Investment http://www.wisebread.com/taxonomy/term/4808/all en-US 5 Essential Things Women Should Know About Investing http://www.wisebread.com/5-essential-things-women-should-know-about-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-essential-things-women-should-know-about-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/women_investors_000054398090.jpg" alt="Things women should know about investing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When it comes to investment decision-making, women wield greater economic power than ever before. They now comprise nearly half the workforce and half of all household breadwinners &mdash; but their financial literacy levels still trail. Here are five important ways women are still behind &mdash; and how to catch up.</p> <h2>1. Women Earn Less Than Men</h2> <p>A growing number of women are primary breadwinners, yet women earn just 77 cents for every dollar earned by their male colleagues working in the same positions, despite having equal qualifications. The &quot;gender-gap&quot; is even wider for African-Americans, who earn just 64 cents on the dollar, and Latino women earning 56 cents for every dollar earned by men.</p> <p>To tackle this pressing issue, in 2009 President Obama enacted the <a href="http://www.lillyledbetter.com/">Lilly Ledbetter Equal Pay Act</a>. Another initiative taken under the Obama Administration is the <a href="https://www.whitehouse.gov/sites/default/files/equalpay/equal_pay_task_force_progress_report_june_2013_new.pdf">Equal Pay Task Force</a>, which is comprised of several federal agencies, including the U.S. Equal Employment Opportunity Commission, the Department of Justice, the Department of Labor, and the Office of Personnel Management.</p> <h2>2. Women Live Longer and Save Less For Retirement Than Men</h2> <p>The average female life expectancy in the United States is age 81 &mdash; about four years more than men. Yet according to a recent study, women save 40% less for retirement than their male counterparts. &quot;This is especially concerning because women live longer than men, and thus need more retirement savings. In addition to a longer average lifespan, women are more likely to have work disruptions for caregiving that hinder their capacity to save. Therefore, they need to capitalize on savings opportunities while they are working,&quot; says Cecilia Shiner, senior analyst.</p> <h2>3. Women Are Less Likely to Receive Retirement Benefits</h2> <p>Of the 62 million working women, the U.S. Dept. of Labor says only about 45% contribute to a retirement plan, because many are likely working in part-time jobs due to family obligations and do not meet the qualifications to contribute. Women who find themselves in this position should <a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth">open an Individual Retirement Account</a> (IRA) and max-out the contribution limit for every year they are employed.</p> <h2>4. Women Lack Confidence in Their Ability to Invest</h2> <p>As a 2014&ndash;2015 Prudential Financial research study shows, women have not improved their <a href="http://www.prudential.com/media/managed/wm/media/Pru_Women_Study_2014.pdf?src=Newsroom&amp;pg=WomenStudy2014">understanding of insurance</a> and financial products over the last decade despite the 2008 financial crisis. However, the same study reported that women are becoming more confident in terms of managing their day-to-day finances (i.e. budgeting and saving). This is extremely significant because it's the first step towards having the discretionary income needed to invest.</p> <h2>5. Women Invest Differently and Are More Risk Averse</h2> <p>Women <a href="http://www.wisebread.com/the-4-best-investments-for-lazy-investors">invest more</a> conservatively than men. A Barclays Wealth Insights study found that men were more likely to consider themselves financial risk-takers and were more willing to choose high-risk investments in order to achieve higher returns. Even when other approaches would have achieved higher gains, women pursued a steadier course and had more stable returns.</p> <p><em>What do you wish you knew more about investing?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/5-essential-things-women-should-know-about-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-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/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</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-dumb-401k-mistakes-smart-people-make">5 Dumb 401(k) Mistakes Smart People Make</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/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</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/dont-know-what-annuities-are-you-might-be-missing-out">Don&#039;t Know What Annuities Are? You Might Be Missing Out</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-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment 401(k)s finances retirement women Fri, 22 May 2015 11:00:21 +0000 Qiana Chavaia 1429695 at http://www.wisebread.com The 4 Best Investments for Lazy Investors http://www.wisebread.com/the-4-best-investments-for-lazy-investors <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-4-best-investments-for-lazy-investors" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_papers_work_000015632807.jpg" alt="Man finding best investments for lazy investments" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Here's good news for time-strapped investors: You can ignore your investments and still get rich.</p> <p>You don't have to spend endless hours conducting research, developing watch lists, trading shares, monitoring performance, and rebalancing your portfolio. Fortunately, there are investments that require minimal upfront work and even less maintenance on an ongoing basis. Here are the four best investments for lazy investors.</p> <h2>Robo-Advisory Portfolios</h2> <p>Portfolios created and managed by <a href="http://www.wisebread.com/should-you-trust-your-money-with-these-4-popular-financial-robo-advisers">robo-advisors</a> require minimal involvement beyond signing up for the service. They are diversified among various asset classes and market segments, such as U.S. stocks, stocks of emerging markets worldwide, U.S. corporate bonds, international bonds, etc. Depending on the advisor's approach, portfolios may be tilted toward small caps and/or value funds.</p> <p>Robo-advisory portfolios often contain commission-free ETFs, which tend to be low-cost and tax-efficient. Generally, rebalancing and tax-loss harvesting are included in the services provided to investors (or are available for a nominal fee).</p> <p>Choose an advisor based on the firm's investment philosophy, account minimums, asset-under-management (AUM) fees, other investment fees (if any), and unique features, such as&nbsp;<a href="http://track.flexlinks.com/a.ashx?foid=1029882.679833&amp;fot=9999&amp;foc=1" target="_blank" rel="nofollow">Betterment's goal-setting emphasis</a> or <a href="https://www.wealthfront.com/tax-optimized-direct-indexing">Wealthfront's direct indexing service</a>.</p> <p>To invest your money, respond to prompts regarding your time horizon and risk tolerance. Typically, you'll enter your age or number of years until you reach retirement (or other financial goal), and choose among conservative, moderate, and aggressive portfolios.</p> <h2>Target-Date Funds</h2> <p>Target-date funds, or life-cycle funds, are often &quot;funds of funds&quot; comprised of passively managed (index) and/or actively managed mutual funds. These typically give investors a balanced portfolio that adjusts from riskier, growth-oriented holdings like stocks toward safer, more stable ones such as bonds as you get closer to the target date associated with your financial goal.</p> <p>Generally, target dates are aligned with the investor's expected year of retirement. For example, if you are 35 years old in 2015, you may consider purchasing a fund with the target date of 2045 &mdash; the year you turn 65.</p> <p>To choose a fund, consider the target date, investment-related fees (such as sales loads), expense ratio, mix of underlying funds, and glide path, which describes the rate at which the portfolio moves from more aggressive to more conservative investments.</p> <h2>Blue Chip Stocks</h2> <p>Blue chip stocks represent well-established, nationally recognized, financially stable, and reliable companies, typically with consistent business performance. Definitions vary, but experts name the 30 stocks in the&nbsp;<a href="http://finance.yahoo.com/q/cp?s=%5EDJI+Components">Dow Jones Industrial Average (DJIA)</a> as blue chips.</p> <p>Companies with household names such as Nike, Johnson &amp; Johnson, and Intel are part of the DJIA. Often, blue chip stocks pay dividends, which can boost overall performance when reinvested.</p> <p>To build a portfolio of blue chip stocks, accumulate shares of individual stocks through your brokerage firm or purchase a DJIA index fund, such as&nbsp;<a href="http://money.usnews.com/funds/etfs/large-cap-funds/ishares-dow-jones-u.s.-etf/iyy">iShares Dow Jones U.S. ETF (IYY)</a>.</p> <p>Alternatively, create a blue chip motif at <a href="https://www.motifinvesting.com/how-it-works/overview">Motif Investing</a>, where you can buy up to 30 stocks for $9.95. Weight your stock positions according to your preferences, such as market capitalization. Periodically, rebalance using this broker's tools.</p> <h2>Lazy Portfolios</h2> <p>Lazy portfolios typically consist of a few to several handpicked mutual funds or ETFs that represent the broader stock and bond market domestically and worldwide. These portfolios are diversified, low cost, and minimalistic. Their purpose is to deliver reasonably consistent returns in varied market conditions.</p> <p>Choose among portfolios with as few as two or as many as 10 funds. For example, you might adopt the&nbsp;<a href="http://www.marketwatch.com/lazyportfolio/portfolio/coffeehouse">Coffeehouse portfolio</a> as specified by Bill Schultheis, author of&nbsp;<a href="http://www.amazon.com/gp/product/159184584X/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=159184584X&amp;linkCode=as2&amp;tag=wisbre03-20&amp;linkId=33K7N33GA6JIY2OH">The Coffeehouse Investor</a>. Accumulate shares in these funds to create an investment portfolio that mirrors the percentages indicated by the model portfolio. This particular portfolio contains Vanguard funds that you can purchase free of commissions with a Vanguard account.</p> <p>Periodically, rebalance by buying more shares of funds that lag percentage-wise in the portfolio.</p> <p>There are no guarantees that investments for lazy investors (or diligent ones) will deliver positive returns, year after year. But after making initial purchases, you can minimize the time spent on managing your investments and enjoy other pursuits.</p> <p>The key to building a healthy portfolio is consistency, rather than finesse. On a regular basis, invest your money, avoid withdrawals when you are in a crisis or panic mode, and keep contributing to your investment accounts in all market conditions.</p> <p><em>Are you a lazy investor? What investments have you discovered to be easy to manage?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/the-4-best-investments-for-lazy-investors">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/7-dumb-stock-picking-mistakes-even-smart-investors-make">7 Dumb Stock Picking Mistakes Even Smart 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/the-most-important-thing-youre-probably-not-doing-with-your-portfolio">The Most Important Thing You&#039;re Probably Not Doing With Your 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/trading-options-is-a-sound-investment-and-its-simpler-than-you-think">Trading Options Is a Sound Investment (and It&#039;s Simpler Than You Think!)</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-easy-ways-to-start-green-investing">5 Easy Ways to Start Green 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/the-top-5-etfs-you-should-buy-now">The Top 5 ETFs You Should Buy Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment funds lazy investors portfolios stocks Wed, 20 May 2015 13:00:09 +0000 Julie Rains 1423465 at http://www.wisebread.com The 4 Greatest Stock Reversals in the Last Decade http://www.wisebread.com/the-4-greatest-stock-reversals-in-the-last-decade <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-4-greatest-stock-reversals-in-the-last-decade" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_money_coins_000027630827.jpg" alt="Man learning about greatest stock reversals of all time" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>America loves a Cinderella tale.</p> <ul> <li>After giving up boxing due to chronic hand injuries during the Great Recession, boxer James Walter &quot;Cinderella Man&quot; Braddock managed the unlikely feat of winning the Heavyweight title.<br /> &nbsp;</li> <li>Despite losing both of her legs and damaging her right arm during the Iraq War, Tammy Duckworth became the first disabled woman to be elected to the House of Representatives.</li> </ul> <p>We even have a special admiration for corporate comebacks. Watching a stock price topple &mdash; only to recover after several years &mdash; is proof of American perseverance and ingenuity. (See also: <a href="http://www.wisebread.com/4-big-tech-stocks-offering-big-returns?ref=seealso">4 Big Tech Stocks Offering Big Returns</a>)</p> <p>Here are four of the greatest stock reversals in the last decade.</p> <h2>1. AIG</h2> <p>Let's start with a big and controversial stock reversal. This company has been no stranger to financial scandals. For example, in 2005 AIG's operations were under fire by the Securities and Exchange Commission, U.S. Justice Department, and New York State Attorney General's Office due to potential accounting fraud.</p> <p>However, AIG (<a href="http://finance.yahoo.com/q?s=AIG">NYSE:AIG</a>) is best known for its credit derivatives debacle that required nearly $200 billion in government bailout funding in 2008. From a peak price of $2073.76 in December 2000, AIG stock tumbled all the way down to $7 by March of 2009.</p> <p>While highly controversial, the bailout worked and the insurance meltdown was halted. The good news was that U.S. taxpayers did come ahead in this deal. As early as 2012, the U.S. Treasury considered selling some of its AIG holdings, providing a profit for taxpayers.</p> <p>Today, the stock trades at about $56. Bearish investors that bought $10,000 of AIG stock at the March 2009 bottom would have close to $80,000 today. That's a 700% return.</p> <h2>2. AOL</h2> <p>Of all the noises that mark a generation, the sound of AOL's modem dial-up connection has to be near the top for both Generations X and Y.</p> <p>Most of AOL's revenue came from <a href="http://qz.com/245585/aol-still-has-2-3-million-dialup-subscribers-and-theyre-very-profitable/">subscriber fees</a>, hitting a total of $25 million back in 2002. Fast forward to June 2014, that number has dropped to just $2.3 million. Ouch.</p> <p>Aside from 90s nostalgia, AOL (<a href="http://finance.yahoo.com/q?s=AOL">NYSE:AOL</a>) has also provided financial gain to stockholders that stuck around. From a rock bottom of $12 per share on September 1, 2011, the company's stock has risen to over $40 by April 2015.</p> <p>The company has gone through a lot of iterations through the years. Currently, AOL makes most of its revenue by amassing eyeballs through its popular websites, such as The Huffington Post and TechCrunch, and hawking online ad space to advertisers. AOL is testament that some investment ideas that sound dubious may still pack a financial punch. (See also: <a href="http://www.wisebread.com/4-great-investments-that-sounded-really-stupid-in-the-2000s?ref=seealso">4 Great Investments That Sounded Really Stupid in the 2000s</a>)</p> <h2>3. Apple</h2> <p>It wasn't always smooth sailing for the giant from Cupertino.</p> <p>Back in 1986, Apple (<a href="http://finance.yahoo.com/q?d=t&amp;s=AAPL">NASDAQ:APPL</a>) commanded a healthy 16% share of the PC market. However, that market share eroded to 2.7% in 2000. Things got so bad for Apple that at the end of the dot-com era, its stock price reached a <a href="http://latimesblogs.latimes.com/money_co/2011/08/apple-stock-steve-jobs-ceo-ipad-iphone-ipod-mac.html">dramatic low of $6.56</a>.</p> <p>But thanks to Steve Job's return to the company, Apple shifted its focus. By focusing on the MP3 market, Apple became the leader with a 72.7% market share. That's when the homeruns started to arrive: iTunes, iPod, iPod Touch, iPhone, and iPad.</p> <p>The constant release of successful products helped Apple rise from the ashes to become the world's largest company by market capitalization. In November 2014, <a href="http://business.financialpost.com/fp-tech-desk/apple-inc-tops-us700-billion-market-share-on-strong-iphone-and-ipad-demand?__lsa=3376-5d84">Apple's market cap</a> was $700 billion, which is higher than the GDP of all but 19 of the world's economies.</p> <p>Apple's stock price reached such a high price ($700) in June 2014 that the company decided to do a <a href="http://appleinsider.com/articles/14/04/29/why-apple-inc-decided-to-split-its-stock-7-1-">7&ndash;1 stock split</a>. The move to lower the stock price back to $100 was designed to attract more individual investors who could't afford buying the stock at $700. Given that Apple's current price is over $130 already, there are several financial pundits predicting that Apple's stock price may rise again to $700.</p> <h2>4. Best Buy</h2> <p>As more and more people are turning to online shopping, it may appear a bit confusing to include this chain of electronics superstores in this list. However, this once-ubiquitous big box store is enjoying a comeback.</p> <p>Amazon has claimed a lot of victims, such as Circuit City (liquidated in 2009) and Nobody Beats the Wiz (permanently closed since 2003), in its rise to the top. And Best Buy (<a href="http://finance.yahoo.com/q?s=BBY">NYSE:BBY</a>) certainly felt the squeeze as well. From a high of $58.32 per share back in May 2006, its stock tumbled to a low of $11.29 by December 2012.</p> <p>Times were tough for Best Buy. Earlier in 2012, the company had posted a $1.7 billion quarterly loss and had experienced 0% growth in revenue from the previous year. However, Best Buy powered on by closing underperforming stores, reorganizing the shopping experience at its locations, and streamlining its supply chain. These renewed efforts have positively impacted Best Buy's stock price, which currently trades around the $35 mark.</p> <p>Due to its large volatility, holding Best Buy stock is not for the faint of heart. Still, those investors that were in for the long run have been rewarded.</p> <p>Now, here's to wishing that you discover some of the greatest stock reversals of the next decade!</p> <p><em>What are other great stock reversals in the last decade that need to be on this list?</em></p> <p><em>(Disclaimer: I neither own any of these stocks nor receive compensation by the mentioned companies.)</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/the-4-greatest-stock-reversals-in-the-last-decade">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/5-reasons-social-media-is-still-a-smart-investment">5 Reasons Social Media is Still a Smart Investment</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/3-ways-technology-makes-personal-finances-easier">3 Ways Technology Makes Personal Finances Easier</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-top-5-index-funds-to-own-now">The Top 5 Index Funds to Own Now</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-debate-between-buy-and-hold-vs-timing-the-market">The Debate Between Buy and Hold vs Timing The 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/5-creative-ways-to-invest-during-a-weak-market">5 Creative Ways to Invest During a Weak Market</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment reversals stock market volatility Wed, 13 May 2015 15:00:38 +0000 Damian Davila 1416510 at http://www.wisebread.com 7 Dumb Stock Picking Mistakes Even Smart Investors Make http://www.wisebread.com/7-dumb-stock-picking-mistakes-even-smart-investors-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-dumb-stock-picking-mistakes-even-smart-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_thinking_newspaper_000053925278.jpg" alt="Smart man realizing he picked dumb stocks" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Everybody loves a winner.</p> <p>That explains why America seems to be obsessed with stories of amazing stock pickers, such as the New Jersey teen wonder who allegedly <a href="http://www.theverge.com/2014/12/3/7319277/whiz-kid-penny-stocks-smartphone-mobile-trader">turned $10,000 into $300,000</a> by trading penny stocks from his smartphone</p> <p>However, even some of the smartest (and luckiest!) investors make mistakes sometimes. Here are seven dumb mistakes to watch out for the next time you're picking investment options.</p> <h2>1. Having No Investment Goals</h2> <p>If you don't know where you're going, you'll never know when you get there.</p> <p>However deeply people may agree with this statement, there are still those who lack clear investment goals. Your first step in investing is defining these goals.</p> <p>Here are three examples of good ones:</p> <ul> <li>In order to avoid the extra cost of private mortgage insurance, you would like to save for a down payment that is at least 20% of a $300,000 apartment in your city within the next 10 years.<br /> &nbsp;</li> <li>You first child is just born and you would like to have $35,000 available for his or her college tuition by their 18th birthday.<br /> &nbsp;</li> <li>Planning to retire 33 years from today, you and your spouse calculated you'd need $3,000 every month to cover your expenses during retirement.</li> </ul> <p>Notice the two things that these goals have in common: a specific dollar amount and a target date. These two elements are the starting point for any discussion about investing. They allow you to establish a timeline and select benchmarks to evaluate your performance.</p> <p>Before you even think about stock picking, establish your investment goals. (See also: <a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make?ref=seealso">5 Dumb 401(k) Mistakes Smart People Make</a>)</p> <h2>2. Ignoring Your Risk Tolerance</h2> <p>There are two key elements to determining your risk tolerance.</p> <p>First, there is your time horizon. A rule of thumb is that the longer your time horizon, the riskier your investments may be. Since you don't need the funds for quite a while, you can better sustain the ups and downs of the market and chase higher returns. On the other hand, if you need the funds a year from now, you're better off taking more conservative investments.</p> <p>Second is your available &quot;play money.&quot; A person with a net worth of $1 million is more likely to better stomach the price fluctuations of a $25,000 investment than a person with a net worth of $75,000. Also, don't forget about potential liquidity issues. The second individual would be in a really tough situation if he were to suddenly need those $25,000 to pay damages from a lawsuit or meet another type of big financial obligation.</p> <p>Pick investments according to your time horizon and bankroll.</p> <h2>3. Spending Instead of Investing</h2> <p>While some people are very eager to start stock picking, others think they can't even afford it.</p> <p>Or it could be that those others may be listening to their &quot;lizard brain&quot; a bit too much. The idea of the &quot;lizard brain&quot; refers to the instincts that helped our ancestors to survive back in the stone age. Given scarce resources and the ever-present possibility of death, our ancestors prefered to enjoy things right away instead of waiting.</p> <p>Old habits die hard. Given the choice of enjoying $500 right now or receiving $3,000 in five years, most of us would chose the first option. However, this is a bad idea.</p> <p>By refusing to invest even just a little bit, you're incurring a huge opportunity cost. For example, let's imagine that you make an initial investment to your 401(k) of $100. Assuming your 401(k) has a return rate of 5% compounded annually and you contribute $100 every month for 20 years, you would end up with $40,845.78.</p> <p>Start investing today. Right now. Even a little bit! 20 years from now, you'll be glad that you did.</p> <h2>4. Paying Too Much in Fees</h2> <p>This is one of Warren Buffett's <a href="http://www.usatoday.com/story/money/personalfinance/2013/10/26/warren-buffett-investment-advice/3188499/">top three investing mistakes</a> to avoid. (See also: <a href="http://www.wisebread.com/5-investors-with-better-returns-than-warren-buffett?ref=seealso">5 Investors With Better Returns Than Warren Buffett</a>)</p> <p>While you can't be 100% sure about the return of your stock picks, you can be 100% sure of how much money you're paying in management and trade fees. For example, if you were to invest $10,000 in the average actively managed U.S. mutual fund, you would pay $132 in fees. On the other, you would pay just $17 by investing the same $10,000 in the Vanguard Total Stock Market Index (VTSMX), the largest index mutual fund.</p> <h2>5. Trying to Beat the Market</h2> <p>Here's another reason to choose index mutual funds.</p> <p>Most actively managed funds fail to achieve returns above their respective benchmark. Only about 20%&ndash;35% of fund managers are able to &quot;beat the market.&quot; These are the pros that do this for a living. Are you sure that you can do better than them on your spare time while juggling your job and family life?</p> <p>Over the long-term, index funds are typically top performers and do better than 65%&ndash;75% of actively managed funds. And index funds cost you less than a fund manager, too.</p> <h2>6. Betting on a Single Stock</h2> <p>There are too many stories about people getting filthy rich by putting all their money on Apple stock.</p> <p>Before you decide to put all your eggs in one basket, consider the performances of these two other past media darlings.</p> <h3>Groupon</h3> <p>Launched in November 2008, Groupon quickly became the leader of the deal-of-the-day movement. Groupon became one of the fastest companies to reach a <a href="http://www.forbes.com/forbes/2010/0830/entrepreneurs-groupon-facebook-twitter-next-web-phenom.html">$1 billion valuation</a>. Heck, Groupon was doing so well that it turned down a <a href="http://www.businessinsider.com/why-groupon-said-no-to-google-2010-12">$6 billion buyout offer</a> from Google. However, an original investment of $10,000 in Groupon on November 7, 2011 would only be worth about $2,554.66 today.</p> <h3>Enron</h3> <p>It's hard to believe that Enron was once a media darling. Back in 2001, Enron's stock was priced at 70 times earnings and 6 times book value. Out of the 22 analysts covering Enron, 19 of them rated the stock a &quot;buy.&quot; The maximum stock price of $90 in August 2000 convinced several people to put all their nest eggs on Enron. A little over two years later, the stock was trading below $1.</p> <p>The lesson is that history tends to repeat itself, so don't bet all your money on a single stock. (See also: <a href="http://www.wisebread.com/10-investing-lessons-you-must-teach-your-kids?ref=seealso">10 Investing Lessons You Must Teach Your Kids</a>)</p> <h2>7. Not Rebalancing Your Portfolio</h2> <p>Last but not least, remember that asset prices vary over time.</p> <p>Your investment plan sets a target allocation of your monies in different types of investments. For example, you may have 50% in domestic stocks, 30% in foreign stocks, 20% in bonds, and 10% in T-bills.</p> <p>Let's imagine that your foreign stock holdings had a nice upward ride for the last five years. So, now they represent 50% of your total investment portfolio's value. It's a good idea to rebalance your portfolio to set back your allocation of funds to the target 30% so that you're not taking more risk than you're comfortable with.</p> <p>It's shocking how simple it can be to avoid these six investing mistakes.There's no secret to stock picking &mdash; it just requires planning and sticking to that plan. It may not sound exciting, but it's more likely to make you a profit. And isn't that why you really invest?</p> <p><em>What steps have you taken to fix your investment decisions?</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/7-dumb-stock-picking-mistakes-even-smart-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-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/the-4-best-investments-for-lazy-investors">The 4 Best Investments for Lazy Investors</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-most-important-thing-youre-probably-not-doing-with-your-portfolio">The Most Important Thing You&#039;re Probably Not Doing With Your 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/5-easy-ways-to-start-green-investing">5 Easy Ways to Start Green Investing</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/trading-options-is-a-sound-investment-and-its-simpler-than-you-think">Trading Options Is a Sound Investment (and It&#039;s Simpler Than You Think!)</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/why-young-investors-should-stay-the-course-and-continue-to-invest">Why young investors should &quot;Stay the Course&quot; and continue to invest</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Mistakes portfolios risks stocks Tue, 12 May 2015 17:00:44 +0000 Damian Davila 1414192 at http://www.wisebread.com The Most Important Thing You're Probably Not Doing With Your Portfolio http://www.wisebread.com/the-most-important-thing-youre-probably-not-doing-with-your-portfolio <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-most-important-thing-youre-probably-not-doing-with-your-portfolio" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/calculations_000028679096.jpg" alt="Business man doing calculations" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Life changes, and so do financial markets. That's why it's important to periodically examine whether your portfolio still reflects your financial goals. &quot;Rebalancing&quot; is simply the process of bringing your portfolio's assets back to their original, planned percentage-mix of investment types. The reason for this is that some investments appreciate, while others depreciate over time, creating a different balance than you may have intended.</p> <h2>Why Rebalance?</h2> <p>One investing rule of thumb is that stock and bond prices move in opposite directions. Let's say you're 35, and allocate 65% of your portfolio to stocks and 15% to bonds. The economy is moving along nicely and you have a good year in the stock market and by the end of it, stocks represent 75% of your portfolio. This asset mix is out of alignment with your goals! To bring it back into balance, you will need to sell the over-weighted asset (stocks in this case), and purchase the under-weighted asset &mdash; bonds. This realigns your portfolio with your investment objectives.</p> <h2>How Often, How Far, and How Much: How Frequently Should You Rebalance?</h2> <p>There are three rebalancing strategies. How often you choose depends on whether you're still saving and re-investing the dividends, or retired and taking withdrawals.</p> <h3>Time Strategy</h3> <p>For a systematic approach, investors can follow the time-table strategy. This can be daily, monthly, quarterly, yearly, or whatever works. With this approach, it will not matter how far away your assets deviate from your goals. The only variable impacting your rebalancing decision is time. Of course, which frequency you choose should be determined based on your time horizon, risk tolerance, diversification strategy, and the costs to rebalance.</p> <p>But the average investor doesn't have the time nor resources for a daily &mdash; or even monthly &mdash; rebalancing strategy, and most of us choose less frequent rebalancing..</p> <h3>Threshold Strategy</h3> <p>With the threshold strategy, the one thing that will trigger a rebalance is deviation away from your target goals by a definitive amount, say 3%, 5%, or 10%. Deciding on this strategy could require daily, monthly, or quarterly rebalancing, or it may be that you won't need to rebalance for five, 10, or 15 years. Again, your investment goals should help you determine whether this strategy is appropriate for you.</p> <h3>Hybrid: Time and Threshold</h3> <p>Here, both the time and threshold strategies guide your decision to rebalance.</p> <p>You will rebalance your portfolio on a periodic time-table, but only if your assets deviate from your goals by a pre-determined amount. Therefore, if you reach your time schedule and your assets are below the threshold, you would not rebalance. Likewise, if your assets exceed the threshold, but you haven't reached the scheduled rebalancing date, you will wait to rebalance.</p> <p>For the average investor, rebalancing too frequently could result in higher tax costs (from selling assets) and added transaction fees. But many experts suggest taking a hard look at least once a year at whether your portfolio's asset mix still matches your intended goals.</p> <p><em>How often do you rebalance your portfolio?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/the-most-important-thing-youre-probably-not-doing-with-your-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-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/the-4-best-investments-for-lazy-investors">The 4 Best Investments for Lazy Investors</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-easy-ways-to-start-green-investing">5 Easy Ways to Start Green 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/7-dumb-stock-picking-mistakes-even-smart-investors-make">7 Dumb Stock Picking Mistakes Even Smart 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/your-401-k-is-not-an-investment">Your 401(k) is not an investment</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/5-crucial-things-you-should-know-about-bonds">5 Crucial Things You Should Know About Bonds</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bonds portfolios rebalancing stocks Thu, 07 May 2015 11:00:07 +0000 Qiana Chavaia 1412613 at http://www.wisebread.com Help, I Bought a Stock Dud! — What Now? http://www.wisebread.com/help-i-bought-a-stock-dud-what-now <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/help-i-bought-a-stock-dud-what-now" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_stress_laptop_000029627144.jpg" alt="Man stressed because he bought a dud stock" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We've all bought a stock that has failed to perform as expected, and we may have even lost a good chunk of change in the process. When you realize you've bought a &quot;dud&quot; of a stock, it's natural to feel a bit helpless. But things may not be as bad as they seem. Consider these ways to handle a bad stock investment:</p> <h2>1. Wait it Out</h2> <p>Unless you need the money soon (or you suspect the company is going out of business), there's not much downside to holding onto a stock, since the price will almost inevitably rise again. In fact, this is the approach most experts recommend &mdash; buy and hold a stock, staying steady through the dips.</p> <p>A company that seems like a dud now might have a great turnaround later. Consider Facebook (<a href="http://www.google.com/finance?cid=296878244325128">NASDAQ: FB</a>). Its much-anticipated initial public offering in 2012 was a bust, and the stock languished below $30 per share for months. Now it's trading above $80. (Disclosure: I own some shares of Facebook stock.)</p> <h2>2. Sell, and Buy Something Better</h2> <p>If you've lost your patience with a stock, it can under some circumstances be fine to consider investing your money elsewhere. But consider the cost implications of selling &mdash; such as short-term capital gains taxes, trading fees, and the costs associated with the new stock or fund. And once you sell, don't look too hard at the performance of the stock you unloaded &mdash; you might go crazy.</p> <h2>3. Sell to Balance a Capital Gain</h2> <p>If you have other stocks that you've sold for big gains, you can avoid a tax hit by selling your dud stock. In fact, if the losses exceed the gains, it can offset taxable ordinary income, as well. This is called tax-loss harvesting, and it's a great way to offload some underperforming stocks while avoiding a tax bill.</p> <h2>4. Buy More</h2> <p>Are you sure the stock is a dud? Or is it just undervalued? One man's &quot;dud&quot; could be another man's bargain. As the great investor Warren Buffett once said, &quot;The lower things go, the more I buy.&quot;</p> <p>For example, some experts recommend buying energy stocks now for this reason. While these stocks have been pummeled of late by low oil prices, they'll eventually rise again, and this may be a good opportunity to buy these stocks on the cheap.</p> <h2>5. Give it to Charity</h2> <p>If it stresses you out too much to hang on to a bad stock, give it away. There are many tax advantages to donating stock, and charities often like receiving stock because of the potential for increased value. And they won't be on the hook for any capital gains.</p> <h2>6. Get More Diversified</h2> <p>You shouldn't worry too much about a &quot;dud&quot; stock if you have a wide range of investments. Seek to hold a good mix of large, midcap, and smallcap stocks in various industries, and no single stock should comprise a significant percentage of your portfolio. It may also be worth it to explore international investments, real estate, and bonds. Index funds are an easy way to get diversified. The point is that if you have a good mix of investments, that underperforming stock shouldn't be a major source of anxiety.</p> <h2>7. Sell Short</h2> <p>If you are completely convinced a stock won't go up in value, you can profit off its poor performance by betting that its price will go down even more. When you short sell a stock, you borrow shares at one price, then buy them for real when the price goes down. This can serve as a hedge against the ownership of other shares that have lost value. It's important to note that short selling can result in <em>big </em>financial losses if you bet wrong, so it's truly a strategy for more experienced and well-funded investors.</p> <p><em>What actions do you take when your stocks underperform?</em></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/help-i-bought-a-stock-dud-what-now">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-6"> <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/10-times-you-shouldnt-invest-in-stocks">10 Times You Shouldn&#039;t Invest in 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/the-4-best-investments-for-lazy-investors">The 4 Best Investments for Lazy Investors</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-best-free-financial-learning-tools">9 Best Free Financial Learning Tools</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/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</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/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment capital gains equities saving stocks Mon, 27 Apr 2015 11:00:06 +0000 Tim Lemke 1401146 at http://www.wisebread.com The Top 5 Index Funds to Own Now http://www.wisebread.com/the-top-5-index-funds-to-own-now <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-top-5-index-funds-to-own-now" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_reading_paper_000031064290.jpg" alt="Man deciding which index funds he should own now" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Can you tolerate some market volatility? Is investing in passively-managed index funds still part of your diversification strategy? Hang in there if it is, because <a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds">index funds</a> are still a good choice.</p> <p>If you're hot on the trail for index funds to invest in, here are the top five index funds to own right now.</p> <h2>1. Vanguard High Dividend Yield Index Fund Investor Shares (<a href="https://personal.vanguard.com/us/funds/snapshot?FundId=0623&amp;FundIntExt=INT">VHDYX</a>)</h2> <p>Morningstar rating: 5 stars</p> <p>This large capitalization fund was designed for investors seeking long-term growth and those who can withstand greater volatility. This is an income-focused fund that invests in large U.S. companies that tend to pay higher dividends. Some of its holdings include ExxonMobil, Proctor &amp; Gamble, and JP Morgan Chase, to name a few.</p> <h2>2. Vanguard PRIMECAP Fund Investor Shares (<a href="https://personal.vanguard.com/us/funds/snapshot?FundId=0059&amp;FundIntExt=INT">VPMCX</a>)</h2> <p>Morningstar rating: 5 stars</p> <p>A long-term capital appreciation fund that invests in large and mid-cap companies with an emphasis on the technology and health care sectors. The fund follows a well-established investment strategy of dividing its portfolio amongst several fund managers for diversity of thought. Its holdings include Texas Instruments, Inc., Eli Lily &amp; Co., FedEx Corp., and many others.</p> <h2>3. Vanguard PRIMECAP Core Fund (<a href="https://personal.vanguard.com/us/funds/snapshot?FundId=1220&amp;FundIntExt=INT">VPCCX</a>)</h2> <p>Morningstar rating: 5 stars</p> <p>The PRIMECAP Core Fund is very similar to its younger sibling, PRIMECAP Investor Shares. This is a large cap fund that invests using the investment strategies of multiple fund managers. The key difference is the fund has both value and growth perspectives. Some of its holdings include Texas Instruments, Inc., Eli Lily &amp; Co., Google, and Johnson &amp; Johnson.</p> <h2>4. Vanguard U.S. Value Fund (<a href="https://personal.vanguard.com/us/funds/snapshot?FundId=0124&amp;FundIntExt=INT">VUVLX</a>)</h2> <p>Morningstar rating: 4 stars</p> <p>This is a large to mid capitalization fund that remains vested in about 200 companies using a qualitative approach that seeks to identify undervalued stock. Due to its broad-market exposure, investors should expect greater volatility and therefore invest with a long-term investment horizon. Some of the fund's major players are Pfizer, Inc., AT&amp;T, Chevron, ExxonMobil, and Wells Fargo &amp; Co.</p> <h2>5. Vanguard Consumer Staples Index Admiral Shares (<a href="https://personal.vanguard.com/us/funds/snapshot?FundId=5484&amp;FundIntExt=INT">VCSAX</a>)</h2> <p>Morningstar rating: 4 stars</p> <p>This fund is comprised of U.S. consumer staples, such as Wal-Mart, Costco, Coca-Cola Co., and PepsiCo. As a result, the fund will realize volatility consistent with consumer behavior, and investors should expect greater fluctuations. This is a very high-risk investment and it's advisable that it is used to hedge an already well-balanced portfolio.</p> <p><em>Are index funds part of your portfolio? Which?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/the-top-5-index-funds-to-own-now">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-7"> <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/the-4-greatest-stock-reversals-in-the-last-decade">The 4 Greatest Stock Reversals in the Last Decade</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-reasons-social-media-is-still-a-smart-investment">5 Reasons Social Media is Still a Smart Investment</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/investing-101-5-essential-steps">Investing 101: 5 Essential Steps</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/mutual-funds-for-wise-bloggers">Mutual Funds for Wise Bloggers</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/why-index-funds-are-the-best-choice-for-new-investors">Why Index Funds Are the Best Choice for New Investors</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment diversification index funds market volatility stock market Fri, 24 Apr 2015 11:00:07 +0000 Qiana Chavaia 1396634 at http://www.wisebread.com 10 Times You Shouldn't Invest in Stocks http://www.wisebread.com/10-times-you-shouldnt-invest-in-stocks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-times-you-shouldnt-invest-in-stocks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_thinking_stocks_000030689114_0.jpg" alt="Woman considering when she shouldn&#039;t invest in stocks" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Investing in stocks is one of the best ways to build wealth over time, since on average, the stock market returns 9% per year. But there are many instances when buying stocks might not make sense. If you're on the fence about whether to enter the stock market, ask yourself if any of these apply to you.</p> <h2>1. You're About to Retire</h2> <p>If you are right on the cusp of retirement and need to rely on your savings when you stop working, it's best to avoid riskier stocks and place it in safer investments, such as bonds or cash. Most experts recommend that bonds and safer investments should comprise the same percentage of your portfolio as your age. So, a 65-year-old investor would want about 65% of their portfolio in bonds and lower-risk investments, and only 35% in stocks (which tend to be higher-risk). The last thing you want is for your nest egg to rapidly decline in size right as you plan to dip into it.</p> <h2>2. You Need the Money Right Away</h2> <p>Investing in stocks isn't really for people looking to make a quick buck. Sure, you might make 10% in one month, but you might also lose just as much. If this is cash you need soon for a new car, down payment on a home, or a new child, you're best off keeping it somewhere safer and more liquid.</p> <h2>3. You Haven't Researched the Most Tax-Advantaged Ways to Invest</h2> <p>It's relatively easy to buy individual stocks, but have you explored buying these via tax-advantaged accounts, such as a Roth IRAs and 401(k)s? If not, you may find yourself owning stocks in regular brokerage accounts, meaning you'll be on the hook right away for any taxes on dividends and capital gains. Do a little bit of homework on tax-advantaged vehicles before you invest, and you'll end up saving thousands of dollars in the long run.</p> <h2>4. You Don't Have an Emergency Fund</h2> <p>Investing in stocks is a great way to build wealth, but it doesn't really make sense to put money in the markets if you have no cash savings. Before you invest, work to ensure that you have enough liquid savings to cover at least three months of expenses, so that you're not financially crippled by a job loss, major medical expense, or other crisis.</p> <h2>5. You Freak Out Over Market Fluctuations</h2> <p>It's a simple fact that markets go up and down. There may be days you'll lose hundreds &mdash; or even thousands of dollars. Can you stomach this? If you're losing sleep over a single day's losses, perhaps you're not ready for stock investing. Before jumping in, take some time to get acquainted with the movement of markets. Becoming comfortable with the ups and downs will make you a more patient and happier investor.</p> <h2>6. You Can Only Invest a Very Small Amount at a Time</h2> <p>When you buy and sell stocks, you will usually pay a commission on each trade. This costs less than $10 at most discount brokerage firms, but if you only plan to buy a few shares of stock, that could add up to a big chunk of your return. Generally speaking, it's more efficient to buy larger quantities of shares, if you can. (There are some caveats to this. Many brokerage firms offer commission-free trades on many investments, so it's possible to buy small numbers of shares. But your choices are limited.)</p> <h2>7. You Have a Lot of High-Interest Debt</h2> <p>If you have thousands of dollars in credit card debt and are paying 13% in interest, is it wise to place your money in stocks? Sure, there may be stretches of time where investment returns are higher than your interest rates, but most of the time you are better off using money to pay down debt. In the long run, eliminating debt will free up more money to invest, putting you in better financial shape.</p> <h2>8. Stock Valuations Are Completely Insane</h2> <p>I am not a believer that you should always &quot;sell high&quot; and &quot;buy low.&quot; If you are investing for the long haul, it's not worth stressing over whether you're getting into the markets at the right time. Young investors, in particular, are best off just getting started as soon as they can. That being said, there may be instances when there is broad agreement that stocks are overpriced based on a company's earnings, or other factors. In these cases, it might make sense to wait for the market to cool a bit before pouncing. Pay close attention to things like a company's price-to-earnings ratio, and how close a stock price is to a 52-week high.</p> <h2>9. Interest Rates Start Shooting Way Up</h2> <p>Right now, interest rates are still historically quite low, but there have been instances when interest rates were so high that you'd end up with better returns from your savings account than the S&amp;P 500. If economic conditions suggest interest rates might rise dramatically, it might make sense to hold off on investing in stocks. It's worth noting, however, that interest rates have been quite low for many years now, and that past predictions of rate jumps didn't materialize.</p> <h2>10. You Really Have No Idea</h2> <p>It may seem like everyone is telling you to invest. But you just have no idea how to get started or what to do. That's okay! If you're unfamiliar with investing, you're more likely to make a mistake that will cost you money. Ignore outside pressure and take the time to learn about the stock market and the mechanics of investing before putting your money at risk.</p> <p><em>Have there been other occasions in which stocks weren't the right choice for you?</em></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/10-times-you-shouldnt-invest-in-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-8"> <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-best-free-financial-learning-tools">9 Best Free Financial Learning Tools</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/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</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-easy-ways-to-start-green-investing">5 Easy Ways to Start Green Investing</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-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</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/5-dumb-401k-mistakes-smart-people-make">5 Dumb 401(k) Mistakes Smart People Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bonds debt emergency funds retirement saving stocks Wed, 22 Apr 2015 15:00:09 +0000 Tim Lemke 1392474 at http://www.wisebread.com 5 Easy Ways to Start Green Investing http://www.wisebread.com/5-easy-ways-to-start-green-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-easy-ways-to-start-green-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_recycling_000013114340.jpg" alt="Woman happy because she made environmentally friendly investment" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We'd all love to invest our money in a way that benefits our finances while helping to build a better world. If that sounds like a pipe dream to you, it's not. Impact investing is a growing trend, and there are plenty of ways to do well and do good with your money. Here are five classes of green investments that are kind to the Earth:</p> <h2>1. Green Bonds</h2> <p><a href="http://www.institutionalinvestor.com/gmtl/3382260/Green-Bonds-Planting-Seeds-for-Eco-Friendly-Investment.html#.VRmawpPF-l0">Green bonds</a> are a perfect entry point for someone interested in making a social investment. Like other bonds, you pay a certain amount of money for the bond now to get a larger amount of money at a specific future date. With green bonds, your up-front investment is used to finance environmentally friendly projects. They're relatively low-risk and provide critical funds that are urgently needed in the short-term for these green initiatives.</p> <h2>2. Green Mutual Funds</h2> <p>Chances are that if you have any type of retirement account, at least a portion of it is invested in mutual funds. If you'd like to use that money to support green projects, choose green funds when allocating your investments. Broadly speaking, these investments are also included under the umbrella of socially responsible investments.</p> <h2>3. Green Stocks</h2> <p>As an investor, you also have the option to invest directly in companies that have a green mission, product, or service. This means you can buy stock in a publicly traded company that produces renewable energy products such as solar panels, or any other &quot;green&quot; mission of your choice.</p> <h2>4. Green Startups</h2> <p>One of the riskiest (but perhaps one of the most potentially lucrative) green investments you can make is in a green startup. There are plenty of entrepreneurs who are founding companies in the environmentally-friendly space. They range from new composting techniques, to energy-saving products, to innovative concepts such as carbon credits that are bought and traded to compensate for energy consumption.</p> <h2>5. Sustainable Product Stocks</h2> <p>Many companies are taking up the green mantle by transforming their products and using renewable resources. Some also pledge a portion of their earnings to environmental nonprofits, and support green efforts in the communities where they operate. These companies can contribute enormously to protecting the environment, and supporting their efforts with your investment dollars and purchases can help encourage them to continue and enhance these practices.</p> <p>As always, it's important to make informed investment decisions. It's best to educate yourself about these options by reading about the ins and outs of green investing. I also suggest seeking the advice of a professional financial advisor before making any investment decisions. Together, we can build a bright future for ourselves and for the planet as a whole through our investment dollars.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christa-avampato">Christa Avampato</a> of <a href="http://www.wisebread.com/5-easy-ways-to-start-green-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-9"> <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/book-review-game-over">Book review: Game Over</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-most-important-thing-youre-probably-not-doing-with-your-portfolio">The Most Important Thing You&#039;re Probably Not Doing With Your 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/your-401-k-is-not-an-investment">Your 401(k) is not an investment</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/why-young-investors-should-stay-the-course-and-continue-to-invest">Why young investors should &quot;Stay the Course&quot; and continue to invest</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/5-crucial-things-you-should-know-about-bonds">5 Crucial Things You Should Know About Bonds</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Green Living Investment bonds eco-friendly environment mutual funds startups stocks sustainability Wed, 15 Apr 2015 11:00:12 +0000 Christa Avampato 1380916 at http://www.wisebread.com 5 Ways to Boost Your Odds of Retiring Early http://www.wisebread.com/5-ways-to-boost-your-odds-of-retiring-early <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-boost-your-odds-of-retiring-early" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/guy_computer_000025658945.jpg" alt="Man trying to boost his odds of retiring early" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The <a href="http://crr.bc.edu/briefs/the-average-retirement-age-an-update/">average age of retirement</a> stands today at 62 for women and 64 for men. But if you're like many Americans, you'd probably much prefer to have your feet in the sand and a piña colada in hand well before you reach your 60s. No matter your age, it'll be pretty hard to pay for that oceanfront real estate and tiki bar tab if you haven't set aside enough savings.</p> <p>Fortunately, your dreams of a comfortable, early retirement can still come true &mdash; so long as you're willing to do some heavy duty planning, smart saving, and savvy investing. Read on for our roundup of the best tips and tricks for retiring early &mdash; without winning the lottery.</p> <h2>1. Set a Savings Goal</h2> <p>First thing's first: You need to calculate how much money you'll need to stockpile before you can quit your day job. Be forewarned &mdash; it'll likely be a number that will make your jaw drop. But even if it seems totally unattainable, rest assured that it's not. Let's say you'd like to retire at 48 &mdash; a plum 15 years earlier than the average American. Take your pre-retirement income and multiply it by the number of expected years of life you'll have in retirement; in this case, we'll say it's 48 x 31 (this assumes you're going to live to be 79, the average life expectancy for an American).</p> <p>For example, if you're living off a $70,000 salary now, you'll need to save $2.2 million before you can ditch your nine-to-five. On average, retirees spend between 65% and 95% of their<a href="http://www.forbes.com/sites/fidelity/2015/03/23/are-you-on-track-for-the-retirement-you-want-infographic/?sr_source=lift_polar"> pre-retirement income</a>, so this calculation shoots a little high. But since you very well may live a decade or two longer than the average Joe, it's better to have a bigger cushion than no cushion at all.</p> <h2>2. Live Frugally</h2> <p>If you want to achieve a comfortable, early retirement, one way of getting there is by living frugally. That means forgoing name brand clothing, coupon-less meals at restaurants, salon visits, and airplane travel. Buying used cars only &mdash; or giving up cars, altogether and instead riding a bike or public transit. (See also: <a href="http://www.wisebread.com/the-two-biggest-mistakes-people-make-when-starting-to-live-frugally?ref=seealso">The Two Biggest Mistakes People Make When Starting to Live Frugally</a>).</p> <p>If this sort of lifestyle sounds foreign to you, you may want to begin by crafting a carefully detailed budget that will set you up to achieve your long-term retirement savings goal. If all of this sounds exactly like the way you don't want to live out your younger years, frugal living as a road to early retirement quite simply may not be for you.</p> <h2>3. Start a Business &mdash; Then Let Someone Else Run It for You</h2> <p>If you've got an entrepreneurial bone in your body, you might want to explore launching your own business as a means of achieving early retirement. Whether it's a food truck or a marketing and consulting firm, the idea is to launch the business and work it until it's profitable enough that you can hire someone else to run the day-to-day operations while you kick back in that beach chair and watch the money pour in. Alternatively, the sale of your business could fund your retirement. Nearly 40% of small business owners say they are <a href="http://www.guardianlife.com/glife11pp/groups/camp_internet/@stellent_camp_websites/documents/document/sbo-retirement-readiness.pdf">poised to retire earlier</a> than they had anticipated. (See also: <a href="http://www.wisebread.com/starting-your-dream-business-is-easier-than-you-think-heres-how?ref=seealso">Starting Your Dream Business Is Easier Than You Think &mdash; Here's How</a>)</p> <h2>4. Get Yourself a Pension</h2> <p>The beauty of the pension plan: It's sort of like earning a salary, only without having to put in the work. And although many industries are phasing out these plans, about one in four large employers still offer some sort of <a href="http://www.towerswatson.com/en/Insights/Newsletters/Americas/Insider/2014/retirement-in-transition-for-the-fortune-500-1998-to-2013">pension to new hires</a>, according to a recent study. At the top of the list are companies in the insurance, utilities, energy, transportation, and food and beverage industries. Government is another sector where pensions are alive and well. Many municipalities still offer firefighters, police officers, and public works employees pensions that include overtime and saved vacation in the final calculation. The result is that some workers can retire with a pension that's <a href="http://www.ctpost.com/local/article/Crushed-by-town-pensions-1413396.php">higher than their former salary</a>. Imagine that.</p> <p>Alternatively, Apple, Google, Microsoft, and other big-name employers in the <a href="http://money.usnews.com/money/retirement/slideshows/10-industries-with-the-best-retirement-benefits/10">information industry</a> offer workers an average retirement benefit contribution of $2.76 per hour worked. That's huge. Also, these tend to be pretty high-paying jobs, which means employees have more flexibility to make larger contributions to their own retirement savings, in addition to what the company chips in.</p> <h2>5. Make Smart Investments</h2> <p>The best time to start investing is now. Case in point: If you start maxing out your IRA contributions at age 25, you will have saved $1.6 million by the time you're 70. But if you were to start at 35, you'd save about half that sum. Clearly, a few years can make a huge difference. Now, if you're not investment savvy, there are tons of tools available to help you figure out where to put your money.</p> <p>One of the best and easiest is an automated investment advisor, such as FutureAdvisor, that specializes in retirement planning. With <a href="https://www.futureadvisor.com/">FutureAdvisor</a>, you can get your 401(k), IRA, and other accounts analyzed, plus receive recommendations on how to improve your existing investments &mdash; absolutely free of charge. Then, if you're impressed with the results and want to hire FutureAdvisor as your investment manager, there's a monthly fee of either $9 or $19, depending on the value of your assets. Rest assured, all of FutureAdvisor's investment recommendations are made with the goal of setting you up for the most comfortable retirement years possible.</p> <p><em>What other steps are you taking to ensure an early retirement?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/5-ways-to-boost-your-odds-of-retiring-early">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-10"> <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-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</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/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</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/12-surprising-things-women-should-know-about-retirement-planning">12 Surprising Things Women Should Know About Retirement Planning</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/6-valid-reasons-not-to-contribute-to-your-401k">6 Valid Reasons Not to Contribute to Your 401(k)</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/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Entrepreneurship Investment Retirement 401(k) pensions savings Tue, 14 Apr 2015 09:00:42 +0000 Brittany Lyte 1379696 at http://www.wisebread.com 7 Stocks Warren Buffett Loves — And You Should, Too http://www.wisebread.com/7-stocks-warren-buffett-loves-and-you-should-too <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-stocks-warren-buffett-loves-and-you-should-too" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/binoculars_000012990755.jpg" alt="Man looking towards wealthy financial future with stocks" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Warren Buffett is one of the <a href="http://www.stockpickr.com/pro/portfolio/warren-buffett/">most successful investors</a> of all time. He's also famous for living modestly (he still occupies a very middle class home in Omaha and drives an older vehicle) and investing in products that can be easily understood by anyone. (That's enough to make any Wise Bread reader swoon.) Here are seven of the stocks he loves that we should all seriously consider for our portfolios:</p> <h2>1. Wells Fargo</h2> <p>Mr. Buffett devotes almost a quarter of his stock portfolio to <a href="https://www.google.com/finance?q=NYSE%3AWFC&amp;ei=1MEhVfnmJMje8AbPoYBQ">Wells Fargo</a>. Many financial services stocks boomeranged during the recession. In this instance, Wells Fargo's diversification helped cushion them from the losses and rock bottom stock prices that many of their competitors experienced during the depths of the financial crisis. Its motto could be simply stated as &quot;steady as it goes.&quot; And if there's anything that Mr. Buffett likes, it's stability.</p> <h2>2. Coca-Cola</h2> <p><a href="https://www.google.com/finance?q=NYSE%3AKO&amp;ei=38EhVdn8PIGB8Abn94HoAg">Coca-Cola</a> is synonymous with Americana. I still remember the iconic commercials from my childhood, and its polar bears remain a staple of Christmas advertising. All of the nostalgia aside, the world's most famous beverage (and brand) has held its value. For almost 40 years, it's steadily climbed its way up in price from $0.81 per share in 1978 to almost $41 per share in 2015.</p> <h2>3. American Express</h2> <p><a href="https://www.google.com/finance?q=NYSE%3AAXP&amp;ei=9sIhVYnQHOqysAftxoHIAQ">American Express</a> zeroes in on wealthier customers who tend to experience less strife during a difficult economy. Though Amex experienced a significant decline in its stock price during the most recent recession, it has since bounced back nicely. Since its low of $10 in 2009, the stock has clawed its way back to almost $80 per share, significantly higher than its share price prior to the recession.</p> <h2>4. IBM</h2> <p><a href="https://www.google.com/finance?q=NYSE%3AIBM&amp;ei=I8QhVfm0C4uM8Qb07YGIBg">IBM</a> is a bit of a roller coaster stock if we focus on any short-term timeframe. However, if we zoom out and take a look at its performance over the long-haul, we see that the highs outweigh the lows. Mr. Buffett is famous for taking the long view, and IBM is a great example of the value of this perspective. Since the doldrums of 2009, IBM has doubled its per share price.</p> <h2>5. Wal-Mart</h2> <p>There's plenty of criticism in the press when it comes to <a href="https://www.google.com/finance?q=NYSE%3AWMT&amp;ei=vMQhVfnmJIWB8wbr24HADw">Wal-Mart's</a> business practices. Many take umbrage with its employee practices and environmental policies. But when it comes to making an investment in a company that provides returns, Wal-Mart is another stock that consistently delivers for its shareholders. Even during the latest recession when many other companies were bottoming out, Wal-Mart held its value. In the past 20 years, its stock price has grown more than seven times over.</p> <h2>6. Procter &amp; Gamble</h2> <p>Open up your medicine cabinet or look under your sink, and chances are you've got at least one <a href="https://www.google.com/finance?q=NYSE%3APG&amp;ei=ucUhVbj8CIGB8Abn94HoAg">Procter &amp; Gamble</a> product that's a staple in your daily life. Mr. Buffett loves companies like this because they are such a part of the fabric of American consumer's habits. P&amp;G is an innovation leader with a careful and thoughtful eye toward improving the lives of its customers through its products. This commitment shows in its stock price, which has grown by over 28% in the past five years.</p> <h2>7. U.S. Bancorp</h2> <p>Like many of Mr. Buffett's other stock picks, <a href="https://www.google.com/finance?q=NYSE%3AUSB&amp;ei=PckhVaGWA-zBsAeP_oCADg">U.S. Bancorp</a> has been on an upward climb since the depths of the latest recession. Though it hasn't seen a dramatic rise in price like American Express and Wal-Mart, it's nonetheless a solid bet thanks to its business spanning the full range of financial services from retail banking, to capital markets, to investment management.</p> <p>In Mr. Buffett's portfolio we immediately notice one obvious pattern &mdash; he invests in brands that are well-known and ubiquitous to American life. In the days of flashy startups, over-the-top IPOs, and Silicon Valley's flashes in the pan, Mr. Buffett provides us with a salient counter example for the prudent investor: invest in what you know and in what everyone else knows, too.</p> <p><em>Do you own any of Warren Buffett's favorite stocks? If so, which ones and why?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christa-avampato">Christa Avampato</a> of <a href="http://www.wisebread.com/7-stocks-warren-buffett-loves-and-you-should-too">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-11"> <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/the-4-best-investments-for-lazy-investors">The 4 Best Investments for Lazy Investors</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/trading-options-is-a-sound-investment-and-its-simpler-than-you-think">Trading Options Is a Sound Investment (and It&#039;s Simpler Than You Think!)</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-easy-ways-to-start-green-investing">5 Easy Ways to Start Green Investing</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-investors-with-better-returns-than-warren-buffett">5 Investors With Better Returns Than Warren Buffett</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-dumb-stock-picking-mistakes-even-smart-investors-make">7 Dumb Stock Picking Mistakes Even Smart Investors Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment investors stock portfolios stocks Warren Buffett Mon, 13 Apr 2015 17:00:04 +0000 Christa Avampato 1380770 at http://www.wisebread.com Here's How Rich You'd Be if You Stopped Drinking Expensive Coffee http://www.wisebread.com/heres-how-rich-youd-be-if-you-stopped-drinking-expensive-coffee <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-how-rich-youd-be-if-you-stopped-drinking-expensive-coffee" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_coffee_000021560271.jpg" alt="Woman drinking expensive coffee and spending too much money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Last week I was in Starbucks, and found they now have a list of enticing new lattes. One was <em>tiramisu</em>! Starbucks will be glad to know that the tiramisu latte did not disappoint. On taste, that is. The price tag for a tall tiramisu latte with coconut milk in my area is a staggering $5. That's right: <em>five dollars</em>. For what ultimately amounts to a small coffee with some flavors and milk substitute thrown in. Oh my.</p> <p>Fortunately for my pocketbook, I usually home brew. I have a very nice coffee maker that had an upfront cost the equivalent of 40 tall tiramisu lattes with coconut milk (after my 20% Bed Bath and Beyond coupon). Sure, it was expensive, but like I said; I'm a coffee lover, and the coffee it auto-grinds and brews is so delicious that I'm often disappointed when I'm out and have to buy from a coffee shop. (See also: <a href="http://www.wisebread.com/better-brewing-12-ways-to-make-coffee-at-home?ref=seealso">12 Ways to Make Better Coffee at Home</a>)</p> <p>Before I get all annoying and tell you how much your five-dollar-a-day coffee habit is costing you, I want you to know that I'm not picking on Starbucks. You can run the same numbers by picking your favorite brew from Peet's or Caribou or Costa, or wherever you happen to frequent. Heck, skip the coffee analogy altogether and substitute cigarettes, a microbrew at your local hang-out, cable TV, or whatever daily vice you think is harmless to your pocketbook.</p> <p>What's most important is that, before you make even the smallest of financial decisions, you understand the big picture effect. Maybe you'll decide your daily latte is worth the long-term price. But, before you decide, you should understand the variables. (See also:&nbsp;<a href="http://www.wisebread.com/73-easy-ways-to-save-money-today?ref=seealso">73 Easy Ways to Save Money Today</a>)</p> <h2>$5 a Day for 40 Years Could Buy a House (in Today's Dollars)</h2> <p>If you took $5 a day and put it in an 8% investment like a low-cost, well diversified index fund (I love Vanguard, if you're looking for one!) for 40 years, that daily foregone latte could compound to a staggering $510,600.40. Don't want to wait 40 years? The daily tiramisu latte habit adds up to $1,971 over a year, $11,563,07 over five, and $28,553.01 over 10. Just think about all the vacations you could take with that extra dough, or all the kids' college accounts you could fund, or all the debts you could pay off (and save yourself the interest payments!). The possibilities are endless. (See also:&nbsp;<a href="http://www.wisebread.com/this-is-how-rich-youd-be-if-youd-saved-the-money-you-earned-in-high-school?ref=seealso">This is How Rich You'd Be if You'd Saved All the Money You Earned in High School</a>)</p> <h2>But I Don't Want to Give Up That Much Coffee</h2> <p>I love coffee, even the five dollar variety, even though I know how much it costs to my long-term bottom line.</p> <p>Drop just one froufrou cuppa from your weekly routine and you'll still see great investment results. Assume again you take that $5 per week and invest it in that low-cost index fund (which we'll assume returns 8% per year) and you'll earn $280.80 per year, $4,067.83 in 10, and $72,743.07 after 40 years. It's no McMansion in the burbs but $70k is still enough for a double wide in the country or a condo in the city. (See also:&nbsp;<a href="http://www.wisebread.com/how-to-save-26000-in-5-years-or-less?ref=seealso">How to Save $26,000 in 5 Years or Less</a>)</p> <h2>No, Really, I Just Can't Give up My Coffee</h2> <p>I get it. Really, I do. Sometimes a daily habit means more than what we have to gain by giving it up. So, in my last ditch effort to show you that little changes lead to big results, let's see how much you have to gain by giving up just one fancy coffee per month.</p> <p>In one year (assuming an 8% annual return): $64.80. In 10: $938.73. In 40: $16,786.86. Even giving up just one $5 coffee per month can make a sizable difference over time. (See also:&nbsp;<a href="http://www.wisebread.com/16-easy-ways-to-save-100-this-month?ref=seealso">16 Easy Ways to Save $100 This Month</a>)</p> <p>Just for fun, here's an expanded version of the numbers so you can choose your own timeframe and dollar savings.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/coffee%20savings%20chart%20-%20tweddale.jpg" width="605" height="389" alt="" /></p> <p>The next time you find yourself pulling a fiver out of your wallet for a seemingly inconsequential expense, I hope you'll think twice and consider the long-term cost of that impulse buy. Just plug the cost of that impulse buy into a <a href="http://www.bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx">compound savings calculator</a> and see how much you'll save &mdash; and earn. Over time, the decision could just fund your next home, vacation, or child's college tuition. Or, Howard Schultz's pocketbook. The choice is yours.</p> <p><em>What daily expense would you be willing to give up for a house in 40 years?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/alaina-tweddale">Alaina Tweddale</a> of <a href="http://www.wisebread.com/heres-how-rich-youd-be-if-you-stopped-drinking-expensive-coffee">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-12"> <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/10-ways-to-save-money-when-you-are-unemployed">10 Ways to Save Money When You Are Unemployed</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-mindless-ways-youre-spending-money">10 Mindless Ways You&#039;re Spending Money</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-sites-and-apps-to-help-you-track-your-spending-and-stick-to-your-budget">10 Sites and Apps to Help You Track Your Spending and Stick to Your Budget</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/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</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-quiet-millionaire-part-2-major-obstacles-to-financial-success">The Quiet Millionaire: Part 2 – Major Obstacles to Financial Success</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Investment coffee coffee drinkers compound interest money saving tips spending Tue, 07 Apr 2015 09:00:10 +0000 Alaina Tweddale 1370567 at http://www.wisebread.com 8 Ways ETFs Can Put More Money in Your Pocket Than Mutual Funds http://www.wisebread.com/8-ways-etfs-can-put-more-money-in-your-pocket-than-mutual-funds <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-ways-etfs-can-put-more-money-in-your-pocket-than-mutual-funds" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_at_work_000019464427.jpg" alt="Man discussing ETFs and mutal funds with woman" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of the most common pieces of investment advice is to diversify your portfolio. This means having a good mix of investments, including stocks from a variety of asset classes and industries.&nbsp;Mutual funds have long been the most common way for investors to easily diversify their portfolios, but there's a relatively new investment vehicle that is arguably better.</p> <p><a href="http://www.wisebread.com/exchange-traded-funds-the-low-fee-investment-option-you-dont-know-about">Exchange-traded funds, or ETFs</a>, have many advantages over mutual funds, and should be a part of most investment plans. ETFs are very much like mutual funds, in that they are designed to track a particular index, such as the S&amp;P 500, or industries like health care or tech. But unlike mutual funds, they can be bought and sold just like stocks. (See also: <a href="http://www.wisebread.com/the-top-5-etfs-you-should-buy-now?ref=seealso">The Top 5 ETFs You Should Buy Now</a>)</p> <p>There are now more than 1,000 ETFs available for most investors, and they are growing in popularity. Here's a look at some key <a href="http://www.wisebread.com/the-duel-etfs-vs-mutual-funds">advantages of ETFs over mutual funds</a>.</p> <h2>1. Expense Ratios Are Lower</h2> <p>Generally speaking, you will keep more of your money if you trade an ETF over a mutual fund. Most ETFs have expense ratios of less than 1%, and there are some &mdash; such as the iShares Total Stock Market ETF [ITOT] &mdash; which have ratios of under 0.1%. (Disclosure: A significant portion of my Roth IRA is invested in this ETF.)</p> <h2>2. You Can Trade Many ETFs Without a Commission</h2> <p>Depending on the brokerage, you can buy or sell many ETFs at no charge. Fidelity, for example, charges no commission for iShares ETFs, and TD Ameritrade has more than 100 commission-free ETFs. This will save you a great deal of money, especially if you like the idea of buying small quantities of ETFs frequently.</p> <h2>3. They Trade All Day on the Exchange</h2> <p>Unlike mutual funds, ETFs are available for intraday trading. This means that you can buy them or sell them quickly if you believe the market may go up or down sharply during the day, and also place limit orders, which allow you to direct your broker to buy or sell only at a specific price.</p> <h2>4. You Can Take Short or Long Positions</h2> <p>Because ETFs trade like stocks, you can use them in options trades. This means you can potentially profit from a down market. For example, if you believe an ETF will lose value, you can &quot;borrow&quot; shares and then sell them at a higher price using the proceeds to buy them back at a lower price in the future. (Note: This investment activity is complex and generally for more experienced investors.)</p> <h2>5. They Offer Tax Advantages</h2> <p>ETFs are built to be tax efficient. They are generally passively managed, so they do not produce as much in the way of capital gains. ETF managers are also not required to sell shares &mdash; and thus produce capital gains &mdash; to accommodate the redemption of shares.</p> <h2>6. There Are No Minimums</h2> <p>It's possible to buy or sell just a single share of an ETF. Contrast this to many mutual funds that have minimum investment requirements into the tens of thousands of dollars.</p> <h2>7. Dividends Are Not Automatically Reinvested</h2> <p>There's nothing necessarily wrong with reinvesting dividends, but mutual funds don't even give you a choice. With ETFs, dividends are placed into your brokerage account. If you want to buy more shares of that same ETF, you certainly can, but you're given the flexibility to put the cash elsewhere.</p> <h2>8. There's a Big Selection, But It's Not Overwhelming</h2> <p>According to the Investment Company Institute, there were <a href="http://www.ici.org/etf_resources/background/faqs_etfs_market">1,411 available ETFs</a> in the U.S. at the end of 2014. Compare that to about 7,400 mutual funds. The number of ETFs at this point should offer investors plenty of ways to diversify their holdings any way they choose, without drowning them in a sea of confusing choices.</p> <p><em>Do you own ETFs? Why or why not?</em></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/8-ways-etfs-can-put-more-money-in-your-pocket-than-mutual-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-13"> <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/8-cheap-easy-and-not-so-obvious-ways-to-invest-in-a-companys-stock">8 Cheap, Easy, and Not-So-Obvious Ways to Invest in a Company&#039;s Stock</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-duel-etfs-vs-mutual-funds">The Duel: ETFs vs. Mutual Funds</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-best-online-brokerages-for-your-ira">5 Best Online Brokerages for Your IRA</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/mutual-funds-for-wise-bloggers">Mutual Funds for Wise Bloggers</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/why-index-funds-are-the-best-choice-for-new-investors">Why Index Funds Are the Best Choice for New Investors</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment ETFs exchange traded funds mutual funds Thu, 02 Apr 2015 11:00:12 +0000 Tim Lemke 1360989 at http://www.wisebread.com 10 Investing Lessons You Must Teach Your Kids http://www.wisebread.com/10-investing-lessons-you-must-teach-your-kids <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-investing-lessons-you-must-teach-your-kids" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mother_son_money_000014942268.jpg" alt="Mother talking to her son about investments" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Roughly 68% of Americans feel that <a href="https://www.wellsfargo.com/about/press/2014/middle-class-retirement-saving_1022/">saving for retirement</a> is harder than they anticipated. Some 25% of all middle-class Americans &quot;get depressed&quot; when even thinking about it. And 40% of millennials have no idea how much <a href="https://www.wellsfargo.com/press/2014/20140610_millennials">money to save</a>. The most frightening statistic: 21% of Americans think that <a href="http://www.consumerfed.org/pdfs/Financial_Planners_Study011006.pdf">winning the lottery</a> is the most practical way for them to fund their retirement.</p> <p>I discussed these problems and the financial behavior of investors with Rob Pivnick, a financial literacy advocate and author of &quot;<a href="http://www.amazon.com/gp/product/B00NDHXOH8/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=B00NDHXOH8&amp;linkCode=as2&amp;tag=wisbre03-20&amp;linkId=5MOTCBD3L7AR5A2F">What All Kids (and Adults Too) Should Know About...Saving &amp; Investing</a>.&quot; His message is that parents should teach their children the right habits as early as possible, so they don't become one of these statistics. And it doesn't have to be difficult. Here are 10 easy ways to teach your children about smart investing.</p> <h2>1. Start Them Off Early</h2> <p>Starting to save as early as possible is the easiest way to let your money work for you. In fact, this is probably the number one thing you can teach your children about money.</p> <p>Consider this example from Rob's book comparing two savers: One starts saving when he is 20 years old, while the other waits until she is 30 years old. Each one saves $100 per month until they are 60 years old, and they both get the same 8.5% return. The early saver will have $406,825. The saver who waited ten years will only accumulate $166,339. That 10 year difference results in over $240,000 more growth! But the difference in the amount contributed was only $12,000 &mdash; compound interest made up all the rest. So, encourage your children to start investing now.</p> <h2>2. Don't Try to Beat the Market</h2> <p>Your kids should want to be average &mdash; at least when it comes to investing. It is better to embrace the market than try to beat the market. It isn't very often in life that you won't tell your children to try to be the best, but when it comes to investing, teach them to be average. Passive management, or indexing, is an investment approach that tries to match the performance of the market as closely as possible rather than try to beat it.</p> <p>Over the long term, it is impossible to consistently beat the market without taking on additional risk. Over just about any historical five year period, passive index funds beat actively managed funds. Over the last five years, for example, only 20% to 35% of <a href="http://www.spindices.com/documents/spiva/spiva-us-mid-year-2014.pdf">actively managed funds</a> beat the benchmark for their category. The professionals aren't smarter than the market. And neither are you (or your kids). It's a humbling fact, but still a fact nonetheless. (See also: <a href="http://www.wisebread.com/5-investors-with-better-returns-than-warren-buffett?ref=seealso">5 Investors With Better Returns Than Warren Buffett</a>)</p> <h2>3. Minimize Expenses: Invest in Low-Cost Index Funds</h2> <p>Actively managed funds have an average expense ratio of a full percentage point higher than passive funds. One percent may not sound like much, but over the long term it becomes much more significant. How does this translate into lost dollars? Well, from another example in Rob's book, if you invested $100,000 over 30 years at an average yearly growth of 8.5%, paying for those higher fees would cost you approximately $280,000. (See also: <a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds?ref=seealso">3 Steps to Getting Started With Index Funds</a>)</p> <p>Everyone should know that past performance is no indication of future returns. But does everyone know that the most accurate predictor of future returns is low fees? When looking at factors like past performance, fees, and Morningstar ratings, expense ratios are the only reliable predictor of future performance.</p> <h2>4. Think Long Term: Buy and Hold Is the Best Strategy</h2> <p>The average <a href="http://www.dalbar.com/ProductsampServices/AdvisorsSolutions/QAIB/tabid/214/Default.aspx">investor's annual return</a> is around 4%. That's compared to the historical average market return of 8.5%. Why? Because we tend to invest emotionally &mdash; which causes us to buy high, and sell low (instead of the opposite).</p> <p>Emotional investing is a losing strategy. Don't fall into this trap &mdash; teach your children to stick to their long term plan and ignore the daily market swings.</p> <h2>5. Don't Put All Your Eggs in One Basket</h2> <p>An important part of smart investing is diversifying. While diversification alone won't increase returns, it allows investors to reduce their risk. Diversification limits losses without sacrificing gains. It's the only way to do that. It's the &quot;free lunch&quot; of investing.</p> <p>By spreading investments over a variety of sectors and assets, the risk that any specific investment will fail is partially canceled by the other investments, thereby lowering the overall risk. Teach your adolescent children to diversify among asset classes, and furthermore, to diversify within each type of asset (such as different sectors, geographical regions, market capitalization, industries, etc.). Pivnick's book devotes a very readable chapter to diversification and provides useful examples of how to make it work for you.</p> <h2>6. Involve Your Children in Investment Decisions</h2> <p>Parents know that children tend to model their behavior after them, so it should be unsurprising that children's saving and investing behavior also follows that of their parents. Any chance you have to involve your children in day-to-day discussions about money are learning opportunities. And they are habit forming. If your children see you making sound, reasoned decisions about spending, they will start to think the same way about their spending habits.</p> <h2>7. Have Kids Write Goals and Savings Charts</h2> <p>It shouldn't come as a surprise that those who write down their goals are a third more likely to reach them. Plus, this can serve as a teaching moment for budgeting.</p> <p>As soon as your children receive birthday money, are old enough to do chores, or begin earning allowance, start a savings chart outlining their budget. People who write down their savings goals save, on average, over two times more than those that don't write a goal down.</p> <h2>8. Practice Learning by Doing</h2> <p>Anything you can do that actually involves your children in &quot;money&quot; tasks is a teaching opportunity and can instill good spending habits. Here are a few examples Rob provided:</p> <ul> <li>Have them help you figure out the restaurant bill and tip.</li> <li>Take them to the bank with their piggy bank to deposit funds in a savings account.</li> <li>Encourage them to take the lead on a refund or return with customer service.</li> <li>Allow them to negotiate a discount on the purchase of goods and services.</li> </ul> <h2>9. Give Limited Control and Let Them Make Mistakes</h2> <p>Once they are old enough, young adults should be given limited access to their money or bank accounts. Limited, in the context of parents-get-final-say-and-approve-silly-purchases, but still providing enough room to allow them to make those silly purchases. It only takes one super wasteful purchase to teach a lesson.</p> <h2>10. Teach Rules of Thumbs and Takeaways</h2> <p>Studies have shown that <a href="https://www.moodys.com/microsites/miic2010/presentationfiles/Fischer.pdf">rule-of-thumb money rules</a> affect financial behavior more than a thorough lesson on the topic. So, the rules of thumb must be included in your discussions. Here are some examples.</p> <ul> <li>After a lesson on compounding, provide an actionable takeaway, such as &quot;start early.&quot;</li> <li>Show the power of diversification with a rule of thumb: &quot;A single stock is riskier than a stock mutual fund.&quot;</li> </ul> <p>In Pivnick's book, you can find a great list of 14 takeaways to share with your children. After all, as parents, you want your kids to succeed &mdash; so set them up for that success by following these tips.</p> <p><em>What are you doing to teach your children about smart investing?</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/10-investing-lessons-you-must-teach-your-kids">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-14"> <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/buy-baby-bunting-but-dont-pay-full-price">Buy Baby Bunting... But don&#039;t pay full price!</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/how-to-tell-if-youre-on-track-for-retirement">How to Tell if You&#039;re on Track for Retirement</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/when-should-you-say-no-to-those-who-want-to-borrow-money-from-you">When Should You Say No to Those Who Want to Borrow Money from You?</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-ways-having-kids-makes-you-more-frugal">8 Ways Having Kids Makes You More Frugal</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/balancing-living-in-the-now-with-planning-for-the-future">Balancing Living in the Now With Planning for the Future</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Family Investment Lifestyle allowance investment money smart raising kids savings Fri, 20 Mar 2015 13:00:11 +0000 Damian Davila 1349215 at http://www.wisebread.com 5 Ways to Profit From Obama's Cuba Announcement http://www.wisebread.com/5-ways-to-profit-from-obamas-cuba-announcement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-profit-from-obamas-cuba-announcement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/obama_000019001597.jpg" alt="Obama town hall meeting" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The historic executive order issued by President Obama heralds a new era of eased relations between the United States and Cuba. After over 50 years of iciness between the two neighbors, Obama's order establishes official diplomatic ties, reduces some travel and financial restrictions, and paves the way for greater humanitarian support, as well as trade in some areas, such as communications equipment.</p> <p>While the executive order still doesn't mean all Americans can travel to Cuba for tourism or bring back as many Cuban cigars as they'd like, it does pave the way for stronger economic and social ties between the two countries. Even better, there are a few simple ways you can profit from this historic accord. Read on to learn five ways the Cuba announcement can boost your pocketbook.</p> <h2>1. Consider Travel Stocks</h2> <p>At just 90 miles from the U.S., Cuba was an American tourism hotspot before the embargo, and remains a top travel destination for many Canadians and Europeans. That's why easing of restrictions to the island nation is likely a boon for travel companies. Cruise lines such as <a href="http://finance.yahoo.com/q?s=CCL&amp;type=2button&amp;fr=uh3_finance_web&amp;uhb=uhb2">Carnival&nbsp;Cruises</a>&nbsp;and <a href="http://finance.yahoo.com/q;_ylt=AkV8CgTowyRCTxgevM741TEnv7gF?uhb=uhb2&amp;fr=uh3_finance_vert_gs&amp;type=2button&amp;s=RCL">Royal Caribbean</a> have rallied on the news, seeing their stock prices boosted in anticipation of liberalized travel restrictions. Keep in mind, however, that this executive order is not a lifting of the Cuban embargo &mdash; that's up to Congress. American tourism to Cuba would be limited until such a time, so assess travel stocks accordingly.&nbsp;</p> <h2>2. Buy Into a Caribbean ETF or Fund</h2> <p>Today's historic announcement triggered a spike in the <a href="http://finance.yahoo.com/q;_ylc=X1MDMjE0MjQ3ODk0OARfcgMyBGZyA3VoM19maW5hbmNlX3dlYgRmcjIDc2EtZ3AEZ3ByaWQDBG5fZ3BzAzUEb3JpZ2luA2ZpbmFuY2UueWFob28uY29tBHBvcwMxBHBxc3RyAwRxdWVyeQNDVUJBLARzYWMDMQRzYW8DMQ&mdash;?p=http%3A%2F%2Ffinance.yahoo.com%2Fq%3Fs%3DCUBA%26ql%3D0&amp;type=2button&amp;fr=uh3_finance_web&amp;uhb=uh3_finance_vert&amp;s=CUBA">Hertzfeld Caribbean Basin Fund (CUBA)</a>, a fund which invests in companies throughout the Caribbean, including Cuba. Its price was up over 30% in intraday trading. Consider investing in ETFs or mutual funds with exposure to the island nation's businesses.</p> <h2>3. Look at Wire Transfer and Remittance Companies</h2> <p>The executive order increases the amount Americans may send in remittances to Cuba to $2000 per quarter, up from $500 today. That'll mean brisk business for remittance and wire transfer companies such as <a href="http://finance.yahoo.com/q?s=WU&amp;fr=uh3_finance_vert_gs&amp;type=2button&amp;uhb=uhb2">Western Union</a>. Its stock was up nearly 4% in intraday trading on the news.</p> <h2>4. Consider Credit Card Companies and Banks</h2> <p>The new rules will also be to the benefit of many financial services companies, since it'll now enable American debit and credit cards to be used on the island. That could be a boost to credit card companies and card processing services. Shares of <a href="http://finance.yahoo.com/q;_ylt=AwrBJR9565FUrSEA0UCTmYlQ?s=V">VISA</a> and <a href="http://finance.yahoo.com/q?s=AXP">American Express</a> also saw gains.</p> <h2>5. Consider Telecommunications</h2> <p>An authoritarian regime, Cuba has long been plagued by controls on its communications technologies which have been exacerbated by the embargo. The new executive order promises improved access to American telecommunications and Internet technology imports. That means stock of companies such as Verizon could see a boost. And when combined with further easing on travel to Cuba for import/export reasons, it means Americans involved in trade of communications products and devices may see improved business as a result.</p> <p>To be sure, there is no guarantee all of the executive order will be implemented easily, nor that any of these investments will bear significant returns. Already, some Republican lawmakers have expressed frustration with Obama's executive order, creating a potential Congressional showdown and hampering the likelihood of repealing the embargo. Still, this remains a historic opportunity to get in early on what may be one of the biggest investment stories of the next few years.</p> <p><em>Will you make changes to your portfolio to profit from normalization of relations between the United States and Cuba?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/janet-al-saad">Janet Al-Saad</a> of <a href="http://www.wisebread.com/5-ways-to-profit-from-obamas-cuba-announcement">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-15"> <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/investment-gains-taxes-increase-the-worst-tax-policy-ever">Investment Gains Taxes Increase - The Worst Tax Policy Ever?</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/how-to-build-wealth-in-a-depressed-economy">How to Build Wealth in a Depressed Economy</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/boost-your-retirement-savings-avoid-401k-fees">Boost Your Retirement Savings: Avoid 401(k) Fees</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/portfolio-ailing-take-a-peek-at-asian-markets">Portfolio Ailing? Take a Peek at Asian Markets.</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/should-you-invest-in-goldman-sachs-gs">Should You Invest in Goldman Sachs (GS)?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Investment cuba obama Thu, 12 Mar 2015 07:40:16 +0000 Janet Al-Saad 1270232 at http://www.wisebread.com