My current plan, 2017 June

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Yep, another month has passed by and the last week pretty much rained by.
I have been quite busy at work for the last few weeks, and haven't really been in the mood to follow the news when not at work. Instead I've spent more time then I would like to acknowledge playing Tom Clancy's Ghost Recon Wildlands on the Xbox One and building a floor to our pergola in the garden. It is months like these that routine and a simple plan makes the difference. So this month 'flip of coin', the bank. So another building block added to the money making machine.

This month is also the month of tax returns here in Sweden, so another extra block will be added in the coming week.

No big update this month.

Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

My current plan, 2017 May

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Another month has passed and the outside world is moving in a leisurely way.
The terror attack on Stockholm was solved fast, I am quite impressed with how fast a small country like Sweden was able to mobilize its police force and take control of the situation.
On other news, the Brexit carousel is moving forward at a steady pace but it seems like the markets don't really care as prices are still moving upward. I am currently waiting on a correction to happen but just like all other timings of the market, I'm not really counting on it.

Q1 report season passed during April, nothing new on the companies that I am focused on. They are still 2 good companies that grow.. So why should I look elsewhere?

So. Stick to the plan, continue to buy one of my 2 options, this month I ended up buying the bank. As a happy surprise my own bank Länsförsäkringar had lowered the brokerage fee from 100 SEK to 20 SEK. This actually makes a huge impact on my small transactions each month. Just to give an example:

Share price	Broker fee	Shares bought	Total fee	Total price per share	Overhead per share
82,15 SEK	99	16		88,69 SEK	6,54 SEK
85,15 SEK	99	19		89,58 SEK	4,43 SEK
77,20 SEK	99	23		81,39 SEK	4,19 SEK
102,30 SEK	99	18		107,80 SEK	5,50 SEK
105,60 SEK	20	20		106,40 SEK	0,80 SEK

So, no large sums. But as I've said before, I'm just starting out. But from the example above the benefit of lower brokerage fee is clearly seen on the overhead per share. Buying with a high brokerage fee is like buying at a higher price then you thought you did.
Make sure that you always record both the market price of the share you bought and the actual total fee you paid to make a follow up.

But enough of that for now. Spring is here, 20 degrees Celsius in the sun and I'm enjoying a bottle of homemade cider.

Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

Financial institutes and how they create money (Investment Banks)

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Let's continue the journey through different financial institutes and figure out how they make money.
Be sure to check out the other posts in this series:

Banks

Investment banks

Insurance companies

This time we focus on investment banks.
These are not the banks that you come into contact with as a consumer. . Other than advisory services, investment banks do their own trading in the market and earn money that way.

Advisory

Investment banks are advisers primarily focus on corporations and help them with mergers and acquisitions. Generating large sums of money to the bank as the transactions are huge and they cut into it on a percentage

Sales

The sales divisions of investment banks are occupied with creating and selling product with the help of underwriting.
By performing an underwriting, the bank assesses the risks and figures out a price-tag on the product. When bringing a company to the market (initial public offering) they also raise money from investors.

How do they make money here?

They act as middle men. They buy up all the stock of the new company prior to introducing it to the market. Then, when the new share goes public they profit on the price difference. I.e. what they bought the stock for prior to going public and the price that they go public with. This can be a very large sum.

There are a number of products other than new companies that are created by the investment banks. Basically, if you come up with an investment, an investment bank will calculate the risks and give you a price tag for that investment. For an fantastic movie on the subject, you have to see The Big Short.

Conclusions

Well, the same as for banking in general. Investment banks take calculated risks for profiting. Sometimes on the greater good, other times on the greater stupidity. 

Is it wise to invest in investment banks? Same as for banks. Maybe, you have to do your own research and find out if you can live with the pros and cons of profiting off an investment bank.

Sources

https://en.wikipedia.org/wiki/Investment_banking
http://www.investopedia.com/terms/i/investmentbank.asp
http://www.imdb.com/title/tt1596363/


Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.