stock market http://www.wisebread.com/taxonomy/term/1549/all en-US These 8 Small Cap Value Investments Are on Fire http://www.wisebread.com/these-8-small-cap-value-investments-are-on-fire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/these-8-small-cap-value-investments-are-on-fire" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/kid_money_investments_484334330.jpg" alt="Child finding small cap value investments that are on fire" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The stock market has been on a tear as 2016 comes to a close, and there's one particular investment that has performed especially well. Small cap value investments have risen significantly over the last few months, outpacing stocks and funds representing larger companies.</p> <p>Small cap value stocks are smaller companies (usually of less than $2 billion in market capitalization) that may be perceived as undervalued based on their price-to-earnings ratios. These investments appear to be benefiting from a general run-up in the stock market. But economic uncertainty overseas has further boosted small cap value investments, because they tend to be U.S.-based.</p> <p>There are countless small cap value stocks, but the easiest way to invest in them is through a mutual fund or exchange-traded fund (ETF). Here's a look at some small-cap investments that have been supercharging investment portfolios this year:</p> <h2>1. iShares S&amp;P Small Cap 600 Value ETF [NYSE: <a href="http://www.google.com/finance?cid=700320">IJS</a>]</h2> <p>Shares of this ETF are up more than 20% just since the start of November, and more than 34% over the last 52 weeks. Top holdings include TiVo, defense contractor CACI, and chemical company Chemours. IJS is designed to mirror the S&amp;P Small Cap 600 Value Index.</p> <h2>2. SPDR S&amp;P Small Cap 600 Value ETF [NYSE: <a href="https://finance.yahoo.com/q?s=slyv">SLYV</a>]</h2> <p>This is another ETF designed to track the S&amp;P Small Cap 600, and it's had a great 2016. Shares are trading at about $123, up 23% in the last two months and a whopping 50% since hitting a low of $80 in January. Returns on the year are nearly triple that of the S&amp;P 500. SLYV's holdings are very similar to its iShares counterpart, though its expense ratio of 0.15% is slightly lower.</p> <h2>3. iShares Russell 2000 Value ETF [NYSE: <a href="https://finance.yahoo.com/q?s=iwn">IWN</a>]</h2> <p>Another strong offering from iShares, this ETF is designed to track &mdash; surprise! &mdash; the Russell 2000 Value Index. It's up 20% in the last two months and 30% over 52 weeks. IWN's top holdings include Webster Financial Corp., Prosperity Bancshares, and chemical manufacturer Olin Corp.</p> <h2>4. Vanguard Small Cap Value ETF [NYSE: <a href="https://finance.yahoo.com/q?s=VBR">VBR</a>]</h2> <p>VBR has been on a tear recently, up about 17% since the start of November, and 24% in 2016. This is a passively managed fund designed to mirror the performance of the U.S. Small Cap Value Index. An expense ratio of .08% is another strong selling point for this ETF. Top holdings include insurance brokerage Arthur Gallagher &amp; Co., technology provider CDW, and Westar Energy Inc., the largest electricity provider in Kansas. (Disclosure: I own shares of VBR).</p> <h2>5. Schwab U.S. Small Cap ETF [NYSE: <a href="https://finance.yahoo.com/q?s=scha">SCHA</a>]</h2> <p>With an expense ratio of a mere 0.06%, this ETF costs almost nothing extra to own. And returns have been great in 2016, with shares rising by 20% on the year and 16% in the last two months. Holdings include U.S. Steel, Pacwest Bancorp, and Coty Inc., a maker of beauty products.</p> <h2>6. Wells Fargo Special Small Cap Value Fund [NYSE: <a href="http://etfs.morningstar.com/quote?t=ESPAX&amp;culture=en_us&amp;platform=RET&amp;viewId1=3577733644&amp;viewId2=2545513703&amp;viewId3=2700073027&amp;test=QuoteiFrame">ESPAX</a>]</h2> <p>Shares of this fund are up 30% in 2016, making it one of the best performing funds of the year. It's powered by diverse holdings that include First Citizens BancShares, cement maker Eagle Materials, and metal manufacturer Mueller Industries. There are no transaction fees to buy and sell this fund through Fidelity, though there is a $2,500 minimum investment.</p> <h2>7. American Beacon Small Cap Value Fund [NYSE: <a href="https://finance.yahoo.com/q/hl?s=AVFIX+Holdings">AVFIX</a>]</h2> <p>This mutual fund has risen in value by 23% in 2016. That's not quite as good as the Russell 2000 Value index, but still outpaces most investments these days. This fund is weighted heavily toward financials and technology. Top holdings include Vishay Intertechnology Inc. and Portland General Electric Company. Note that its expense ratio of 0.82% is on the high side.</p> <h2>8. Queens Road Small Cap Value Fund [NYSE: <a href="https://www.zacks.com/funds/mutual-fund/quote/QRSVX">QRSVX</a>]</h2> <p>This well-regarded fund is up 12% since the end of October and 17% overall this year. This fund is weighted toward industrials and technology, with a good dose of consumer products and financials. Top holdings include Plantronics, a maker of wireless headsets; Hilltop Holdings, a bank and insurance company; and aerospace firm Orbital ATK. The minimum to invest in this fund is $2,500, and the expense ratio of 1.26% is on the higher side. However, those with brokerage accounts at Fidelity can trade this fund without paying a commission.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/these-8-small-cap-value-investments-are-on-fire">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-16"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-buy-your-first-stocks-or-funds">How to Buy Your First Stock(s) or Fund(s)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-questions-to-ask-before-you-sell-a-stock-or-a-fund">10 Questions to Ask Before You Sell a Stock or a Fund</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/survive-the-bear-market-10-steps-to-ride-the-downturn">Survive The Bear Market: 10 Steps To Ride The Downturn</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-deliciously-profitable-food-and-beverage-stocks">10 Deliciously Profitable Food and Beverage Stocks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-youd-held-these-10-stocks-instead-of-sold-youd-be-rich-now">If You&#039;d Held These 10 Stocks Instead of Sold, You&#039;d Be Rich Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment small cap small cap value small companies stock market stocks Thu, 05 Jan 2017 11:00:08 +0000 Tim Lemke 1868659 at http://www.wisebread.com The Easiest Way to Invest in the World's Biggest Companies http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-easiest-way-to-invest-in-the-worlds-biggest-companies" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/invest_money_476336804.jpg" alt="Learning how to invest in the biggest companies" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Here's a classic way to build up an investment portfolio: Regularly invest modest amounts of money in growing companies. Do that for a few decades, reinvesting the dividends as you go along, and &mdash; if you've picked the right companies &mdash; you will end up with sizable holdings. Perhaps even real wealth.</p> <p>If you want a diversified portfolio, and you really should, there are a lot of cheap ways to get one. Any number of mutual funds will let you open an account with a modest initial deposit, and the minimums for subsequent investments are quite reasonable for even a small saver.</p> <p>But what if you don't like someone else's idea of a diversified portfolio? What if you have some strong opinions about which companies are worth investing in, and out of the thousands of mutual funds available, none of them focuses on those companies? What if you really want to invest in specific companies picked by you?</p> <p>One option would be to open an account at an online brokerage and make your purchases there. That will work great if you have ample money to invest. But what if your free cash for investing is small?</p> <p>Even small investments can add up to a lot of money, if you've got both time and a good annual return working for you. If the companies you pick can average an 8% annual return for 40 years, just $20 a week will build to a fortune of over $300,000.</p> <p>But the online brokerage solution is no good for investments that small, because of commissions. Even the cheap online brokers charge $5 on a trade, and plenty of them charge closer to $10 &mdash; there's half your investment gone right there.</p> <p>Fortunately, there's an alternative that's tailor-made for this situation: Direct Stock Purchase Plans, or DSPPs.</p> <h2>Direct Stock Purchase Plans</h2> <p>Back in my day they were called Dividend Reinvestment Plans, or DRIPs, but they're basically the same thing: Big companies hire somebody &mdash; usually the stock transfer agent &mdash; to create and manage accounts that let individuals buy small quantities of stock &mdash; usually for no commission &mdash; and reinvest their dividends.</p> <p>It's a win for the investor, because they get to invest in the stock for free. It's a win for company, because they get a dependable stream of new capital, and a stable base of shareholders who are aren't likely to sell out at the first sign of bad news or to go chasing after the next hot trend.</p> <p>Besides charging no commissions, they also solve another problem for the very small investor: the cost of whole shares. Suppose you want to invest $20 out of every paycheck, but the stock you want to buy is $63 a share. It would take you four paychecks to save up enough money to buy one share. With a DSPP you'd get 0.317 shares with the first contribution, and a similar amount each paycheck after.</p> <h2>Things to Know</h2> <p>There are a few caveats.</p> <p>First, only certain companies go to the trouble and expense of offering a DSPP. Happily, as suggested by the title of this article, they're mostly the largest companies on the U.S. stock exchanges. The web has plenty of lists of companies that offer DSPPs or DRIPs. Alternatively, if you know which company you're interested in, go to the company website and look for a link like &quot;investors&quot; or &quot;shareholder information.&quot; If there's a direct investment program, you'll find the information about it there.</p> <p>Second, buying stocks this way &mdash; through numerous small purchases &mdash; may make figuring your taxes a lot more complicated in the years that you sell. (This may be less true than it used to be, now that brokers are required to track your cost basis for you.)</p> <p>Third, be aware that these sort of plans don't offer the services of a broker. They are basically just for accumulating shares in one specific company. They will probably let you shift from reinvesting your dividends to receiving them in cash, something you might want to do when you retire and will be living off your investments. They usually let you take delivery of your stock (if at some point you want to transfer it to a regular broker) or sell it (if you have found a better investment, or need the money to live on). They won't let you borrow against it, they won't have cash management tools, they won't be interested in holding any other shares you own, or selling you bonds, or advising you on other investment opportunities.</p> <p>Fourth, investing in just one company won't give you a diversified investment portfolio. You'd need a dozen carefully chosen companies to get something reasonably diversified. Of course, as an adjunct to some well-diversified mutual funds, a DSPP in a company that does very well, can provide a considerable boost to your total return, without completely unbalancing your portfolio.</p> <h2>History</h2> <p>Plans like these used to be a much bigger deal. Especially before 1975 (when minimum commissions were abolished), but continuing right up until Internet brokers got big in the 1990s, the costs to trade stocks were high enough that it was completely impractical for a small investor to gradually accumulate shares in a growing company. Investing in individual stocks was a game only for the wealthy.</p> <p>It's generally not important these days, but there's a technical difference between DRIPs and DSPPs. Back in the day DRIPs usually required that you purchase your first share from a broker (or acquire it some other way, such as by inheriting it). Then you could reinvest dividends, or even make additional cash purchases of shares, but that first share had to come first.</p> <p>Starting in the mid-1990s, the SEC relaxed some rules, making it practical for companies to offer DSPPs that could sell you your first share, as well as shares beyond that.</p> <p>It's kind of a technical point, but that's the difference between the two kinds of plan.</p> <h2>Small Versus Tiny Investors</h2> <p>With internet brokers, even a fairly small investor can buy and sell stocks. You need a certain amount of capital &mdash; a few thousand dollars &mdash; to make it possible to buy a round lot of 100 shares and to make the $5 or $10 commission a small enough percentage of your total investment.</p> <p>But if you're a tiny investor &mdash; if your investable capital is only a few hundred dollars &mdash; something like a DSPP makes it possible for even the smallest investors to accumulate sizable portfolios through frequent, modest investments made over a long period of time.</p> <p>It's what they were designed for.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment direct stock purchase plans dividend reinvestment plans DSPP large companies portfolio small investors stock market Mon, 28 Nov 2016 10:00:06 +0000 Philip Brewer 1839210 at http://www.wisebread.com 6 Stocks to Buy Before Black Friday http://www.wisebread.com/6-stocks-to-buy-before-black-friday <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-stocks-to-buy-before-black-friday" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/ebay_sign_93270545.jpg" alt="Finding stocks to buy before Black Friday" title="" class="imagecache imagecache-250w" width="250" height="165" /></a> </div> </div> </div> <p>Thinking about playing the stock market to take advantage of the holiday uptick? Consider investing in these stocks to boost your gift-shopping budget. Or, just scrap it all and go on vacation. Merry Christmas to <em>you</em>!</p> <h2>1. UPS</h2> <p>It makes perfect sense that global-shipping giant United Parcel Service [NYSE: <a href="https://www.google.com/finance?q=NYSE:UPS">UPS</a>] would see a surge in stock prices as the height of shipping season approaches. A recent survey conducted by comScore reveals that <a href="http://fortune.com/2016/06/08/online-shopping-increases/">online shopping will increase this year</a> &mdash; to nobody's surprise &mdash; and that only means more business for UPS. According to independent trader and investor Tela Holcomb, UPS stock has risen from early November to early December for nine out of the last 10 years. Given data that even more packages than ever before will crisscross the country this year, 2016 should be a boon for business as well. She notes, however, that stock trends are based on historical data and should not be taken as investment advice; your personal decision on whether to invest should be supported by current stock charts.</p> <h2>2. Amazon</h2> <p>Amazon [NASDAQ: <a href="https://www.google.com/finance?q=AMZN&amp;ei=utctWImsKIW7ep7hpbAJ">AMZN</a>] has given department stores a run for their money and their stock price shows it. Like UPS, Amazon's stock has a trend of rising from early November to early December, nine out of the last 10 years, with the highest increase being over 11%, according to Holcomb.</p> <h2>3. eBay</h2> <p>If Amazon doesn't have what you're looking for when shopping for gifts, eBay [NASDAQ: <a href="https://www.google.com/finance?q=NASDAQ%3AEBAY&amp;ei=vtctWKHUGM_BeuzHp8gG">EBAY</a>] probably does &mdash; which is why each of these platforms continues to perform at peak levels during the holidays. Vic Patel is a professional trader and investor with over 20 years' experience in the Stock, Futures, and Foreign Exchange Markets, and he's particularly bullish about eBay in the short term going into Black Friday.</p> <p>&quot;Last year, eBay posted a healthy 4% gain from early November leading into Black Friday; I see a similar seasonal tendency for the stock this year as well,&quot; he says. &quot;This is especially likely given that the stock has been beaten down a bit over the last few months and is ready for a bounce upwards.&quot;</p> <h2>4. Priceline</h2> <p>The holiday period has a stronghold on many industries, including restaurants, retail, and travel. Which is why it stands to reason that during the most traveled period of the year &mdash; the day before Thanksgiving through New Year's &mdash; travel sites like Priceline [NASDAQ: <a href="https://www.google.com/finance?q=priceline&amp;ei=F9gtWNG1HdW_e8zjhtAF">PCLN</a>] start climbing.</p> <p>&quot;Analyzing changes in Priceline's stock price shows the stock has a trend of going up the last two weeks of November into the beginning of December,&quot; Holcomb says. &quot;With Thanksgiving being the day before Black Friday, it's no surprise their stock is up around this time.&quot;</p> <h2>5. Big 5 Sporting Goods</h2> <p>In a year that saw one of the biggest sporting goods store in the United States &mdash; Sports Authority &mdash; go belly up, it's a surprise (or maybe not, thanks to less competition) to see Big 5 Sporting Goods [NASDAQ: <a href="https://www.google.com/finance?q=BGFV&amp;ei=X9gtWLmuIo29e8LPoogO">BGFV</a>] projecting gains. But the company, with an e-commerce platform and brick-and-mortars limited to the western U.S., is dazzling investors. In fact, Forward View, an investment research provider, moved the company from a sell rating to a buy rating while increasing its target price to $20, up from $15, based on new modeling.</p> <h2>6. A Few Things You've (Maybe) Never Heard Of</h2> <p>The election of soon-to-be President Trump sent the market into a tailspin leading up to the results, but the Dow bounced back to post a six-day winning streak, closing at a <a href="http://www.cnbc.com/2016/11/14/us-markets.html">record high despite a tech fall</a>, according to CNBC, with Goldman Sachs [NYSE: <a href="https://www.google.com/finance?q=Goldman+Sachs&amp;ei=vtgtWKCWA8_BeuzHp8gG">GS</a>] and UnitedHealth Group [NYSE: <a href="https://www.google.com/finance?q=NYSE%3AUNH&amp;ei=1tktWJCsNYHweNWzqJgB">UNH</a>] contributing the most gains. Before the election, however, GoBankingRates predicted a few stocks poised to grow, including Applied Materials [NASDAQ: <a href="https://www.google.com/finance?q=AMAT&amp;ei=QdotWLHgLtSne9LWh4gB">AMAT</a>], Edwards Lifesciences [NYSE: <a href="https://www.google.com/finance?q=EW&amp;ei=YdotWInxEdSne9LWh4gB">EW</a>], ARRIS [NASDAQ: <a href="https://www.google.com/finance?q=ARRS&amp;ei=hNotWIiyJtSIe-KahcAH">ARRS</a>], Lam Research [NASDAQ: <a href="https://www.google.com/finance?q=LRCX&amp;ei=qNotWJGJF52ge_O4gpAP">LRCX</a>], and Northrop Grumman [NYSE: <a href="https://www.google.com/finance?q=NOC&amp;ei=0totWNmyK9-Se6q3nOAD">NOC</a>]. These stocks represent a wide range of industries &mdash; from entertainment and communication technology (ARRS) to aerospace and defense tech (NOC) &mdash; none of which are tied to the holidays outright. It's sometimes wise to look beyond the obvious.</p> <h2>The General Consensus</h2> <p>Invest in seasonal or holiday-driven companies to make the most out of this time of year. Get in and get out.</p> <p>&quot;Chances are if you're spending more than usual during the holidays, so is everyone else,&quot; says financial expert Dustin Jacobs, VP for marketing at BrightStar Credit Union. &quot;Use this to your advantage by buying stocks in companies that are most profitable during the time between Thanksgiving and New Year's like airlines including JetBlue, retailers like Target and Amazon, and transportation companies such as UPS and FedEx. Do it before the 'January Effect' kicks in and you'll be ready to ring in the New Year with a champagne toast to a temporary bull market.&quot;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/6-stocks-to-buy-before-black-friday">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-expensive-stocks-that-are-totally-worth-it">7 Expensive Stocks That Are Totally Worth It</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-you-need-to-start-flipping-items-for-cash-online">What You Need to Start Flipping Items for Cash Online</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-8-small-cap-value-investments-are-on-fire">These 8 Small Cap Value Investments Are on Fire</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/learn-how-to-invest-with-these-5-stock-market-games">Learn How to Invest With These 5 Stock Market Games</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Amazon big 5 sporting goods black friday bull market eBay holiday season priceline stock market UPS Fri, 18 Nov 2016 10:00:07 +0000 Mikey Rox 1835350 at http://www.wisebread.com 7 Financial Reasons 2016 Needs to Be Over ASAP http://www.wisebread.com/7-financial-reasons-2016-needs-to-be-over-asap <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-financial-reasons-2016-needs-to-be-over-asap" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/2016_money_78468345.jpg" alt="Why 2016 needs to be over ASAP" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The year is winding down, and for many of us, it can't end soon enough. From a financial standpoint, 2016 was a mixed bag, at best. Of course, there's no guarantee that next year will be markedly better. But here are a bunch of financial reasons why we're ready to put up a new calendar.</p> <h2>1. Poor Economic Growth</h2> <p>For most of the time after World War II, Americans could count on a growing economy, usually to the tune of at least 3%, and often significantly higher. These days, the gross domestic product (GDP) of the United States is stuck on a slower growth path. While the economy did have a good third quarter, it's likely that growth for the year will be under 3% because of a dismal first half of the year. It's better than being in a recession, but this slower growth could have big implications on incomes, investment returns, and Americans' overall quality of life over time.</p> <h2>2. Mediocre Investment Returns</h2> <p>So far in 2016, the S&amp;P 500 has increased in value by a little over 7%. That's not bad, but many investors were hoping for a bigger jump after an increase of less than 2% in 2015. In the post World War II period, there have been only about a dozen instances when investment returns didn't average at least 5% annually over a two-year period. This will be the eighth consecutive year of positive market returns, and that's a good thing. But the last couple of years have fallen into the &quot;good, not great&quot; category, and that may force a lot of people to adjust their overall retirement projections downward.</p> <h2>3. Fewer People Working</h2> <p>America's unemployment rate is 4.9%, and that's historically quite low. So good news, right? Well, any excitement over that number is tempered by the fact that overall participation in the labor force is at one of its lowest points in the last 50 years. About 63 million people are considered part of the civilian workforce, but that's down from 67 million 15 years ago. The unemployment rate does not consider people who have voluntarily left the workforce or have been out of work for a very long time.</p> <p>There are a variety of reasons why fewer Americans are working, and not all of them are bad. An aging population means more people are retiring. More people are pursuing advanced education. The Affordable Care Act has made it easier for some people to get health insurance without the need to get it through an employer. People who choose to be out of the workforce for too long may lose skills that will make them more employable later. And a declining workforce also has a negative impact on household incomes, consumer spending, and, ultimately, economic growth.</p> <h2>4. Paltry Interest Returns</h2> <p>We've been in an ultralow interest environment for years now. Many of us have benefitted from the low cost of borrowing, but this also means that our savings accounts aren't generating much return. This is bad for anyone starting out saving and for older retirees who rely on interest income. It's also generally a sign from the Federal Reserve that the economy still needs some propping up. Low interest rates can be helpful to us in some respects, but most economists yearn for a time when rates weren't hovering near zero.</p> <h2>5. Flat Wages</h2> <p>Did you get a raise in 2016? If not, you're probably not alone. Real wage growth has been basically flat for years, and this year has been no exception. The U.S. Department of Labor reports that real average weekly earnings rose just 1% in September compared to the same month a year ago. The average worker earns just 11 cents per hour more than this same time last year, when you factor in inflation. This stubborn wage stagnation has a negative impact on the middle class, especially when you consider things like the rising cost of education. Will 2017 be better?</p> <h2>6. Brexit Reax</h2> <p>The world pretty much freaked out over the summer when people in the United Kingdom voted to have their country leave the European Union. It was a result that many believed could not happen, and sent stock markets around the globe tumbling. The British Pound lost a good chunk of its value, and overall uncertainty of what happens next has led to a drag on the economy and England and Europe as a whole.</p> <h2>7. Fumbling Phone Makers</h2> <p>In recent years, companies that make smartphones and other digital devices have been huge drivers of the stock market and the economy. Apple and Samsung certainly come to mind. But in 2016, it was a lot of bad news and disappointment.</p> <p>Samsung was forced to recall and stop production on its Galaxy Note 7, after reports that the phones were catching fire. This news virtually wiped out all of the company's profits for the third quarter of 2016.</p> <p>Meanwhile, Samsung's top competitor, Apple, hasn't exactly taken advantage. The company sold 45 million of its popular iPhone in the most recent quarter, compared to 48 million in the same period last year. And reviews of the newest iPhone 7 have been tepid. Shares of the company are up about 8% this year, which is solid growth but less than what we've come to expect from the tech behemoth. There is hope for 2017, however, as Apple says it will spend a whopping $16 billion on capital expenditures next year.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/7-financial-reasons-2016-needs-to-be-over-asap">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-money-goals-you-can-still-reach-by-2017">13 Money Goals You Can Still Reach by 2017</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-the-election-could-impact-your-wallet">Here&#039;s How the Election Could Impact Your Wallet</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-smart-money-moves-to-make-in-the-new-year">8 Smart Money Moves to Make in the New Year</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-world-currencies-that-took-a-hit-in-2016">8 World Currencies That Took a Hit in 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moments-that-should-be-on-everyones-bucket-list">8 Money Moments That Should Be On Everyone&#039;s Bucket List</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 2016 2017 Economy employment finances jobs New Year news stock market wages Tue, 08 Nov 2016 09:00:09 +0000 Tim Lemke 1828890 at http://www.wisebread.com 5 Essentials for Building a Profitable Portfolio http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-essentials-for-building-a-profitable-portfolio" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/growing_money_trees_84090749.jpg" alt="Finding essentials for building profitable portfolio" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For many people, investing is the most complicated and intimidating aspect of managing money. But it doesn't have to be. Here are some of the essentials for building a successful investment portfolio.</p> <h2>1. Know What You're Investing For</h2> <p>Investing is best done with a purpose in mind. Investing for a child's <a href="http://www.wisebread.com/when-should-you-start-saving-for-your-child-s-education">future college costs</a> is not the same as investing for your retirement. You would use different investment vehicles &mdash; a 529-plan account or Coverdell Education Savings Account for college, and an <a href="http://www.wisebread.com/401k-or-ira-you-need-both">IRA or 401K</a> for retirement.</p> <h2>2. Know Your Time Frame</h2> <p>Investing is for goals you want to accomplish in five or more years. Anything shorter than that and you can't afford to take much, if any, risk, so you would be best served by a savings account.</p> <p>Still, a &quot;five or more years&quot; time horizon contains a wide range of options. Someone planning to retire in 10 years should invest quite differently than someone planning to retire in 30 years. The first person can't afford to take as much risk as the second person. By the same token, the second person can't afford the risk of playing it too safe.</p> <h2>3. Know Your Temperament</h2> <p>This has to do with how well you sleep at night when the stock market is in free fall. Vanguard has a decent <a href="https://personal.vanguard.com/us/FundsInvQuestionnaire">free assessment</a> that combines your investment time frame with your temperament to suggest an optimal asset allocation &mdash; that is, what percentage of your portfolio you should allocate to stocks and what percentage to bonds (or stock, or bond-based mutual funds).</p> <h2>4. Know How to Choose Specific Investments</h2> <p>If investing is the most complicated and intimidating aspect of managing money, choosing specific investments is the most complicated and intimidating aspect of investing. Very few people have the wherewithal to do this on their own. It's helpful to acknowledge that. As Clint Eastwood's Dirty Harry character noted, &quot;A man's got to know his limitations.&quot; Of course, the same is true for women!</p> <p>There's just too much to know. There are thousands of different investments to choose from. And it can be crazy confusing (and dangerous) to make these decisions based on the all-too-common articles about &quot;Last Year's Best-Performing Mutual Funds&quot; or &quot;Where to Invest to Take Advantage of Advances in Wind Power.&quot;</p> <p>The crucial decision you need to make is not so much about which investments to choose; it's about which investment process to use. Here are three options.</p> <h3>Go With a Target-Date Fund</h3> <p>The simplicity of such funds has made them tremendously popular. Most of the big mutual fund companies offer them. You just choose the fund with the year closest to the year of your intended retirement as part of its name (Fidelity Freedom 2050, for example). The fund is designed with what the fund company believes is the ideal asset allocation for someone with that retirement date in mind, and it even changes the allocation as you get closer to that target date, becoming increasingly conservative. It's a very simple process, but <a href="https://www.soundmindinvesting.com/articles/view/target-date-funds-the-devils-in-the-details">all target-date funds are not alike</a>. So, be informed.</p> <h3>Go With an Investment Adviser</h3> <p>He or she will get to know you and your goals and then tailor an investment strategy to you. Along the way, you will typically pay 1% of the amount of money you have the adviser manage for you each year. Also, advisers usually won't work with anyone with less than $100,000 to manage. If you go this route, ask friends for referrals and opt for a fee-based adviser (as opposed to one compensated by commissions) who works as a &quot;<a href="http://www.wisebread.com/who-to-hire-a-financial-planner-or-a-financial-adviser">fiduciary</a>.&quot;</p> <h3>Go With an Investment Newsletter</h3> <p>Whereas an investment adviser works with clients one-on-one, an <a href="https://www.soundmindinvesting.com/articles/view/what-investing-newsletters-do-that-financial-magazines-dont">investment newsletter</a> works with investors on a one-on-several thousand (or however many subscribers they have) basis. There are hundreds of investment newsletters, each with their own investment strategies. Subscribers gain access to the strategies along with the specific investment recommendations needed in order to implement the strategies. Subscription costs range from less than $200 per year to over $1,000 per year.</p> <h2>5. Know Some Market History</h2> <p>One of the biggest threats to your success as an investor can be seen in the mirror. When the market falls, it's easy to give in to fear and sell. When the market is booming, it's easy to give in to greed, and invest too aggressively.</p> <p>Far better to understand that the market cycles between bull markets and bear markets (growing markets and declining markets). Even within a specific year, there will be ups and downs.</p> <p>That's why it's so important to have a trusted investment selection process. With a good process in place, you should have some sense as to how your portfolio is likely to perform under a variety of market situations and you should be content to stay with it in good times and bad.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment advice college fund financial advisers money management portfolio retirement risk stock market target date funds Wed, 26 Oct 2016 10:00:11 +0000 Matt Bell 1820715 at http://www.wisebread.com What Are Income Stocks? http://www.wisebread.com/what-are-income-stocks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-are-income-stocks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_investments_71091499.jpg" alt="Learning the basics of income stocks" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You may think that investing in stocks is all about share price increases over time. In reality, you may be surprised to find out that the price of some stocks can vary little over time and still provide an ever-increasing stream of income. These types of securities are known as income stocks.</p> <p>Let's review the seven things you need to know about income stocks and their ability to provide a high payout to investors.</p> <h2>1. They Pay a Dividend</h2> <p>The defining feature of an income stock is that it pays a regular and predictable dividend, which often increases over time. For example, Caterpillar Inc. [NYSE: <a href="https://finance.yahoo.com/quote/cat">CAT</a>], a leading manufacturer of construction, mining, and transportation equipment, has <a href="http://www.caterpillar.com/en/investors/stock-information/dividend-history.html">paid a dividend to its stockholders</a> every quarter since 1933. For the last 22 years, Caterpillar's cash dividend has consistently increased and it stands at $0.77 per share of common stock &mdash; up from $0.35 in 1996, and without adjusting for the two-for-one stock splits of 1997 and 2005.</p> <p>A predictable, steady, and ever-increasing stream of income makes income stocks attractive to those retirement savers who're close to retirement age.</p> <h2>2. They Are Often Large Companies</h2> <p>While income stocks can be found in many industries, they are most often part of the real estate, energy, utility, natural resource, and finance industries. One example of an income stock in the energy sector is Phillips 66 [NYSE: <a href="https://finance.yahoo.com/quote/PSX/">PSX</a>], which has been in the news due to its spinoff from ConocoPhillips back in 2012. It doubled its stock price in the first year after the spinoff, and attracted Warren Buffett's investment (a <a href="http://www.barrons.com/articles/buffet-bets-1-billion-more-on-phillips-66-1472470538">15.2% share of the company</a> as of late August 2016). (See also: <a href="http://www.wisebread.com/the-5-best-pieces-of-financial-wisdom-from-warren-buffett?ref=seealso">The 5 Best Pieces of Financial Wisdom From Warren Buffett</a>)</p> <p>The Houston-based multinational energy company generated $161.2 billion in revenue in 2014, a figure that is bigger than the GDP of some nations around the world. Since its 2012 spinoff, Phillips 66 has been consistently paying a quarterly dividend that started at $0.20 per share of common stock and stands now at $0.63 per share of common stock.</p> <h2>3. They Have Been in Business for a Long Time</h2> <p>Generally speaking, the less established a company, the more likely that company can experience extraordinary growth per quarter. Think of 12-year-old Facebook or 13-year-old Tesla, whose current stock prices are seven and 10 times, respectively, their original prices after going public. Both Facebook and Tesla would be considered growth stocks. On the other hand, income stocks are those of companies with a long history. Caterpillar and Phillips 66 were originally founded back in 1925 and 1917, respectively. (See also: <a href="http://www.wisebread.com/what-are-growth-stocks?Ref=seealso">What Are Growth Stocks?</a>)</p> <h2>4. They Are an Alternative to Fixed-Income Securities</h2> <p>If you have a 401K, chances are that you have a target-date fund. In 2014, 48% of 401K plan holders <a href="https://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&amp;content_id=3347">had target-date funds</a>, which gradually lowers exposure to risk as you get closer to retirement age and helps maintain a steady stream of income during your retirement years. However, dialing back your risk doesn't necessarily mean that you will stick to municipal bonds and money market accounts from now on.</p> <p>Legendary investor Peter Lynch said it best: &quot;Gentlemen who prefer bonds don't know what they're missing.&quot; The appeal of income stocks is that they provide a steady stream of income while providing some exposure to corporate profit growth. Many investors use the yield of a 10-year treasury bond rate as a benchmark to grade the performance of income stocks. As of October 10, 2016, the yield of a <a href="http://data.cnbc.com/quotes/US10Y">10-year treasury bond</a> was 1.77% and those from Phillips 66 and Caterpillar were 3.13% and 3.48%, respectively.</p> <h2>5. They Have Modest Annual Profit Growth</h2> <p>That being said, don't expect companies behind income stocks to have ambitious goals of profit growth. Due to its long business history, some income stocks may have limited future growth options and provide only a moderate annual profit growth. However, this is the main reason why these companies are able to pay a dividend in the first place. Since there may be no need to aggressively reinvest in new infrastructure, research, or development, then the company can afford to issue a dividend every quarter to its shareholders.</p> <h2>6. They Have Low Stock Price Volatility</h2> <p>Among the many statistics that analysts report on stock tables, <em>beta </em>is one of the most relevant ones, besides dividend and yield, to incomes stocks. (See also: <a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table?ref=seealso">Beginner's Guide to Reading a Stock Table</a>)</p> <p>Since the beta of the market as a whole is 1.0, a stock with a beta below 1.0 would move less than the market, and a stock with a beta above 1.0 would deviate more than the market. Often, income stocks have betas below 1.0. For example, machinery manufacturer Deere &amp; Company [NYSE: <a href="https://finance.yahoo.com/quote/DE/">DE</a>] has a beta of 0.63, and retailer Wal-Mart Stores Inc. [NYSE: <a href="https://finance.yahoo.com/quote/WMT/">WMT</a>] has one of 0.09.</p> <h2>7. They Are Available in Mutual Funds and Index Funds</h2> <p>Even though throughout this article we have only focused on individual companies, you can still buy a basket of several income stocks at the same time. You can do this through either a mutual fund or a low-cost index fund. One example of the second category is the Vanguard High Dividend Yield Index Fund Investor Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VHDYX">VHDYX</a>], which holds many income stocks, such as Microsoft, Exxon, Johnson &amp; Johnson, and General Electric.</p> <p>Two advantages of using index funds to include income stocks in your portfolio are diversification (e.g. 420 holdings in the mentioned index fund from Vanguard) and low cost (e.g. 0.16% annual expense ratio for the same index fund).</p> <h2>The Bottom Line</h2> <p>Before buying an income stock, make sure to evaluate it using your current investment strategy. While an income stock can offer you a way to get higher yields than those of treasury securities or certificates of deposit, you may be so far away from retirement age that you could afford a higher exposure to risk through value or growth stocks. Consult with your financial adviser to discuss more about your investment objectives and the appropriate ways to achieve those financial goals.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/what-are-income-stocks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table">Beginner&#039;s Guide to Reading a Stock Table</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment dividends fixed income securities growth income stocks index funds large companies mutual funds portfolio profits retirement stock market volatility Thu, 20 Oct 2016 09:30:23 +0000 Damian Davila 1815776 at http://www.wisebread.com What Are Growth Stocks? http://www.wisebread.com/what-are-growth-stocks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-are-growth-stocks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/coins_in_jar_82501487.jpg" alt="Learning what growth stocks are" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Growth. It's what you want if you're an investor, especially if you're many years away from retirement.</p> <p>Any investment portfolio should have a heavy dose of stocks that offer strong returns over time, from companies with solid earnings records. These are growth stocks. But what exactly is a &quot;growth&quot; stock? What are its characteristics, and how does it differ from other kinds of investments? And what are some ways to invest in them?</p> <p>Here are nine things you need to know about growth stocks and their ability to supercharge your portfolio.</p> <h2>1. It's All About Earnings</h2> <p>When seeking out quality growth stocks, it's key to look for the company's track record of earnings that are above the market average. The best companies will have reported consistent earnings growth quarter after quarter and year after year. A track record of five years in a row of growth is usually a good barometer, according to guidelines offered by Investor's Business Daily.</p> <h2>2. They Often Don't Pay a Dividend</h2> <p>When you buy growth stocks, you want to see the share price rise and don't care much about income. And that's good, because growth stocks generally don't pay out dividends to investors. Instead, these companies take whatever net earnings they have and reinvest them in research, new products, new business lines, infrastructure, and acquisitions. In other words, their cash is being used to make the company bigger.</p> <h2>3. They Are Often Smaller Companies</h2> <p>Many growth stocks fall into the category known as &quot;small cap,&quot; which is shorthand for saying a company has a small market capitalization (usually less than $2 billion). This small size means that there's the potential for quick growth. Smaller companies are often aggressively investing money back into the company to boost earnings and grow.</p> <h2>4. They Are Often Younger Companies</h2> <p>Generally speaking, the more established a company, the less likely they are to see supercharged growth on a quarterly basis. In fact, most companies see their fastest growth in the first decade after going public. Consider that Facebook has seen shares rise sevenfold since the summer after going public in 2012.</p> <h2>5. Their Stock Prices Don't Always Make Sense</h2> <p>For many growth stocks, share prices aren't always a reflection of the company's current value. Rather, their share price is based on what investors think a company may be worth in the future. In other words, the growth is often &quot;baked&quot; into the stock price already. Often, a growth stock will seem overpriced based on its price to earnings ratio. But with many growth stocks, the price to earnings ratio does not have much bearing on a company's price. In fact, many of the stock market's biggest success stories, including Apple and Amazon, have seen big run-ups even when price-to-earnings ratios were high.</p> <h2>6. Growth Comes With Risk</h2> <p>If you want growth, you're going to have to be comfortable with losing money once in awhile as well. Growth stocks tend to be more volatile than the broader market. In essence, the potential for growth is your reward for accepting some additional risk. That's why growth stocks aren't the best investments for someone who is close to retirement age.</p> <h2>7. You Can Buy Funds of Growth Stocks</h2> <p>If you're not sure which growth stocks to buy, there are mutual funds that have you covered. Most major brokerage firms offer the ability to invest in a wide range of stocks that are younger and growing more quickly than the rest of the market. Like the stocks within them, growth stock funds can be volatile, but rewarding for a patient investor. Top examples include the <a href="https://personal.vanguard.com/us/funds/snapshot?FundId=0023&amp;FundIntExt=INT">Vanguard U.S. Growth Portfolio</a> and the <a href="https://fundresearch.fidelity.com/mutual-funds/summary/316200203">Fidelity Growth Strategy Fund</a>. There are also exchange-traded funds, such as the <a href="https://www.blackrock.com/ca/individual/en/products/239562/ishares-growth-core-portfolio-builder-fund">iShares Growth Core Portfolio Builder</a>, which are often available to trade without a commission.</p> <p>One caveat is that there are often a plethora of confusing choices, including small-cap, large-cap, and mid-cap growth funds, and growth funds focused on specific industries. It's fine to own more than one of these funds, but it's best to research these funds first to ensure there is no overlap in the companies you are invested in.</p> <h2>8. They Are Not to Be Confused With Value Stocks</h2> <p>We often hear growth and value stocks mentioned together because they both offer great opportunities for investors to make money. But value stocks differ from growth stocks in that they are considered to be undervalued by the market, and thus offer a potential bargain for investors. Growth stocks are often overvalued and less of a bargain for investors, but have a stronger track record of earnings. Most financial advisers recommend holding a mix of growth and value stocks in your portfolio.</p> <h2>9. Look for Leaders and Innovators</h2> <p>Typically, the best growth stocks are those from companies that are leaders in their industries, and who have shown a penchant for innovation. Consider a company like Starbucks [NASDAQ:&nbsp;<a href="http://www.nasdaq.com/symbol/sbux">SBUX</a>], which is synonymous with coffee. Apple, Amazon, and Facebook are examples of solid industry leaders and great growth stocks. But it's also worth looking at fast-growing companies that aren't yet their industry leader. Under Armour [NYSE: <a href="https://finance.yahoo.com/q?s=UA">UA</a>] is one example of a company that isn't yet #1 but has seen better-than-average earnings and share growth in recent years.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/what-are-growth-stocks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table">Beginner&#039;s Guide to Reading a Stock Table</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/learn-how-to-invest-with-these-5-stock-market-games">Learn How to Invest With These 5 Stock Market Games</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying">9 Ways to Tell If a Stock is Worth Buying</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment dividends earnings growth stocks risk stock market Thu, 06 Oct 2016 09:00:08 +0000 Tim Lemke 1805691 at http://www.wisebread.com 9 Costly Mistakes DIY Investors Make http://www.wisebread.com/9-costly-mistakes-diy-investors-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-costly-mistakes-diy-investors-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_ripping_paper_69469761.jpg" alt="Man making costly mistakes DIY investors make" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>With the right approach and education, it's possible for people to handle their own investments. But it's also easy to make mistakes that could cost you large sums of money in the long run.</p> <p>If you're a do-it-yourselfer, ask yourself whether you're making any of these mistakes below. If so, it may be worth seeking professional advice from a certified financial planner.</p> <h2>1. Trading Without Considering Fees and Taxes</h2> <p>For many investors, it's fun to trade stocks. The actual buying and selling can be a bit of a rush, especially when things are going well. But all of that activity can come with a cost, in the form of transaction fees and capital gains taxes. If you are finding that the returns on your portfolio seem a bit lackluster, it may be because you're investing without taking these costs into account. More experienced investors and financial advisers understand how to avoid extra fees and maximize returns as a result.</p> <h2>2. Getting Emotional</h2> <p>Investing your own money can sometimes be hard on the psyche. You may go through stretches where you see your portfolio shrink. Stocks that you personally selected may not always perform the way you predicted. Markets can be volatile, and not everyone can stomach it. If you find yourself getting stressed out by the investing process or buying and selling based on emotion, you may want to consider having a financial adviser take over the reigns.</p> <h2>3. Not Investing Enough</h2> <p>When you invest on your own, you may only be guessing as to how much you need to save. And it's common for investors to feel a little skittish and invest too little if the market is down. A financial adviser may be more tuned into the appropriate level of risk an investor can take on, and will usually advise a more aggressive approach for someone far out from retirement.</p> <h2>4. Not Diversifying Enough</h2> <p>Most do-it-yourselfers understand the basics of diversification, and will invest in index funds that track the S&amp;P 500 or broader stock markets. And that's perfectly fine. But often, these funds are heavily weighted toward larger companies or certain industries. If you are investing only in basic index funds, you may not have good exposure to international markets or smaller companies, for example. There may be entire industries that will be underrepresented in your portfolio.</p> <p>To achieve true diversification, you can have an S&amp;P Index fund as a base, but should also look for funds and stocks that fill in the gaps.</p> <h2>5. Failing to Rebalance</h2> <p>You may think you're creating a diverse portfolio based on the investments you've selected. But have you checked the balances recently? Over time, portfolios can get out of whack if certain investments are performing better than others. For example, you may think you're investing in 50% large cap, 25% small cap, and 25% mid cap stocks. Until one day, you check your account and realize that small cap stocks make up 40% of the portfolio. Financial advisers will recommend when to rebalance, and offer advice on how to avoid taxes in the process.</p> <h2>6. Trying to Beat the Market</h2> <p>Some investors insist on doing things themselves, because they believe they are expert stock pickers and can beat the performance of the overall stock market. In most cases, they are wrong. Numerous studies have shown that even professional investment managers can't beat the market on a regular basis, and that most investors would be best off with a portfolio of index funds.</p> <h2>7. Falling in Love With Shiny New Things</h2> <p>Do-it-yourselfers can become enamored with whatever the hot stock is at the moment. They go for name brands and flash rather than looking closely at a balance sheet. They also tend to go with what's familiar, rather than doing some research and finding investments that are less well known but of sound quality.</p> <h2>8. Having No Backup Plan</h2> <p>If you are an older DIY investor, do you have a plan for what happens to your investments if you are incapacitated? Are you sharing your investment accounts with your spouse or other loved ones? Many DIY investors are too stubborn to seek help from anyone, and thus run into problems when they are no longer in a position to manage things themselves. It's fine to handle your own investments if you're confident enough to do so, but it's wise to have a plan for how things will be dealt with if you're no longer in charge.</p> <h2>9. Becoming Too Consumed</h2> <p>Realistically, the average person can handle their own investments while checking in only periodically each week. A properly balanced portfolio does not need a lot of maintenance. But investing can be like an addiction to some people, and it's possible to spend hours a day buying and selling and becoming obsessed with the movement of the markets. If you're finding that your investing is having a negative impact on your relationships and other aspects of your life, it may be best to back off and let someone else handle things.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment beat the market diversification DIY emotional investing fees financial advisers financial planning portfolio rebalancing stock market taxes Wed, 05 Oct 2016 10:30:08 +0000 Tim Lemke 1805247 at http://www.wisebread.com Beginner's Guide to Reading a Stock Table http://www.wisebread.com/beginners-guide-to-reading-a-stock-table <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/beginners-guide-to-reading-a-stock-table" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_happy_newspaper_66002597.jpg" alt="Man learning how to read a stock table" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've thought about investing, you've undoubtedly considered stocks. And for good reason: During the period of 1928&mdash;2015, the Standard &amp; Poor's 500 index averaged an annual return of 11.25%.</p> <p>But getting started can be confusing, and even making sense of stock tables and the information in all the columns can be daunting.</p> <p>Fear not, however &mdash; here's a basic primer for novice investors on how to read stock tables and better understand the information in each column. (See also: <a href="http://www.wisebread.com/how-to-buy-your-first-stocks-or-funds?ref=seealso">How to Buy Your First Stock(s) or Fund(s)</a>)</p> <h2>Let's Imagine That You Search for Apple Stock</h2> <p>Given that Apple Inc. [Nasdaq: <a href="https://finance.yahoo.com/quote/AAPL">AAPL</a>] is currently the publicly-traded company with the largest market capitalization, at some point you'll probably want to learn more about its stock price.</p> <p>If you were to start researching Apple's stock, you might find something like this on Yahoo! Finance:</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-09-20%20at%2012.35.53%20PM.png" width="605" height="310" alt="" /></p> <p>First, take note of the market in which the public company trades, since it'll yield important clues about the stock. For example, Apple trades in the NASDAQ, which is an electronic marketplace for buying and selling securities mostly in the U.S. technology sector. On the other hand, more traditional companies like General Electric Company, Wal-Mart Stores, Inc., and Target Corporation trade on the New York Stock Exchange (NYSE). And keep an eye out for stocks traded on foreign exchanges. Some investment accounts may limit you to only stocks traded on U.S.-based exchanges or charge you high fees to invest in foreign stocks.</p> <p>Let's break down the meaning of these numbers.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-09-20%20at%2012.36.07%20PM.png" width="605" height="149" alt="" /></p> <h2>Key Measures of Stock Price</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-09-20%20at%2012.36.18%20PM.png" width="605" height="371" alt="" /></p> <p>On the left side of the summary table of our example, you'll find a list of key measures of the stock price. Let's review these measures, starting from the top.</p> <h3>Open Price and Previous Close</h3> <p>This the price at which a stock first trades upon the opening of an exchange on a given trading day. Both Nasdaq and the NYSE open at 9:30 a.m. Eastern Standard Time.</p> <p>The previous close is the final price at which a security is traded on a given trading day. If the opening price is dramatically different from the previous closing price, you have a signal that investors reacted to an important piece of news, such as an earnings call, industry regulation, or a downgrade or upgrade from an investment firm.</p> <h3>Bid and Ask</h3> <p>The bid is the price in the market to buy a stock, while the ask is the price a seller in the market is willing to accept. The difference between the bid and ask price is a measure (referred to as &quot;spread&quot;) of the demand and supply for stock. The smaller the spread, the easier and faster is to conduct a sale or purchase of a stock. Given a bid-ask spread of just $0.05, your transaction order for Apple stock would be cleared quickly.</p> <p>The number following the bid or ask price represent the number of pending trades in lots of 100 at the given bid and ask price. In this example, there were 10,000 pending purchase orders at $107.70 per share and 30,000 pending sale orders at $107.75 shares. Any pending orders that aren't processed on the same trading day are carried on to the next one.</p> <h3>Day's Range, 52-Week Range, and One-Year Target Estimate</h3> <p>These figures provide an idea of the volatility of a stock price. While the 52-week range gives you the minimum and maximum price of Apple stock during a trailing 52-week period, the day's range gives you the same values for the most current trading day.</p> <p>In our example, Apple stock is currently trading below its 52-week high. Given that the consensus among analysts is that the one-year target estimate price of Apple stock is $124.11, the price of Apple stock appears to have upside potential (it's price will go up). Keep in mind that this is just a consensus of estimates, meaning that different analysts may have different targets and that all of these numbers are just predictions. In the stock market, anything can happen!</p> <p>Paying attention to the price volatility of any stock's price is important to put those ups and downs in context.</p> <p>Now let's take a look at the right side of this stock table. The next set of measures are a bit more advanced, but they are also useful even to the newbie investor.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-09-20%20at%2012.36.32%20PM.png" width="605" height="362" alt="" /></p> <h3>Market Capitalization</h3> <p>Also referred to as &quot;market cap,&quot; this is the total dollar market value of a company's outstanding shares. This value changes constantly and is often used to rank the size of publicly-traded companies. On this date, Apple stock still held onto the number one spot on the list of companies ranked by market capitalization.</p> <h3>P/E Ratio</h3> <p>P/E ratio is short for price-earnings ratio and is calculated by dividing a stock's current share price by its earnings per share (EPS) for the last trailing 12 months (TTM). The P/E ratio provides you a guide as to how much you can expect to invest in a company in order to receive one dollar of that company's earnings. In our example, you can expect to pay $12.56 to get a $1 in return for investing in Apple.</p> <p>By following the investing maxim &quot;buy low and sell high,&quot; you would want to buy stocks when P/E ratios are low and sell when P/E ratios are high. Still, there are stocks with low P/E ratios that have tanked even more and stocks with high P/E ratios that have turned out to be great investments.</p> <h3>Beta</h3> <p>This is a measure of volatility of the stock price compared to that of the market. The market has a beta of 1.0, so stocks with a beta below that benchmark move less than the market and stocks with a beta above that benchmark move more than the market.</p> <p>Given the beta of 1.38, the price of Apple stock fluctuates a bit more than that of the market, meaning that you can't expect wild fluctuations. If the market were to tick up a bit, you would expect this stock to tick up just a bit more, and vice-versa.</p> <p>Generally, investors with very low tolerance to risk avoid stocks with high beta. Otherwise, those investors could end up with too many sleepless nights.</p> <h3>Volume and Average Volume (Three Months)</h3> <p>The volume tracks the total number of transactions for the stock for a trading day. The average volume tracks the average number of transactions per day within a specified period, such as three months in this example. A high trading volume indicates that a stock is very liquid (transactions clear quickly).</p> <h3>Dividend and Yield</h3> <p>The dividend indicates the annual dividend payment per share and its yield indicates the percentage return on the dividend (annual dividends per share divided by price per share). When the stock table provides no dividend and yield numbers, the company doesn't currently pay out dividends.</p> <h3>Earnings Date</h3> <p>This is the date on which you can expect the company to release an official public statement of a company's profitability for a specific time period, typically a quarter (<a href="https://www.sec.gov/answers/form10q.htm">Form 10-Q</a>) or a year (<a href="https://www.sec.gov/answers/form10k.htm">Form 10-K</a>). Expect analysts to release their own estimates of those numbers close to that date and correct those estimates shortly after the official statement from the publicly traded company.</p> <p>Depending on the nature of the announcements made on an earnings date, you can expect a small or big reaction from the stock market and a reflection of that reaction in the price of a stock.</p> <h2>The Bottom Line</h2> <p>You can find stock tables both in print and online. This guide is a useful primer to interpret the data. Keep in mind that printed stock tables may not include all of this data. Another advantage of searching stock tables online is that you will access the latest information. Still, stock tables available in yesterday's newspaper are still useful to have a snapshot of how your equities are performing. Warren Buffett said it best: &quot;If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes.&quot; (See also: <a href="http://www.wisebread.com/the-5-best-pieces-of-financial-wisdom-from-warren-buffett?ref=seealso">The 5 Best Pieces of Financial Wisdom From Warren Buffett</a>)</p> <p>To buy or sell a stock, always check against your holding period, tolerance to risk, target investment fee for a period, and overall retirement strategy.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-growth-stocks">What Are Growth Stocks?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying">9 Ways to Tell If a Stock is Worth Buying</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-buy-your-first-stocks-or-funds">How to Buy Your First Stock(s) or Fund(s)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment dividends earnings how to guide market capitalization NASDAQ new investors nyse stock market stock tables volatility Wed, 21 Sep 2016 10:30:10 +0000 Damian Davila 1796591 at http://www.wisebread.com 7 Reasons Millennials Should Stop Being Afraid of the Stock Market http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_texting_newspaper_79438675_0.jpg" alt="Millennial man not being afraid of the stock market" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you a Millennial who's interested in investing? Then stop being afraid of the market. Sure, the Great Recession wiped out market fortunes during your early adulthood, but in the years since, it's roared back. Those who held steady during the market tumult made their money back &mdash; and then some. And those who were smart enough to invest when the market was at its bottom? Well let's just say we should all be a little jealous of their foresight (and earnings).</p> <p>So, don't be a slave to your stock market fears. Here are seven reasons why you should be investing in equities, too.</p> <h2>1. You Have Options When Deciding to Invest</h2> <p>There are different investment options available that match your goals and time horizon. For instance, you can invest more conservatively if you're trying to save for a down payment on a house in a few years, versus investing for retirement 30 years down the road. And with increased diversification, you can maximize your investment returns while taking smaller risks.</p> <p>&quot;The more risk you take, the longer you should be willing to wait before it pays off, but you can match your investment objectives with your time horizon,&quot; says Ryan McGuiness, founder of the wealth management firm CTR Financial. &quot;I invest my clients in a diverse portfolio of 12 different index funds to provide maximum diversification at the lowest cost, and match their risks to their goals, time horizon, and risk tolerance. You can try to learn what to do on your own or work with an adviser, but there are plenty of options out there.&quot;</p> <h2>2. Market Volatility Is Normal</h2> <p>Hands down, everyone's biggest fear in investing in the stock market is that it's going to crash and you'll lose your life savings. While that scenario <em>can</em> happen, a crash is not as likely as you think. In fact, it's uncommon. And even when markets crash, they inevitably come back. So, if you invest for the long term, this volatility should be much less of a concern.</p> <p>Of course, Millennials are more on edge about this particular setback than other generations, because they may have experienced the financial crisis firsthand in the late 2000s with parents losing their jobs or &mdash; even worse &mdash; their homes due to the global meltdown. As a result, you probably equate the stock market with extremely high risk, but that isn't usually the case.</p> <p>Lori Pinkowski, co-founder of the Pinkowski-Allen Financial Group, explains.</p> <p>&quot;A 2008-type crash occurs very infrequently; however, a 10% market correction happens on average once a year, so stock volatility is normal,&quot; she says. &quot;Market volatility also creates opportunity to purchase good companies at a lower price. With an active management strategy, their investment portfolios shouldn't simply rise and fall with the market like they do with a buy and hold management style. It's important to raise cash and get defensive at times but then be ready to deploy that cash once risk levels improve.&quot;</p> <h2>3. Investing Has Never Been Less Expensive</h2> <p>You don't have to be rich to invest &mdash; all you need is a little bit of disposable income. Many online brokers offer low-cost or even free trades, a prospect that was unimaginable just a few years ago. You also don't have to go broke by hiring a financial adviser to navigate you through the process, which is recommended. While the cost prospect of the latter is a deterrent for some Millennials, investment adviser Jeremy Torgerson details an inexpensive &mdash; and automated &mdash; solution:</p> <p>&quot;While many investors still want the assistance of a human financial adviser to help them figure out what to invest in and when to hold their hand during market corrections, it's no longer necessary to use and pay for a human adviser,&quot; he explains. &quot;The technology is incredible, and the robo-adviser is on duty, 24 hours a day. Or if you want a human adviser, the ability to shop for exactly the right one, in terms of service, expertise, and cost, has never been easier.&quot;</p> <h2>4. Investing Protects Your Money From Inflation</h2> <p>Think about this sobering fact for a second: The money you're earning and saving today will be worth less in the future if you keep it in a bank &mdash; guaranteed. The amount may not change, but over time, thanks to inflation, the value of your money will go down if it's left sitting in a bank account. As Pinkowski puts its, &quot;Inflation is approximately 2% and your bank savings account generates less than inflation, which means you have actually negative real growth. If you want healthy growth above inflation over time, stocks are the best choice.&quot;</p> <h2>5. Relying on Yourself Is a Better Bet Than Relying on the Government</h2> <p>The simple reality of our current fiscal situation includes underfunded promises to Medicare, Medicaid, Social Security, and prescription drug benefits to the tune of $121 trillion and counting.</p> <p>&quot;Millennials will, in many ways, be 'stuck with the check' in later years for all the spending that's already happened, which will mean a later retirement age for Social Security, higher tax rates and inflation in the future, and, likely, reduced benefits from these entitlement programs,&quot; Torgerson says.</p> <p>Considering this potential, you owe it to yourself to prepare for a government that's less able to provide for you in retirement. Of course you should be contributing to a 401K, and taking advantage of matching contributions from your employer if they offer it. But investing separately in the stock market also can fortify your ability to retire at a decent age, if not sooner.</p> <h2>6. Reinvested Growth Can Pay Off in the Long Run</h2> <p>Many stocks pay dividends, and reinvesting those dividends as well as any capital gains will benefit you over the long run. For example, if you're 25 today and invest $10,000, earning on average 6% annually, you will see your investment grow to just over $100,000 by the time you reach 65 &mdash; and that's only with a $10,000 investment today. Consider that the S&amp;P 500 has averaged 9.6% annual returns over the last 25 years, which includes the tech bubble and 2008 credit crisis, and the growth you could enjoy might be even higher.</p> <h2>7. Time Is on Your Side</h2> <p>Of course, let's not forget that you're young, Millennials, and you have a several decades of saving and investing ahead of you &mdash; and that's a benefit that older investors don't have which can be used to your advantage.</p> <p>&quot;If Millennials are saving for retirement, their time horizon is much greater than someone older,&quot; says Pinkowski. &quot;They have time to wait out blips in the stock market and can focus on the long term. They also won't need to withdraw any income, thus allowing the investments to grow over many years. The power of compounding can be astonishing. Albert Einstein once said, 'Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it.' Give your money a job and make it work for you!&quot;</p> <p><em>Are you afraid of the stock market?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-making-the-biggest-investment-risk-of-all">Are You Making the Biggest Investment Risk of All?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-stocks-that-are-actually-having-a-good-year">10 Stocks That Are Actually Having a Good Year</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table">Beginner&#039;s Guide to Reading a Stock Table</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment compound interest fear growth inflation millennials retirement returns stock market volatility young investors Thu, 08 Sep 2016 09:00:10 +0000 Mikey Rox 1787551 at http://www.wisebread.com How Too Much Investment Diversity Can Cost You http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-too-much-investment-diversity-can-cost-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_suit_thinking_53925384.jpg" alt="Man wondering if too much investment diversity can cost him" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Financial experts agree that you shouldn't to put all your eggs in one basket. But just like with everything else in life, moderation is essential to truly reap the benefits of diversification. Spread out your investment funds into too many funds and you'll end up with a subpar portfolio bogged down with excessive charges and, even worse, potentially more risk than you're willing to bear. Here are four warning signs that you may have your investments in too many baskets &mdash; and how to fix it.</p> <h2>1. Paying Too Much in Investment Fees</h2> <p>The more that you branch out of plain vanilla investments, the more likely that you'll end up paying more investment charges and fees. Take, for example, the portfolio that Warren Buffett has <a href="http://www.berkshirehathaway.com/letters/2013ltr.pdf">laid out in his will</a>: &quot;Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&amp;P 500 index fund.&quot;</p> <p>Let's take a look at the potential investment fees of such a portfolio.</p> <p>Since the Oracle of Omaha prefers Vanguard and chases low fees, let's assume that both investments are in index funds. It's safe to assume that he meets the $10,000 minimum investment required for the Vanguard Admiral index funds. So, he allocates 90% of his portfolio to the Vanguard 500 Index Fund Admiral Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VFIAX/?p=VFIAX">VFIAX</a>], which has a 0.05% expense ratio, and 10% of his portfolio into the Vanguard Short-Term Government Bond Index Fund Admiral Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VSBSX?p=VSBSX">VSBSX</a>], which has a 0.10% expense ratio. For a $10,000 portfolio, Buffett would pay $55 in investment fees.</p> <p>If Buffett were to start diversifying into other types of investments, he would very likely run into higher expense ratios. For example, the Vanguard New York Long-Term Tax-Exempt Fund Admiral Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VNYUX/?p=VNYUX">VNYUX</a>] has a 0.12% expense ratio (despite its $50,000 minimum investment requirement!) and the Vanguard Interm-Tm Corp Bd Index Admiral [Nasdaq:&nbsp;<a href="http://finance.yahoo.com/quote/VICSX/?p=VICSX">VICSX</a>] has a 0.25% purchase fee on top of its 0.10% expense ratio. Assuming that he were to allocate 50%, 30%, 10%, and 10% to the New York muni bond fund, S&amp;P 500 index fund, short-term government bond index fund, and the intermediate-term corporate index fund, respectively, Buffet would pay $220 on investment fees!</p> <p><strong>How to Fix It: </strong>Calculate your current total of investment fees across all your holdings. If the total is above what you're willing to pay (a useful rule of thumb is that anything beyond 1% of your total investment is too much), then it's time to focus your investments in lower-cost options.</p> <h2>2. Rebalancing Portfolio More Often</h2> <p>Speaking of fees, there is a higher chance that you'll run into more of them when you hold lots of investment categories. In the 90%-stocks-and-10%-bonds portfolio example, you only need to keep track of two funds. This means that figuring out when your portfolio is no longer meeting your target asset allocations is straightforward &mdash; and you may not need to do it as often. For example, you could set a target to rebalance when 80% of your portfolio is in stocks and 20% in bonds.</p> <p>On the other hand, spreading your money out too thin can complicate keeping track of asset allocations and make you trade more often. Here's an example: Assuming a target 3.5% allocation in an emerging markets index fund, big market swings could force you to buy or sell many times throughout the year, triggering many charges. From front-end loads to back-end loads, there are plenty of investments to keep an eye on. And yes this even applies to 401K accounts! (See also: <a href="http://www.wisebread.com/watch-out-for-these-5-sneaky-401k-fees?ref=seealso">Watch Out for These 5 Sneaky 401K Fees</a>)</p> <p><strong>How to Fix It: </strong>Tabulate how much you're incurring in fees on top of the regular annual expense ratios of your portfolio holdings. If that percentage is too high, or consistently increasing throughout the years, you need to consolidate your portfolio into fewer holdings.</p> <h2>3. Experiencing Diminishing Returns</h2> <p>Of course, you might be thinking that the extra returns of a very diversified portfolio may more than compensate for those additional fees and charges.</p> <p>Let's bust that investment myth.</p> <p>In a joint-study by The Wall Street Journal and Morningstar, the portfolio that generated the highest return over a 20-year period was a 70-30 mix of U.S. stocks and bonds, yielding a <a href="http://www.wsj.com/articles/is-your-portfolio-too-diversified-1408032582">9.1% annualized return</a>. A portfolio with 40% in U.S. stocks, 20% in U.S. bonds, 10% in foreign developing market stocks, 10% in international bonds, and the rest in a mix of investments, including emerging market stocks, commodities, and hedge funds, yielded only an 8.8% annualized return.</p> <p><strong>How to Fix It: </strong>Measure each of your funds against its respective benchmark. If an investment has been missing the benchmark for too many quarters or years, it may be time to cut that fund loose.</p> <h2>4. Owning Too Much of the Same or Wrong Type of Investments</h2> <p>Another issue with putting many eggs in many baskets is that you can unintentionally end up with more eggs than you thought in a particular basket or, worse, a wrong basket.</p> <p>Let's assume that you hold an index fund tracking the S&amp;P 500. As of August 8, 2016, that means that your portfolio would hold about 3.08% on Apple Inc, 2.40% on Microsoft Corporation, and 1.53% on Facebook Inc. Class A shares. If you were to also hold an index fund on the technology sector, you'll probably end up increasing your holding on each one of those investments. For example, the Vanguard Information Technology Index Fund Admiral Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VITAX/?p=VITAX">VITAX</a>] has those same three stocks among its top four largest holdings.</p> <p>Additionally, if you're open to throwing more money around investments, you could end up buying some investments that fail to meet your investment objectives. Remember the late 1990s dot-com bubble? How about 2008's housing bubble? During those times, too many individual and institutional investors were buying financial instruments that they shouldn't have been purchasing. If you force yourself to allocate 5% &quot;somewhere,&quot; then you could end up with the wrong type of investment.</p> <p><strong>How to Fix It: </strong>First, read the prospectuses of your mutual funds and other accounts and understand their actual holdings. Using this information, you can spot whether or not you hold too much of the same investment. Second, review your investment objective (ie; income vs growth) and evaluate whether or not your current investment funds qualify for that objective.</p> <h2>The Bottom Line</h2> <p>Holding all of your money in a single stock is definitely not a good idea because it would have a 49.2% average standard deviation (a measure of risk). At 20 stocks, your portfolio risk is reduced to 20%. However, every additional stock added to your portfolio will only further decrease your portfolio risk by about 0.8%.</p> <p>The evidence suggests that due to greater returns, very marginal risk reductions, and lower fees over time, you would be better off with simpler diversification on stocks and bonds. Some financial advisers suggest that when you have more than <a href="http://money.usnews.com/money/personal-finance/mutual-funds/articles/2011/02/17/diversification-can-you-have-too-much-of-a-good-thing">20 stocks or mutual funds</a>, you're actually minimizing returns instead of maximizing them. So, before adding that extra holding, keep in mind that an index fund tracking the S&amp;P 500 is already splitting your investment into 500 baskets!</p> <p><em>How many different types of investments is too many?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/learn-how-to-invest-with-these-5-stock-market-games">Learn How to Invest With These 5 Stock Market Games</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment fees portfolio rebalancing returns risk stock market too diverse warning signs Thu, 25 Aug 2016 10:30:14 +0000 Damian Davila 1778732 at http://www.wisebread.com 8 Money Moves to Make Before You Start Investing http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-money-moves-to-make-before-you-start-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/coins_growing_plants_67145371.jpg" alt="Finding money moves to make before you start investing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I'm a staunch advocate for investing &mdash; especially if the alternative is piling up money in a savings account just to have &quot;savings.&quot; Savings are great, but you only need so much in that offensively low-interest account. Put the excess to work, hopefully making even more money out of your investment. Before you take that plunge, however, there are a few financial matters you need to mind.</p> <h2>1. Organize Your Budget and Expenses</h2> <p>If you're considering making an investment &mdash; whatever it may be &mdash; you should have a solid handle on how much money is coming in and going out on a monthly basis. You want to make sure you can afford the investment without teetering on the edge of debt, but this also is a good time to find any weak spots in your budget so you can address them accordingly. Online money-tracking services like Mint.com can make this task much easier on you, and help you stay on track over the long term.</p> <p>&quot;When you know where your money goes, you are in control and can be thoughtful about aligning spending with priorities,&quot; says Carla Dearing CEO of SUM180, an online financial planning service. &quot;Mint, for example, gives you complete access to your data through the website and your mobile device, whether you use iOS or Android. Better yet, Mint keeps an eye on your money for you. It even sends alerts to remind you to pay your bills or when you go over budget.&quot;</p> <h2>2. Get That Emergency Fund in Order &mdash; Stat!</h2> <p>In almost every &quot;money moves&quot; article I write, the &quot;emergency fund&quot; usually pops up somewhere. That's because it's a critical and indispensable part of your overall financial picture. You should have a sizable cushion in the bank to cover life's little mishaps, and that &quot;should&quot; becomes a &quot;must&quot; when you add investing to the equation. If you don't have an emergency fund, you have no business investing &mdash; bottom line.</p> <p>Just how much dough are we talking for an emergency fund to be considered satisfactory? Six times your monthly expenses, according to Dearing.</p> <p><strong>&quot;</strong>Be disciplined about saving a little every month until your emergency fund is where it needs to be, even if it means sacrificing little luxuries once in a while,&quot; she says. &quot;Remember to replenish the account every time you use it. Having your cushion ready whenever you need it will give you a great sense of security and freedom. It will also free you up to work on other savings goals without getting derailed by unexpected expenses.&quot;</p> <h2>3. Pay Off Your High-Interest Debts</h2> <p>You don't need to be completely out of debt before you start investing. Many financial advisers argue that you should be debt free before you start investing, but that's just not true. Most people don't pay off their homes for up to 30 years, and you wouldn't want to wait that long before you start a retirement fund.</p> <p>You should, however, pay off your high-interest debts. They'll drag you down faster than the Titanic.</p> <p>&quot;Whether it's a credit card or student loan, it doesn't make any sense to invest and make a market average return of 7% annually while you're paying 20% on credit debt,&quot; says Nick Braun, founder of a pet insurance company. &quot;Pay off your high-interest debts first, then start using excess income to save for the future.&quot;</p> <p>See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=article">Fastest Way to Pay Off Your Credit Card Debt</a></p> <h2>4. Contribute to Your Retirement Savings</h2> <p>Retirement savings <em>is</em> an investment. It may not seem like it now, because what you're funding seems so far away &mdash; but you'll see it as such when you reach retirement age. Which is why, before you start throwing money at other investment opportunities, you need to invest in yourself. If you don't have a retirement account set up yet, make that a priority. If you have one currently, like a 401K, for instance, take advantage of free, pretax contribution opportunities where available, like matching funds from your employer. Then max those contributions out so you don't miss a single cent.</p> <h2>5. Contribute to an HSA</h2> <p>If you have a health insurance policy that comes with a qualifying Health Savings Account, take full advantage of it and fully fund it.</p> <p>&quot;Most contributions are tax-deductible, and withdrawals to pay qualifying medical expenses &mdash; at any time in life &mdash; are tax-free,&quot; explains Kevin Gallegos, vice president of Freedom Financial Network in Phoenix. &quot;These accounts are essentially emergency funds devoted to health care costs, and so savings have a double benefit of tax relief and savings.&quot;</p> <h2>6. Refinance Your Student Loans</h2> <p>Are student loans holding you back from building your savings or investment accounts or from making other types of investments? Free up some of your budget by <a href="http://www.wisebread.com/should-you-refinance-your-student-loan?ref=internal">refinancing your loans</a> for a lower monthly payment.</p> <p>&quot;The average Class of 2016 graduate owes more than $37,000 in student loan debt,&quot; says financial expert Michael Blattman, professor at University of Maryland. &quot;With 43 million borrowers nationwide, Americans owe nearly $1.3 trillion in student loan debt. Individually, this crushing debt delays borrowers' life decisions, such as getting married, investing in the stock market, buying a house, or having children. Collectively, it's hampering the U.S. economy.&quot;</p> <p>You don't, however, have to be part of these statistics. Take back some of your financial freedom by making a call to your loan provider(s) to discuss refinance options that are right for you.</p> <h2>7. Get Started on a Taxable Investment Portfolio</h2> <p>After you've maxed out your retirement accounts, Dearing suggests starting a taxable investment portfolio. You can get started investing with just a few simple steps.</p> <p>To get set up, call one of the high-quality, low-fee money management companies, like Vanguard, Fidelity, or T. Rowe Price, tell them about yourself, and ask them to tell you what type of account or fund you need, and what minimum investment requirements apply. These companies, which are the gold standard in the financial services industry, are extremely knowledgeable and committed to serving their clients (who, in the case of Vanguard, are also their shareholders).</p> <p>&quot;Companies like this get you started with a comprehensive, diversified, low-cost fund that will serve you well as a beginning investor,&quot; says Dearing. &quot;Follow their recommendations and you won't go wrong.&quot;</p> <h2>8. Set Savings Goals for Your Taxable Investment Portfolio</h2> <p>Once you have your taxable investment portfolio established, set goals &mdash; $10,000, then $25,000 and, eventually, $100,000.</p> <p>&quot;When you are just starting out, choose one or two tax-advantaged funds, like the Vanguard Total Stock Market ETF or the Vanguard Small Cap Index ETF, or similar index funds,&quot; Dearing suggests. &quot;These passively managed funds do a minimum amount of buying and selling &mdash; what the industry calls 'churning' &mdash; which translates into significantly less taxable investment income for you to deal with each year. They also tend to outperform most actively managed mutual funds over time.&quot;</p> <p>Revisiting the goal aspect of this equation, it helps to have a contribution target in place so you have a solid idea of what you're trying to achieve. Likewise, make sure that it's a goal that you <em>can</em> achieve. $10,000 may take a while to reach, but you can do it. If that goal is too steep for you right now, start smaller. There's no harm in that. The most important part of this is that you set the bar just high enough to accomplish it and be motivated by your success to continuing striving further.</p> <p><em>Do you have additional suggestions on money moves to make before investing? I'd love to hear your thoughts in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-6-best-financial-news-sites-for-investors-in-a-hurry">The 6 Best Financial News Sites for Investors in a Hurry</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment advice emergency funds health savings account money moves Paying Off Debt portfolio retirement savings stock market student loans Wed, 17 Aug 2016 09:00:08 +0000 Mikey Rox 1771628 at http://www.wisebread.com With Micro-Investing, Your Smartphone Pays YOU http://www.wisebread.com/with-micro-investing-your-smartphone-pays-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/with-micro-investing-your-smartphone-pays-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_happy_phone_93826397.jpg" alt="Woman using micro-investing and getting her phone to pay her" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Approximately two-thirds of Millennials do not have any money invested in the stock market due to concerns about risk, putting them at a distinct disadvantage when it comes to retirement. Without regular returns and compound interest, young professionals will need to sock away a much larger amount of <a href="http://www.wisebread.com/are-you-making-the-biggest-investment-risk-of-all">money to retire</a>.</p> <p>But new, micro-investing apps can help Millennials dip their toes into the stock market. Because the invested amounts are small, and the apps make investing accessible, young adults are more likely to start contributing money and earning returns.</p> <h2>What Is Micro-Investing?</h2> <p>Micro-investing, where users invest tiny amounts of money on a regular basis, allows people to start investing with relatively small sums. Some brokerages have investment minimums as high as $1,000; for those just starting out or battling debt, coming up with that first $1,000 can be overwhelming.</p> <p>With micro-investing, your account is linked to your debit card or bank account. Every time you make a purchase, such as your morning coffee, the apps round up the purchase and the difference is invested in stocks. While the amounts are negligible and you are likely not even going to notice the withdrawals from your account, small investments build over time and help you develop the habit of saving and investing.</p> <p>These innovative apps and platforms make investing simple and easy to do, even if you are new to financial management.</p> <h2>Acorns</h2> <p><a href="https://www.acorns.com/">Acorns</a>' name is derived from the saying &quot;From little acorns mighty oaks grow.&quot; Its goal is to empower people to build a large nest egg from small, regular investments. The app links to any credit card or debit card. When you make a purchase, the app rounds up and deposits your change into a portfolio of exchange-traded funds (ETFs). There are different portfolios available depending on your risk tolerance, from conservative to aggressive. If you do not know where to begin, Acorns also provides recommendations based on your age and target retirement date. There are no minimum account balances or commission fees, but there is a monthly cost of $1 and a management fee of 0.5%.</p> <h2>Robin Hood</h2> <p><a href="https://www.robinhood.com/">Robin Hood</a> is one of the few apps that offers zero-commission stock trading. It features a simple and intuitive design and allows you to connect to your bank account and make recurring deposits. You can shop for specific stocks or sell shares directly from your phone. Each day, the menu will show you how much you have earned on the market. Once you are ready to withdrawal money, the funds are easily transferred to your bank with the touch of a button.</p> <h2>Stash</h2> <p><a href="https://www.stashinvest.com/">Stash</a> is one of the newest apps on the market. Their motto is if you have $5, two minutes, and a phone, you can be an investor. It is a tool that allows you to buy fractional shares, rather than having to pay the entire amount for a single share yourself. You can pick investments based on what is <a href="http://www.wisebread.com/a-simple-guide-to-socially-responsible-investing">important to you</a>, such as clean energy or fair trade. Stash is free for the first three months, then charges $1 a month with no commissions.</p> <p>For Millennials spooked by the stock market and traditional stock market investments, micro-investing apps can be a useful tool to help them test the waters and get used to regular investing. These apps enable users to start investing with just small amounts, eliminating one of the main barriers to entering the stock market. With regular contributions and patience, over time, these small amounts can grow to substantial amounts of money.</p> <p><em>Are you a micro or macro investor?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kat-tretina">Kat Tretina</a> of <a href="http://www.wisebread.com/with-micro-investing-your-smartphone-pays-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-making-the-biggest-investment-risk-of-all">Are You Making the Biggest Investment Risk of All?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-technology-makes-personal-finances-easier">3 Ways Technology Makes Personal Finances Easier</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-8-small-cap-value-investments-are-on-fire">These 8 Small Cap Value Investments Are on Fire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Technology fractional shares micro-investing millennials retirement savings rounding up spare change stock market Mon, 15 Aug 2016 10:00:07 +0000 Kat Tretina 1771547 at http://www.wisebread.com How to Buy Your First Stock(s) or Fund(s) http://www.wisebread.com/how-to-buy-your-first-stocks-or-funds <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-buy-your-first-stocks-or-funds" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_drawing_desk_98135205.jpg" alt="Woman learning how to buy her first stocks or funds" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>So you're ready to start investing. That's great, because it's never too early. The sooner you start investing, the more you'll be able to take advantage of the power of compound interest. Here's how to get started.</p> <h2>Open an Account</h2> <p>In order to invest, you'll need an investment account at a broker such as TD Ameritrade, Schwab, Vanguard, or Fidelity. Prominently displayed on their sites, you'll find &quot;open an account&quot; buttons.</p> <p>After clicking, you'll have to decide whether to open a taxable account or a tax-advantaged account, such as an IRA. If your purpose for investing is to build a retirement nest egg, you'll probably want to open an IRA. Keep in mind, however, that IRAs have relatively low annual contribution maximums. If you want to invest more than $5,500 per year, a taxable account would be necessary.</p> <p>After entering some personal information, you'll need to fund the account, usually with an electronic transfer from your checking account.</p> <p>Of the brokers just mentioned, only TD Ameritrade has no minimum required amount for opening an account. The others require $1,000 to $2,500, although some allow you to open an account with less if you sign up for automatic monthly contributions. At Schwab, the monthly commitment is $100. Shop around to find a broker that best meets your needs.</p> <h2>Choose Your Investment Vehicle</h2> <p>There are two primary types of stock market investments &mdash; stocks and mutual funds.</p> <p>Buying individual stocks probably sounds like a fun way to get started with investing. There's something inherently appealing about the idea of owning a piece of some of the most famous companies in the world, such as Amazon, Facebook, and Apple.</p> <p>However, while investing in stocks might be exciting, mutual funds have some advantages over stocks. When you buy the stock of one company, your money isn't diversified at all. The performance of your portfolio is completely dependent on the performance of that one company. If the company has a bad year, your portfolio will have a bad year.</p> <p>However, if you invest in 10 companies and one has a bad year, some of the other ones will likely have good years, which may more than offset the one company's losses. That's why making sure your portfolio is diversified is so important.</p> <p>In order to be adequately diversified, you would need to buy stock in many companies. But when you're starting out, you probably don't have all that much money to work with &mdash; which is why you may want to consider using a mutual fund.</p> <p>When you buy shares of a mutual fund, your money is inherently diversified. That's because a mutual fund is a pool of money from many investors that the fund manager invests in many companies (there are also bond funds, real estate funds, etc.). Buying a single share of a mutual fund gives you instant diversification.</p> <h2>Decide What to Invest In</h2> <p>One of the easiest ways to invest for your retirement is to choose a target-date mutual fund. With such funds, you just choose the one with the year of your intended retirement in its name (Fidelity Freedom 2040, for example, or Schwab Target 2035). The fund will be designed in a way that the fund manager believes is appropriate for someone with your investment time horizon.</p> <p>If you're 30 years old and plan to retire when you're 70, you would choose a 2055 fund (most target-date funds are offered in five-year intervals, so you choose the one that's closest to the year of your intended retirement). Such a fund would likely be mostly invested in stocks and a little bit in bonds. As you get older, it will automatically change that investment mix to become appropriately more conservative.</p> <p>Many mutual fund companies offer such funds. Here are the target-date offerings from <a href="http://www.schwab.com/public/schwab/investing/accounts_products/investment/mutual_funds/mutual_fund_portfolio/target_funds">Schwab</a>, <a href="https://www.fidelity.com/mutual-funds/fidelity-fund-portfolios/freedom-funds">Fidelity</a>, and <a href="https://investor.vanguard.com/mutual-funds/target-retirement/#/">Vanguard</a>. TD Ameritrade doesn't have its own mutual funds, but offers target-date funds from several mutual fund companies.</p> <p>Look for no-transaction-fee (NTF) funds, which means there will not be a fee associated with buying the fund, and be sure to check the fund's minimum required investment amount.</p> <h2>Invest</h2> <p>Now you're ready for action. After logging onto your account, look for a button that says &quot;trade&quot; or &quot;buy and sell.&quot; You buy or sell mutual funds in one place, and stocks in another.</p> <p>To buy a mutual fund, you'll need to look up and then enter its &quot;ticker&quot; symbol &mdash; the four- or five-letter abbreviation for the fund's name. Then enter the amount you'd like to invest and click &quot;buy.&quot;</p> <p>Of course, there's more to know about investing and there are many different ways to invest. But this simple tutorial will get you started.</p> <p>Welcome to the world of investing.</p> <p><em>Have you gotten started investing? What are you waiting for?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/how-to-buy-your-first-stocks-or-funds">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-8-small-cap-value-investments-are-on-fire">These 8 Small Cap Value Investments Are on Fire</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table">Beginner&#039;s Guide to Reading a Stock Table</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-ways-to-invest-50-500-or-5000">The Best Ways to Invest $50, $500, or $5000</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-investing-tips-you-wish-you-could-tell-your-younger-self">11 Investing Tips You Wish You Could Tell Your Younger Self</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Fidelity first time mutual funds new investors schwab stock market stocks target-date funds vanguard Wed, 10 Aug 2016 09:30:35 +0000 Matt Bell 1767152 at http://www.wisebread.com 7 Best Money Management Tips From John Oliver http://www.wisebread.com/7-best-money-management-tips-from-john-oliver <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-best-money-management-tips-from-john-oliver" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/john_oliver_12450865504_98a7a40631_z.jpg" alt="Learning money lessons from John Oliver" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I don't often admit to it, but I have a little crush on comedian and <em>Last Week Tonight</em> host, John Oliver. I mean, what's not to like? There's his adorable British accent, his hilarious takes on the modern world, his dimples, his sound money advice&hellip;</p> <p>No, really. John Oliver is actually a pretty solid source for financial tips. Over the past few years, he has cemented his place in my heart by using his comedic platform to educate his audience on everything from credit scores to debt management and retirement savings</p> <p>If you haven't had a chance to watch all of John Oliver's money-related episodes, here are my favorite financial funnyman's seven best money management tips:</p> <h2>1. Before Taking a Payday Loan, Be Absolutely Sure There Are NO Other Options</h2> <p><iframe src="https://www.youtube.com/embed/PDylgzybWAw" width="560" height="315" frameborder="0" allowfullscreen="allowfullscreen"></iframe></p> <p>As seen on:&nbsp;<a href="https://www.youtube.com/watch?annotation_id=annotation_959988635&amp;feature=iv&amp;src_vid=aRrDsbUdY_k&amp;v=PDylgzybWAw" target="_blank">Last Week Tonight: Predatory Lending</a></p> <p>Wise Bread readers are likely very well aware of the predatory nature of payday loans. Taking a short-term loan can kick off a terrible cycle of debt with annual interest rates as high as 700%. But, as John Oliver points out in his rant, a Pew survey found that &quot;a majority of borrowers say payday loans take advantage of them, [but] a majority also say they provide relief.&quot;</p> <p>The point is that there will be times when people need money in a hurry and feel that their choices are limited. However, most borrowers have more choices than they think they do. Prospective payday loan customers could always borrow from a family member or friend, pawn or sell an item, or even sell blood or plasma. In other words, it's a better idea to do almost <em>anything </em>else to generate some quick cash than visit a payday loan store. (Although some of the ideas suggested by Sarah Silverman, the official spokesperson for <em>doing anything else</em>, are clearly meant to be tongue-in-cheek.)</p> <p>Many payday loan borrowers end up turning to these anything else options in order to get out of the cycle of payday loan debt, so it would be better to just start there.</p> <h2>2. Start Saving for Retirement Now &mdash; And Build a Time Machine and Start Saving 10 Years Ago If Possible</h2> <p><iframe src="https://www.youtube.com/embed/gvZSpET11ZY" width="560" height="315" frameborder="0" allowfullscreen="allowfullscreen"></iframe></p> <p>As seen on:&nbsp;<a href="https://www.youtube.com/watch?time_continue=1249&amp;v=gvZSpET11ZY" target="_blank">Last Week Tonight: Retirement Plans</a></p> <p>We all need to be saving more money for retirement, and the earlier you start, the more time compound interest has to work its magic. According to a 2014 study from the Center for Retirement Research at Boston College, a 25-year-old would only need to set aside <a href="http://crr.bc.edu/wp-content/uploads/2014/07/IB_14-111.pdf">15% of her income</a> each year to adequately replace her income as of retirement at age 62 &mdash; but if she started at age 35 she would need to save 24%, and 44% if she waited until age 45.</p> <p>While I have no issue with encouraging people to save more (really &mdash; save more!), I do have a quibble with the slight whiff of shame clinging to the build-a-time-machine portion of this advice. We can't change our past financial behavior, but we can feel bad about it and let it affect our present behavior &mdash; which too many people tend to do. There's no point in offering coulda-shoulda-woulda advice when time machine technology is still a couple of thousand decades away from reality.</p> <p>However, the basis of this advice is more than sound. Don't waste your money on Elf School in Reykjavik. Put it in your retirement account where it can do you some real good.</p> <h2>3. Check Your Credit Report Every Year</h2> <p><iframe src="https://www.youtube.com/embed/aRrDsbUdY_k" width="560" height="315" frameborder="0" allowfullscreen="allowfullscreen"></iframe></p> <p>As seen on:&nbsp;<a href="https://www.youtube.com/watch?v=aRrDsbUdY_k" target="_blank">Last Week Tonight: Credit Reports</a></p> <p>Your credit history can affect everything from whether you qualify to make large purchases, to your ability to land a job or rent an apartment. Unfortunately, credit reports are not always accurate, even if you have been a boy scout when it comes to your responsible credit usage.</p> <p>As John Oliver reports, the credit reporting bureaus make major mistakes in one out of every 20 credit histories. That may be a 95% accuracy rate, but it does leave 10 million consumers to deal with critical mistakes on their credit reports.</p> <p>The only thing we can do to fight mistakes (and identity theft, which <em>Last Week Tonight</em> did not even get into) is to regularly check our credit reports. We are legally allowed free access to a credit report from each of the major reporting agencies &mdash; TransUnion, Experian, and Equifax &mdash; once per year. You can access that information at annualcreditreport.com.</p> <p>If you're particularly organized, you can keep an eye on your credit on a rolling basis by checking one of the three agencies every four months.</p> <h2>4. Invest in Low Cost Index Funds</h2> <p>As seen on: <a href="https://www.youtube.com/watch?v=gvZSpET11ZY" target="_blank">Last Week Tonight: Retirement Plans</a></p> <p>Seeing this particular piece of advice had me standing up and cheering in front of my laptop. The financial industry likes to tout the superiority of actively managed funds since there is an individual making decisions for your investments &mdash; which has got to be better than doing nothing.</p> <p>Except the active managers who are tinkering with investments have a couple of big detractions. First, they are human, which means they are subject to emotional reactions to market volatility. It is very hard to stick to a plan when ego, panic, or greed is driving the train. According to research by Nobel laureate William Sharpe, you would have to be correct about timing the market (that is consistently buying low and selling high) 82% of the time in order to match the returns you will get with a buy-and-hold strategy. To put that in perspective, Warren Buffett aims for accurate market timing about 2/3 of the time.</p> <p>In addition to the difficulty of market timing, an actively managed fund will have higher transaction costs because of all the active buying and selling (each of which generates a fee) going on. Even if you have the world's most accurate active manager, a great deal of your returns will be eaten up by your transaction costs.</p> <p>Low cost index funds, on other hand, keep their costs low by having fewer managers to pay, and they tend to outperform actively managed funds because they are simply set to mimic a certain index. The majority of consumers will not beat low cost index funds for satisfactory retirement investment growth.</p> <h2>5. If You Have a Financial Adviser, Ask if They're a Fiduciary</h2> <p>As seen on: <a href="https://www.youtube.com/watch?v=gvZSpET11ZY" target="_blank">Last Week Tonight: Retirement Plans</a></p> <p>A financial adviser is a fiduciary if he or she is legally required to put your economic interests ahead of their own. This is an important distinction because the terms financial adviser, financial planner, financial analyst, financial consultant, wealth manager, and investment consultant are unregulated &mdash; which means someone introducing himself by any of these titles might not have the expertise to back it up.</p> <p>But even if your financial adviser does have the credentials necessary to help you manage your money, she might be paid via commission, which could mean she recommends products to you that help her bottom line more than your retirement.</p> <p>Since a fiduciary is legally obligated to put your interests above their own, you are more likely to get objective advice from them.</p> <p>While John Oliver recommends running the other direction if you find that your financial adviser is not a fiduciary, that may not be necessary as long as you understand how your adviser is paid and you are willing to commit to due diligence in double-checking your adviser's recommendations.</p> <h2>6. Gradually Shift From Stocks to Bonds As You Get Older</h2> <p><iframe src="https://www.youtube.com/embed/gvZSpET11ZY" width="560" height="315" frameborder="0" allowfullscreen="allowfullscreen"></iframe></p> <p>As seen on <a href="https://www.youtube.com/watch?v=gvZSpET11ZY">Last Week Tonight: Retirement Plans</a></p> <p>This advice is part of target-date retirement planning. The thinking behind it is that you need to be invested in riskier (and therefore higher-earning) investments like stocks when you are young, because you have the time to ride out the volatility and reap the returns. But as you age, you need to be sure your principal is protected, which means gradually shifting more of your investments into bonds, which are more stable but have lower returns.</p> <p>This is pretty good general advice, and I love the show's take on when to remind yourself to shift more to bonds &mdash; whenever a new James Bond actor is chosen. (I'm team Gillian Anderson!)</p> <p>The only nuance I would like to add to this piece of advice is to remind investors that retirement does not mark the end of your investing days &mdash; and you should not be entirely invested in bonds by then. Theoretically, you still have 25 to 40 years ahead of you as of the day you retire, and you will still need to be partially invested in aggressive assets like stocks in order to make sure your money keeps growing.</p> <h2>7. Keep Your Fees, Like Your Milk, Under 1%</h2> <p>As seen on <a href="https://www.youtube.com/watch?v=gvZSpET11ZY" target="_blank">Last Week Tonight: Retirement Plans</a></p> <p>Except for the fact that skim milk is a watery horror I would not wish on my worst enemy's morning Wheaties, this is probably my favorite of John Oliver's money tips.</p> <p>Fees on your investments work a lot like interest &mdash; in that they compound quickly. <em>Last Week Tonight</em> showed a clip from the 2013 PBS documentary The<a href="http://www.pbs.org/wgbh/frontline/film/retirement-gamble/"> Retirement Gamble</a>, which illustrated how compounding interest would eat up 2/3 of your investment growth over 50 years, assuming a 7% annual return and a 2% annual fee.</p> <p>The only way to combat such termite-like destruction of your investment growth is to keep your fees low &mdash; under 1%. And the lower you can get your fees under 1%, the better you are. As John Oliver's segment points out, &quot;Even 1/10 of 1% can really [bleep] you.&quot;</p> <h2>Money With a Side of Funny</h2> <p>The majority of financial information is not exactly fun to read through. That's why it's so important for a satirist and comedian to take on these vitally important issues and make them entertaining. I'm thankful that John Oliver has decided to make money one of the issues he illuminates for his audience.</p> <p><em>Are you a regular watcher of Last Week Tonight? What valuable advice have you gleaned?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/7-best-money-management-tips-from-john-oliver">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. 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