Your Questions About Invest In Gold Stock

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Daniel asks…

What will happen to India if all foreign investors withdraw their investments in India and stop investing here?

I had invested in the Indian stock market,but as of late the investors from abroad as well as in India are shying away from the Indian market,in light of such continuing withdrawal and the Indian government doing jack shit to restore the Indian economy what would happen if all foreign investors including USA withdrew all their invested money in India and went some place else permanently then what would happen to Indian businesses and the investments of those who have already invested money in the Indian market.

Justin answers:

1.Rupee will depreciate
2.Stock market will temporarily go down.
3.Many small investors will be washed out.
4.Few Big investors may go bankrupt.
5.Exports will get a boost & Imports becomes costly.
6.Gold and crude will zoom up in local currency.
7.Inflation may come down.
8.GDP and Industrial growth will go down

Thomas asks…

I want to invest in the stock market, I know nothing about it, where or how can I learn?

I have heard all sorts of things like semiconductors and forestry etc, and to invest in things that will always be needed, even in the toughest of times. How do I get started? How do I know what to invest in that will gain the highest returns? How do I learn about the terminology and structure of how it all works?

Justin answers:

We can talk about several possible approaches to stock market investing. Most popular (of the easy approaches) are buy-and-hold and dollar-cost-averaging. Buy-and-hold is suited to long sustained bull markets, where the average returns will always take you higher over the long term. Arguably, we haven’t seen a steady bull market for several years. However, it’s always possible you might identify a winning stock, even in down markets.
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Next, dollar cost averaging. To dollar-cost-average, you simply buy regular dollar amounts of stock at regular intervals. This causes you to buy more when prices are down, and less when prices are up. Dollar cost averaging is actually a very mild form of market timing. More elaborate forms of market timing, based on doing technical analysis of stocks, are generally risky and difficult to perform.
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Sector investing is another relatively easy-to-learn approach. Here you trade funds between different sectors of the economy – i.e. Defense, housing, banking, technology, gold etc. This strategy requires a good working knowledge of the economy.
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Next are professional market timing systems. These are increasingly popular computerized services that provide buy and sell signals to investors, managed either though a broker, or with a direct subscription, and send you buy-sell signals via email. Some are risky and expensive (designed for day traders), while others are mild – providing only a trade or two per year for managing mutual funds or trading inside retirement accounts.
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This just scratches the surface of this, there are many other types and methods of choosing investments. Links with examples of the strategies discussed are below.

Steven asks…

looking for a place to invest in stocks?

I want to invest in some stocks but at first I don’t want to spend a lot of money. I’m only looking to spend a couple hundred dollars. Is there any place to buy and trade stocks online without a lot of fees.

Justin answers:

Well, if your looking to invest such a small sum in stocks, then really your quite limited in what you can chose. The best answer I can give you is to invest in a mutual fund. Investopedia explains the benefits of mutual funds quite nicely

“One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund”

Should you decide to look into mutual funds, you should be careful to chose one that is based on a defensive sector (sectors that provide the basic necessities for life). In case you did not know, there are 2 types of stocks, defensive and cyclical. Defensive provide the necessities for life, and do well in both bullish and bearish markets. Cyclical provide things that are “optional”, like computers and cars. They tend to outperform defensive sectors considerably in bullish markets, but do poorly in recessions/bearish markets.

Considering we are in a recession right now (and a bad one to) a mutual fund that is based on defensive sectors are highly advisable. Another alternative might be gold, as gold has always been a hedge for investors against inflation. Gold has performed amazing over the past 10 years (from $300-1600), however, some people argue that gold may be another bubble waiting to burst. Especially since its reached record heights and people may be thinking of cashing out, pushing the price lower.

Hope that helped 🙂

-Karmo, economics wannabie

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