Equity Market is a financial term that refers to any open trading market of stocks, bonds, derivatives, or any other number of financial investment instruments.  An equity market is more commonly referred to as a “stock market”.  Various equity markets operate throughout the world and have become a key process of modern business ownership.  A stock is a small ownership stake in a company.  

Globally, the value of all stocks and derivatives is currently estimated at over $800 Trillion.  The largest stock market in the world is the New York Stock Exchange.  The following are just some of the world’s stock exchanges:

1. The Toronto Stock Exchange (Canada).

2. The Amsterdam Stock Exchange.

3. The London Stock Exchange (Britain).

4. The Tokyo Stock Exchange (Japan).

5. The Hong Kong Stock Exchange (People’s Republic of China).

On each stock market, stocks are listed and traded on a daily basis.  Individual people, investment companies, or other corporations can freely exchange stocks, usually at the prevailing price at the time of sale.  Other forms of trading can also occur, including short selling, margin buying, or any number of methods of buying, selling, and trading stocks.  

In order to invest in a stock market, you must be registered with the exchanged or employ a broker to trade on your behalf.  

1. Traditionally, brokers have been brick and mortar institutions that required their clients to physically contact a broker to place orders on the stock market.  

2. New technology has lead to the proliferation of online brokerage accounts, which allow clients to access their accounts anywhere in the world and seek trades at any time from their computer.  

Physical exchanges, such as the New York Stock Exchange, exists in a centralized location and requires floor brokers to enter orders and work with other brokers in order to establish trades for their clients.  Now, virtual stock exchanges are possible, such as the NASDAQ, where all trades occur over a connected computer network.  This still requires that brokers trade the stocks, however they no longer are in a centralized location.  

In order to get listed in an equity market, a business must “ go public”.  Going public refers to the selling of stock in the company to the general public, which raises money for the company while diluting ownership to numerous stockholders.  In order to get listed, a company must do the following:

1. First, the company must conduct a process of “due diligence”, in which all aspects of the company are investigated to determine an accurate value.

2. Once a value is assigned, a specific number of shares are sold through an “Initial Public Offering”, in which the stocks are sold at an initial price.

3. Once the IPO is initiated, the company goes public on an opening date, in which its stock value will go up and down according to the daily trading value.   

When you are planning for the future, or just trying to eliminate unnecessary expenses, it is important to start and manage a budget.  A great tool for doing so is to use budgeting software.  Budgeting software comes in all shapes and sizes.  There are many free online budgeting software applications that an individual, family, or business can use through the internet in helping to formulate a budget.  

Exceptional free budgeting software such as Quicken Online can help you develop a budget and maintain your finances and even directly input your bank account and credit card information automatically.  Quicken Online will also let you view this data including your expenses, income, investments and retirement data through the use of charts and graphs.

When you have complex financial information coming in you may want to opt for budgeting software that does a little more.  Quicken offers a number of budgeting software choices that are specifically tailored to what your needs are.  The price ranges for budgeting software can vary from $50 to $200 for individuals with higher needs.

Quicken offers a number of products including Quicken Deluxe, Quicken Premier, Quicken Home & Business, and Quicken Rental Property Manager.  

Quicken Deluxe is the basic budgeting software offered by Quicken and allows the consumer to track assets in bank accounts, credit cards, investment and retirement accounts at once.  The program will automatically update information from those accounts for easy access so that you do not have to go searching through all of your accounts to find out the status of your income and investments.  Quicken Deluxe will also help you to categorize your financial transactions and reduce your debt over time.

More complex and expensive, budgeting software includes Quicken Home & Business.  This program has all the advantages of Quicken Deluxe and Quicken Premier but also compiles and categorizes data relating to both personal and financial finances.  The Home & Business budgeting software will also find tax deductible business expenses by looking through your financial data.  In addition, the budgeting software will create cash flow and profit/loss reports and charts to help you manage your business and assets.

Budgeting software is a vital tool in today’s complex society.  The amount of bills, expenses, and income that a person, and especially a business, deals with on a monthly basis can be overwhelming.  Budgeting software can save you time and accurately report your finances to help you save money and eliminate unnecessary expenses.  The cost of budgeting software may add up to $200 or more but it is often the case that the use of budgeting software will help you save more than that in a short period of time.

A dividend is a payment made to a shareholder of stocks.  A dividend serves as a share of profits the company is making and can be paid out on a scheduled basis or issued at the discretion of the executive board.  Typically, when a company earns profits over its operating costs, that money can be used to either reinvest in the company or be paid to the owners.  

High dividend stocks can return a high rate of income as the company pays out a large amounts per the price of the stock.  For example, some of the highest returning dividend stocks can return dividends as high as 20% of the stock purchase price.  These extremely high dividend yields are often difficult to predict, as the dividend is usually the result of an unforeseen increase in profits over a short period of time.  These extremely high dividend stocks are also usually high risk stocks, which may or may not be safe areas of long term investment.

Many blue chip stocks provide high dividend returns and provide a more secure place to invest over a long term period.  Many high profile stocks will return between 4% to 6% yearly on their investment.  These high dividend stocks are very unlikely to reach the dividend levels of higher risk stocks, however they provide a much more consistent and safer investment option.  

In order to best predict which high dividend stocks to invest in, it is important to understand the basic process of how a dividend is distributed.  

1. First, all dividends are at the discretion of the board of directors.  If a company becomes stagnant or loses money, dividends may be limited or not distributed at all.

2. In order to receive a dividend, you must own the stock before the ex-dividend date through the record date.  The time in between these dates can be a couple days to about a week.

3.  Payment of the dividend will be made on the payment date, which is often a few weeks after the record date.  

While high dividend stocks will often provide relatively quick returns on investments in the stock market, you must consider the tax consequences of these profits.  Currently, dividends are taxed according to the income bracket of the taxpayer and are taxed the same as any other source of income.  Tax rates can range from 10% for the lowest income bracket up to 25% for the highest taxable income bracket.  

Investing in high dividend stocks can provide a relatively safe and consistent source of investment income.  As most investment strategies call for, make sure to diversify you investment portfolio, using the numerous types of investment resources available.  High dividend stocks can play an important role in your investment portfolio.   

A Pell Grant is a government grant furnished by the United States Department of Education that helps students who could not normally afford the luxury of a secondary education, the opportunity to attend college or, in some cases, post-bachelors degree education.  

The federal Pell Grant helps 5.4 million individuals pay for college every year through the United States Department of education, which allots $17 billion a year towards  the funding of Pell Grants.  

The yearly allowance for funding for Pell Grants is a maximum of $5,550 dollars per student.  Prior to the 2011 amendments to Pell Grants a student who meets the hardship requirements under Pell Grant eligibility was permitted to receive two allocations of money per year for the funding of post-secondary education.  Under the new amendments that has decreased to one dispersement a year equal to $5,550.

Pell Grants were established by the United States Department of Education in 1965 as an aspect of the Higher Education Act of 1965.  The goal of the act was to supply those  individuals who would not normally be able to afford post-secondary education the opportunity to do so.  Pell Grants are unlike loans in that they do not need to be repaid.  They are considered to be the first step in post-secondary  education funding.  

In addition to Pell Grants a student attending post-secondary education will want to supplement the rest of their post-secondary education with student loans through the government and private institutions.  Lending through the federal government, through Sallie Mae will result in low interest rates whereas going through a private institution will result in higher interest rates and more difficult repayment plans.

When looking to fund post-secondary education you will want to first get your Pell Grant.  If you still need money to fund your annual post-secondary education tuition then you will want to analyze how much money you will need.  If the amount you will need to cover the rest of your annual education is low then the best option is to look for part time work.  You may also consider part time education and work a full time job.  The benefit of this is that you will not incur student loan debt.  Student loan debt can be overwhelming, especially for someone recently out of college who is having trouble finding acceptably paying employment in todays harsh employment environment.

If the money you need for post-secondary education is much more than is covered by the Pell Grant and any part time work you may want to consider a government loan.  You can apply for government loans, including your Pell Grant, through filling out a FAFSA application.  This will allow you to get the funding you need for your post-secondary education while paying a low interest rate upon graduation.  

There are two main types of government loans.  The first are subsidized and the second are not.  The subsidized loans are the first type you will want to get from the federal government’s department of education, through Sallie Mae.  The amount that will be allotted per student through subsidized loans is low, but usually allows around $12,000 per year.  The benefit of these loans is that they do not garner interest until the completion of your education.  For example, if you borrow $36,000 over 3 years for your college education starting in 2011 you will not be charged interest for the school years ending in 2012, 2013, and 2014., but upon your graduation in 2014, or if you leave your educational institution before graduation, then your interest will start accumulating.

In contrast, unsubsidized loans through the federal governments department of education will begin accumulating interest upon the time that  your loans are dispersed to you.  Because of this reason it is always beneficial for students to avoid unsubsidized loans through either the federal government department of education or through a private lending institution.  

Because of these reasons, when you are beginning your grant and loan process you should look to take advantage of the Pell Grant, and any other grants that you may be applicable for either through the state or federal government and private entities.  If you are ineligible for the Pell Grant or any other grant or scholarship, or that amount is deficient for your complete educational year, then you should apply for subsidized federal loans through the department of education.  Only if you need more funding should you even think about unsubsidized loans and those should be gotten through the department of education if at all possible.  Private unsubsidized loans should be your last resort.  

The process for qualifying for a Pell Grant requires some paperwork and the tracking down documentation and information pertaining to both you and your families income.  Individuals who are eligible to receive government funding for post-secondary education through a Pell Grant must meet certain requirements.  An applicant must be a  United States citizen, must not be in default on any other student loans through previous education, must not have been found guilty of any drug related offenses including possession, distribution or selling of a controlled substance and must be a high school graduate.  

If an individual meets these requirements then he, or she, will be eligible for a to apply for a Pell Grant through the United States Department of Education.  This is done by completing and filing, in a timely manner, a FAFSA application.  The FAFSA  form, or Free Application for Federal Student Aide may be downloaded  and printed from the  United States Department of Education website by going to www.fafsa.ed.gov.  

The FAFSA form will require you to input information including your income,and if you are a dependent, your families income; the cost of attendance of the educational institution; your status as a full time or part time student; and whether you will be attending post-secondary education for the whole year or on a semester basis.  You may only receive one Pell Grant for your  post-secondary education per year, no matter how many post-secondary institutions you may attend in that given year. You may only use a Pell Grant for your first bachelors degree or some post-bachelors degree education and license, such as teaching.  

By filling out the FAFSA form the department of education will properly be able to assess your need based on your, and your families, income.  The eligibility under FAFSA will also analyze your expected family contribution which is calculated based on your household income, number of students from the household in college, and your families net assets (not including 401ks).  

One exception to requiring a certain need to qualify for funding under the Pell Grant is if you are a child of a member of the armed forces who has fought, and died, in either the war in Iraq or Afghanistan.  This is limited to individuals who were 24 or younger at the time of their parents death and that death occured during those conflicts at or after September 11, 2001.  

In its current form, a FAFSA form will consist of 130 questions based on the student and families income and dependency.  None of the questions address the issue of race, religion, or any other aspect that may be considered to insinuate any other motive other than need based.

Under the 2011 amendments to FAFSA and Pell Grants there are a number of changes.  Under the current regulations, and as a result of the budget cuts of 2011, the amount of federal funds that the United States Department of Education is allotted to spend on Pell Grants has been cut by $5.7 billion.  This means that the average allotment per student will drop by $845 per student per year.  In addition, over 1.7 million students who are not eligible for the full amount under the previous legislation are cut out entirely from eligibility for Pell Grants.  

The purpose of a personal budget is to allocate income towards expenses, debts, and savings.  A personal budget will help you keep track of your financial status and using a number of resources to ensure that you are making sound financial decisions that will keep you from losing money, falling into bankruptcy and improving your net worth.

Making and maintaining a personal budget can be difficult and in many regards require a great amount of discipline. All individuals who you would consider “rich” did so; not because they have high paying jobs, although that helps, but because they managed their personal budget and income. Instead of spending their paychecks on short term, and material, benefits these individuals budgeted their income and invested their funds in assets that, over time, increased their wealth.

There are numerous tools that can be used for making a personal budget. There is the traditional paper and pen method but in today’s day and age it is almost essential that any tool used for making a personal budget be in the form of computer software.  There are a number of different options in this regard.  You can use spreadsheet software such as Microsoft Excel which will require you to manually input all data and is more of a “do-it-yourself” method.  You may also take advantage of management software for creating a personal budget.  This includes programs such as Quicken and Microsoft Money.  These programs will help you manage your personal budget and even automatically update your personal budget based on data from your bank accounts, credit cards, investments, and retirement accounts.  

A personal budget should have a goal that is achievable within a certain period of time.  When creating a personal budget it is always helpful to have a “light at the end of the tunnel.” If you set your goals too far away or you make them too unreachable the chances of you meeting your personal budget goals may be slim.

Your personal budget should also be simple and flexible.  You should have the ability to adjust your budget depending on certain circumstances.  If you find that you are spending an extra $100 a month on entertainment, over your budget, you should be able to simply remove that expense and without incurring any hardship.

There are a number of different philosophies on personal budgets.  MSN Money editor and chief Richard Jenkins created the “60% solution.”  What the “60% solution” does is allocate 60% of your gross income to fixed expenses such as mortgages, taxes, social security expenses, car payments, groceries, etc.  The other 40% is allocated, 10% a piece, to retirement, long-term savings, irregular savings, and “fun money.”

Another philosophy is to have a personal budget that includes spending only 25% of your budget on housing. 

One popular form of personal budgeting is a resource called envelope budgeting.  Envelope budgeting consists of placing the budgeted amount for each expense in an envelope.  Over the course of the month, as you deplete the resources in that envelope you will eventually come to one of two circumstances.  The first is that you have money left over, that should go into a savings account, or other long term savings plan.  The second is that you run out of money before the end of the month.  When this happens you will have the option of taking money from a different envelope reserved for a different expense or doing without the expense.

Whether seeking to begin investing or even after investing for many years, many people can benefit from investment advice.  The realities of investing are constantly changing and it takes constant attention and review to understand the changes in the markets and to learn effective investing strategies.  The following are some reasons to seek investment advice:

1. You are just beginning to invest and need to learn how, when, and where to invest your money.

2. You want to establish a retirement plan or a college fund for your children.

3.  You have recently obtained a large sum of money and want to put it to start earning you profits safely and effectively.

Investment advice should almost always be sought by an established professional who has a good track record helping clients invest profitably.  While you may think any advice can be helpful, investment advice is only helpful when it comes from a good source.  The following are some good sources of investment advice:

1. A Certified Financial Planner helps clients with all aspects of their personal or business finances.  These professionals advice often comes at a high price, however they can be a valuable resource for ensuring your finances are well protected and invested properly.

2. Your stock broker can be a good source of investment advice, especially if your stock broker has been involved in trading and investments for a long period of time.  However, you must be cautious , as your stock broker may persuade you to invest more actively, which would require more commission fees.

3. The internet can provide some good advice, however it can be very difficult to sort through the bad advice.  When looking for advice on the internet, always look in numerous places to substantiate claims.  Do not rely on a single expert, instead check with others to ensure you are investing safely.

There are several areas where you should be cautious when seeking investment advice.  

1. Always be cautious of insider trading issues that may arise if you obtain advice from corporate “insiders”.  And insider can be anyone who has information that can affect a stock price that is not public information.  If you are unsure whether you are at risk for insider trading, consult with a professional or err on the side of caution and do not act on this advice.

2. Ensure that a financial advisor is certified to provide such information.  An unlicensed and unqualified professional giving advice will often provide poor advice.  

3.  Always be cautious of investment advice from family members and friends who are inexperienced in investing.  Often, they will provide information that they think is good, but you cannot be sure of their source or even if they can provide good advice.

A Thrift Savings Plan is a retirement plan that is designated specifically for United States Civil Service employees, retirees and uniformed servicemen.  The Thrift Savings Plan is divided into three parts:  The Federal Employees Retirement System, Federal Employees Retirement System Annuity and Social Security.

The Federal Employees Retirement System is developed to mimic the 401(k) savings plan in the private sector.  Once an individual enters the United States Civil Service or the United States Armed Forces he, or she, is automatically enrolled in the Thrift Savings Plan.  In addition the Civil Servant or Serviceman is automatically vested in the thrift savings plan when they become active.

The Thrift Savings Plan allows for a maximum of $16,500 in annual contributions to the thrift savings plan.  There is an automatic 3% allocation of the individuals’ salary into the thrift savings plan yearly.  This is the default plan and a service member who wishes to allocate more must proactively do so.  In addition, if a member of the Civil Service or Armed forces is over the age of 50 they are eligible for “catch up” contributions.  This means that those eligible individuals may increase their yearly contributions by $5,500, allowing them a total allocation to the thrift savings plan of $22,000.  

The advantages of the thrift savings plan are much akin to a 401(k) in that the amount that is contributed to the plan is not taxed until it is taken out of the thrift savings plan in the future.  Another advantage is that the federal government contributes to the thrift savings plan by making an “agency automatic contribution.” The agency automatic contribution consists of an automatic dollar for dollar contribution to the individuals’ thrift savings plan up to 3% of the individuals’ contribution.  After the 3% threshold is met the federal government will match 50% of the individuals’ contribution up to 5% of the individuals’ salary.  Any amount contributed by the individual in excess of 5% of his, or her, salary will not be matched afterwards.

There are 10 investing options that a member of the Civil Service or Armed Forces will have in investing in their thrift savings plan.  These investments include 5 individual funds and 5 lifecycle funds.  These investments are in the form of trust funds that are managed by the Office of The Comptroller of the Currency.  If you are eligible to enter into a thrift savings plan then it is wise to discuss the various options with the appropriate personnel in the federal government

An investment banker is a professional who assists individuals, corporations, and government agencies to raise capital by underwriting or helping the issuance of securities.  An investment banker can provide services for mergers, acquisitions, market making, derivative trading, and commodities.

Investment bankers are very different from commercial or retail bankers, who take deposits from clients and function as a safe place to hold cash or other funds.  Instead, the investment banker focuses more on providing services in regards to the establishment and maintenance of securities.  In the United States, investment bankers and retail bankers were required by law to be separated by the Glass-Steagall Act of 1933.  However, a recent shift in policy in 1999 eliminated this separation.

Investment bankers will usually specialize in one of two areas of investment banking.  

1. Some investment bankers focus on facilitating transactions between stockholders and corporations through public or private stock exchanges.  

2. Other investment bankers focus on promoting securities, which requires the use of pension funds, mutual funds, hedge funds, and public investors.  

When seeking the services of an investment banker, you must look for the following characteristics:

1. First, ensure that the investment banker is properly licensed as a broker-dealer, subject to the rules of the SEC and FINRA regulations.

2. Select an investment banker who specializes with similar clients as you.  Some investment bankers will work primarily with large market cap corporations, while some work solely with small start-ups or individual investors.

3.  Choose an investment banker who typically works on either the buy side or sell side of investment transactions, depending on the services you are seeking.

Finding an investment banker that is right for you will require some research and work in order to assure your investment banker is qualified to handle your investment banking needs.  Investment bankers are often listed in banking directories or listings available through small business resources or even the internet.  

Seek recommendations from others in your line of work.  Typically, an investment banker will specialize in a certain area of business, so you can check with other similarly situated business people to determine what investment bankers they use and which they would recommend.

While investment bankers can work for investment firms both small and large, most business is conducted through the major global investment firms.  The following is a list of the world’s top five largest investment banks:

1. J.P. Morgan

2. Bank of America

3. Goldman Sachs

4. Morgan Stanley

5. Credit Suisse

The above investment banks provide all types of investment banking services that are sought by both individuals and companies.  While recent economic troubles have had a large effect on these banking institutions, their services are still needed through the financial world.  These firms employ thousands of investment bankers, who are often on multi-member teams aimed at helping both large and small companies.  

Investment management is a professional service which helps individuals and corporate entities handle their various securities holdings while trying to achieve specific financial goals through investment and savings.  Investment management can refer to both individualized management of securities or collective management of securities for cooperative financial instruments.  Cooperative financial instruments can include mutual funds, exchange traded funds, or even some large pension funds.  

Investment management professionals may specialize in some of the following areas:

1. Managers of collective or cooperative instruments.

2. Advisory or discretionary investment management, who typically work with high net worth individuals, providing specific advice for their large portfolios.  

3. Commercial investment management professionals, who work for large banks, helping both corporate and private clients manage their investment funds.

Understanding the process of investment management can greatly enhance how you select an investment manager that is right for you.  The following is a breakdown of how an investment manager can help the management of your assets:

1. Determining investment objectives and restrictions.  Your investment manager will work with you to understand what you want want to achieve through your investments and the restrictions you may face.  

2. Your investment manager will then work with you to determine what mix of financial instruments you should invest in, particularly to diversify your holdings to protect and make best use of your finances.  This step can vary greatly depending on the investing philosophy of the manager and the risks you are willing to make.

3. The investment manager will then actively seek out the stocks, bonds, and derivatives that compliment your investment strategy.  Securities can fluctuate greatly, so the type of investments may change depending when you are entering the market or the potential changes that may occur.

4. Once your plan is set and the proper instruments chosen, the investment manager will actively put your portfolio into effect, purchasing and trading for the correct mix of securities needed to create your investment portfolio.

5. From time to time, your portfolio will need to be modified, expanded, or contracted depending on changes in the market or changes in your financial situation.

When searching for investment management firms, it is important that you find one that has professionals that can meet your needs and has experience with other similar clients.

1. Look for investment management firms in banking listings, which can be found through banking institutions or even on the internet.  

2. Seek recommendations from similarly situated people or corporations who have used investment managers in the past.  Listen intently on the type of service they provide and whether they were happy with the service provided.

3.  Check with regulatory agencies, such as the SEC or FINRA, to determine if an investment manager has any complaints or investigations against them.  Avoid any investment management firm that has acted improperly in the past.  

Every investor should diversify their investments to manage risk.  This means investing in various assets across markets as well as different assets within the market and reducing the amount of investment in one asset to invest in another.

Hedging and diversifying are both risk management strategies in investing portfolios but have significant differences.  For one, hedging allows profitable investments to be leveraged against negative assets thus having the profitable assets compensate for losses on riskier investments.  Having insurance would be one example of hedging against a possible risk.  Diversifying is different in that the amount in an investment is reduced to purchase another investment, thus spreading risks through multiple investments.

For instance, in diversifying:

You own 50,000 shares of Stock A valued at $1 per share, for a total value of $50,000.

To diversify, you sell 20,000 shares of Stock A and use the $20,000 proceeds to buy shares in Stock B and C.  Stock B is valued at $2 a share and you buy 5,000 shares.  Stock C is valued at $.50 and you buy 20,000 shares.

You now have a diversified portfolio that manages risk by splitting the investments into three assets that will gain and lose value independent of each other.  Hedging compensates for risk through the sale of stocks from competitors or other relatively risk-free investments.

The simplest way to diversify is to buy other stocks strategically.  You will generally want to avoid stocks in an industry similar to the primary investment as losses generally spread through an industry as a result of news affecting the entire industry.  It is unlikely that all stocks in a diversified portfolio will fall but one single stock or stocks invested heavily in a specific industry possess significant risk for the typical investor.  It will sometimes be best to see the aid of a financial advisor if there are familiar with stocks that they can invest in to diversify their portfolio.  The financial advisor will also be able to determine “risk parity,” which is the comparative risk of all assets in the portfolio and suggest ways to improve parity to the benefit of the client.

Many studies have proven conclusively that most portfolios with multiple, diverse assets faced a lower standard deviation in annual returns, reflecting the relative stability diversity provides.  The more stocks in a diversified portfolio, the lesser the impact of the stock, negative or positive, on the overall portfolio.  Diversification of assets is almost certainly one of the best ways to manage risks outside of hedging, which will usually require the time and expertise of a financial advisor.

All investing carries risk and one should only invest when they understand these risks and have knowledge on their investment.  If the prospective investor cannot identify company or industry then there is no hope that the investor will be able to make an informed and ration investing decision.