Showing posts with label Stocks and Bonds. Show all posts
Showing posts with label Stocks and Bonds. Show all posts

Tuesday, December 19, 2017

Your Quick Guide To Going For Growth In 2018

There’s no doubt about it, this last year has been one of the strangest of all with a new President, unrest in the world and the continuing saga of the UK’s plans to leave the EU.

So now it’s time to start questioning what 2018 holds in store for us and how we can all start to make our hard-earned cash work even harder for us. A good place to start would be to look at what we can say about the way the economy will be headed in 2018, or what we may be able to predict.

The first thing to say would be that already the Federal Reserve has indicated that interest rates may be raised up to four times over the next 12 months. While it’s all but impossible to predict what this will mean in actual terms it is fairly safe to say that, for many, this will place an extra burden on their finances while also making savings rates a little more favourable.

It’s also important to look at exactly why rates may have to rise and the reasons are far from bad. In fact, it’s that the economy is on the up, unemployment’s going down and even globally there are the early stirrings of other countries’ economies coming back to life. So it all adds up to the fact that we’ll be going into 2018 on a strong economic wave.

We also know the stock market will start 2018 at near historic highs as the S&P 500 is currently running a Shiller price-to-earnings ratio of 32, which is nearly double the long-term. average. What this means is that to really maximise your returns and take full advantage of the situation, you’ll have to be extra vigilant about where you invest.

It’s also worth noting that it seems like neither pronouncements from President Trump or the risk of conflict in North Korea have had any effect on the markets over 2017, but that’s not to say that these factors won’t come into play in 2018.

So let’s take a look at some of the investments that could pay off for you over the next year. It’s in no way intended to be definite guidance but it should certainly give you plenty to think about.

Your 401(k) Plan is a great investment - especially for the over 50s

If you thought that tax shelters were only for the super-rich it might be a big surprise for you to learn that you’re sitting on one right now, whatever the level of your wealth, and it’s called the 401(k).

Now you may also have thought that the 401(k) plan is, at best, some far from impressive mutual funds which also have high fees attached to them. But, in fact, it’s a very good and tax-efficient place for your money.

For example, if you currently pay 25% tax then for every dollar you invest it’s an extra 25 cents of your investment that’s compounding, and this, over time, is of huge benefit to you. The fact that next year the IRS is going to increase the annual contribution limit on 401(k) plans to $18,500, excluding employer matching, is good news PLUS if you’re 50 or older, you can add another $6,000 per year making $24,500.

So, even if you’re nervous about where the market may be heading, you really should try to maximize your 401(k) plan, especially as there are money market and stable value funds to invest in with minimal risks.

Consider alternative investments too

While there is plenty to recommend the stock market both as a tried and trusted method of increasing wealth, at least during the good times, as well as being a way to own a stake in the US economy, it’s not necessarily always the very best place to invest.

You only have to look at the 13 years between 1968 to 1981 when the Dow Jones Industrial Average actually lost money when inflation was taken into account. But over the same period commodities and gold did far better, especially in the case of the latter whose value rocketed by 2,000% between 1971 to 1980. So the moral of this story is not just to buy gold to think about diversifying in order to not be just relying on the market.

A word of caution, though. When you’re thinking about investing in alternatives you need to be aware that it’s far less regulated than the stocks and bonds markets so a little more diligence is needed. You should also never invest in something you never fully understand. We only have to look back as far as 2008/9 to see exactly where that can lead.

The Bitcoin bubble?

One example of understanding what you’re getting into before you make the leap is the Bitcoin and other cryptocurrencies.

Throughout the year Bitcoin has been hitting the headlines as its value has gradually increased, finally hitting the symbolic $10,000 mark in November. There are also many stories about the people who got in at the earliest days and now are finding that they are multi-millionaires, on paper at least. But, even in the light of these huge gains in value, there’s also increasing disquiet amongst banks and economists that this is showing all the signs of a classic bubble, and we all know what happens when they burst.

The fact is that Bitcoin’s key strength and point of difference in the eyes of some – its independence from governments and financial institutions – is also its biggest weakness. The facts behind this expressed very succinctly by Rodney Johnson, the head of the highly respected economic forecasting firm Dent Research who has pronounced that “If a company or commodity has no assets, no returns and no backing, what’s it worth? In a word, ‘priceless.’ Some will see zero value, others infinite value”. So it very much depends on how you stand on this point which will dictate your attitude to jumping on the Bitcoin bandwagon.

When asked more precisely about his attitudes to investing in a cryptocurrency Johnson was also quoted as saying. “I wouldn’t risk any significant portion of my wealth on such a thing. But I might put a few dollars in, like buying an investment lottery ticket.”

So, in terms of gambles, you might well be better off trying your luck at any of the many online casinos that offer you the chance to take up free spins and bonuses and play without putting up a single cent of your own money, in a fiat currency, of course!

Go for value stocks

So now we’ve covered off these areas, it’s time to take a look at the sorts of stocks that could prove to be a good investment throughout 2018 and beyond.

There’s a simple reason why we’ve left this to last and that’s because your first priority should always to be making your definite savings decisions first before seeing what cash is left over for more speculative investments.

Assuming you go have a pot to invest, it could well be worth following the advice given by many market observers who have been advising that we should be looking for value rather than growth. Now this may sound counterintuitive at the end of a year in which the Russell 1000 Growth Index outgunned the Russell 1000 Value Index by showing returns of over 100% more but the tide may be beginning to turn. So talk to your financial advisor and keep a close eye on the financial pages to spot the value opportunities as and when they arise.

As to what all of our financial situations will be at this point next year, only time will tell. But what is certain is that we’ll all be a year older - but hopefully also a little wiser and richer too - and ready to take on all of the challenges that 2019 may have in store for us.

Thursday, January 30, 2014

Should you Invest in Property, Gold or Stocks this 2014

Once all the new year celebrations are done with, it is time to deal with the more intricate and complex things that are bound to shape the rest of your 2014, at least in financial terms. Investing has always been an important aspect for every salaried man as it increases their chances at a better life and a slightly higher income. However, these investments always tag along with their own set of risks, which also need to be addressed so as to not lose all your savings in the same. Therefore, before you even consider investing, you need to measure the pros and cons of the same. Ideally, there are three markets which seem intensely attractive to an investor and can help give you good returns depending on the situation. However, the question is, where should you invest? Given below is a detailed account of what you can possibly expect and where you are likely to achieve more positive results.

1.) Real estate:

Essentially, price and the corresponding affordability have a huge impact on the decisions that you make. In any ideal situation, the gap between price and affordability should be lower. However, with the year 2013 rounding up and even after the beginning of 2014, the real estate market has not shown any real improvement. The gap between these two fators continues to widen, with the property rates shooting up every passing day and the corresponding affordability staying constant or sinking down due to the inability of employers to raise income. Therefore, the negative growth in income and the continuous growth in property rates make it extremely volatile for you to invest in real estate. It is being predicted that this scenario is likely to change with the advent of General Elections; however, it is very unlikely that this will have any effect on the benefits that you may enjoy from investing in real estate this 2014.

2.) Stock market:

In Jan 2008, Sensex achieved a commendable feat of reaching 21000 level points. But instead of things improving from that point on, there has been a nearly 50% downfall. Therefore, many people are flustered as to whether or not this is the right area for invetsing in 2014.

Ideally, predicting how a stock market will do is not in the hands of people. Even the best investor or employee may be unable to answer that for you. The fact if the stock market will climb at least 24000 points and upwards remains a mystery. However, the sustainable bull market plays the deciding role for this and since the two factors that define this phenomenon– inflation and interest rates are not exactly in the country’s favour, it may be difficult to predict.

3.) Gold:

Gold has not just been the jewellery of choice but also a popular choice among investors. However, with the prices of gold falling to an all time low, with nearly 40% the past year, this trend continues to see the lower grounds even in 2014 and therefore, would not be very advisable. Not much progress in prices was made past 2013, and the situation is likely to remain the same or fall even further.

4.) So, where should you invest?

Ideally, it would be most rewarding to have your investments in products that are also known as debt products.This includes a vast range of fixed deposits and bonds. It is important that the places in which you invest will give you a redeemable offer and help save money at the very same time. As a rule of thumb, investing in Mutual funds, especially the short term bond funds will do your finances and savings a world of good this 2014.

Author’s bio:
Cher Keel is a finance analyst and works with a well known financial company. She enjoys learning nd reading extensively on investments. She is also a guest lecturer at a renowned finance institute and also writes a finance blog giving out investment advice.

Wednesday, November 6, 2013

Investment Basics: Six Steps To Successful Long-Term investment

In order to successfully invest for a child’s educational costs and your own retirement, you must start now and think long-term. Investing successfully over the a longer period of time is not as complex as you might think. Keep these six steps in mind to help you make wise financial decision:

Don’t Time The Market

Day trading is something that became incredibly popular during the tech boom. Large amounts of cash combined with small upticks in the market, and frequent trades were able to create full time incomes for many investors. When it comes to long term investing however, less is more. There is no need to sit in front of your computer all day to be successful. Research an investment, select it, and stay with it.

Past Performance

Though past performance does not guarantee future success or failure, it can be a strong indicator, and should be thoroughly reviewed. Stocks and mutual funds are easy to track performance with earnings and rates of return. Many mutual funds mix stocks and bonds in order to diversify. There are plenty of experts with bond market research and investments tips that you can learn from to avoid past mistakes and understand the market better.

Don’t Panic

Remember that you are a long-term investor. Short term market fluctuations and sell offs are nothing to be feared. These should be viewed merely as buying opportunities where your cost basis can be greatly reduced by buying low to later sell high. If you panic and try to sell when the market drops just a little, you will end up losing much more. Again, think long-term, because there will be small dips and spikes in every stock.


Even excluding short term market fluctuations, as a wise investor, you should still review your portfolio periodically to ensure that your portfolio performance is on the right track. This may be an opportunity to invest more in a particular fund that is outperforming others. Keep in mind that diversification is still critical to ensure success.

Never Chase a Trade

You have completed your research and resolve to purchase a stock, bond, or mutual fund at a strike price. If something unexpected happens that no longer makes the trade an attractive one, don’t chase the trade, move on. Although it is good to invest long-term, that doesn't mean you should chase after an investment that is clearly not going to have a positive benefit for you in the long run.

Cheap is Not Always Good

Penny stocks may seem like a good idea because they allow you to execute large purchase orders with only a small cash investment. As with any investment, you must factor in risk. Penny stocks are so cheap because they are extremely risky. Though some risk is acceptable in the successful long term portfolio for diversification, penny stocks are too volatile, and should not be considered.

Investing for education or retirement can by simple when you take these tips into consideration. Understanding to to successfully invest long-term is essential to help you meet your financial goals. Remember these tips when investing, and you will be able to gain the return on your money that will make a significant difference for you financially.

Friday, September 6, 2013

The 5 Smartest Investments To Make After Retirement

When it comes to investing, the level of risk you can take and your age have somewhat of an inverse correlation. As your age goes up, you want to take on less risk. This never rings more true than after you retire. At this point in life, you're living off of the wealth you've accumulated while still trying to generate more through investments. It's important to be savvy, and that's why we've come up with the five smartest investments for after retirement. 

Dividend-paying stocks are a beacon of safety. These are typically offered by companies that have strong roots in the economy and aren't likely to collapse in a hurry. The lack of expected rise in value is a big part of why these companies pay dividends, but it's great to have that security and still see a return just for holding stock. You don't necessarily want these to be a large part of your portfolio, but having a few is a great idea. 

Foreign assets are also a great pick. In the long run, the shift to a global economy means that more assets are overseas than ever. As the US economy and the dollar start to see parity with the output of other nations, the relative value of those foreign assets is going to see an unprecedented jump. By holding a small amount of foreign assets and increasing that share as the market appreciates, you'll have security. 

Companies that fill a need are also a wise sector to invest in. An obvious pick here is medical companies, but there are other companies that also offer products that will always be needed. Take home security, for instance. Most people live alone, so home security will always be in demand and is unlikely to be replaced in the market. The best alarm services to monitor are the ones that have an established customer base.
Fixed-rate assets are another sound investment. Think securities and fixed-rate bonds. Anything that pays a guaranteed amount of money is a strong pick in a retirement portfolio. 

Boom industries round out the list, although this one requires prudence. Getting in front of the technology boom of the last several years would have been a wise position, just as getting a jump on investing in healthcare would be wise now. 
Investing after retirement doesn't have to be tricky—just stick to the same goals you've always had, and always consult with a financial professional.

Wednesday, August 7, 2013

Companies Still Risk Averse as Economy Grows

The financial markets are watching the recent stock market records with a great deal of interest relative to a potential renewal of significant merger and acquisition activities. This indicator that the downturn that started in 2008 is now history is only one reason for expectation of increased M&A announcements. 

The fact that many companies now carry record cash balances while they experience historically low interest rates would normally drive an interest in aggressive hunting for industry-shaping deals. This is especially the case in light of the relatively limited global opportunities for strong organic growth. 

Evaluating the reasons for so many CEOs remaining risk averse can be found, in part, in the ongoing concerns over major market-shaping events. The continuing issues of problems in the Eurozone, the U.S. budgetary fiscal cliff, and several large deals that were announced but failed to happen are examples. 

These traumas all weigh heavily on companies and their boards when any consideration of major transactions takes place. While macro factors affect every industry, there are indications that some areas are more inclined to aggressive actions than others. 

For example, chemical M&A advisors see an increasing necessity to return to acquisitions and mergers as a viable way for larger companies to achieve their strategic growth objectives. 

When evaluating the most productive ways to put their cash hoards to work in a way that will increase earnings, there are simply limited opportunities to grow organic revenue streams. Analysts are most focused on the possibility of a sustained period of market and global stability to light the fires in the M&A market segment.

Sunday, June 30, 2013

3 Best Ways to Build Equity Over the Next Five Years

Sometimes it's not enough to simply make money. Unless you want to see the money you earn disappear with no return, you'll need to look into ways to build personal equity.

Making smart investments that either build value over time or hold their value for a reasonable duration ensures you can actually spend money to make money. Here are a few of the best ways to build equity over a manageable, five-year period.

Purchase a Home

Intelligently investing in real estate is one of the surest ways to turn a small investment into a big payday down the road. A large or lavish home isn't imperative. With proper research, you can end up spending less on a decent condo investment than you'll spend on monthly rent.

You can also see a huge turnaround on a house that has seen its value plummet over resolvable issues, like worn paint or a dead lawn. Keep the property for several years and do what you can to improve the property without investing too much more money. After several years, put the house back on the market.

With just a few valuable improvements, you could see a decent return. Be careful, though -- the real estate market is volatile and neighborhoods can change over time. Be sure to thoroughly research both the property and neighborhood so you can avoid any future surprises.

Invest in Stocks and Bonds

The great thing about the stock market is that, while many of the highest payoffs come from the biggest risks, there are still safer stocks that can give you a decent return on investment through smarts and patience. Spend some time learning about stocks that interest you and don't be afraid to consult a broker or three. Once you find stocks and brokers you can trust, sink a few dollars into a smart investment and bide your time.

There is, of course, always the chance that your investment gets lost in the often unpredictable market, so start small so you can get your sea legs. And when it comes to bonds, keep your eye on interest rates -- these will affect the return you receive at maturity.

Purchase a Car

The key to making the most out of your automotive investments is buying vehicles that keep their value. Aside from those cars that will eventually become sought-after vintage models, all vehicles depreciate in value. In this case, it's not about identifying an investment that will turn you a profit in a few years, but finding a good place to spend money where you would spend it anyway.

If you must drive, make sure industry projections show that the car will retain its value for several years and with minimal depreciation. For example, the 2014 Ford Fusion is at the top of the list of current cars slated to hold value for several years to come.

Whether you're aiming for property, stocks, or more obscure investments like precious metals, it's essential to do your research and think long-term. Ask experts how your investment might change over time. Consider the benefits and drawbacks, and whether it's about making money later or saving money today.

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