tag:businessknowledgesource.com,2009:/investing/17 2009-11-07T15:12:32Z Investing info to build your income and prepare for the future. Movable Type 3.36 tag:businessknowledgesource.com,2009:/investing//17.29065 2009-11-07T15:00:00Z 2009-11-07T15:12:32Z

Warren Buffet has been known to be one of the smartest investors of all time. He uses several different investment strategies to make his money including value investing. Value investing "involves buying securities whose shares appear underpriced by some...

DF Warren Buffet has been known to be one of the smartest investors of all time. He uses several different investment strategies to make his money including value investing. Value investing "involves buying securities whose shares appear underpriced by some form(s) of fundamental analysis." Better said, value investing is buying cheap stock whose price should be much higher than it currently is. Value investing includes taking a good look at the actual value of a stock. You can do this by taking a look at the stocks earnings, its dividends, or its price-to-earnings ratio. ]]> Value investing is tricky because you don't know exactly why the stock may be cheap. It is similar to purchasing a t-shirt for $5 instead of $19. Why is this t-shirt so much cheaper? Does it carry the same value as the $19 t-shirt or do you notice that it has started to fray after its first wash? With stocks, there is usually a good reason why they may be underpriced. There could be some problems with the management of the company that is causing the stock price to be lower. Take a look at the executive report in their annual report to see if the executives are full of false promises. You should also find out about the way the company is run. Faulty management can easily cause stock to drop. Normally the management information of a company is not provided from the brokers and reports you may be getting about your stocks. This is why it will do you some good to get your hands dirty and do some research on your own. There are other reasons why the value of a particular stock may have dropped. Have the patents expired? How has the company faired when new competitors joined the market? Have there been some product recalls? When a company goes through bad media spotlights, they can easily lose investors and customers. Always be aware of outside circumstances that may be impacting the stock you are interested in. Sadly, a lot of investors don't do the research and they buy the cheap stocks thinking they are undervalued when they really aren't. Check for market presence when you are using value investing. Small companies probably do not have their names established in the market like the big companies. If you are sold on this particular company, find out what their strategy is to make their presence known. It took a long time for big companies like Starbucks and Dell Computers to build their reputation in the market. This is why their stock is normally of high value because people expect them to stay in business for a long time. The large companies are always worth millions, even billions of dollars and this is due to a hard-working staff and their market presence. Companies that are well-known like The Gap, Old Navy, Reebok, and Pizza Hut are going to carry a certain level of value for their stock. Since they are well-known, their stock is rarely undervalued. The only reason why their stock will go down is do to bad media coverage of their company due to poor manufacturing or a big problem like food poisoning. If there is some bad media coverage of a well-respected company, this may be the time to buy stock. A lot of investors recognize that customers will stay away from their product until the company sends in their PR team to repair their reputation and re-gain their customers trust. You have a small window to value invest in these large companies so you must pay close attention to the media and the stock tickers. Value investing really depends on how smart you are and if you are able to recognize when and why a stock is cheap and when you should buy it. tag:businessknowledgesource.com,2009:/investing//17.29064 2009-11-06T15:00:00Z 2009-11-06T15:14:54Z

If you don't know much about the investment world, bonds are a good place to start. Unlike stocks, bonds do not come with a high amount of risk and it is guaranteed that you will re-gain the money you...

DF If you don't know much about the investment world, bonds are a good place to start. Unlike stocks, bonds do not come with a high amount of risk and it is guaranteed that you will re-gain the money you invested plus some interest. Two of the most popular types of bonds are municipal bonds and government bonds. What is a bond? To get started, you need to understand what a bond is. A bond is a debt note from a company. You basically give them money to spend on whatever they need like research and expansion. The company will then re-pay the money they borrowed from you plus the interest amount you agreed to. Depending upon the type of bond you invest in, you could receive interest annually or at the end of the term in a lump sum.]]> What are municipal bonds? Municipal bonds tend to be one of the most popular types of bond investments. Investors get a nice tax break on the bond depending upon their state or municipality. Municipal bonds are used to fund state or local projects like city parks, buildings, road construction, etc. Since the investors are investing in these projects, the state's like to recognize them with a nice tax break. The reason why states push for people to purchase municipal bonds is because it is much cheaper from raising money in an alternative manner like a loan. The funds are used to accomplish projects that the government will not provide the state with financial backing for. A lot of good can be done with municipal bonds if people are willing to invest in them. Your rate of return may not be anything too significant, but you are guaranteed to make some money. Only the income you make from the municipal bond is tax free, not the capital appreciation you will receive if you end up selling your bond early. What are government bonds? Government bonds are backed by the U.S. government, making them the safest form of bonds. The tax break you will be given is on your federal taxes, it is similar to the tax break on municipal bonds. Since government bonds are extremely safe, they don't have as high of rate as return as municipal bonds and other types of bonds. There are 3 main types of government investments:

• Treasury bonds
• Treasury bills
• Treasury notes

A treasury bond is used to pay for big government investments. War bonds have been a popular treasury bond in the past as it helped the government pay for past wars. Treasury bonds have been around for a long time and they have the highest return rate of all the U.S. treasuries investments. A treasury bill is a short-term investment that lasts for about 3-6 months. Treasury bills are extremely safe and a great way to add some diversity to a high-risk investment portfolio. Lastly, treasury notes are used as a short term or long-term investment. Normally they average anywhere from a 1-5 year investment. Their rate of return is higher from a treasury bill, but not by much. You always have the option of investing in both types of bonds and receiving tax breaks at the federal and state level. Bonds are secured investments and provide you with the comfort of knowing you will make back the money you invested plus some interest. They may not make you rich, but at least you will have a comfortable amount of money to use in the future.]]> tag:businessknowledgesource.com,2009:/investing//17.28866 2009-11-05T15:00:00Z 2009-11-05T15:13:53Z

During hard economic times it's difficult to tell what the stock market will do. But will a diversified portfolio make any difference when the stock market collapses? Diversification means dividing your investment among a variety of assets to help...

DF During hard economic times it's difficult to tell what the stock market will do. But will a diversified portfolio make any difference when the stock market collapses? Diversification means dividing your investment among a variety of assets to help reduce the risk you take with investing. Investments will naturally rise and fall and work independently of each other, so it's really in your best interest to diversify your investment portfolio. Often times the combination of these assets will cancel out each other's fluctuation. Investors can diversify their portfolio in several different ways. You can diversify across one type of asset classifications, like stocks. For example you might purchase shares in leading companies across several industries that are unrelated. You can also diversify across different types of assets or by regional decisions. Let's take a look at some pros and cons of having a diversified portfolio and why it often times does make a difference having a more diversified portfolio.]]> Pros of having a diversified portfolio

• Even if a few of your stocks are performing poorly, it will not significantly affect the overall portfolio performance. When you diversify your portfolio you reduce the risk you take because if one stock is doing poorly, another may be doing well. It creates balance.
• A diversified portfolio requires less active management with fewer buy and sell decisions and attendant lower costs.
• The performance is correlated with broad indexes and thus generally does well in an up market.
• The performance of your portfolio will be no worse than the broad market or index.

Cons of having a diversified portfolio

• Even with a diversified portfolio you could have one excellent performing stock, but it will not significantly improve the performance of your portfolio. This can also cause you to miss out on large potential gains.
• Performance is highly correlated to the broad market or sector and generally does poorly in a down market.
• Performance will not be better than the broad market or index.

So will a diversified portfolio make any difference if the stock market crashes? The answer is yes. The most important part about creating a diversified portfolio is to try and find good stocks that will most likely survive the stock market crash, and to invest your money in more than just stocks. It's always a good idea to have some of your investing money in the stock market, but it can also work towards your advantage to have some of your money in government bonds. While the bonds may not generate as much return as a high paying stock, they are the most likely to survive a market crash. They are fairly risk free as they are secured by the government and so you are pretty much guaranteed the money you put in, while stocks are a little less predictable. You want to diversify your portfolio so that just in case the stocks you invested in do lose all their value when the market crashes, you will still have some money left in your bonds. You don't have to diversify your portfolio if you're certain that your stocks will be the ones that survive a market crash. It is however less risky if you diversify your portfolio and can potentially save you from losing all your money if the stock market does crash.]]> tag:businessknowledgesource.com,2009:/investing//17.28865 2009-11-04T15:00:00Z 2009-11-04T15:13:40Z

Everybody wants to find a good investment. One that they don't have to spend every last penny on, but will still give them a good return. Unfortunately there will always be some type of risk involved when it comes...

DF Everybody wants to find a good investment. One that they don't have to spend every last penny on, but will still give them a good return. Unfortunately there will always be some type of risk involved when it comes to investing; however, there are several things you can do to help make a solid investment. The best tip for removing guesswork in investing is by creating a solid investment plan. This article will show you how to remove guesswork in investing by creating a solid investment plan.]]> Essential parts to a good investment plan A good investment plan will include a variety of different parts to create balance in your portfolio and to help remove most of the guesswork in your investing adventures. The following is a list of some of the most crucial parts of an investment plan.

• Always know how much money you can currently invest, not what you would like to invest. Add up all the money you have in bank accounts, assets, and cold hard cash. Anything that you have immediate access to can be used to invest. Of course remember to leave money for emergencies and living expenses.
• Know how much you can deposit into your investment each month. If you have a full time job, set aside a portion of what you make to put into your investment and figure what it is before you make the investment.
• Assessing your risk tolerance is a "must do" when it comes to investing. Some individuals like to invest in high risk stocks, and others like to play it safe.
• Always give yourself a time line. It is crucial to have a time line for investing your money. This will help keep you motivated.

Here are some other helpful tips to remove guesswork form investing:

• Be proactive. Reacting to the market will only make your investments options worse. Like everything else, the market has good days and it has bad ones. Know your investment goals and figure out what your risk tolerance is.
• Take investments when the market is stable or depressed. Capitalizing on the weakness of the economy can work towards your advantage. When the market collapses you can usually buy stock for much less than you would have been able to prior to the collapse, and can find high dividend stocks. You are likely to reap huge benefits when the market comes back up if you have the patience to wait out the rough waters.
• Create a diversified portfolio. By building a diversified portfolio you are building a strong foundation. Choose from several different mutual funds and ETFs and then figure out what types of asset classes you would like represented and what percentage they should represent in your mix.

There are obviously several different types of investment available out there for you to choose from. Some investments are much riskier than others but will give you a great return on your initial investment. Others are less risky but will give you a smaller return. The choice is yours on how you want to invest. And although you cannot completely remove all the guess work, hopefully these tips will help you create a good solid investment plan so you can remove some of the guesswork in investing. Good luck.]]> tag:businessknowledgesource.com,2009:/investing//17.28864 2009-11-03T15:00:00Z 2009-11-03T15:12:23Z

Americans today have several different options when it comes to retirement investments. From the stock market to 401K plans Americans can literally have their pick of the litter for investing. With the economy however in so much turmoil, most...

DF Americans today have several different options when it comes to retirement investments. From the stock market to 401K plans Americans can literally have their pick of the litter for investing. With the economy however in so much turmoil, most Americans are beginning to worry about their retirement savings and feeling a need to supplement it with something else. IRAs or self directed IRA options can prove to be an excellent addition to any retirement portfolio. IRAs have given individuals the flexibility to place money into a trust or retirement account since 1974. A self directed IRA account is one that the tax payer has greater control over in terms of investment decisions. You are basically in charge of where your money goes and how much you want to invest, however you don't ever really get to touch it. Self directed IRAs are also sometimes called "real estate IRAs." There are however some rules that apply to self directed IRA funds. For example, under sec. 408 you can invest in real estate notes, private placements, and investment partnerships. You cannot however make investments on collectibles or insurance contracts. It's important to understand all the red tape before you buy into a self directed IRA fund. Self directed IRAs are ideal for individuals that are not completely comfortable with the ups and downs of the stock market and who want a little more control over their own money. Therefore the traditional and Roth IRAs are typically invested in bonds and mutual funds, because they are a little less risky and don't have as much up and down as the stock market. ]]> Self directed IRA options As with every other investment option, self directed IRAs come with many advantages, disadvantages, and challenges. There are however several options to choose from in order to overcome the risks and challenges. Here are a few self directed IRA options:

1. Transfer a portion of your original IRA fund into the self directed IRA. By doing this you are limiting the risk exposure to your funds. You need to set up this type of account very carefully and make careful considerations about how you want the investment run.
2. Real Estate. Most self directed IRAs are known as real estate IRAs because it is very common for the owner to invest in real estate.
3. Stock
4. Mortgages
5. Franchises
6. Partnerships
7. Private Equity
8. Tax liens.

Because self directed IRAs allow for a wide range of investment options and choices for the owner, they can help diversify your IRA portfolio. Be aware of challenges While there are several advantages to a self directed IRA like flexibility in choosing from a variety of investment options and a possible tax free growth of your investment asset there are also several challenges you need to know about.

1. The potential for prohibited transactions and investment growth opportunity for each asset inside the IRA must be considered.
2. In order for it to be a self directed IRA the custodian is not allowed to give any type of advice about the investments.
3. The plan asset needs to generate enough income to pay the expenses of that asset.
4. You generally have to go outside your trusted relationships with bankers and financial planners to set up your account.

So there you have it, some self directed IRA options and a little more background and information to help you get started. Whatever you decide to invest in just make sure you know what you're getting into and you have done your research on the advantages and disadvantages to your specific self directed IRA plan.]]> tag:businessknowledgesource.com,2009:/investing//17.28863 2009-11-02T15:00:00Z 2009-11-02T15:12:37Z

Investing during an economic decline can be tricky, but you don't have to avoid it altogether. There are definitely some ways to get the most out of your investments; you just have to be aware of the safest investments...

DF Investing during an economic decline can be tricky, but you don't have to avoid it altogether. There are definitely some ways to get the most out of your investments; you just have to be aware of the safest investments during economic decline. Here is a list of some of the safest investments to make during an economic crisis:]]>

Gold or Gold stock. Many people believe that during economic crisis Gold is a safe thing to investment. While it isn't the safest, it can offer more security than other types of stocks during an economic decline. While many stocks will crash during an economic crisis, Gold will generally go down but almost always come back up. Things like fiat currencies will come and go, but gold has outlasted all of them. Most people are willing to bet a few dollars in gold stock than they are any other.

Treasuries. The great thing about buying treasuries is that they are owned by the government and you know you will get that money back. You basically give the US government your money and they give you a piece of paper that states your maturity date and when you can exchange your paper for your principal and interest. Some examples of government treasuries are Fidelity U.S. Treasury Money Market Funds, Vanguard Treasury Money Market funds, etc. They can work both for and against you however. If there is enough interest you can lose some of the interest and principal. They are however safe investments because you accept very minimal interest.

TIPS (Treasury Inflation-Protected Securities). This is very similar to investing in government treasuries. You basically give the government your money and they again will give you a piece of paper. However TIPS provide protection against inflation. The principal behind it is that it increases with inflation and decreases with deflation. As your TIPS mature, you get the adjusted principal or original principal; whichever is greater. They are relatively cheap and one of the safest types of investments during economic decline.

CD's (Certificates of Deposit). A certificate of deposit or CD is a time deposit; a financial product of commonly offered to consumers by banks, thrift institutions, or credit unions. They are similar to savings accounts in that they are insured and virtually risk free. They are generally insured by the FDIC for banks. The difference between a savings account and a CD is that the CD has a specific time frame for its maturity. It can be anywhere from three to six months, and sometimes as long as five years. In exchange for keeping the money on deposit the institution will usually grant higher interest rates than they do on accounts where money is withdrawn on demand.

Non-Cyclical stock. If you just can't stay away from investing in the stock market and the economy is in a crisis you still have a few options. There is what they call "non-cyclical" stock, or stocks of food, supplies, or other necessities that people will always buy no matter what the crisis is. Some examples of this type of stock may be "Johnson & Johnson" products, "Proctor and Game" or even "Coca Cola" products.

So remember, if you want to invest even though the economy is in financial crisis remember to keep this list of safest investments during economic decline on hand.]]> tag:businessknowledgesource.com,2009:/investing//17.28862 2009-11-01T15:05:00Z 2009-11-01T15:12:52Z

Investing in stock is always going to be risky. Investing in stock after the market crashes is going to be extra risky. There are definitely pros and cons to both sides of the coin. So what are the pros...

DF Investing in stock is always going to be risky. Investing in stock after the market crashes is going to be extra risky. There are definitely pros and cons to both sides of the coin. So what are the pros and cons of investing in stocks after a market collapse; or are there any pros at all. Let's take a closer look. Investing in stocks is a lot like buying a lottery ticket; the maximum amount of money you can lose is limited to the price of the ticket. You can really only lose as much as what you have paid for the stock, however unlike a lottery ticket, there is no set prize amount when you invest in stock. It gets even trickier when the market crashes, and you have to be extra careful in what you invest your money in, and how much you decide to invest. ]]> Pros of investing in stocks after a market collapse

• Cheap stock. One of the biggest advantages to buying stock after the market crashes is that you can generally buy a good stock for a much lower price than you would find if the market hadn't collapsed.
• High dividends. When the market crashes you will generally find that dividends will increase. So for example, before the market crashes you might invest in a great stock but only get about 2-3 percent dividend. During a market collapse the dividends on stock will sometimes be anywhere between 5-8 percent which basically means that you're making more money on your investment.
• History is on your side. If you follow the lines of history you will always see that after the market collapse, usually comes prosperity and a turn of events. You're fairly safe in thinking that the market will always come back and your stocks will end up being worth more than they were when you first invested due to the market collapse. It's a game of patience; if you can wait out the economic turmoil and low value of your stock until the market comes back around then you're going to happy you did so. Generally after the market crashes and comes back your stock investments could triple and the waiting and patience will pay off.

Cons of investing in stock after a market collapse

• Losing money. Well, obviously when the market collapses and you have stock investments you're more than likely going to lose money before you make it again. If the market tanks, so will the stock market and therefore you're going to lose money.
• Waiting game. Not only will you lose money on your investment, but it starts to be a waiting game. If you invest while the market crashes you may indeed find cheap stock or high dividends but you literally have no idea if the stock market is at its lowest point or "calling the bottom." It might take a really long time for your investments to come back and for you to make money.
• Lone investing. Because the economy suffers when the market crashes and fewer people are investing in stock, you could be the only person investing.

So if you're thinking of making any type of stock investment while the market is down, you may want to consider the pros and cons of investing in stocks after a market collapse before you do anything you regret.]]> tag:businessknowledgesource.com,2009:/investing//17.28861 2009-10-31T14:00:00Z 2009-10-31T14:12:52Z

If you're lucky enough to still have some money left in your retirement it might be a good idea to find something else to do with it. With the economic status today some retirement funds have dwindled down to...

DF If you're lucky enough to still have some money left in your retirement it might be a good idea to find something else to do with it. With the economic status today some retirement funds have dwindled down to practically nothing, so why not try to convert your funds to a safer option? If you're looking to do something else with the money you have left in retirement, here are some tips to legally convert your retirement funds into safer options.]]> Diversify First and foremost you will need to diversify your portfolio if you are unsure about whether or not your retirement will actually get you through your retirement years. For example, if most of your retirement is found in strictly stocks, you may find yourself in a world of hurt if and when the stock market crashes. In order to keep more of your retirement safe you will want to diversify your portfolio and invest your money in more than just the "big money maker" stocks. Talk with your financial adviser about different options available for retirement investing. Bonds vs. Stock Part of creating a more diversified portfolio is looking into some other available options besides stock. While high performing cyclical stocks are very beneficial to invest in during a hot economy, they may prove to be the vane of your existence when the market turns cold. Therefore some safer options in terms of retirement are shifting the funds within your account to bonds. Bonds typically will not swing in value as much as stocks but are much safer because they won't lose their value. Investing in bond mutual funds or a money market fund might be in your best interest if you're thinking of converting your retirement funds. In today's economy legally converting your retirement funds into safer options is difficult because so many people are losing money. If you are close to retirement, here are a few things you can do to shift from saving and building your retirement, to spending and taking the money out:

• Have some extra cash set aside. Like we already said, it's not a bad idea to set aside cash in a money market mutual fund, in short term bond funds, or even certificates of deposit.
• Get your retirement assets organized. You may have several different accounts that could be rolled into just one. This will help you keep better track of how much and where the money is coming from and going to.
• Tap in. To get the most from your retirement savings, pull from your taxable accounts first.

It's important to keep in mind that there are certain rules to moving your retirement funds into other accounts. If you are uncertain about those rules you should always ask a financial adviser what type of penalty is associated with moving, converting, or drawing money out early. Legally converting your retirement funds into safer options can be tricky if you are uneducated on how to do it. Do your homework and talk with people who know what they're doing before you make any rash decisions.]]> tag:businessknowledgesource.com,2009:/investing//17.28860 2009-10-30T14:00:00Z 2009-10-30T14:13:37Z

When it comes to finance these days hedging and protecting your retirement investments is more crucial than ever. With the economy in literally a financial meltdown from the real estate and mortgage crises many individual and group retirement plans...

DF When it comes to finance these days hedging and protecting your retirement investments is more crucial than ever. With the economy in literally a financial meltdown from the real estate and mortgage crises many individual and group retirement plans will and have already been affected for the worse. The American dream of early retirement is lost. That's why it's so important to hedge and protect your retirement investments now, so that you have a future later.]]>

Hedged Portfolio's. One of the only ways to protect your retirement from going belly up is to by hedging portfolios. This can literally save you from the financial meltdown that is currently happening in the economy. This is also referred to as a hedge fund. Its main focus is to have a positive return at the end of the year; it is not designed to perform the best year in and year out.

Get out of the stock market. While a few years back the stock market was booming and it seemed like investing was the perfect opportunity to get a huge return, today there is another story. With the economic crisis and stocks down it's a good idea to get rid of any stock you may own as well as getting out of any residential real estate market. Farmland is probably your best bet when it comes to owning real estate in the market today because it will produce food and fuel for energy; two things that will be in high demand in the very near future.

401(k) plans and other traditional investments. When it comes to your 401(k), Roth, and traditional IRAs, in order to protect them you need to move them out of the managed environment to a self directed environment. Self directed environment investments allow you to invest and trade in bonds, commodities, real estate, and stocks if need be. It gives you more freedom to use the money you are making. You might also want to think about maxing out your 401K contributions. While this may sting a little at first it is the best way to save for retirement.

Be Proactive. When it comes to retirement it can be difficult figuring out exactly what you will need to live on. If you think you are going to come up short then reconsider your options. Delaying your retirement can give your assets more time to grow.

Know what you're investing in. Be investment savvy and align your retirement investments with your risk tolerance and your time line of retirement. If you are close to retirement then you may want to choose investments that are more stable and vice versa.

No matter what type of investment you make just be certain it is the right investment for you and you have looked at all angles of the investment plan.]]> tag:businessknowledgesource.com,2009:/investing//17.28859 2009-10-29T14:00:00Z 2009-10-29T14:12:34Z

Investing in stocks will always carry risk no matter what angle you look at it. Evaluating growth potential and price stability in stocks to diversify your portfolio can help you reduce risk and spread your money among many different...

DF Investing in stocks will always carry risk no matter what angle you look at it. Evaluating growth potential and price stability in stocks to diversify your portfolio can help you reduce risk and spread your money among many different kinds of investments. Diversified portfolios tend to provide less volatile returns and will help minimize downside risks.]]>

Stocks. As you are probably already aware, stocks represent the most aggressive portion of your portfolio. They give you an opportunity for higher growth over a longer period of time. However, there is a draw back to investing in stocks. Stocks have a great risk potential, particularly in short term because as the market gets hot and cold, your investment can be worth a lot, or a little; depending on when you sell it.

Bonds. Most bonds will provide you with a regular income and a lower volatility rate which can act as a nice pin cushion against some fairly unpredictable ups and downs in the stock market. If you are the type of investor that likes to play it a little safer rather than experience high stock growth then investing in bonds is a better way to help diversify your portfolio. The nice thing about US Government bonds is that they are insured and you will always get your money no matter what happens with the economy.

Short term investments. Short term investments are things like money market funds, or CD's (certificates of deposit). They are a more conservative type of investment compared to bond funds and especially in comparison to stocks.

Figuring out how to allocate your investments across all three asset classes is the best way to diversify your portfolio. Depending on what type of growth you are looking for and the price stability will depend on where you put the most or the least amount of the money you invest. The amount of time you have until you will actually need the money to become liquid will help you determine where to put your investments and will help you assess the growth and price stability. Growth potential and price stability with stocks As most of us already know, the biggest growth potential in almost any type of investment is by investing in stock. The stocks that will give you the best return will also give you the largest growth potential and are also typically the riskiest. For example, today investing internationally has the potential to give you a huge return but there are also huge swings in prices. Any type of investment that will give you a high growth return or a potentially high growth return will also have the highest volatility. Growth potential and price stability with bonds Bonds may not give us the largest potential growth but they are much more stable in terms of price. You are almost guaranteed that the money you invest into a bond fund will always give you the return you are looking for. They are much more stable, but won't make you a lot of money very quickly. So you can see how evaluating the growth potential and price stability to diversify your portfolio can only be beneficial. It's important to understand the different asset classes, and more important understand where and how to invest your money to help you reach your long and short term goals.]]> tag:businessknowledgesource.com,2009:/investing//17.28858 2009-10-28T14:00:00Z 2009-10-28T14:12:47Z

Today's economy is definitely suffering, as are American's in general. The economic climate has taken its toll in the world of investing. Some have seen drastic losses in stock investment, while others with more diversified portfolios have not been...

DF Today's economy is definitely suffering, as are American's in general. The economic climate has taken its toll in the world of investing. Some have seen drastic losses in stock investment, while others with more diversified portfolios have not been hit quite as hard. Any way you look at things, there have been significant economic climate effects on investing. What does "economic climate" mean? When we refer to the term "economic climate" it simply means that the economy is either hot because it's making a lot of money, or it's cold because it's not making a lot of money. It is a particular set of social institutions which deals with the production, distribution and consumption of goods and services. The economic climate takes into account everything that contributes to how much or how little money the economy is generating.]]> Cyclical vs. Non-cyclical stock We all know that investors cannot control the cycles of the economy, but they can adjust their investing practices to roll with the punches. Knowing and understanding the different between cyclical and non-cyclical companies can help you distinguish between sectors that are affected by economic changes and those that are more immune to them. This will help investors or potential investors know where to put their money when the market declines, and then again when it starts to come back up The terms cyclical and non-cyclical refer to "how highly correlated a company's share price is to economic fluctuations." When economic growth cools off and begins to slow down it is the non-cyclical stocks that out perform the market. They generally experience profit regardless of what the economic climate is because they produce or distribute goods and services that we will always need; food, water, gas, etc. A company with cyclical stocks, on the other hand will thrive during economic highs; when people have extra income to spend on thing they may not necessarily need. The biggest difference therefore is found between necessity and luxury. So what are the economic climate effects on investing? Well, if you want to invest in stock, there are certain types of stock, cyclical or non-cyclical that you will want to place your money in. Make sure you do your homework about where and how much to invest before you do anything, as the economic climate can drastically affect every investment you make.]]> tag:businessknowledgesource.com,2009:/investing//17.28857 2009-10-27T14:00:00Z 2009-10-27T14:12:31Z

There are several different options available when it comes to investing. From retirement, to stocks, and of course investing in bonds are just a few options. When it comes to finance, a bond is a debt security in which...

DF There are several different options available when it comes to investing. From retirement, to stocks, and of course investing in bonds are just a few options. When it comes to finance, a bond is a debt security in which the authorized issuer owes the holder a debt. Let's take a look at some different types of bonds, characteristics and how comparing performance of bonds can make a huge difference in your return.]]> Types of Bonds Bonds are generally known as a "fixed income" security because the amount of money the bond will generate is usually fixed. It doesn't matter what happens or who the bond holder is, it will always generate the exact same amount of money. Here are a few different types of bonds:

1. Treasuries. United States government treasury bonds come in a variety of different lengths of time and maturity. The time frame for maturity can range from six months to thirty years; depending on the investor. Some different types of treasuries are notes, bills, bonds, and inflation indexed notes. Treasuries are guaranteed by the United States Government and are free of state and local taxes. They are an extremely safe investment to make.
2. Corporate bonds. A corporate bond is a bond issued by a corporate usually issued in order to raise money to expand the business. They generally carry higher interest rates than government bonds because there is always the risk that the company can go bankrupt and default on the bond.
3. State and local governments. These types of bonds are usually sold free of federal income tax on the interest paid. Investors usually pay lower interest rates, unless you are in a higher tax bracket, which could actually have a higher after-tax yield than other forms of fixed income investments.

Bond Characteristics There are certain things you want to know about bonds before you buy one and run comparisons between them; the par value, coupon rate, and the maturity date. These and a few other simple things will help you analyze the bond and compare it to other potential investments.

• Par value is the amount of money the investor will receive once the bond has reached maturity. Par value for corporate bonds is usually about $1000 and government par values are usually higher.
• The coupon rate is the amount of interest the bondholder will receive.
• The maturity date is the date in which the bond issuer has to return the principal amount to the lender.

Comparing performance of bonds Depending on the type and characteristics of the bond or bonds you buy will depend largely on how it performs. Some will perform much better than others; and as we have learned some perform slower than others, depending on maturity dates and par value, etc. You can compare bond funds by looking at their characteristics to help you determine which bond fund offers the best balance of risk and return for you. For example, you can compare several mutual funds by looking at characteristics like credit quality, maturity, and duration. You can also compare bond funds by analyzing tax issues. In order to get the best return on your bond fund investment you need to know your bond types and characteristics of each. This will give you a better idea of how to compare performance of bonds.]]> tag:businessknowledgesource.com,2009:/investing//17.28856 2009-10-26T14:00:00Z 2009-10-26T14:12:41Z

With the state of the country's finances and stock market, many people are nervous about the effect it will have on their own investments. While fluctuations in the market are common, huge dips and record lows tend to send...

DF With the state of the country's finances and stock market, many people are nervous about the effect it will have on their own investments. While fluctuations in the market are common, huge dips and record lows tend to send people into a panic, worrying whether or not their investments are safe. If you are unsure about how to handle a financial crisis, the following tips will help you to weather the storm with your investments. ]]> Take a close look at what you have. One thing you will want to do to weather the storm with your investments is take a close look at what you already have within the market and what sectors your investments are in. With the bank bailouts and financial institutions across the country in a crisis, it's important to understand the great risks of having money within the financial sector of the market at this time. Financial stocks, mutual funds, and EFTs are examples of investments you may have within the financial sector. That said, now is not the best time to be investing heavily in finance. If you are going to, make sure you do plenty of market research and select companies that are in a strong position within the market. Freddie Mac, for example, would be a bad company to invest money in, but there are other financial institutions that have held strong and will likely continue to. Diversify your portfolio Many investors will go over this time and time again because it is important to have a diverse portfolio if you want to weather the storm with your investments. Having a diverse portfolio means that your investments are strategically placed in different investments, such as stocks, foreign treasuries, bonds, CD's, and so forth. When your portfolio is diverse, you are less likely to take a great hit and more likely to weather the storm with your investments. For example, if you have all of your money tied up in financial stocks, you are going to be worse off than an investor who has, say, 25% in the financial sector and the rest in other more stable markets. Mutual funds are a good way to go if you want a low-risk, stable investment. Not only is there a professional selecting them for you (helpful in a bear market), but mutual funds will automatically diversify your portfolio. Look at it as an opportunity Believe it or not, this is not a bad time to invest your money in the stock market-you just need to make smart decisions about what stocks you are going to invest in. One way you can do this is through stock research and careful, close analysis of the companies you are going to invest in. So what are some smart investments to make right now? Non-cyclical stocks are a good choice. These are stocks that are not heavily influenced by the state of the economy. Utilities are a good example of this; regardless of how poorly the economy is, people will still need utilities such as electric companies and alternative energy organizations. The current financial crisis the country is in as well as the volatility of the stock market has many people worried, but there really is no need to panic. The above tips are just a few things you can do to weather the storm with your investments and come out of the financial crisis on top.]]> tag:businessknowledgesource.com,2009:/investing//17.28855 2009-10-25T14:00:00Z 2009-10-25T14:13:35Z

With bank bailouts, the stock market dropping and rising, mergers, buyouts, and the general dismal state of the country's finances, many people are concerned with their portfolios and investments. They are not sure whether to invest more, pull their...

DF With bank bailouts, the stock market dropping and rising, mergers, buyouts, and the general dismal state of the country's finances, many people are concerned with their portfolios and investments. They are not sure whether to invest more, pull their money out now, sell stocks, or take other steps to protect their portfolios. If this sounds familiar, and you would like to protect your portfolio, these steps will help you to protect your portfolio and multiply your money.]]> Don't panic. It's easy to panic when you look at the news and hear that the country is in a financial crisis-after all, your hard-earned money and retirement savings are tied up in it. However, many financial experts advise investors against panicking and making hasty decisions. Investing is meant to be long-term, and it is natural for the market to experience bouts of volatility. More often than not, in the long run weathering storms like these is your best bet. Make informed changes. While you don't want to make hasty decisions with regards to your portfolio, you can still make changes; the purpose of investments is to multiply your money, so it can be beneficial to you to make changes to your portfolio. However, it's important to make sure they are informed, smart changes. Study the market, come up with a strategy, and you can make changes to your portfolio that will in turn help you to multiply your money, even in a poor economy. Diversify your portfolio. You've probably heard it a million times, but the best defense against a shaky financial market and the best way to protect your portfolio is to diversify your portfolio. This means putting your money in a variety of different sectors and in a wide range of different investments. This goes along with the old saying "Don't put your eggs in one basket." The more diverse your portfolio is, the less risk you have of losing a lot of money and the higher your chances of multiplying your money as well. When deciding how to diversify your portfolio, there are a number of different factors you should consider. These include your investment goals, the amount of money you have to use on investments, how long you plan on investing to reach your goals, your risk tolerance, and so forth. It's a good idea to review your investments on occasion and make sure you have a portfolio that is sufficiently diverse to protect your portfolio and multiply your money. Look for investment opportunities While some sectors of the market aren't doing so well (think financial, transportation, and others), there are many that are virtually unaffected, or even doing better than ever. Take advantage of the downturn in the market by investing your money in non-cyclical stocks such as utilities, which have a better chance of helping you multiply instead of lose your money. Consider hiring an investment adviser. If you are unsure of how to protect your portfolio, you are new to investing, or you want to make the best decisions with your money possible, it might be a good idea to hire an investment adviser to help you protect your portfolio and multiply your money. Fees vary depending on the adviser and may be hourly or commission based, but it could be well worth it. Instead of panicking over a shaky market, the above steps will help you to protect your portfolio and multiply your money.]]> tag:businessknowledgesource.com,2009:/investing//17.28854 2009-10-24T14:05:00Z 2009-10-24T14:12:18Z

One of the most important things you can do for yourself is invest for your future. Investing your money for your future helps to ensure you have the peace of mind needed to pay for an education for you...

DF One of the most important things you can do for yourself is invest for your future. Investing your money for your future helps to ensure you have the peace of mind needed to pay for an education for you or your children, retire comfortably, travel, or do anything else you may want to do. Many people have already started saving for their future, but there is a difference between saving and investing. With saving, you have a safe way to put money away. Your savings is easily accessible, although it typically has very little return, and is best used for the short term. ]]> Start early The best way to invest in your future is to start early. While it's never too late, the sooner the better. If you are just graduating college, it may not be a priority for you to invest in your future, especially when you are paying off student loans and just starting out on your own. But the longer you wait, the harder it will be and the less money you will have for your retirement. If you are saving for a college education, or saving for your children, starting early will help to ensure there are more funds for schooling when the time comes. With the state of the economy and the future of student loans questionable, it's a good idea to have your own savings for college set aside. Take advantage of 401k plans If your employer offers a 401k plan, take advantage of it. This is a type of savings plan that will allow you to save for your retirement. It comes out of your check every month, so chances are you won't even miss it. This money is then invested in a way you choose-employers offer different options. If your employer matches 401k contributions, and many do, you are even better off. It's like getting free money for your retirement. 401k plans are also nice because of the tax benefits. You are not taxed on the money that you pay to your 401k, and you only pay taxes on the income from your paycheck that you receive after you contribute to your 401k. 401k funds are also protected, so if your company goes out of business or bankrupt, you still have your funds. IRAs An IRA, or Individual Retirement Account, is another form of savings and investment plan for retirement purposes. There are two main types of IRAs - traditional and Roth. Many advisors recommend Roth IRAs for a number of reasons. With a Roth account, you can withdraw your money at any time without a penalty. With a traditional IRA, you are penalized for withdrawing your money before a certain age, and you must also pay taxes on it. In addition, you don't have to make the mandatory withdrawals at age 70, as you do with a traditional IRA. With a traditional IRA, the money you contribute is deducted from your taxable income. With a Roth, the money is not deductible. There are many ways you can invest in your future.]]>