There are two kinds of trading that are referred to as "insider trading":

• Trading of a security of a company (e.g., shares or options) based on material nonpublic information. The trader need not be a corporate "insider."
• Trading by "insiders" of a corporation.

Trading on material nonpublic information

There are rules against this type of "insider trading" in most jurisdictions around the world, though the details and the efforts to enforce them vary considerably. In the United States, for example, there is no general federal law directly prohibiting insider trading. Authority to prosecute cases of insider trading came from the Supreme Court's interpretation of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, prohibiting fraud in connection with the purchase or sale of securities. Insider trading was legal in the U.S. until the 1960's.

An example of illegal insider trading may be that you, as an assistant to the Chief Executive Officer, learn that your company is going to be taken over before it is announced to the stock exchange. Knowing that such a move is liable to cause the price to rise, you buy shares in the company and subsequently profit from the transaction.

In practice, prosecutions for insider trading tend to be rare and difficult to win for a variety of reasons. It can be difficult to prove what the accused actually knew at the time the trades were made -- and people may not even be told directly but merely advised to buy or sell with a nudge and wink. Proving that a particular individual was responsible for a trade can also be difficult, because a clever trader can hide behind a variety of nominees, companies, and proxies, some of which may be located offshore in jurisdictions that don't cooperate with the local authorities. Insider trading is usually performed by the already wealthy, who can afford the best lawyers available and have the resources to drag a case out and cost the prosecutors millions along the way. Finally, the details of insider trading can be highly confusing to non-experts, and convincing a randomly-selected jury, many with no experience of share trading, that a crime was committed can be difficult.

Advocates of legalizing insider trading assert that insider trading is a victimless act, pointing out that a stock will eventually move when the non-public information is released regardless. It is claimed that insider trading laws are not aimed at protecting the general public from a crime perpetrated against them but rather serve to relieve what some believe to be a matter of "unfairness" if someone profits by having more information than them. Advocates will claim that making money by having superior information is what the stock market is "all about" and that allowing trading by anyone based on any information they have available will increase the efficiency of the stock market.

Advocates of legalization sometimes also make free speech arguments. Imprisoning someone for telling someone else about a development pertinent to the next day's likely stock moves would seem, prima facie, to be a punishment of prohibited speech, i.e. an act of censorship. Also, there is the question of why what amounts to insider trading is legal in other markets but not in the stock market.

Trading by "insiders" of a corporation.

Within a company, there are many people who might have access to information that might be construed as privileged to their position in the company but which is not considered "material nonpublic information." These "insiders" therefore, may legally trade in the shares of their company (e.g., selling share options).These companies are required in many jurisdictions (required in the U.S.) to publish the dates when managers and senior staff members have traded the shares of the company. In the U.S., SEC form 4 is used to declare this kind of insider trading.

In finance and economics, a bond or debenture is a debt instrument that obligates the issuer to pay to the bondholder the principal (the original amount of the loan) plus interest. Thus, a bond is essentially an I.O.U. (I owe you contract) issued by a private or governmental corporation. The corporation "borrows" the face amount of the bond from its buyer, pays interest on that debt while it is outstanding, and then "redeems" the bond by paying back the debt. A mortgage is a bond with a lien on a real estate.

Bonds are securities but differ from shares of stock in that stock is an ownership interest (termed "equity"), but bonds are merely "debt": Therefore a shareholder is an owner, but a bond-holder is merely a creditor.

Each country sets its own rules for issuing and redeeming short and long-term debt and stock. In the U.S. (for example):

• Bonds are long-term loans secured by property rather than short-term loans secured merely by the debtor's promise to pay.
• Interest paid to bondholders receives preferential tax treatment compared to dividends paid to shareholders.
• In bankruptcy, bondholders are paid before short term creditors (including workers who are owed wages) and all creditors must be paid in full before owners receive anything.

Issuing bonds

Bonds are issued by governments or other public authorities, credit institutions, and companies, and are sold through banks and stock brokers. They enable the issuer to finance long-term investments with external funds. The term total volume refers to the number of individual bonds in a bond issue.

Features of bonds

The most important features of a bond are:

• initial value, known as the "par value"
• maturity date - Bond maturity tells when investors should expect to get the principal back and how long they can expect to receive interest payments. The maturity of a bond can be any length of time, although typical bond maturities range from one year to 30 years. There are three groups of bond maturities:
• • Short-term (Bills): Maturities less than 1 year
  • Medium-term (Notes): Maturities between 1 and 10 years
  • Long-term bonds (Bonds): Maturities greater than 10 years. Most bonds are 30 years or less, but bonds have been issued with maturities of up to 100 years. Some bonds never mature (perpetuities).
• the "coupon" or "nominal yield," effectively the interest rate
• whether the interest rate is fixed or floating
• whether the lender can force the borrower to buy back the bond before maturity (which is often called an embedded put option).
• whether the borrower can pay back the bond at any time before the maturity date (which is called prepayment, or an embedded call option).

The rights of a particular bond issue are specified in a written document, called an "indenture". In the U.S. federal and state securities and commercial laws apply to the enforcement of those documents, which are construed by courts as contracts. Those terms may be changed while the bonds are outstanding, but amendments to the governing document often require approval by a majority vote of the bondholders.

Interest is paid on the first "coupon date" and subsequently on coupon dates at regular intervals, assuming the issuer has the money to make the payments on those dates. If all interest ("coupon") payments have not been made when due, and so are in arrears, the issuer must also pay those back-due amounts when it redeems the bond, in addition to the principal ("face") amount.

Callable

The bond may have a "call" provision that allows the issuer to pay back the debt (redeem the bond) before its nominal maturity date. When there is no such provision requiring a holder to let the issuer redeem a bond before its maturity date, the issuer may offer to redeem a bond early, and its holder may accept or reject that offer.

There are three broad categories of callable bonds.

• A "European callable", one with a European-style contract, can only be called on one specific date.
• A "Bermudan callable" can be called on several different dates (usually coinciding with coupon dates).
• A "US" or "American callable" can be called at any time until the option matures.

The European option can also be considered to be a type of Bermudan option, with only one call date.

Bonds can also carry "put options", which allow the investor to sell the bonds back to the issuer at par value on specified dates.

• Convertible bonds or convertible debentures are those that can be converted into some other kind of securities, usually common stock in the corporation that issued the bonds.
• Fixed-rate bonds, where the interest rate remains constant throughout the life of the bond.
• Floating-rate bonds, with a variable interest rate that is tied to a benchmark such as a money market index. The "coupon" is then periodically reset, normally every three or six months.
• High-yield bonds are bonds that yield more than investment grade bonds. The usual reason a company has to pay more interest on their debt is that the company has poor credit rating, which means it is considered a high risk investment. Bonds with a poor credit rating are sometimes known as junk bonds. Junk bonds of companies that previously had higher credit ratings are sometimes known as fallen angels. Other companies have lower credit ratings because they are relatively unknown and haven't established enough of a track record to qualify for lower interest loans. Equity techniques are often used for the analysis of high-yield bonds, as they tend to share more characteristics than investment grade bonds. Different credit analysis techniques, such as researching the covenants of the bonds, are also considered much more important than with investment grade bonds.
• Zero-coupon bonds, which do not bear interest, as such, but are sold at a substantial discount from their par value. The bondholder receives the full face value at maturity, and the "spread" between the issue price and redemption price is the bond's yield. (Series E savings bonds from the U.S. government are zero-coupon bonds.) Zero-coupon bonds may be created from normal bonds by finance institutions "stripping" the coupons (the interest part of the bond) from them - that is, they separate the coupons from the principal part of the bond and sell them independently from each other.
• Inflation-indexed bonds, in which the principal (or "face" value) is indexed to inflation, which causes higher interest payments (interest is calculated as the coupon rate multiplied by the principal amount). TIPS (Treasury Inflation-Protected Securities) and I-bonds are examples of inflation indexed bonds issued by the U.S. government.
• Securitized bonds whose interest and principal payments are backed by an underlying cash flow from another asset. For example, if a credit card company needs immediate cash to lend to credit card holders, they can issue a bond that is backed by the credit card payments. Another large market of securitized bonds are mortgage backed debt.
• Subordinated bonds are those that have a lower priority than other debts of the issuing corporation, so if there is not enough money to pay all the company's debts, the "senior" (higher-priority) bonds are paid first, and the subordinate bonds are paid out of what money, if any, is left. These priority levels are called 'tranches', and many bonds have more than two. In some cases, the tranches don't determine whether a bond holder will be paid, but rather how fast they will be paid. For example, if the bond is a mortgage, the senior tranche might receive any funds that are prepaid by the debtor.
• Perpetual bonds are also often called annuities. The most famous of these are the UK Consols, which are also known as Treasury Annuities or Undated Treasuries. They have no maturity date and still trade today despite, for example, dating to 1888 for the specific Consols known as the Treasury 2.5% Annuities. The concept of perpetual bonds also serves a useful purpose in that it represents an extreme case of a bond having only a cash flow and no re-payment of principal, being the theoretical opposite in many ways of a Zero-coupon bond which has no cash flow during the life of a bond and has only a re-payment of principal against a purchase price at a discounted par value. Perpetual bond concepts thus serve an extremely useful purpose, along with Zero-coupon bond concepts, for estimating the volatility of many other bond types having characteristics falling between the extremes of perpetual bonds and Zero-coupon bonds under conditions of variable yields, variable maturity dates, and variable basis point shifts that may occur during the life of a bond.

By issuer

• Government bonds ("sovereign bonds"), are issued by national governments.
• • Germany. Bunds are bonds issued by the German government.
  • United Kingdom. Gilts are bonds issued by the government of the United Kingdom in sterling.
  • US. Treasury bonds.
  • Municipal bonds are issued by local governments in the US.

Bonds are bought and traded mostly by institutions like pension funds, insurance companies and banks. Most individuals who want to own bonds do so through mutual funds. Still, in the U.S., nearly 10 percent of all bonds outstanding are held directly by households.

Bonds are generally viewed as safer investments than stocks, but this perception is only partially correct. Bonds do suffer from less day-to-day volatility than stocks, and bonds' interest payments are higher than dividend payments that the same company would generally choose to pay to its stockholders. Bonds are liquid -- it is fairly easy to sell one's bond investments, though not nearly as easy as it is to sell stocks -- and the certainty of a fixed interest payment twice per year is attractive. Bondholders also enjoy a measure of legal protection: under the law of most countries, if a company goes bankrupt, its bondholders will often receive some money back, whereas the company's stock often ends up valueless. However, bonds can be risky:

• Bonds incur interest rate risk, meaning they will decrease in value when the generally prevailing interest rate rises. This happens to all fixed-rate bonds, no matter what company or government issues them. When the market's interest rates rise, then the market price for bonds will fall, reflecting investors' improved ability to get a good interest rate for their money elsewhere -- perhaps by purchasing a newly issued bond that already features the newly higher interest rate. This drop in the bond's market price does not affect the interest payments to the bondholder at all, so long-term investors need not worry about price swings in their bonds.

However, price changes in a bond immediately affect mutual funds that hold these bonds. Many institutional investors have to "mark to market" their trading books at the end of every day. If the value of the bonds held in a trading portfolio has fallen over the day, the "mark to market" value of the portfolio may also have fallen. This can be damaging for professional investors such as banks, insurance companies, pension funds and asset managers. If there is any chance a holder of individual bonds may need to sell his bonds and "cash out" for some reason, interest rate risk could become a real problem. (Conversely, bonds' market prices would increase if the prevailing interest rate were to drop, as it did from 2001 through 2003.) One way to quantify bond risk is in terms of its duration.

• Bonds can become volatile if one of the bond rating agencies like Standard and Poor's or Moody's upgrades or downgrades the credit quality of the issuing company or government. A downgrade can cause the market price of the bond to fall. As with interest rate risk, this risk does not impact the bond's interest payments, but puts at risk the market price, which affects mutual funds holding these bonds, and holders of individual bonds who may have to sell them.
• A company's bondholders may lose much or all their money if the company goes bankrupt. Under the laws of the United States and many other countries, bondholders are in line to receive the proceeds of the sale of the assets of a bankrupt company ahead of some other creditors. Bank lenders, deposit holders (in the case of a deposit taking institution such as a bank) and trade creditors may take precedence.

There is no guarantee of how much money will remain to repay bondholders. As an example, after an accounting scandal and a Chapter 11 bankruptcy at the giant telecommunications company Worldcom, in 2004 its bondholders ended up being paid 35.7 cents on the dollar.

• Some bonds are callable, meaning that even though the company has agreed to make payments plus interest towards the debt for a certain period of time, the company can choose to pay off the bond at once. This creates reinvestment risk, meaning the investor is forced to find a new place for his money, and the investor might not be able to find as good a deal, especially because this usually happens when rates are falling.
  
  From Wikipedia, the free encyclopedia.

In Islamic economics, green economics and a few other types of economics, there are theories that argue the overall impact debt can cause to ecosystems and society is so negative that bonds should never have legal status.

These theories are all part of a larger economic category called creditary economics. In creditary economics there is no creditor, only a joint investor or partner. Parts of this same belief still exists in Western finance and legal precedents today. You will find them in places like usury laws, mortgage laws, and also in perpetual bonds.

When perpetual bonds were sold in the late Middle Ages, they were not sold as debt, but instead as an income stream or annuity instrument. Investors who brought these bonds were buying a future income instead of lending money. By this thinking, no interest was paid on perpetual bonds, despite the existence of a yield for such financial instruments.

We all have goals, some are small and other are big. When it comes down to it, some of us will reach our goals and others will not. More often than not, it will come down to the amount of time spent.

The importance of time management echoes through most self help guides and mentoring programs. Without enough time, you will fail.

Saving money

To be able to save a decent amount of money you need to spend time organizing a budget or finding the cheapest option.

Investing money

Time needs to be spent researching the options and watching the news. The best informed can make the best investment decisions, but this takes time for research.

Obtaining a high paying job

To get a top job, you need to spend the time studying and learning about the industry. You can not get there overnight, but with time and persistence, you can.

Playing a musical instrument

I have seen musicians fail and succeed and it comes down to how much practice was done. Some people would only play half an hour a day, while the top players would spend over 3 hours playing.

Website development

To make a successful website you need to spend time developing content and understanding your visitors requirements.

The only way to achieve your goals is to spend time on them. More time spent means more chance of success, so you should be putting in more time than your opponents or competitors. Organize your time, and success will follow.

In simple economies, there is little distinction between savings and investments. One saves by reducing present consumption, while he invests in the hope of increasing future consumption.

Therefore, a fisherman who spares a fish for the next catch reduces his present consumption in the hope of increasing it in the future.

Most of the people probably have savings accounts with ATMs to access their hard-earned cash and be able to store away any extra cash in a place a little safer than a mattress. A few of you may even have some stocks or bonds.

Let me explain why while a savings account in the bank may seem like a safer place than the mattress to store your money, in the long-term it is a losing proposition!

If you open a savings account at the bank, they will pay you interest on your savings. So you think that your savings are guaranteed to grow and that makes you feel extremely good!

But wait until you see what inflation will do to your investment in the long-term!

The bank may pay you 5 percent interest a year on your money, if inflation is at 4 percent though, your investment is only growing at a mere 1 percent annually.

Saving and investing are often used interchangeably, but they are quite different!

Saving is storing money safely, such as in a bank or money market account, for short-term needs such as upcoming expenses or emergencies.

Typically, you earn a low, fixed rate of return and can withdraw your money easily.

Investing is taking a risk with a portion of your savings such as by buying stocks or bonds, in hopes of realizing higher long-term returns.

Unlike bank savings, stocks and bonds over the long term have returned enough to outpace inflation, but they also decline in value from time to time.

The rate of returns and risk for savings are often lower than for other forms of investment.

Return is the income from an investment.

Risk is the uncertainty that you will receive an expected return and preservation of capital.

Savings are also usually more liquid. That is, you may quickly and easily convert your investment to cash.

The decision about which investment to choose is influenced by factors such as yield, risk, and liquidity.

Investments may produce current income while you own the investment through the payment of interest, dividends or rent payments.

When you sell an investment for more than its purchase price, the profit is known as a capital gain, also called growth or capital appreciation.

Whether you are a first-time investor or a savvy investment guru, know that mistakes happen. The key to avoiding mishaps is to keep on top of investment rules, tax codes and annual reports.

Instructions

• STEP 1: Study. Read financial news, personal-finance magazines, corporate annual and quarterly reports, proxy statements, registration statements and prospectuses.
• STEP 2: Develop goals and strategies for meeting your goals and for picking stocks and other investments. Ask for professional advice in these areas if you are uncomfortable.
• STEP 3: Diversify. Avoid putting large portions of your portfolio in a single stock or industry.
• STEP 4: Take advantage of tax breaks. Your employer might offer a 401(k) plan. If not, you might be able to set up an Individual Retirement Account or, for self-employed people, a Keogh plan.
• STEP 5: Buy stocks that you will want to keep for three to five years. Remember that "good" stocks at unrealistically high prices are a bad buy.
• STEP 6: Invest in what you know. Conversely, avoid buying stocks in industries and companies with which you are unfamiliar.
• STEP 7: Shop for total value. That means learning to calculate key financial figures such as price-earnings ratios so that you can compare one stock with others.
• STEP 8: Resist fads. If everyone is buying gold, variable annuities or some other faddish investment, watch out. The herd soon will change direction.
• STEP 9: Know when to fold. Your objective may be to hold a particular stock or mutual fund for three to five years, but if it appears to be on terminal descent, bail out.

Tips & Warnings

• Know your appetite for risk. 
• Avoid putting all your money in individual stocks. Consider mutual funds, bonds, money market accounts and other instruments as well.

Evaluate a number of factors before you decide it is time to sell some of your shares.

Instructions

1. Consider selling if the price has dropped substantially or remained stagnant for several months.

2. Think about selling if the price has risen to or beyond a target that you established when you bought the shares.

3. Note whether the company's fundamentals remain strong..

4. Evaluate earnings trends, management changes, revenue growth and other basics to determine whether fundamentals are sound. Even if the share price is sluggish or, for that matter, has hit new highs, you might want to hang on to the shares if fundamentals remain sound and growth prospects look good.

5. Visit your public library's business reference section and review reports by Standard & Poor. Do they project no price appreciation for the shares?

6. Consider changes in the competition. If an effective new player or several hot new players have entered the market, your share growth prospects could be in jeopardy.

7. Think about the company's product line. If the company depends on one product alone and has no plans of broadening its base, perhaps you should think about selling.

Tips & Warnings

• Consider the tax consequences of selling shares. If you have taxable capital gains, you might want to take some losses to reduce your taxes.

A bond with no maturity date. Perpetual bonds are not redeemable but pay a steady stream of interest forever. Some of the only notable perpetual bonds in existence are those that were issued by the British Treasury to pay off smaller issues used to finance the Napoleonic Wars (1814). Some in the U.S. believe it would be more efficient for the government to issue perpetual bonds, which may help it avoid the refinancing costs associated with bond issues that have maturity dates.

Since perpetual bond payments are similar to stock dividend payments - as they both offer some sort of return for an indefinite period of time - it is logical that they would be priced the same way. The price of a perpetual bond is therefore the fixed interest payment, or coupon amount, divided by some constant discount rate, which represents the speed at which money loses value over time (partly because of inflation). The discount rate denominator reduces the real value of the nominally fixed coupon amounts over time, eventually making this value equal zero. As such, perpetual bonds, even though they pay interest forever, can be assigned a finite value, which in turn represents their price.

Have you ever heard co-workers talking around the water cooler about a hot tip on a bond? We didn't think so. Tracking bonds can be about as thrilling as watching a chess match, whereas watching stocks can have some investors as excited as NFL fans during the Superbowl. But don't let the hype (or lack thereof) mislead you. Both stocks and bonds have their pros and cons, and in this article we will explain the advantages of bonds and why you might want to include them in your portfolio.

A Safe Haven For Your Money

Those just entering the investment scene are usually able to grasp the concepts underlying stocks and bonds. Essentially, the difference can be summed up in one phrase: debt versus equity. That is, bonds represent debt, and stocks represent equity ownership. (If you are unfamiliar with the differences between these two securities or need a quick refresher on the subject, check out the stock and bond tutorials.)

This difference brings us to the first main advantage of bonds: in general, investing in debt is safer than investing in equity. The reason for this is the priority that debtholders have over shareholders. If a company goes bankrupt, debtholders are ahead of shareholders in the line to get paid. In a worst-case scenario such as bankruptcy, the creditors (debtholders) usually get at least some of their money back, while shareholders often lose their entire investment.

In terms of safety, bonds from the U.S. government (Treasury bonds) are considered "risk-free". (There are no stocks that are considered as such.) If capital preservation - which is a fancy term for "never losing any money" - is your primary goal, then a bond from a stable government is your best investment. But keep in mind that although bonds are safer as a general rule, that doesn't mean they are all completely safe. Very risky bonds are known as junk bonds. (Learn more by reading Junk Bonds: Everything You Need To Know.)

Slow and Steady - Predictable Returns

If history is any indication, stocks will outperform bonds in the long run. However, bonds outperform stocks at certain times in the economic cycle. It's not unusual for stocks to lose 10% or more in a year, so when bonds comprise a portion of your portfolio, they can help smooth out the bumps when a recession comes around.

There are always conditions in which we need security and predictability. Retirees, for instance, often rely on the predictable income generated by bonds. If your portfolio consisted solely of stocks, it would be quite disappointing to retire two years into a bear market! By owning bonds, retirees are able to predict with a greater degree of certainty how much income they'll have in their golden years. An investor who still has many years until retirement has plenty of time to make up for any losses from periods of decline in equities.

Better Than The Bank…

Sometimes bonds are just the only decent option. The interest rates on bonds are typically greater than the rates paid by banks on savings accounts. As a result, if you are saving and you don't need the money in the short term, bonds will give you the greatest return without posing too much risk.

College savings are a good example of funds you want to increase through investment, while also protecting them from risk. Parking your money in the bank is a start, but it's not going to give you any return. With bonds, aspiring college students (or their parents) can predict their investment earnings and determine the amount they'll have to contribute to accumulate their tuition nest egg by the time college rolls around.

How Much Should You Put Towards Bonds?

There really is no easy answer to this question. Quite often you'll hear an old rule that says investors should formulate their allocation by subtracting their age from 100. The resulting figure indicates the percentage of a person's assets that should be invested in stocks, with the rest spread between bonds and cash. According to this rule, a 20 year old should have 80% in stocks and 20% in cash and bonds, while someone who is 65 should have 35% of assets in stocks and 65% in bonds and cash. That being said, guidelines are just guidelines. Determining the asset allocation of your portfolio involves many factors including your investing timeline, risk tolerance, future goals, perception of the market and income. Unfortunately, exploring the various factors affecting risk is beyond the scope of this article.

Conclusion

Hopefully, this article has cleared up some misconceptions about bonds and demonstrated when they are appropriate. The bottom line is that bonds are a safe and conservative investment. They provide a predictable stream of income when stocks perform poorly, and they are great vehicles for saving when you don't want to put your money at risk.

Every day there are a dozen new HOT sharemarket tips that guarantee your financial success. Every day there are hundreds if not thousands of people that jump on the bandwagon, and every day, each of those people are disappointed.

When it comes to popular sharemarket tips, there is no golden ticket to striking it rich. So I'm going to show you how to make your own HOT guidelines that will ensure you stay on the right course-the one that leads to success.

Share Market Tip #1: Play Your Game

Develop a set of rules that you can follow. Whether they include some of the tips in this article or are strategies you've always lived by, STICK WITH THEM. An inconsistent, but more importantly an undisciplined trader will never make a profit. Chasing share market tips won't make you money. Your rules are your money. Again, there will always be hot share market tips that ensure success, but if you continue to whole-heartedly practice your own tips, you'll see profits in no time.

Share Market Tip #2: Control Your Risk

There are many adventurous traders out there…and those are the ones that loose their fortunes. If you always look out to protect your capital base you'll ensure your financial safety. Now one of the most important share market tips I can give you is to continue to let that capital base grow. That way, even if all of your investments fail, you won't be jeopardizing your previous profits. As a general share market tip, never risk more than 3% of your portfolio on any one trade.

Share Market Tip #3: The High Road in Cutting Your Losses

Things happen. People lose money…LOT'S of money. So don't be one of them. Basically this share market tip means don't be stupid. If one of your investments turns sour don't stick around hoping it will right itself. Have a set target loss percentage where you can cut and run. Again, it's about being disciplined, remember? Set it no higher than 15% of your opt in, and you'll have a save exit with every trade.

Share Market Tip #4: The Sky's the Limit

In contrast to Share Market Tip #3, if a share is rising beyond belief, don't jump out in fear of it suddenly falling back to reality. Instead, ride it out as long as humanly possible. This is how the biggest and most talked about gains are made-this is how FORTUNES are made. This share market tip will ensure that you give yourself the best chance possible of striking that gold mine. Now if the share does in fact start to fall, go ahead and opt out. It'll be worth more to you to risk that little loss in the end for that huge gain you'll make.

Share Market Tip #5: Back to School

You know the saying, “Learn one new thing every day?” Do it. Seriously. Our share market is ever-changing, diversifying, and adjusting, and YOU need to do your homework. It takes a lot to stay on top of it all. So if you come across something that you're not familiar with just look it up. If you think you know it all…go LOOK for something. One of the easiest ways to accomplish this share market tip is to know all of the trading vocabulary. That's also the easiest way to ensure you're prepared to take on any obstacle that comes your way.

Share Market Tip #6: How to Bring Your “A” Game

Share market trading isn't only about successful financial advancements. Well actually it is, but you're not going to be able to do that every day if you don't have the emotional strength to pull it off. This stuff is supposed to be fun. If you're not at your best psychologically, you're not going to be focused, you'll make poor judgments, and most importantly you won't make money. Just think about the meaning of this share market tip. If you're enjoying yourself, it's no longer work, so you are free to “work” in a mentality that will, in fact, play to your strengths…and wallet.

Share Market Tip #7: Staying Above the Curve

You don't have to make a fortune with every trade you make. You don't have to become a millionaire at the end of every trading day. Here's share market tip #7: You won't. The people that shoot for that glory every day are the ones that are losing fortunes, not making them. What you need to do is play above the curve. Don't be average, but don't be extraordinary. Extraordinary has WAY too many risks to worry about. Fortunes are made gradually. It takes discipline and consistency…something the “average” trader lacks. 

We all have a different style when it comes to our relationship with money. I'm not talking about your fears or stories about money. Your fears are a whole other box of worms. When I refer to style, I mean how you would relate to money if you had never been influenced by another persons style or fears.

Dominant type of people are really driven to make money and use it to please themselves. They like to buy nice cars. They go after money and success with intense passion. When they set a money goal they know they'll get it. Once they get that money, they are reaching for more. They are generous with money but do not like people to take advantage of them. Competition is fun to them. Dominant styles think it is easy to make money and can't understand why everyone else doesn't think this way, too. They are willing to take risks and do not hesitate very long when making decisions about investments. When they desire a certain price on something they will negotiate down. Watch out, they may not bend. Give them the bottom line price up front and you'll save a lot of time and frustration for them and yourself!

Influencing and promoter type of people are excited to make and spend money. If the path to the money is not fun, they will take a right hand turn. When they are in the zone, they will seem to magnetize money in very interesting ways…ways that other people would doubt. They don't think before they buy. They see something they want and they usually go for it, even it breaks the bank. They make a plan but many times they completely forget about when a bright shiny object in a store window catches their eye. Details, details, yuck! Have you ever heard of the terms "shop-o-holic and impulsive"?

Steady and supporter type people like to be slow to their decisions. They will usually let their mate make investment decisions if they are a different style. They are very consistent with their practices and are not thrilled with big risks…they'd rather be patient and watch their money grow over time. Their purchases are more on the practical side.

Analytical type people are very calculated about what happens with their money. By the time they choose to do something, whether it's a purchase, creating a business or an investment, they have created a very thought out a plan. If the choice seemed like a risk before they did their research, it is now a safe bet. They've checked out all the possible down falls of their choice and have a back up plan. Spontaneous with their money? Not! If they are making a purchase, it will last them a long time.

Which style are you?

None of these styles is better than another. Each of them does, however, have a shadow side. For instance, an analytical style might get in so much fear about losing their money that they never make a move or go after a dream. A promoter style might spend every penny they have with no money in savings. A dominant style may use their money as manipulative tool. A steady person may get stuck in a rut and fear change that is to their benefit. It is important to know your natural style and work with it, not against it. It is good to implement some traits from other styles, when you see that yours is hindering you. But always stick to your values, no matter what advice you get or read. Remember that everyone has their own style and what works for you may not be tolerable for your mate or business partner. This is where blending styles becomes important. Stay compassionate to other's needs when communicating or taking action with money.

No doubt, investing your hard-earned money is a risky business. Sure, there are investments that look like they don't carry huge risk of failure, but these won't get you huge amounts of dough. Remember -- huge risk comes with huge returns. And if you're properly informed as to the basic terms and principles of investing, chances are you'll lead yourself into financial security.

That said, why should you invest? Here are a couple of good reasons:

1. Have your money make more money for you -- and you won't have to lift a finger. Sounds great? Of course it is. It's just that some people can't afford to keep away their money, and spend them a short time after they earn it. Learn to save and invest some.
2. Beat inflation. If you wisely invest your money in places or products that give a return that surpasses the rate of inflation, your future finances are in good hands. Many experts agree that over the long term, investing in the stock market will give you returns that beat inflation.
3. You have a business? Investments are crucial to any business, whether small or big. Lessons in investment are also lessons in owning and maintaining a business -- learning the risks involved, choosing the risks to take, and keeping an eye out for lucrative opportunities. So investing doesn't just help you grow your capital and expand your business; it also teaches you how to become a successful businessman.
4. You have a family? Raising a family is hard, especially with all the costs you have to face day in and day out -- the house mortgage, the family car, appliances, and so on. The initial effort of investing part of your monthly salary can yield large sums of money later on. You can use these returns to pay the bills or buy something for your family -- even a vacation!
5. You’re in school, or paying for someone who’s in school? Education is one of the most profitable investments you can make. Tuition fees can shoot up through the years, so it's wise to be ready to support someone’s studies in the long-term. Investing in a good educational plan is a good move.
6. Assure yourself of a good future. Even if you're still young, it's better to think ahead than be sorry. Have enough money when you retire by making long-term investments. You'll be surprised to see how much you'll earn through the years, or even the decades.
7. Investing isn't that hard to do. You don’t even need to hire a professional to manage your finances -- you can do it yourself! First thing you need to do is get over the intimidation factor. Then, familiarize yourself with all the jargon and procedures, and study the various places where to invest your money.

There are many more reasons why you should invest, and you'll get to learn more about them when you take the first steps and start exploring your investment

Many beginner investors always start asking this question and it is good to know the difference. Bonds and shares are quite different when compared by their risk, returns and payouts.

What are bonds?

Bonds are a form of debt, where the owner of the bond is the lender. A bond is a contractual loan that is made between institutions and investors. In return for the financing though the bond, the institution pays a premium for the borrowing. This is premium is known as a coupon.

When the bond matures, the bonds face value is returned to investors. This payback and coupon payments can only occur if the borrowing institution has sufficient cash flow.

What are shares?

Shares (or stock) signifies ownership of a company and are brought on share markets (or stock exchange). They allow investors to profit from the companies growth and revenue. As a company performs well and profit increases, the share price of a company rises, increasing the value of an investors holdings. There are no promises or guarantees on the return of the initial amount of investment.

Are bonds or shares better?

This depends on the amount of risk and the rate of returns you are expecting.

Shares have:

• Higher returns

• Higher risk

• No guaranteed return

• Part company ownership

• Unlimited return from rising share price

Bonds have:

• Lower returns

• Less risk

• Periodic Payment structure

• Set time frame

• Set rate of return

• Company guarantees return

Although shares have a higher risk, most investors find a combination of shares and bonds to be a good bet. This allows investors to diversify their investments, giving some safety through bonds while leaving the opportunity open for higher returns from shares.

One of the visitors to this website raised the question "Is the stock market affected when Standard and Poors downgrades a rating?"

The simple answer to this is Yes, but it can vary to some degree.

What is a credit rating?

A credit rating evaluates the credit risk of an individual, corporation or country. It tells lenders the probability of a borrower being able to pay back money. For corporations, this credit rating tells investors how risky it is to invest in a corporation.

Corporations and businesses can thrive because of debt. Debt is used to fund growth, buy other companies and make major investments. By using debt, companies are no longer limited to the amount of money they have but rather the amount of money that they can borrow.

A credit rating takes into account all the income and outstanding debt of a company. A high or good credit rating means that a company is likely to pay back all of their debts and loans. A low or bad credit rating means that the company is not as likely to pay back all their debts and loans.

How does a credit rating affect the stock market?

A credit rating helps investors to know the risk that they are taking. More return should be expected on higher risk investments to help out way the risk.

When a credit rating is lowered it is telling investors:

• Less money is available to the company

• A possible lower return

• More risk

• Not worth as much

The opposite applies when the credit rating is raised:

• More money is available to the company

• A higher possible return

• Less risk

• Worth more

These items have a direct effect on the stock market price.

Money, it is something that we can not live without. Although having a lot of money does not mean you will be happy, it does mean that you have one less problem to worry about. There are many problems in life that can be fixed with money. Problems with cars, TVs and houses can all be fixed with money. How can you grow you net worth so that you have money to spend on what you consider important?

Spend less than you earn

Although this is a simple idea, there are many people who struggle with this. It is also the most important step to growing your net worth. When you spend more than you earn, your finances are effectively going backwards. Spending too much will eat into your saving and push you further into debt. Once you can spend less than you earn you can work on growing your net worth further.

Increase your income

This is something that we would all like and it is easy when you set your mind to it. The first way to do this is to work harder, make sure that you are the rising star among your co-workers. If this is not possible, think about studying to get more qualifications. Qualifications are proof that you can do the job and are often a doorway to higher pay. If both of these are not an option, try just simply asking for a pay rise. I have met many people who have never been given a pay rise as they have never asked for one.

Save and invest your savings wisely

Once you have a small nest egg in the bank account you want to work on growing that nest egg. If you have not invested money before I would advise you to look at doing night classes to learn about reading the financial sections of annual reports. This will help as I am sure you have heard the saying “If it sounds too good to be true, It is”. Pick sound and reliable investments that have the top ratings.

Get out of debt

Unless you are buying your first house or borrowing money to study, being in debt is stupid. It is setting you up to suffer in the long term. When you are in debt you will often be paying for things many times over.

Cut down on expenses

If you really want to get your savings going, this is one of the best methods. Stop buying the things that you do not need. Do you really need a brand new car, to buy all that junk food or to drink so much?

Never gamble

If there is a sure way to make sure that your net worth is not going to grow, it is to gamble. Instead of gambling save your money. You will be surprised with just how much you have been spending. Many people could have been rich if they saved their money but spent it all (ironically) trying to win themselves rich.