer is worthwhile from two perspectives. He owns a company that suits his industry and has one less competitor. To be in a better negotiating position, the seller should make more than one offer. If his company has a good business value, this strengthens his position.

Important facts about goodwill

If a company or shares in a company are sold, the goodwill must be determined. The GoF can be determined using the capitalized earnings value method or the EBIT method.

Goodwill is determined by comparing the value for the entire company and all assets less liabilities. In addition, the factors future prospects, product range, customer structure and personnel are important parameters.

Goodwill plays a decisive role for entrepreneurs and investors. The higher it is, the better the company is positioned. This is a benefit for both sides.