Market Research and Marketing

Do you have previous marketing experience where you didn’t get the results you expected? Marketing is a very important aspect of any business. Whether your business is offline or online, effective marketing as a result of decent market research is the key to your success.

Mistake #1: Most entrepreneurs just don’t know who their customers are, not knowing who they are marketing to, and not understanding the demand and the need of their customers.

Many people that I’ve talked to, who have previous failure marketing experiences, simply didn’t understand their audiences. Some tried to put advertisements on websites that have audiences around the age of 50, when their products are for people around the age of 20. Obviously you won’t get positive results when you do that and you are just putting up “blind” advertisements – advertisements that are of no interest to the targeted audiences.

Mistake #2: Not willing to invest in marketing

There are still a lot of people who simply don’t get the importance of marketing, and how quality marketing can significantly increase the growth of their business(s). Some are willing to invest effort and cash in it, but they go for the cheapest services. The results you receive are directly related to how much you put in. There are a lot of marketing services and opportunities out there but quality marketing will result in exponential increase in sales / leads over time.

Things to look into when managing your marketing campaign:

Understanding the age of the audiences that are suitable for your products

Understanding the medium (channel) that is suitable for your marketing campaign

Understanding the variety (different types of people around the age of your audiences) of your audiences and make your marketing campaign targeted for the majority of your audiences for most effective results

Put little investment on your marketing campaign in many mediums to see which ones performs the better results. Then invest more on your marketing campaign in the mediums that produced the best results.

How to Invest and Diversify

If history repeats itself, over the long term investors should earn about 10% a year in stocks, over 5% in bonds and about 3% in safe money market securities (like T-bills) or savings in the bank. If you invest in stocks, bonds and the money market equally across the board you would average about 6% a year overall based on the above returns. You would also be diversified and have a conservative portfolio.

Based on the above average historical investment returns, an investment portfolio of 60% stocks and 40% bonds would produce average yearly earnings of 8% over the long term, at a higher, yet moderate level of risk.

If you squirrel all of your money away at 3% you have safety, but it takes more than 23 years to double your money. Put all of your money in stocks at 10% and you can double in 7 years, but your risk is heavy.

I suggest that most average investors shoot for an average yearly return of about 8% at a moderate level of risk. At this rate it takes 9 years to double your money. Now, the question is how to invest and how to diversify to accomplish this.

Mutual funds are the simplest way to diversify your investments, and they come in all 3 of the types you will need: stock funds, bond funds and money market funds. By holding a combination of all three, you can tailor an investment portfolio to fit your own personal risk profile.

In order to average 8% a year, stock funds should be your largest holding and amount to about 60% of your investment portfolio. The rest of your money is then split between bond funds and money market funds. If you want to lean toward the conservative side, invest about the same amount in each. If you want to be more aggressive favor bond funds over the high safety of money market funds.

If you include money market funds in your portfolio, how do you make up for the lower average earnings that they will likely contribute? You either accept a slightly lower overall rate of return, or you learn the ins and outs of how to invest.

Remember, 10% is what stocks have earned on AVERAGE per year over the long term. An investor who knows how to invest can do better than average. There are many varieties of stock funds to choose from. Get familiar with them. Examples include: growth funds, small-cap funds, international funds, and specialty funds like real estate and natural resources funds.

There is also a simple investment strategy you can use to help keep your risk moderate while boosting long term returns. REBALANCE your investment portfolio periodically. Example: you decide to go with 60% stock funds, 20% bond funds and 20% money market funds. Keep these figures in line by moving money from one area to another whenever the percentages change by more than a couple of points.

For example, after a couple of years you see that stock funds now account for 65% of your investment assets with bond funds at 20% and your money market fund at just 15%. To rebalance you simply move money from stock funds to your money market fund to get back to 60% … 20% … 20%.

Good money management requires a sound understanding of diversification and investment strategy. Putting it all together will require that you learn to invest in bonds, stocks and money market securities. The simplest way to do this is with mutual funds.

Online Investing and How it Compares to Stock Trading

People who are interested in creating additional income often look to the stock markets as the most profitable route to follow. Our financial education teaches us that over the long term stocks outperform many other types of investment, especially for those who like to trade for themselves.

However, in recent years global economic crises have severely dented the image of stock investing as many hard working people have found to their cost. In this article I’d like to explore how stock trading compares with what I term online investing which for this discussion I will define as passive investments.

Stock Trading

Clearly, given the technology available today most stock trading is carried out online so it needs to be clear that my definition of online investing is different. And in fact if you ask anyone who trades stocks via online brokers I don’t believe they would consider themselves to be online investing rather investors who use online tools.

In its simplest form stock trading online can be undertaken by any eligible individual who opens a trading account with a broker and then funds that account. There are always restrictions on who is eligible to open an account and these would need to be considered when contemplating this form of investment. Assuming however that an account can be opened and funded it is a relatively straightforward process to trade stocks in a vast array of markets and companies.

The benefits of stock trading include:

1. Wide range of online platforms to use from well established companies

2. Accounts can be funded directly from individual bank accounts

3. Reasonable liquidity in markets

4. Choice of markets/stocks to trade is wide

5. Competitive trading costs on execution only basis

6. Potential gains can be high

Disadvantages include:

1. Sizable fund required to trade

2. Potential for significant losses where price movement unfavourable (although robust stop loss strategy can mitigate this)

3. Little or no advice available if execution account only

4. Requires close monitoring

Passive Investment

Next let’s take a look at passive investing and see how it compares. In essence I’m using an example where you open and fund an account and returns are defined in advance usually based on the sum invested. You are effectively handing your funds over to someone else to invest on your behalf and you are able to withdraw as needed subject to any restrictions on minimum holding periods.

The benefits of passive investment include:

1. Hands-off investment

2. Simple to open an account

3. Good rates of return

4. Compounding of returns is normally an option

5. No knowledge of trading required

Disadvantages include:

1. Offered by companies who are not household names

2. Passive nature attracts investors with limited investment experience

3. Depositing and Withdrawing funds can be a time consuming process

4. Need to keep accounts with several online payment processors

5. Difficult to carry out due diligence on the company and their operations

Is it worth the risk?

On the face of it passive investments are a greater risk and it will take a very long time for this to change, if ever. However, as an investor you should be looking to create a balanced portfolio and to diversify across a range of instruments so I’d suggest that passive investments should be considered.

The purpose of this article is not to dissuade current stock traders from investing money in that way, rather it’s an attempt to introduce them to an alternative source of investment that, whilst it certainly carries risk, also offers good returns when chosen carefully. Clearly, advice should be sought when considering any specific investment but the potential for introducing passive investment into an individuals portfolio should not be overlooked.