Beginner Investing » money

Why Are People Buying Stocks In This Bad Economy?

Sun, 26 Sep 2010 14:13:59 +0000

It seems many people are suddenly interested in the stock market. After the huge downswing in 2008, a lot of us lost money and went out of the market. But 2009 was a much better year for stocks and 2010 has seen the market go sideways.

After testing some lows in 2010, the Dow seems to want to go up again and apparently, people don’t want to get left behind. They might have been watching AAPL stock go way up or they might be aware of the year end Santa Claus rally that often happens but whatever the reason, there are a lot of people interested in buying stocks online right now.

Sometimes the stock market goes up even though the economy is bad and that is called the wall of worry. When market conditions and news stories are all negative, you would think people would be more apt to sell stocks than buy. But occasionally people continue to buy and the market goes up when you think that everything indicates it should be going down. Right now is one of those times that the market might be climbing the wall of worry.

With the November elections just weeks away, people might be counting on Republicans winning and taking over more seats in Congress. Republicans are seen as more business friendly than Democrats and a win by them would be good for the market. People might be looking for the best stocks to buy right now in anticipation of that happening.

There has been a lot of money on the sidelines for quite some time and people have been waiting for an opportunity to buy. But on the surface this doesn’t seem like a great opportunity as the economy is still awful and unemployment remains high. Why then does the market keep bouncing back up and appearing like it want’s to go higher?

It might just be a case that people sense things aren’t quite as bad as the news stories say they are and they don’t want to miss out if it does continue to go up. People hate to miss the chance to make money and they hate being on the sidelines while the market rises. Greed is a powerful force in our lives and greed does play a factor in stocks. It is often why the market (and particular stocks) get bid up higher than it should before it comes crashing down. Lets hope that greed isn’t playing a part in the stock market moving higher right here and that it is just a case of the economy being better than it seems.

Tax Free Municipal Bonds Or Taxable Bonds?

Mon, 29 Mar 2010 01:59:54 +0000

If you’ve been a diligent saver and maxed out your 401k at work and Roth IRA at home, congratulations! You’re well on your way to a comfortable retirement. But what if you still have money to invest? One of the more difficult questions to answer when it comes to taxable investing is whether you should reshuffle your tax-advantaged accounts to make more room for tax-inefficient bond funds or to go with tax free municipal bonds in a taxable account.

The Rule Of Thumb:

The rule of thumb is that bonds go in tax-deferred accounts and more tax-efficient equity funds should go in taxable accounts (assuming you don’t have enough room for both in your 401k). The reason for this is that taxable bonds have much higher yields than even the most generous high yield municipal bonds. That said, most investors will eventually hit a point where they simply don’t have enough room in their tax-deferred accounts for the quantity of bonds required to fill out their asset allocation. Part of this is due to the fact that the longer you invest, the larger your portfolio will naturally become. But most of it is due to the simple fact that as we grow older, we usually become more conservative and wish to allocate a larger percentage of our portfolio to bonds.

The Taxable-Equivalent Yield Formula:

So you have no choice but to own bonds in a taxable account. How do you decide which is better, tax free municipal bonds or taxable bonds? The formula is actually pretty simple. Note: If you buy municipal bonds from the state you live in (for example California if you live in California, etc), the interest earned on them is also exempt from state income tax, which you should factor into the formula below.

Taxable-Equivalent Yield = municipal bond interest rate / 1 – (federal tax rate)

If the taxable-equivalent yield of a particular muni bond fund is greater than the yield on a comparable taxable bond fund, you are better off owning municipal bonds. If it’s lower, you’re better off owning taxable bonds even after paying tax on the income.

Save Your Money When Investing In Long-Term Growth Stock Picks

Sun, 28 Mar 2010 13:23:28 +0000

Getting rich is a preoccupation of most people. A popular way that people go about it is to invest in the stock market. While most people would assume that their success is based on whether or not they picked good stocks, this is not the only consideration.

There is a popular saying among rich people and that it isn’t about the money they make but it’s more about the money they keep. This is actually profound advice if you consider that so many people invest in the stock market hoping for fast money without any savings to their name. Having money in the bank will definitely help in influencing you NOT to sell in rough times.

When people are investing, they should think about investing for the future with long-term stock picks. This is for a few reasons. Hopefully, you’re able to spot some growth stock picks that will be worth more in the future and it takes time for a company to build. Given the time you need to wait, they should be selling at a value price.

Other reasons to invest in the long term include just not triggering so many commission fees with buying and selling transactions like a lot of traders do. This eats away at your initial investment and like stated above, being rich is about the money you get to keep. While day trading might seem glamorous and there’s no doubt that you can make a lot of money fast, you can also lose it as quickly as the money came in.

One of the rules of investing from the famed investor Warren Buffett is to never lose your money. And given his track record of being a billionaire stock picker, who can argue with him? It takes discipline not to invest in losers and that is why Buffett is known to hold billions of dollars in cash. Going in and out of trades and being forced to make decisions when you don’t have money is not a good way to invest. If you want to be rich investing, you need to your money to pounce on opportunities when they do come along.

Beginner Investing Hosts The Investing Carnival

joanne — Mon, 01 Feb 2010 02:43:13 +0000

We’re so happy to host the first edition of The Investing Carnival. We have some really interesting and informative posts for you to read so get comfy and dig right in.

This first post will explain the 401k rules that you need to be aware of before borrowing from your account. There’s lots of good points to consider in this article and it’s one that everyone should read before taking such a drastic move.

Ty Coon talks about stock market investing system over at Stock Market Investing Today. In his post, he talks about determining overall market direction and how to start setting up screens to identify stocks for further review.

We all have to start somewhere and Stock Market for Beginners provides insight into the world of the stock market with easy language that a beginner can understand. This site has covered other investing topics like gold investing and forex so as to give a complete investing perspective to a beginner.

If you ever wanted to know more about investing, Saving Cash Tips has a post about how you can learn to invest, and why it’s important. Many folks who lost money in the market over the past couple of years really didn’t know how to invest, and just put money into an account where they expected it to go up forever until retirement. Learning more about investing is a smart idea to protect your financial future.”

If you have, or will soon be leaving your current employer and have invested in the companies 401k plan, you will certainly need to understand the 401k rollover process.

We all dream of early retirement but only some truely make it their reality. At Retire Early Guide you can find posts to help you pay off your mortgage faster, effectively save for retirement, put money away for your children’s eduction and more!

That concludes this edition of The Investing Carnival. We would love to host again in the future. Don’t forget to leave a comment when you visit the sites. Tell them we sent you!

Beginner Investing: Mutual Funds

joanne — Thu, 21 Jan 2010 17:05:50 +0000

A mutual fund is simply a pool of money compiled and managed by an investment team. This team is usually centered on the fund manager. The mutual fund is under strict guidelines by the Securities Exchange Commission (SEC). However, because of the strict trading rules the SEC allows them to be open to the average investor and included in retirement accounts like a 401k because they won’t be overly risky with your money.

Why Mutual Funds?
The stock market is generally considered the best investment over the long haul, but one of the riskiest, especially if you’re a beginner investing for the first time. No one is guaranteeing your money and the factors that control the price of a stock can be complicated. The pool of billions of dollars from many people’s accounts can support a top notch investing team to make decisions without the hefty price bill of paying for them yourself. Also, a mutual fund is significantly less work than managing your own stock portfolio. Choosing stocks, watching their prices to buy in, watching their prices to know when to get out, and making sure what was a good investment 5 years ago still is can be a full time job in itself. Many people just don’t have the time or inclination to do this properly. If this is you a mutual fund can be an excellent choice.

What to Look For When Buying Your First Mutual Funds?
The first things you want to do when buying a mutual fund, especially your first ones, is make sure they have a long healthy track record. Look for mutual funds that have been around for 20 years or longer. If they haven’t been able to stand the test of time you don’t need them right now. The stock market has averaged around 8-10% per year annual returns. The mutual fund you are looking at should at least have maintained this return over the last 20 years to be in your consideration. Also, look at the worse years the mutual fund has had and see if you can stomach that kind of loss without bailing out.

The second thing you want to look at is the performance of the current portfolio manager; he will be driving the decisions. You mutual fund broker should be able to fish up where this person has worked prior.

The last note of caution is you want to make sure you are well diversified. At least split your investment money into four fund pools. I like small cap, international, blue chip, and commodity.

Beginner Investing: Bonds

joanne — Mon, 28 Dec 2009 23:57:36 +0000

Have you been giving some thought to investing your hard earned money but do not know which investment vehicle you want to put it into? Investing in bonds is a very safe solution to getting a return on the money that you invest. If you’re a beginner investing in bonds there are some things that will be helpful for you to know before you invest your money in bonds. Investments can be very complicated for someone who is just beginning to invest their money so to avoid some of the confusion you will want to get all of the information that you can.

When you invest your money in bonds it is like you are the banker for a company. You are giving your money to a company in exchange for their promise to pay you back with interest. The interest that you will get paid on bonds that you invest in is variable among companies and there are different bond repayment terms that each company will have.
When you invest in bonds you should plan to have your money tied up for a few years. Usually companies will have a bond repayment period of around ten years, but the good news is you will be able to get an interest check either on an annual basis or a semi-annual basis for the bond that you have purchased. Then at the end of the term the original money that you have invested will be paid back to you.

Usually bonds take a lot of cash to purchase. If you only have a few hundred dollars to invest then you may have a hard time finding a bond to purchase. You will need at least a thousand dollars to purchase a bond but most of the time you will find that you need thousands of dollars to make the investment that you want to make.

Depending on your age bonds are a great way to invest your money. If you are getting older in your investment years then bonds are definitely a great way to invest. You will want to do some research on the company that you are interested in to make sure that they are a stable company before investing any of your money. If the company is stable then you will have a great investment on your hand. You can get a great return on your money without taking a lot of risks by playing banker to different companies.

Beginner Investing: Real Estate

joanne — Mon, 28 Dec 2009 23:25:39 +0000

Are you thinking about investing some of your money in real estate? This is one of the best times to invest in real estate if you are thinking of making a long term investment. With the economy in the shape that it is in people are finding it harder and harder to keep up with their mortgage payments so houses all over the place are being foreclosed on by the bank. Some of them are being sold for dirt cheap so if you have the money to invest this is a great time to purchase some real estate. If you’re a beginner investing in real estate then there is some basic information that you will want to know before you put your money up.

Usually when someone is a beginner in property investing they will start off by purchasing a house and renting it out. You can use the rent money to pay for the mortgage and even make the rent payment a little higher so that you will be able to see some immediate profit. You can save the excess money up each month or you can apply it to the outstanding mortgage loan to get the house paid off a little faster. There are a few things that you will want to do in order to get started off on the right foot.

One thing that you will want to do is find ways to save up all of the money that you can. You will want to have as much investment capital as you can get your hands on so that you are able to make a sizeable down payment. You may want to go in and talk to your local banker about your plans and see how much money you will be able to borrow. Be honest and upfront about your plans so that if you are denied you will be able to find out the reason why and correct it before you try again.

Since you are brand new to investing in real estate you may want to take a professional real estate investment course. There are usually training courses that are held at your local convention center that will teach you some of the basics that you will need to know. If you get all of the information that you need you will be well on your way to successfully investing your money in real estate.

Beginner Investing: Gold

joanne — Tue, 22 Dec 2009 20:43:32 +0000

Investing in gold is one of the smartest ways to ensure the safety of your money and may be the smart way for beginner investing . Gold investment, unlike stock investment, remains at a more stable price and the price movement of gold is comparatively predictable. Investing in gold can be done in two ways, either by investing in the bullion or commodity market or by directly buying it from the jeweler in the forms of gold coins and bricks.

Bullion market trades the gold at the major stock exchanges of the world. Investment in commodity market will require the user to get a Demat account, which is used to trade commodities like gold and metals. The Demat account will be associated with your online bank account and the bank will charge certain brokerage amount on the transactions made through this account. Once you have the logon details, you can start trading in gold at the concerned stock exchange of your country.

Investing in gold will require you to study the market trends and the demand of gold in the near future. You can study online reviews, read online journals and also check out Jim Cramer‘s site to get an idea about the gold investment. Remember to invest at the lower levels and sell at the higher price to earn maximum profits. The share markets must be monitored while investing in gold because whenever the stock markets crash or go low, gold prices automatically increase and any fall in the share or equity markets can be the right moment to enter the gold investment. The timing is very important while investing in gold and the right entry and exit timings will determine the amount of profit you make in the commodity market. Gold investment can do wonders, provided the investor take calculated risk and manages his portfolio in an organized manner.

Search Related Tags: Beginner Investing, Gold, interest rate, Investing In Gold, investments, money, real estate, Stock, stocks

Dividend Reinvestment Program

joanne — Fri, 06 Nov 2009 21:35:08 +0000

Investing in the stock market is a subject of intense curiosity for a huge percentage of wage earners. The images of the flurry of activity at stock exchanges, and the stories about day traders raking it in, are appealing for those who want to be able to provide a better lifestyle for themselves and their families into the future.
However the truth of it is that for the great majority of investors, any gains on the share market will have to be made by sensibly choosing a balanced portfolio and letting it grow over time. The good news is that there are plenty of relatively safe investment strategies that are very likely to offer a reasonable return on your money over a long enough period! One of the less well known options that is worth pursuing if you are interested in developing a long term strategy is a Dividend Reinvestment Program, or DRIP.

A DRIP is a program run in-house by a publicly listed company. They are often offered to employees of the company, but they are also open to external investors who can meet the companies minimum share threshold to participate – usually this threshold is quite low.

The benefit of DRIP investment is that you can start with a very low volume of shares, and gradually increase your shares over time. You usually set a fixed cash amount that you will use every month to buy more shares, and this can be set up to be automatically deducted from your bank account – in essence, it is a forced savings system. The strength of a DRIP lies in the fact that any dividends paid by the company on your shares are automatically reinvested, and this has a compounding effect on your number of shares over time. Many companies also offer shares to participants in the program at a reduced rate, and of course you pay no brokers fees if dealing directly with the company!

Although it might not suit day traders out for short term gain, a DRIP is a great tool to have in your arsenal when building a long term portfolio.

Investing Freebies

joanne — Thu, 30 Jul 2009 21:02:02 +0000

When you’re a beginner investing in the stock market, sometimes you don’t have a lot of extra money to spend on investing tools and resources. Here are a few trial offers and freebies that you can use to increase your understanding of the stock market and investing in general.

Free Fantasy Stock Market Game
Free Subscription To Global Finance
Free Investing Membership
Free Subscription To ‘Futures’ Magazine
Free Trial To Cramers Action Alert

Beginner Investing » money

Why Are People Buying Stocks In This Bad Economy?

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Tax Free Municipal Bonds Or Taxable Bonds?

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Save Your Money When Investing In Long-Term Growth Stock Picks

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Beginner Investing Hosts The Investing Carnival

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Beginner Investing: Mutual Funds

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Beginner Investing: Bonds

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Beginner Investing: Real Estate

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Beginner Investing: Gold

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Dividend Reinvestment Program

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Investing Freebies

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