Investing: Personal Portfolio

Before one decides that they want to invest they need to make a few sub-decisions. Firstly one must know the purpose why they are investing, where they will invest, how they will invest and when they will invest. If these elements are not outlined clearly then there may be losses that occur because of this indecision.THE WHY QUESTIONDealing with the why question involves looking to the future. This is the intent and purpose why you are delaying consumption. Many people have different reasons why they go into different investment vehicles. As an investor you need to decide what tenure is best for you. I personally classify investment horizons into three; short, medium and long term. The short-term is for those investors who want a quick maturity of their investments that ranges from days to a year. Medium-term would be anything from 1 year to 5 years. Long-term would be anything above 5 years.For example is someone is trading on news or merely speculating on price movements, they would go long or short for a limited time horizon. In this type of investment technical analysis is used to study the trends and candlesticks of an underlying investment such as currency pairs in foreign exchange arbitrage. Transactions of this kind can hardly be called investing. I would call them speculating since they do not take into account any meaningful fundamentals and hence the odds of making a profit become no different than tossing a coin. However if someone is saving for a wedding it would be critical to have an investment vehicle that is liquid and preserves the initial capital or principal such as fixed income securities or treasury bills (TBs). Such a person would be looking at a medium-term horizon depending on when he intends to liquidate and have the wedding. However if a 25 year old starts saving for retirement they have more time to hold investments until their prices align with their true values (in the case of value investors). Such a person could go long in stocks and hold them. In this instance, fluctuation of the stock is not as important since liquidation of the investment is deferred.It is vital for anyone to decide why they are investing as this will give an acceptable time horizon bench-mark and more importantly determine the risk level acceptable to their portfolio.THE WHERE QUESTIONOnce one is clear why they are investing, it will not be hard to establish where they must invest. If you are simply speculating then there is need to take cover in the hedging system. This is because your positions are just guesses that may turn out wrong. This was coined in the saying “downside risk and upside potential”. So if you have bought long a mining stock that you anticipate going up, you may want to protect yourself by going to the derivatives market and buy a put on the same stock. A put is a right but not an obligation to sell an underlying security at a predetermined strike price in the future. So if the security price goes down the holder of the put may still sell at a higher price than the ruling market value of the underlying security (mining stock). These complex transactions are normally done by active traders in search of alpha. I would not recommend a novice trader to be dealing the derivatives market as even the most experienced fund managers and business remodeling gurus like Andrew Fastow shipwrecked because of them.The novice investor can participate in two broad markets; the money and capital markets. The rule to success is keeping it simple. The money market serves those who are in the short-term investment horizon and the capital market serves those who are in the medium to long-term investment horizon. These two markets can be very crucial in making sure that your portfolio is well diversified and balanced. The money market gives a choice of investments such as TBs, negotiable certificates of deposit (NCDs), and other short-term debt instruments. Such instruments stabilize the value of a portfolio since they are not as volatile as stocks. The mix between stocks and debt instruments in a portfolio should be according to an investors risk profile. For the risk-averse investor, a portfolio could have 60%-80% debt instruments (with triple A ratings) and 20%-40% stocks (blue chips). For the more risk-loving investor a portfolio could have the above weighting but however inverted between stocks and debt instruments.You can choose to divide the debt into time horizons as well but however remember that there is price volatility on long-term bonds caused by interest rate fluctuations. Stocks can be sub-divided into small, medium and large cap; value, growth, dividend and so on. If you are after higher return you could look at investing in emerging markets like India. The stock exchanges in India are among the top paying exchanges in the world in terms of yearly market return. It may be a mammoth task to invest in these exchanges on your own. You can easily do this through world funds like the Templeton India Growth Fund and many others. However to be able to harvest the maximum returns from these funds you need to hold your investment for more than five years. This is because you may end up being hurt by transaction costs and capital gains tax.HOW AND WHEN QUESTIONMutual funds are a good way to get started if you are a novice investor. It is not advisable to search for a fund using the highest returns from a single period. A fund has got to consistently return above market to qualify to be enlisted on your potentials. Also evaluate how they invest and their risk tolerance before you take the leap. Once you have invested do not jump from fund to fund as this will hurt your returns. Better still you may choose index funds that emulate a certain sector of the market or a whole market as John Bogle demonstrated with the Vanguard 500 Index Fund. The lack of active management generally gives the advantage of lower fees (which would otherwise reduce an investor’s return) and in taxable accounts, lower tax.If an investor has the basics to begin investing on their own, I would suggest a concentrated portfolio. This portfolio is made up of a small number of stocks (advisably below ten) that you select and invest in. At best a concentrated portfolio must have stocks from sectors that can achieve negatively correlated returns. However if one carries out a thorough fundamental analysis and constantly reviews the portfolio to check for divergences there will be no need to structure a portfolio using the academic approach mentioned above.Fundamental AnalysisWhen conducting fundamental analysis, an investor wants to be sure that they are buying a healthy business. Stock prices in the long run eventually align with the financial health of the underlying stock. The stock market punishes the weaklings and rewards the strong. Hence in doing your fundamental analysis you can look at the following aspects:1. Market share trends – when the market share of a business is decreasing it is a clear sign that it is heading for the doldrums. Business can be operating in decreasing, static or growing markets. You will be better off if you buy a company that is increasing its market share in either a static or growing market. An investor can use the Porter’s Five Forces to analyze an industry and the market trends existing therein.Management – the ultimate test of management is their frugality. In the words of Peter Lynch, if you invest in a company with gold plated toilet seats at its headquarters you have most likely contributed towards their purchase. Salaries paid to managers and the consistency of business strategy can also indicate the suitability of management. If you see management with such inconsistent strategies like raising equity financing and paying out dividends at the same time you should be suspicious. Managers must be open, have integrity and be honest. This is the criteria that the famous investor Warren Buffet uses.2. Return on Equity (ROE) – this is by far the most important indicator of the financial health of a business. This indicator shows the return as a percentage of the equity or shareholders’ worth. It is specifically an investor ratio. Look at the ratio starting 10 year back to the present time. Look at how the trend is progressing. Make sure the accounting policies are consistent over the same period to avoid concealment of salient problems. You should invest in companies with a high and/or increasing ROE ratio. This also shows that the management is careful to incessantly increase shareholder value.3. Price-Earnings Ratio (P/E) – this ratio equates the price of a share to the earnings it made over a period of 6 months or a year. It can also be a forward P/E when it measures using forecast earnings. This ratio is great if you are a value investor. You have heard the gurus say “always buy low and sell high to make the most returns”. But how do you determine whether a stock is cheap? You use the P/E ratio. However you must be careful to research why a stock has a low or high P/E ratio. According to the Efficient Markets Hypothesis all the information of a stock is reflected in its price. So if a stock has a low P/E ratio, it might be because it has very little prospects. On the other hand if a stock has a high P/E it may mean that the market has factored in its future growth. To measure this aspect analysts take to the PEG ratio that expresses the P/E over the future growth anticipated for that stock. However there are some stocks that tend to go under the market radar and it will take a lot of work to identify them.4. Dividend paying stocks – these companies give back money to the shareholder in the form of dividends. Buy stocks in companies that pay dividends or buy back their own stock. Any company that does not have suitable merger or acquisition targets must give back money to the shareholders. A lot of companies lose money by trying to go into new industries in which they are ill experienced. This is why a company which buys back its own shares is a good company to invest in. By buying back shares, a company is actually reducing the supply of those shares on the market. From your Economics 101 course you probably know that when demand is more than supply the price goes up. So when the price of the shares goes up the investor has been rewarded by capital gains. On the other hand when dividends are paid the investor has been rewarded by income.5. Debt – invest in companies that are debt-free or have low gearing. Gearing is the ratio of debt to equity. When a company is leveraged its returns will have more risk as measured by standard deviation. Also in bad times a leveraged company suffers more than a debt-free one. Debt covenants can be very stringent demanding a company to disclose whenever they enter into any riskier projects. Other lenders will recall the bonds placing the company at the risk of bankruptcy. Cash rich companies are better and less risky than debt-ridden ones. They can easily weather a financial storm than those companies in debt and cash-strapped.A passionate and savvy investor will always have a watch list. Certain stocks, however attractive, do not have the right prices. When the market dips and prices fall it would be the right time to buy them. For maximum gains invest in depressions or recessions. Wait for corrections in the market and then buy and hold. There are no formulae for knowing the rock-bottom of a bear market. Follow your gut! On the other hand you can always be buying stocks in a monthly programme known as dollar cost averaging. In this approach you select stocks based on the principles outlined above and you invest infinitely into the future and thereby averaging the price at which you buy the stock.

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How Social Media Allies and Upsides Your SEO Efforts?

SMM and Search Engine Optimization are usually given a separate space in the digital marketing arena.

And, quite reasonably, they are the two most decisive factors in the online marketing sphere.

But what we fail to understand is why many businesses do not acknowledge social media marketing as one of SEO’s most influential allies.

Do we intend to say that social media directly encourages your Search engine rankings?

The simple answer could be NO!

You must recognize that social metrics like Facebook likes and Twitter followers indicate social profile authority but have no hand in directly circumscribing the search engine rankings.

Surely, our straightforward answer is confusing. However, we completely believe that SEO and smo are powerful collaborators whose association must be leveraged for digital marketing success.

Let’s dig deeper and express how SMM can merit and warrant your SEO strategy.

The Relationship Between Social Metrics & SEO

Let’s assume that there might have been experiments conducted in the past that determine the use of social-media metrics such as social mentions and engagement level for search engine rankings.

But due to the unpredictable and unstable nature of smo and the weak signals generated, professionals might have dropped the attempts.

This was well elaborated by Matt Cutts back in 2014 in a Webmasters video. He was the Head of Google’s Webspam Team back then, and he revealed that social media provided incomplete signals.

Also, search engine algorithms can’t ascertain the reliability and authority of the smo posts and the profile.

Nevertheless, is there an Indirect way that social media influences search engine rankings?

And, this was embellished in the Cutt’s video itself.

He said that Google treats all social media websites like any other website on the Internet, which means that the same rules apply to Facebook, Twitter and so on as it applies to other websites.

Benefits of Social Media for Business

A Linkable Opportunity

As most social media consists of links to other websites, site owners and content creators can use it to promote their content.

You can employ a particular mixture of organic and paid promotions strategy to maximize your audience base.

Here’s how this happens-

As you use social media, there might have been countless times that some articles impacted you.

The impression an article made is evident in the things you share and communicate on social media. You might often use the information from the article in your other works, giving the source article a reference.

Understand that people cannot relate to something unless they know about it. Social media gives the perfect opportunity to content creators to prompt the audience and share link-worthy content.

You might well concede that SMM has given attention to many websites and individuals who were not known before. Creating Brand Mentions

Now, suppose someone or something (brand, product, service, individual, business, etc.) that has not yet been identified by Google suddenly notices many remarks online. In that case, it will influence Google to categorize them as an “entity”.

These are some unique circumstances that can boost your search engine rankings. This is bound to the context you are being mentioned or how people are talking about you online.

Understand that you are not adjudicated for how high you rank for a thing but what you entail as an entity.

So your website might not be getting a mention for a specific thing right now, but seeing the number of people who put trust in you, they can well start recognizing your business for that particular piece.

This is called the power of positive mentions.

Nevertheless, you need to make sure that positive mentions are not just on social media but on all public forums.

You can spring your brand marketing with your true audience base and inspire positive reinforcement and communication on social media.

Social Media For Searches

You cannot miss the fact that people use social media to search for a particular product or brand, and your audience base is just not limited to Google or Bing.

As you operate Twitter, you will realize that the social media channel with its trends, hashtags, insights and other tools give you a perfect opportunity to collude with the potential customers, making your content visible to the users.

You will find similar responses to Pinterest and Instagram.

Also, if anyone wants to know more about your company, he/she will likely ascertain your presence on Facebook, Instagram, Twitter channels- do a quick search and decide upon if he/she wants to deal with your business or not.

In 2016 Mark Zuckerberg had mentioned that “Now people are doing more than 2 billion searches a day between looking up people, businesses, and other things they care about.”- source Techcrunch.

Facebook had earlier retreated on a semantic graph search engine and launched a true keyword search, which landed in more search queries for media channel.

Twitter, since its onset, has been the leading destination for the population to flock for searches, especially in the event of big global news. Full post search appeared to have worked for Facebook and have expedited query volume.

Changing The Idea Of SEO

We have reached the phase where SEO is not just centered till Google optimization. We need to realize that search engine optimization is extending and converging on smo.

Also, if Google has been unclear about its stand, Bing, on the other hand, has been quite positive in including social metrics in its search engine algorithms.

You may well agree that the audience that reaches the company website, lurking through digital media channels, has already interacted with the company in a very pragmatic sense.

Also, digital media gives users the capability to engage more powerfully and compellingly. Hence, it will be only effective to broaden your social, media capacities and elicit brand awareness and growth.

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Coinbase Review

As the leading mainstream cryptocurrency exchange in the United States, Coinbase has become a standard on-ramp for new crypto investors. Coinbase offers a wide variety of products including cryptocurrency investing, an advanced trading platform, custodial accounts for institutions, a wallet for retail investors, and its own U.S. dollar stable-coin.

Coinbase was founded in 2012 and is a fully regulated and licensed cryptocurrency exchange supporting all U.S. states except Hawaii. Coinbase initially only allowed for Bitcoin trading but quickly began adding cryptocurrencies that fit its decentralized criteria.

Its list expanded to include Ethereum, Litecoin, Bitcoin Cash, XRP, and many others with the promise of more as long as its requirements are met.

Pros Explained
Solid variety of altcoin choices: Coinbase offers over 25 cryptocurrencies for investment, trading, and also staking.
Extremely simple user interface: Coinbase is perhaps one of the easiest on-ramps to crypto investing. It is easy to sign up and buy cryptocurrencies within a matter of minutes. It also has a learning program that pays users cryptocurrency to learn more about how cryptocurrency works.
High liquidity: Coinbase consistently ranks among highly liquid exchanges. This protects the investor from serious price slippage in an already volatile market.
Cons Explained
High fees when not using Coinbase Pro: Coinbase has high fees compared to some of its largest competitors. Many newcomers who use the standard Coinbase platform will be subject to these fees unless they use Coinbase Pro—free to switch to and with lower fees—which has more features that could be overwhelming to new crypto traders.
Users do not control their own wallet keys: This is consistent with many centralized exchanges but it still remains a con for all of them. When a user purchases cryptocurrency on an exchange, it is stored in a wallet that Coinbase has control over. This means that the user does not have autonomous control over their holdings, which, in essence, goes against the ethos of decentralized currency or finance. This can be avoided if the investor withdraws their currency to their own personal wallet, preferably a hard wallet.
Not a large enough variety of altcoins for altcoin traders: Coinbase has a good variety of altcoin options for newer investors to dabble in, but those interested in seriously trading of altcoins will not find a great selection here. That said, Coinbase plans to add more altcoins over time.
Cryptocurrencies Available on Coinbase
Coinbase has a solid number of options to invest and trade in and has plans to add more to the list. The following currencies are listed right now:

Aave (AAVE)
Algorand (ALGO)
Cosmos (ATOM)
EThe Balancer (BAL)
Band Protocol (BAND)
Basic Attention Token (BAT)
Bitcoin Cash (BCH)
Bancor Network Token (BNT)
Bitcoin Satoshi’s Vision (BSV) (Send Only)
Bitcoin (BTC)
Celo (CGLD)
Compound (COMP)
Civic (CVC)
Dai (DAI)
Dash (DASH)
districtOx (DNT)
EOS (EOS)
Ethereum Classic (ETC)
Ethereum (ETH)
Filecoin (FIL)
The Graph (GRT)
Golem (GNT)
Kyber Network (KNC)
Chainlink (LINK)
Loom Network (LOOM)
Loopring (LRC)
Litecoin (LTC)
Decentraland (MANA)
Maker (MKR)
Numeraire (NMR)
NuCypher (NU)
OMG Network (OMG)
Orchid (OXT)
Ren (REN)
Augur (REP)
Synthetix (SNX)
USD Coin (USDC)
Universal Market Access (UMA)
Uniswap (UNI)
Wrapped Bitcoin (WBTC)
Stellar Lumens (XLM)
Ripples (XRP)
Tezos (XTZ)
Yearn.finance (YFI)
Zcash (ZEC)
0x (ZRX)
Trade Experience
Trading on Coinbase is an extremely easy process and geared toward a beginner. The platform can also be accessed through your android or iOS devices. Coinbase does not offer any downloadable trading software and it is all browser-based, including its more advanced trading platform, Coinbase Pro.

When you log in you are immediately shown your portfolio balance and its performance in a selection of time frames like one hour, 24 hours, one week, and one year.

A banner above your portfolio balance has a “Buy crypto” button where you can enter a dollar value and place market orders for whichever crypto you choose that Coinbase has available. This button also brings up the options to sell or convert your crypto or even set up recurring orders—daily, weekly, on the 1st and 15th, once a month.

Buy crypto Coinbase
On the top right of the page, you will find the options to send and receive. This allows users to send crypto out of their Coinbase wallets or receive crypto from elsewhere into their Coinbase wallets. While most crypto-first exchanges do offer the ability for users to withdraw to their own private wallets, this is unfortunately not the case for some other brokers and exchanges out there. This ability is hugely important to investors who wish to make sure their holdings are safe and secure in their own offline wallets.

Coinbase Pro
While Coinbase is an incredibly simple on-ramp to crypto investment for those who are just starting out, Coinbase Pro offers a far larger and more robust charting and trade experience.

Coinbase users can purchase crypto using market orders that experience high fees compared to other exchange options out there. With that in mind, Coinbase wanted to create a free option for Coinbase users to graduate to when they were a bit more practiced. With Coinbase Pro, users can place market, limit, and stop orders with lower commission fees. Coinbase Pro also has the option of margin trading and has significantly fancier charting capabilities.

Traders using Coinbase Pro can see as short-term as 1-minute candle or line charts and can use overlays like exponential moving averages. Currently, the only 2 available overlays and indicators are EMA (12) and EMA (26). Coinbase Pro also has over 100 trading pairs available worldwide (nearly 40 trading with USD) and more than 40 crypto to crypto trading pairs in 42 regions. Compared to other serious trading tools out there, Coinbase Pro is still bare-bones with regard to indicators.

While the standard Coinbase platform is a great tool to help people understand how easy it is to purchase, store, and move cryptocurrency, Coinbase Pro is, by far, a better platform for those who wish to actively trade or invest with lower fees and more features.

Fees
Coinbase has an incredibly convoluted fee system that is also quite expensive if you are not using Coinbase Pro. The cost of trading on Coinbase’s standard platform is quite high in comparison to its competitors. Those who are new to crypto and are looking for ease of use may overlook this.

Coinbase’s fees vary across different countries and regions, but for the purposes of this review, we will focus on fees within the United States.

Payment Method Coinbase Fee
Bank Account 1.49%
Coinbase USD Wallet 1.49%
Debit/Credit Card 3.99%
ACH Transfer Free
Wire Transfer $10 ($25 outgoing)
Crypto Conversion 2.00%
In addition to these fees, Coinbase also charges variable spreads on purchases and trades. Coinbase says that they typically charge about 0.50% for the purchase and sale of cryptocurrency below $10,000 in value. This fee is significantly reduced for sums between $10,000 and $50,000 (0.35%) and continues to decrease with each pricing tier until maker-taker fees reach 0.00% and 0.04%, respectively, for sums of $500,000,000 and up. Market fluctuations can make this higher or lower.

There is also a “Coinbase Fee” in addition to the spread and the cost of depositing money mentioned above in the chart. This fee is dependent on the value of the purchase, payment type (debit/credit), and region you are purchasing from.

Coinbase gives the following examples of “Coinbase Fees” one might experience on its platform:

If the total transaction amount is less than or equal to $10, the fee is $0.99 | €0,99 | £0,99
If the total transaction amount is more than $10 but less than or equal to $25, the fee is $1.49 | €1,49 | £1,49
If the total transaction amount is more than $25 but less than or equal to $50, the fee is $1.99 | €1,99 | £1,99
If the total transaction amount is more than $50 but less than or equal to $200, the fee is $2.99 | €2,99 | £2,99
Coinbase Pro Fees
Coinbase Pro fees are significantly less expensive and less complicated. With Coinbase Pro, digital assets and ACH transfers are free to deposit and withdraw. Wire transfers are $10 to deposit and $25 to withdraw.

Pricing Tier Taker Fee Maker Fee
<$10K 0.50% 0.50%
$10 – 50K 0.35% 0.35%
$50 – 100K 0.25% 0.15%
$100K – 1M 0.20% 0.10%
$1- 10M 0.18% 0.08%
$10 -50M 0.15% 0.05%
$50 – 100M 0.10% 0.00%
$100 – 300M 0.07% 0.00%
$300 – 500M 0.06% 0.00%
$500M – 1B 0.05% 0.00%
$1B+ 0.04% 0.00%
Security
Coinbase uses a variety of safety measures for account holders. It is important to understand that any crypto on any exchange account is only as secure as the account holder makes them. It is imperative to use strong passwords and to utilize the available security features like 2-step verification.

Coinbase has 2-step verification, biometric fingerprint logins, insurance in the event that Coinbase itself is breached (this insurance does not apply if your account is breached due to your own lack of security measures), and also stores 98% of users’ funds in offline cold storage.

Digital currency is not considered legal tender and therefore is not backed by SIPC or FDIC. Coinbase provides insurance by pooling Coinbase balances and holding them in USD custodial accounts, USD denominated money market funds, or liquid U.S. Treasuries.

Coinbase provides a solid amount of security in comparison to a number of other leading exchanges. This is one of the reasons Coinbase is a great offering for those looking to safely get started investing in cryptocurrency.

That said, the premise of cryptocurrency is to remove intermediaries where possible and to be in total control of your own funds. While Coinbase does provide an easy entry to cryptocurrency investing, it is important to learn about proper cryptocurrency security and storage. Savvy crypto investors may use Coinbase Pro for its reduced fees and then withdraw their holdings to their own secure cold storage.

Opening a Coinbase Account
Signing up for Coinbase is a very straightforward and easy process. First, you enter your name, email, and the password you wish to use. You will then be asked to verify your email address. Next, Coinbase asks you to enter in your phone number to receive a verification code and enter it. Coinbase will later use this phone number to send 2-step verification codes. After this stage, it will prompt you to enter your identification information.

Just like any bank account or investment account, you must prove your identity via state identification. For users in the United States, this will require a social security number. At this point, your Coinbase account will have been created and you are able to add your bank account, credit card, or debit card information to enable deposits and withdrawals so that you can start trading or investing.

VERDICT
Coinbase is an ideal tool for new crypto investors who may not have any other investment experience. While the standard platform is overpriced, its features, like its learn program and the ability to easily set up recurring purchases, provide the inexperienced with a clear path to becoming invested and actually understanding cryptocurrency.

Those with more trading experience will find that Coinbase Pro is a cheaper and more robust option, but it is still lacking in terms of features. If you wish to trade seriously, you may find that Coinbase is not the right fit for you. Overall, Coinbase is designed with the beginner in mind.

Methodology
Investopedia is dedicated to helping those interested in cryptocurrency investing make informed and safe decisions. We are committed to providing our readers with unbiased reviews of the top cryptocurrency exchanges for investors of all levels.

Exchanges are only considered for review if they are safe, secure, liquid, and either regulated by a proper agency or entirely decentralized.

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