Investment http://www.wisebread.com/taxonomy/term/4808/all en-US These 8 Small Cap Value Investments Are on Fire http://www.wisebread.com/these-8-small-cap-value-investments-are-on-fire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/these-8-small-cap-value-investments-are-on-fire" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/kid_money_investments_484334330.jpg" alt="Child finding small cap value investments that are on fire" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The stock market has been on a tear as 2016 comes to a close, and there's one particular investment that has performed especially well. Small cap value investments have risen significantly over the last few months, outpacing stocks and funds representing larger companies.</p> <p>Small cap value stocks are smaller companies (usually of less than $2 billion in market capitalization) that may be perceived as undervalued based on their price-to-earnings ratios. These investments appear to be benefiting from a general run-up in the stock market. But economic uncertainty overseas has further boosted small cap value investments, because they tend to be U.S.-based.</p> <p>There are countless small cap value stocks, but the easiest way to invest in them is through a mutual fund or exchange-traded fund (ETF). Here's a look at some small-cap investments that have been supercharging investment portfolios this year:</p> <h2>1. iShares S&amp;P Small Cap 600 Value ETF [NYSE: <a href="http://www.google.com/finance?cid=700320">IJS</a>]</h2> <p>Shares of this ETF are up more than 20% just since the start of November, and more than 34% over the last 52 weeks. Top holdings include TiVo, defense contractor CACI, and chemical company Chemours. IJS is designed to mirror the S&amp;P Small Cap 600 Value Index.</p> <h2>2. SPDR S&amp;P Small Cap 600 Value ETF [NYSE: <a href="https://finance.yahoo.com/q?s=slyv">SLYV</a>]</h2> <p>This is another ETF designed to track the S&amp;P Small Cap 600, and it's had a great 2016. Shares are trading at about $123, up 23% in the last two months and a whopping 50% since hitting a low of $80 in January. Returns on the year are nearly triple that of the S&amp;P 500. SLYV's holdings are very similar to its iShares counterpart, though its expense ratio of 0.15% is slightly lower.</p> <h2>3. iShares Russell 2000 Value ETF [NYSE: <a href="https://finance.yahoo.com/q?s=iwn">IWN</a>]</h2> <p>Another strong offering from iShares, this ETF is designed to track &mdash; surprise! &mdash; the Russell 2000 Value Index. It's up 20% in the last two months and 30% over 52 weeks. IWN's top holdings include Webster Financial Corp., Prosperity Bancshares, and chemical manufacturer Olin Corp.</p> <h2>4. Vanguard Small Cap Value ETF [NYSE: <a href="https://finance.yahoo.com/q?s=VBR">VBR</a>]</h2> <p>VBR has been on a tear recently, up about 17% since the start of November, and 24% in 2016. This is a passively managed fund designed to mirror the performance of the U.S. Small Cap Value Index. An expense ratio of .08% is another strong selling point for this ETF. Top holdings include insurance brokerage Arthur Gallagher &amp; Co., technology provider CDW, and Westar Energy Inc., the largest electricity provider in Kansas. (Disclosure: I own shares of VBR).</p> <h2>5. Schwab U.S. Small Cap ETF [NYSE: <a href="https://finance.yahoo.com/q?s=scha">SCHA</a>]</h2> <p>With an expense ratio of a mere 0.06%, this ETF costs almost nothing extra to own. And returns have been great in 2016, with shares rising by 20% on the year and 16% in the last two months. Holdings include U.S. Steel, Pacwest Bancorp, and Coty Inc., a maker of beauty products.</p> <h2>6. Wells Fargo Special Small Cap Value Fund [NYSE: <a href="http://etfs.morningstar.com/quote?t=ESPAX&amp;culture=en_us&amp;platform=RET&amp;viewId1=3577733644&amp;viewId2=2545513703&amp;viewId3=2700073027&amp;test=QuoteiFrame">ESPAX</a>]</h2> <p>Shares of this fund are up 30% in 2016, making it one of the best performing funds of the year. It's powered by diverse holdings that include First Citizens BancShares, cement maker Eagle Materials, and metal manufacturer Mueller Industries. There are no transaction fees to buy and sell this fund through Fidelity, though there is a $2,500 minimum investment.</p> <h2>7. American Beacon Small Cap Value Fund [NYSE: <a href="https://finance.yahoo.com/q/hl?s=AVFIX+Holdings">AVFIX</a>]</h2> <p>This mutual fund has risen in value by 23% in 2016. That's not quite as good as the Russell 2000 Value index, but still outpaces most investments these days. This fund is weighted heavily toward financials and technology. Top holdings include Vishay Intertechnology Inc. and Portland General Electric Company. Note that its expense ratio of 0.82% is on the high side.</p> <h2>8. Queens Road Small Cap Value Fund [NYSE: <a href="https://www.zacks.com/funds/mutual-fund/quote/QRSVX">QRSVX</a>]</h2> <p>This well-regarded fund is up 12% since the end of October and 17% overall this year. This fund is weighted toward industrials and technology, with a good dose of consumer products and financials. Top holdings include Plantronics, a maker of wireless headsets; Hilltop Holdings, a bank and insurance company; and aerospace firm Orbital ATK. The minimum to invest in this fund is $2,500, and the expense ratio of 1.26% is on the higher side. However, those with brokerage accounts at Fidelity can trade this fund without paying a commission.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/these-8-small-cap-value-investments-are-on-fire">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-16"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-buy-your-first-stocks-or-funds">How to Buy Your First Stock(s) or Fund(s)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-questions-to-ask-before-you-sell-a-stock-or-a-fund">10 Questions to Ask Before You Sell a Stock or a Fund</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/survive-the-bear-market-10-steps-to-ride-the-downturn">Survive The Bear Market: 10 Steps To Ride The Downturn</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-deliciously-profitable-food-and-beverage-stocks">10 Deliciously Profitable Food and Beverage Stocks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-youd-held-these-10-stocks-instead-of-sold-youd-be-rich-now">If You&#039;d Held These 10 Stocks Instead of Sold, You&#039;d Be Rich Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment small cap small cap value small companies stock market stocks Thu, 05 Jan 2017 11:00:08 +0000 Tim Lemke 1868659 at http://www.wisebread.com 8 Stocks to Dump Before the New Year http://www.wisebread.com/8-stocks-to-dump-before-the-new-year <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-stocks-to-dump-before-the-new-year" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/alarm_clock_2017_610877858.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We here at Wise Bread are big supporters of long-term investing. Therefore, we don't really advocate selling stocks just because they aren't trading where you want them to be at any given moment. That said, there are times when selling <em>some </em>securities at year's end makes sense.</p> <p>In some instances, it's time to sell an investment because they are stinkers, plain and simple. In other instances, it may be time to cut ties because there's little good news on the horizon to suggest they will grow in value in the coming year. But in other cases, it's a matter of selling at a loss in order to offset capital gains elsewhere, thus saving on your tax bill. (You can always buy these stocks back if they are still trading at low prices, as long as you wait more than 30 days.)</p> <p>Here are some notable stocks and other investments that may be worth selling before the calendar turns.</p> <h2>1. Nike [NYSE: <a href="https://finance.yahoo.com/q?s=nke">NKE</a>]</h2> <p>Nike used to be the king of everything athletics, but it's been facing some stiff competition in recent years from Reebok, adidas, and the new biggest player, Under Armour. Nike is still a huge brand, but shares are down 17% in 2016. Sales growth has been uninspiring, margins have been shrinking, and no one really knows how low Nike will go.</p> <h2>2. Starbucks [NYSE: <a href="https://finance.yahoo.com/q?s=SBUX">SBUX</a>]</h2> <p>Starbucks is a solid company, so there's an argument to be made that you should never sell shares once you own them. But the company had a less-than-stellar year, with shares falling more than 2% in 2016, and some analysts have argued that the company is no longer in a position to see massive growth year after year. The American market is a bit saturated, and it may take time for some of the company's investments overseas to bear fruit. Starbucks could be a bargain for those who don't already own shares, but if you bought shares early in 2016, you may be able to use some losses to offset gains elsewhere in your portfolio.</p> <h2>3. Coca-Cola [NYSE: <a href="https://finance.yahoo.com/q?s=KO">KO</a>]</h2> <p>Yes, we know Warren Buffett, America's #1 Coke Lover, would probably have something to say about this. But the reality is that Coca-Cola hasn't had a good year, and faces continued headwinds as it looks to sell products to a populace that is growing more health conscious. Coke shares are down more than 4.5% in 2016. Sales are expected to decline next year after the company spun off most of its bottling operation. Dividends from Coca-Cola are still solid, but some say they have come at the expense of growth. All of this comes at a time when the company's CEO announced he would resign next May.</p> <h2>4. Anheuser-Busch InBev [NYSE: <a href="https://finance.yahoo.com/q?s=BUD">BUD</a>]</h2> <p>Shares of the big beer maker are down nearly 18% in 2016 as the industry faces stiff competition from craft breweries. A-B InBev did complete its takeover of SABMiller, but it will take a while for that merger to have a positive impact. Long-term investors will probably still want to hang on to this stock, but anyone looking for a rebound in price in the short term shouldn't hold their breath.</p> <h2>5. The Walt Disney Co. [NYSE: <a href="https://finance.yahoo.com/q?s=dis">DIS</a>]</h2> <p>On one hand, Disney owns some very profitable theme parks and a humble movie franchise called Star Wars. But questions surround its television offerings, as cord cutters have led to declining subscriptions of its channels, most notably ESPN. Shares are down more than 1.6% in 2016 and 6% in the last 52 weeks. Disney has made some investments to take advantage of the shift from cable to streaming, but it may take time before we see if they pay off.</p> <h2>6. Monster Beverage [Nasdaq: <a href="https://finance.yahoo.com/q?s=mnst">MNST</a>]</h2> <p>There was a time when Monster, a top maker of energy drinks, was one of the hottest stocks available for trade. But like Coke and Starbucks, the story for beverages wasn't great in 2016. Shares of Monster have fallen 13% in 2016. Some analysts say Monster will see strong sales growth as the overall market for energy drinks expands. But with a price-to-earnings ratio that's nearly 40% higher than the national average, Monster is hardly a bargain.</p> <h2>7. Biotech and Pharma</h2> <p>It just hasn't been a good year if you invested in biotech or pharmaceuticals. Companies including Gilead, GlaxoSmithKline, Pfizer, and Bristol Myers-Squibb have all posted losses in 2016. And a look at the biggest losers among ETFs and mutual funds will include a large dose of biotech and pharma. These investments are known for their volatility, so if you knew that going in, perhaps you have the stomach to ride the wave and see if things rebound in 2017. Otherwise, it may be time to cut your losses.</p> <h2>8. Automakers</h2> <p>Major car manufacturers here in the U.S. and abroad had mediocre years at best. Shares of Ford [NYSE: <a href="https://finance.yahoo.com/q?s=F">F</a>] are down about 7.5%, while Toyota and Honda are also in negative territory. Auto sales aren't bad, so there's no massive risk in holding on to some of these stocks. But a tough market in Latin America and uncertainty about trade agreements under the incoming Trump administration are making investors wonder when the growth in share prices will return.</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-stocks-to-dump-before-the-new-year">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/10-questions-to-ask-before-you-sell-a-stock-or-a-fund">10 Questions to Ask Before You Sell a Stock or a Fund</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/help-i-bought-a-stock-dud-what-now">Help, I Bought a Stock Dud! — What Now?</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-investments-that-usually-soar-during-the-summer">7 Investments That Usually Soar During the Summer</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/these-8-small-cap-value-investments-are-on-fire">These 8 Small Cap Value Investments Are on Fire</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/158-free-investment-classes-from-morningstar-earn-rewards-while-you-learn">158 Free Investment Classes From Morningstar: Earn Rewards While You Learn</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment 2016 capital gains Coca-Cola Disney Nike selling Starbucks stocks tax-loss harvesting Fri, 23 Dec 2016 10:00:08 +0000 Tim Lemke 1860473 at http://www.wisebread.com How to Protect Yourself From an Investment Scam http://www.wisebread.com/how-to-protect-yourself-from-an-investment-scam <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-protect-yourself-from-an-investment-scam" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-479413254.jpg" alt="don&#039;t fall for these investment scams" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There's nothing wrong with putting your money to work for you. Investments can be the difference between making ends meet, and making a mint. But remember your mom's advice: If it sounds too good to be true, it probably is.</p> <p>Following this warning is one of the best ways to avoid financial scams. Here's a list of some infamous investment frauds, and ways to spot red flags. Pay attention. Make your mom proud &mdash; and your wallet happy.</p> <h2>The Classic: Pyramid Scheme<strong> </strong></h2> <p>Many pyramid schemes come across as multi-level marketing opportunities. Investors pay fees to join and then make money from direct sales. Backers also get a cut of profits from folks they've recruited to the program. But pyramid organizers need this new money to pay off earlier investors, and often, the scheme collapses under its own weight. There's not enough money to make payoffs. Participants see investments and returns disappear.</p> <p>Pyramid schemes often spread through social media, websites, online ads, and group pitches. Be alert to these warning signs.</p> <ul> <li>You're told you'll make a lot of money quickly, but you won't have to put in much effort.</li> </ul> <ul> <li>You have to pay a fee to join, and your main role is getting others to sign up.</li> </ul> <ul> <li>Any product that's sold has little value outside the scheme.</li> </ul> <ul> <li>You can't find evidence, such as professionally audited financial statements, of sales profits. Money comes from recruitment.</li> </ul> <ul> <li>Profits come from within the program. Your earnings depend upon other participants, not on outside sales.</li> </ul> <p>Lots of money, little work: this is exactly what your mother was talking about.</p> <h2>Risky Business: Energy Scams<strong> </strong></h2> <p>Legitimate investment opportunities in oil and gas development come with no guarantees. They need lots of money and time, and proceeds are uncertain. Developers might drill and drill with little return for their efforts. Investors can lose everything they put in. And that's with authentic energy exploration. If the whole purpose is to separate you from your money, participants don't stand a chance.</p> <p>So how do you separate real energy investment deals from scams? Be on the lookout for these warning signs.</p> <ul> <li>Company offices are in one state, drilling is in another, and investors don't live in either. You can't easily visit the corporation or well site. If fraud is suspected, the geographic range creates a nightmare for law enforcement investigators.<br /> &nbsp;</li> <li>You receive a surprise email or phone call. You don't hear a lot of facts, just tremendous pressure to commit. You're warned that if you don't immediately jump in, you'll miss out. Real energy companies don't fish around for investors.<br /> &nbsp;</li> <li>Little risk, high returns: Is that what you've been promised? Run away, because that's not how it really works in the energy business.</li> </ul> <ul> <li>Some get-rich-quick scams use current events as lures. If high gas and oil prices are currently in the news, investors might be convinced the time is right. But remember, well development is a long process.</li> </ul> <ul> <li>If the company is secretive and doesn't want you to talk to anyone about your investment opportunity, there's a good reason for that. It's a shady proposition. You should be encouraged to consult others and investigate the deal. And all your questions should get answers &mdash; in writing. If you get shut down, close your wallet.</li> </ul> <p>Energy development is a business, not a mystery. All aspects should be open and aboveboard.</p> <h2>I'm Just Like You: Affinity Sham<strong> </strong></h2> <p>Affinity fraud targets participants based on a specific characteristic, such as age, religious affiliation, or ethnicity. Schemers present themselves as members of the same group in order to create an immediate relationship. Some hustlers are so good they enlist recognized leaders of the community. Unfortunately, these respected notables wind up falling prey to the scam &mdash; and unintentionally drawing others in.</p> <p>You might feel a connection to the individual trying to get you to invest, but that's what these con artists count on. Be wary.</p> <ul> <li>Don't invest just because you have an association with the promoter &mdash; even if it's someone you trust. That person may have been duped. Do outside research. If that's discouraged, say no. Real investments hold up against scrutiny.<br /> &nbsp;</li> <li>Avoid online opportunities that show up in chat groups, bulletin boards, or websites exclusive to your group. The Internet is a quick and easy way to target a specific audience.<br /> &nbsp;</li> <li>Steer clear of any investment that guarantees low risk and high returns. The two just don't go together. Valid deals don't promise them.</li> </ul> <p>The bottom line here &mdash; listen to your mother. When it comes to changing your socks, eating your vegetables, and avoiding fraud, she knows best.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/anum-yoon">Anum Yoon</a> of <a href="http://www.wisebread.com/how-to-protect-yourself-from-an-investment-scam">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-spot-a-charity-scam-from-a-mile-away">How to Spot a Charity Scam From a Mile Away</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/dont-panic-do-this-if-your-identity-gets-stolen">Don&#039;t Panic: Do This If Your Identity Gets Stolen</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-sale-aftermath-beware-of-paypal-chargebacks-0">The Sale Aftermath: Beware of PayPal Chargebacks</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-more-scams-everyone-should-know-about">10 More Scams Everyone Should Know About</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/scams-what-the-ftc-wants-you-to-know">Scams: What the FTC Wants You to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Investment advice energy scams fraud money protection multi level marketing pyramid schemes scams Wed, 21 Dec 2016 10:31:29 +0000 Anum Yoon 1858984 at http://www.wisebread.com Is There Such a Thing as a "Safe" Investment? http://www.wisebread.com/is-there-such-a-thing-as-a-safe-investment <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-there-such-a-thing-as-a-safe-investment" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_umbrella_coins_516182744_0.jpg" alt="Man learning if there&#039;s such a thing as a safe investment" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Safety. We all look for it in our investments, while also seeking out the highest return. As we get older, safety becomes more important as we get closer to retirement age.</p> <p>Is there such a thing as a truly &quot;safe&quot; investment? The short answer is that no investment is 100% safe. But there are certainly some investments that are better than others at protecting your hard-earned savings.</p> <p>Let's examine some of the most common &quot;safe&quot; investments and learn how good they actually are at shielding you from financial losses.</p> <h2>1. Cash</h2> <p>You may not be able to stomach the ups and downs of the stock market, and don't want your money tied up in bonds or other fixed-income investments. So you just hold on to large quantities of cash in a basic savings account, a money market account, or certificates of deposit.</p> <h3>Why It's Safe</h3> <p>Cash won't dive in value if the stock market crashes. You can get a predictable return from interest by keeping it in a bank account. And you can access it any time you need it.</p> <h3>Why It's Not</h3> <p>If you have a lot of cash, you can actually <em>lose </em>money in the long-term if there is inflation. But most importantly, putting too much of your investment portfolio in cash will make it hard for you to accumulate the kind of wealth you'll need for a comfortable retirement. Cash is also easy to access, which means it's too easy for you to spend.</p> <h2>2. Dividend Stocks</h2> <p>Dividend stocks are generally issued by companies that don't usually see a lot of volatility, but will pay out a healthy percentage of their income back to shareholders. Dividend stocks are often used by older investors or anyone looking to boost income without a lot of risk.</p> <h3>Why It's Safe</h3> <p>Good dividend stocks will pay out a consistent amount to shareholders each quarter, and it's usually a better return than bonds. By nature, dividend stocks won't go way up and down in price like other stocks, so they aren't as vulnerable to big market downturns.</p> <h3>Why It's Not</h3> <p>They are still stocks, and any stock is potentially vulnerable to market swings. Even dividend stocks will lose value in a down market, so it's still possible to lose money. On the flip side, dividend stocks won't rise in value like other investments when the market goes up. Moreover, dividends are never guaranteed; a company can cut its dividend at any time if its revenues drop.</p> <h2>3. Treasury Inflation-Protected Securities (TIPS)</h2> <p>TIPS are popular investments because they allow you to invest in bonds while seeing the value of the investment rise along with the rate of inflation. They are a common part of many retirement portfolios and can be helpful in diversifying holdings.</p> <h3>Why It's Safe</h3> <p>Investing in U.S. treasuries is about as safe a bet as you can get, as the U.S. government has always paid its obligations. And TIPS have the added benefit of rising in value along with consumer prices, so you're never at risk of losing your investment due to inflation. You are protected even if there is deflation, because in that case, the price at maturity will revert to the price at purchase.</p> <h3>Why It's Not</h3> <p>TIPS aren't great investments for building wealth. There are other, better investments that offer a combination of safety and growth. TIPS are also vulnerable to interest rate moves, just like most bonds.</p> <h2>4. Gold</h2> <p>We've seen gold hailed as a &quot;safe&quot; investment because it's considered a hedge against inflation and a protection against a major economic disaster. History has shown that those who held on to gold during times of crisis held onto their wealth.</p> <h3>Why It's Safe</h3> <p>Gold can protect against inflation and historically has been known to retain its value even during disastrous times. That's why gold became a popular investment during the recent debt crisis in Europe, for example.</p> <h3>Why It's Not</h3> <p>Many financial experts note that gold's reputation as a hedge against inflation is often overstated, and gold has been known to lose value. It is also no less volatile than stocks, and generally does not have the same return on investment. In other words, it's not as &quot;safe&quot; as you think, and you won't necessarily get wealthy by holding onto it.</p> <h2>5. REITs</h2> <p>A real estate investment trust (or REIT) allows individual investors to own shares of real estate without the hassle of being a landlord. REITs trade like stocks, and can also be included in mutual funds and exchange-traded funds.</p> <h3>Why It's Safe</h3> <p>REITs are generally pretty stable investments, especially if the company has many long-term leases. REITs also usually pay out a hefty dividend.</p> <h3>Why It's Not</h3> <p>Real estate can still drop in value, especially if the REIT you buy is focused on one sector of real estate. Moreover, because REITs don't have to pay corporate-level income tax, dividends from REITs are taxed at the normal income rate, not the dividend rate paid out by other stocks.</p> <h2>6. Target Date Mutual Funds</h2> <p>Most brokerages offer mutual funds that start off with an aggressive investment mix and then get more conservative as the investor ages. These are a popular &quot;hands off&quot; part of many portfolios.</p> <h3>Why It's Safe</h3> <p>These funds are designed to build value during your younger years and protect your retirement nest egg as you get older. When properly managed, you'll be able to hold onto more of your money when you are close to retirement, even during down markets.</p> <h3>Why It's Not</h3> <p>Generally speaking, targeted mutual funds come with higher fees than many other funds, and that can cut into your overall earnings over time. And while the funds are comprised of more conservative investments as you approach retirement age, they are still prone to the ups and downs of the stock market in the earlier years.</p> <h2>7. Peer-to-Peer Lending</h2> <p>In recent years, companies such as Lending Club and Prosper have allowed individual investors to profit from the debt of other regular people. These platforms match investors up with those looking to borrow money. Individuals can invest based on their own risk tolerance. (See also: <a href="http://www.wisebread.com/how-to-make-money-with-peer-to-peer-lending-service-prosper?ref=seealso">How to Make Money With Prosper</a>)</p> <h3>Why It's Safe</h3> <p>The most popular peer-to-peer lending sites report a fairly low default rate on loans. This means that those who purchase debt are likely to generate a solid return. Lending Club reports that the median adjusted net annual return is 5.1% for those who have purchased at least 100 notes.</p> <h3>Why It's Not</h3> <p>There's always a risk of loans defaulting, especially if you don't buy quality loans. Buying risky loans, or failing to diversify your loan portfolio, can lead to less-than-stellar returns.</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/is-there-such-a-thing-as-a-safe-investment">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/the-best-ways-to-invest-50-500-or-5000">The Best Ways to Invest $50, $500, or $5000</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-choosing-the-right-fund-for-your-portfolio">Are You Choosing the Right Fund for 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/how-to-build-an-investment-portfolio-for-under-5000">How to Build an Investment Portfolio for Under $5000</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-investment-mistakes-we-all-make">11 Investment Mistakes We All Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-easy-ways-to-start-green-investing">5 Easy Ways to Start Green Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bonds cash dividend stocks mutual funds peer to peer lending REITs safe investments tips Mon, 12 Dec 2016 11:00:07 +0000 Tim Lemke 1850785 at http://www.wisebread.com 8 Investments That May Soar During Trump's Term http://www.wisebread.com/8-investments-that-may-soar-during-trumps-term <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-investments-that-may-soar-during-trumps-term" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/donald_trump_speech_609937238.jpg" alt="Learning investments that may soar during Trump&#039;s term" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>What will the presidency of Donald J. Trump mean for your finances? No one knows just yet, but it's possible to make some educated guesses based on some of his public statements.</p> <p>President-Elect Trump has advocated for lower taxes and higher spending on infrastructure and defense. He's also pushed for policies that could lead to higher interest rates and inflation.</p> <p>It's worth noting that all investment returns are based on a variety of factors separate from who lives in the White House. But here are some investments that might do well under a Trump presidency.</p> <h2>1. Defense Contractors</h2> <p>At various times, President-Elect Trump has spoken about the need to bolster the U.S. Military and has talked about acting more aggressively against terrorism. So it's not a bad bet to look at major defense contractors including Lockheed Martin [NYSE: <a href="https://www.google.com/finance?cid=21553">LMT</a>], Northrop Grumman [NYSE: <a href="https://www.google.com/finance?q=NYSE%3ANOC&amp;ei=D9I9WICUI8yJef_Us_AL">NOC</a>], and Raytheon [NYSE: <a href="https://www.google.com/finance?q=RTN&amp;ei=NdI9WJmYH8_BeuKspbAL">RTN</a>]. If you're not comfortable picking individual stocks, take a look at mutual funds like the Fidelity Select Defense&amp; Aerospace fund [NYSE: <a href="https://www.google.com/finance?q=FSDAX&amp;ei=QtI9WJDHLJLteM3pgcgL">FSDAX</a>] or ETFs like the iShares Aerospace&amp; Defense ETF [NYSE: <a href="https://www.google.com/finance?q=ITA&amp;ei=W9I9WPDdGsmPeYPRs-AL">ITA</a>].</p> <h2>2. Oil Stocks</h2> <p>Trump has voiced support for allowing oil companies to drill on more land, including offshore areas that were declared off limits under President Obama. Such a change would, in theory, give companies like Exxon [NYSE: <a href="https://www.google.com/finance?q=NYSE%3AXOM&amp;ei=fNI9WNDlDcq_evSXhOAL">XOM</a>] and Chevron [NYSE: <a href="https://www.google.com/finance?q=CVX&amp;ei=wtI9WNm-J8LLeZnHi-AM">CVX</a>] access to more supply. There is one big caveat here, which is that oil prices have already dropped due to a glut of supply versus demand, so it's unclear what impact any changes might immediately have.</p> <h2>3. Heavy Equipment Manufacturers</h2> <p>The President-Elect has said he will &quot;Make America Great Again&quot; through massive investment in infrastructure. This means big construction and repairs of roads, bridges, buildings, and airports. And that work can't be carried out without big machines. Look to a stock like Caterpillar [NYSE: <a href="https://www.google.com/finance?q=CAT&amp;ei=1dI9WMHkHdibee3Wn6AL">CAT</a>], which saw shares rise 7% immediately after Trump's election. Asian companies including Doosan (the maker of Bobcat), Hitachi, and Komatsu could also see good results from an infrastructure spending binge.</p> <h2>4. Steel Companies</h2> <p>The steel industry would also get a boost from more infrastructure spending, and Trump has also promised to crack down on the illegal &quot;dumping&quot; of Chinese steel into the U.S. market. If indeed he's serious about support for American steel, that could be a boon for companies like Nucor [NYSE: <a href="https://www.google.com/finance?q=NYSE%3ANUE&amp;ei=ANM9WNHtNNSIe63PqagL">NUE</a>] and U.S. Steel, [NYSE: <a href="https://www.google.com/finance?q=NYSE%3AX&amp;ei=GNM9WOmbI86feYqyrdAL">X</a>].</p> <h2>5. Cement Companies</h2> <p>Another sector that could see good profits from more infrastructure spending. And if Trump somehow manages to build that wall along the Mexican border, it has to be made out of something. Most of the largest cement manufacturers are overseas, but look at France-based Lafarge, Germany-based Heidelberg, Mexico-based Cemex, and a host of Chinese manufacturers.</p> <h2>6. Private Prisons</h2> <p>The Obama administration this year announced that the Justice Department would phase out its use of private prisons. But there's no guarantee Trump won't halt that process. And if he follows through on his efforts to deport millions of illegal immigrants, the country may need jail capacity to hold them as they go through a judicial process. Companies including Geo Group [NYSE: <a href="https://www.google.com/finance?q=NYSE%3AGEO&amp;ei=JdM9WIn8N8LLeZnHi-AM">GEO</a>] and CoreCivic [NYSE: <a href="https://www.google.com/finance?q=CXW&amp;ei=TtM9WOnyBtibee3Wn6AL">CXW</a>] could cash in. Also look to companies that provide health care and phone services to prisons.</p> <h2>7. Banks</h2> <p>President-Elect Trump has said he will roll back many regulations that were put in place after the financial crisis in 2009. Some supporters have argued that repeal of the Dodd-Frank legislation will free banks up to lend more. Shares of JPMorgan, Goldman Sachs, and Bank of America have shot up since the election. Investors in big banks also may be excited by proposals for lower taxes and more infrastructure savings.</p> <h2>8. Commodities</h2> <p>Many observers predict that Trump's economic policies could lead to inflation. And when prices go up, it's usually a good thing for things like precious metals, oil, and agriculture products. It's possible to invest in commodities directly, or invest in mutual funds and exchange-traded funds that track all commodities or commodity sectors as a group.</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-investments-that-may-soar-during-trumps-term">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/could-trump-bring-higher-interest-rates-and-inflation-consider-these-money-moves">Could Trump Bring Higher Interest Rates and Inflation? Consider These Money Moves</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/while-waiting-for-rates-i-bonds">While Waiting for Rates: I-Bonds</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-cool-things-bonds-tell-you-about-the-economy">7 Cool Things Bonds Tell You About the Economy</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-ways-to-invest-when-youre-in-debt">6 Ways to Invest When You&#039;re In Debt</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/4-foolproof-ways-to-protect-your-money-from-inflation">4 Foolproof Ways to Protect Your Money From Inflation</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment donald trump inflation infrastructure interest rates military oil presidency prisons steel Mon, 05 Dec 2016 11:00:09 +0000 Tim Lemke 1845282 at http://www.wisebread.com The Easiest Way to Invest in the World's Biggest Companies http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-easiest-way-to-invest-in-the-worlds-biggest-companies" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/invest_money_476336804.jpg" alt="Learning how to invest in the biggest companies" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Here's a classic way to build up an investment portfolio: Regularly invest modest amounts of money in growing companies. Do that for a few decades, reinvesting the dividends as you go along, and &mdash; if you've picked the right companies &mdash; you will end up with sizable holdings. Perhaps even real wealth.</p> <p>If you want a diversified portfolio, and you really should, there are a lot of cheap ways to get one. Any number of mutual funds will let you open an account with a modest initial deposit, and the minimums for subsequent investments are quite reasonable for even a small saver.</p> <p>But what if you don't like someone else's idea of a diversified portfolio? What if you have some strong opinions about which companies are worth investing in, and out of the thousands of mutual funds available, none of them focuses on those companies? What if you really want to invest in specific companies picked by you?</p> <p>One option would be to open an account at an online brokerage and make your purchases there. That will work great if you have ample money to invest. But what if your free cash for investing is small?</p> <p>Even small investments can add up to a lot of money, if you've got both time and a good annual return working for you. If the companies you pick can average an 8% annual return for 40 years, just $20 a week will build to a fortune of over $300,000.</p> <p>But the online brokerage solution is no good for investments that small, because of commissions. Even the cheap online brokers charge $5 on a trade, and plenty of them charge closer to $10 &mdash; there's half your investment gone right there.</p> <p>Fortunately, there's an alternative that's tailor-made for this situation: Direct Stock Purchase Plans, or DSPPs.</p> <h2>Direct Stock Purchase Plans</h2> <p>Back in my day they were called Dividend Reinvestment Plans, or DRIPs, but they're basically the same thing: Big companies hire somebody &mdash; usually the stock transfer agent &mdash; to create and manage accounts that let individuals buy small quantities of stock &mdash; usually for no commission &mdash; and reinvest their dividends.</p> <p>It's a win for the investor, because they get to invest in the stock for free. It's a win for company, because they get a dependable stream of new capital, and a stable base of shareholders who are aren't likely to sell out at the first sign of bad news or to go chasing after the next hot trend.</p> <p>Besides charging no commissions, they also solve another problem for the very small investor: the cost of whole shares. Suppose you want to invest $20 out of every paycheck, but the stock you want to buy is $63 a share. It would take you four paychecks to save up enough money to buy one share. With a DSPP you'd get 0.317 shares with the first contribution, and a similar amount each paycheck after.</p> <h2>Things to Know</h2> <p>There are a few caveats.</p> <p>First, only certain companies go to the trouble and expense of offering a DSPP. Happily, as suggested by the title of this article, they're mostly the largest companies on the U.S. stock exchanges. The web has plenty of lists of companies that offer DSPPs or DRIPs. Alternatively, if you know which company you're interested in, go to the company website and look for a link like &quot;investors&quot; or &quot;shareholder information.&quot; If there's a direct investment program, you'll find the information about it there.</p> <p>Second, buying stocks this way &mdash; through numerous small purchases &mdash; may make figuring your taxes a lot more complicated in the years that you sell. (This may be less true than it used to be, now that brokers are required to track your cost basis for you.)</p> <p>Third, be aware that these sort of plans don't offer the services of a broker. They are basically just for accumulating shares in one specific company. They will probably let you shift from reinvesting your dividends to receiving them in cash, something you might want to do when you retire and will be living off your investments. They usually let you take delivery of your stock (if at some point you want to transfer it to a regular broker) or sell it (if you have found a better investment, or need the money to live on). They won't let you borrow against it, they won't have cash management tools, they won't be interested in holding any other shares you own, or selling you bonds, or advising you on other investment opportunities.</p> <p>Fourth, investing in just one company won't give you a diversified investment portfolio. You'd need a dozen carefully chosen companies to get something reasonably diversified. Of course, as an adjunct to some well-diversified mutual funds, a DSPP in a company that does very well, can provide a considerable boost to your total return, without completely unbalancing your portfolio.</p> <h2>History</h2> <p>Plans like these used to be a much bigger deal. Especially before 1975 (when minimum commissions were abolished), but continuing right up until Internet brokers got big in the 1990s, the costs to trade stocks were high enough that it was completely impractical for a small investor to gradually accumulate shares in a growing company. Investing in individual stocks was a game only for the wealthy.</p> <p>It's generally not important these days, but there's a technical difference between DRIPs and DSPPs. Back in the day DRIPs usually required that you purchase your first share from a broker (or acquire it some other way, such as by inheriting it). Then you could reinvest dividends, or even make additional cash purchases of shares, but that first share had to come first.</p> <p>Starting in the mid-1990s, the SEC relaxed some rules, making it practical for companies to offer DSPPs that could sell you your first share, as well as shares beyond that.</p> <p>It's kind of a technical point, but that's the difference between the two kinds of plan.</p> <h2>Small Versus Tiny Investors</h2> <p>With internet brokers, even a fairly small investor can buy and sell stocks. You need a certain amount of capital &mdash; a few thousand dollars &mdash; to make it possible to buy a round lot of 100 shares and to make the $5 or $10 commission a small enough percentage of your total investment.</p> <p>But if you're a tiny investor &mdash; if your investable capital is only a few hundred dollars &mdash; something like a DSPP makes it possible for even the smallest investors to accumulate sizable portfolios through frequent, modest investments made over a long period of time.</p> <p>It's what they were designed for.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment direct stock purchase plans dividend reinvestment plans DSPP large companies portfolio small investors stock market Mon, 28 Nov 2016 10:00:06 +0000 Philip Brewer 1839210 at http://www.wisebread.com 6 Ways to Invest When You're In Debt http://www.wisebread.com/6-ways-to-invest-when-youre-in-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-invest-when-youre-in-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/plant_tree_stump_462868653_0.jpg" alt="Learning ways to invest when you&#039;re in debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know you need to begin investing to save for the future, but you still have some debt to pay off. It is possible to take care of both at the same time?</p> <p>The short answer is that yes, you can pay down debt and invest at the same time. In many ways, this is a personal choice. If you despise debt and sleep better at night knowing that you're paying it off as quickly as possible, that's fine. But if you can tolerate paying off debt at a slower rate and investing some money, you may end up ahead of the game financially over the long-term.</p> <p>Here are some things to consider when deciding how much to invest and how much debt to pay off.</p> <h2>1. Minimum Payments First, Then Invest</h2> <p>While it's certainly possible to pay down debt and invest at the same time, it's never a good idea to invest if you can't make your minimum payments first. If you don't make minimum payments, you'll be on the hook for higher interest, late fees, and penalties. Not to mention that your credit score will take a big hit. Consider investing your money only if you know you can set money aside and still make at least the minimum payments on debt.</p> <h2>2. Tackle the High Interest Debt</h2> <p>If your debt is tied up in credit cards and other things that come with high interest rates, you may want to hold off on investing until that's under control. Credit cards have interest rates in the double digits, and you're unlikely to generate an investment return that outpaces that. Once that high-interest debt is down to zero, then investing becomes much more possible. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso">Fastest Way to Pay Off 10K in Credit Card Debt</a>)</p> <h2>3. Use Your 401K Plan</h2> <p>If you work for an employer that offers a 401K plan or something similar, it's worth taking part even if you have some debt. That's because most employers will match contributions up to a certain amount. So it's like getting free money. Any contributions you make to a 401K are deducted from your taxable income, so there are great tax advantages for taking part. Invest what you can while still paying down your debt. Then, when your debt is paid off, increase your contributions.</p> <h2>4. Look at Low-Cost Mutual Funds and ETFs</h2> <p>If most of your debt is tied up in low-interest things like student loans or mortgages, it's okay to set aside some money to invest in things that will generate a good return. In fact, there are many financial planners that argue against paying off low-interest loans early if market returns are higher than interest rates. Over time, stocks have averaged returns of about 7%, which is much higher than interest rates these days. To get this type of return, consider looking at mutual funds and exchange-traded funds that have low fees and are designed to track the performance of the overall stock market.</p> <h2>5. Find Investments That Trade Without a Commission</h2> <p>If you're trying to invest and pay down debt at the same time, there's a good chance you may only be able to invest a little at a time. That's okay, but it's important to be aware of the fees and commissions you pay every time you buy and sell. If you're only buying a few shares of a stock but paying $8 in a commission, for example, that fee is cutting into a sizable percentage of your investment. Fortunately, many discount brokerages allow you to trade certain types of investments without paying a commission. Fidelity offers fee-free investing on all iShares ETFs, ETrade offers many commission-free ETFs from WisdomTree and Global X, and TD Ameritrade offers more than 100 ETFs with no transaction fees.</p> <h2>6. Automate as Much as Possible</h2> <p>Finding the balance between investing and paying off debt requires some discipline. If you have some debt but are considering investing, determine in advance what your ideal balance is. Then, set up automatic monthly transfers of money into an investment account, and automate your bills as well. If you get extra money or a raise, consider tweaking the balance accordingly. When you automate, it takes the guesswork out, allows you to stay consistent, and makes it easier to do other financial planning.</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/6-ways-to-invest-when-youre-in-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-prevent-a-debt-spiral">5 Ways to Prevent a Debt Spiral</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/beware-of-these-common-debt-consolidation-traps">Beware of These Common Debt Consolidation Traps</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/should-you-pay-down-debt-first-or-invest">Should You Pay Down Debt First or 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/7-ways-being-debt-free-can-cost-you">7 Ways Being Debt Free Can Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Investment 401k ETFs fees interest rates market returns mutual funds saving money Wed, 23 Nov 2016 11:30:07 +0000 Tim Lemke 1838645 at http://www.wisebread.com 6 Stocks to Buy Before Black Friday http://www.wisebread.com/6-stocks-to-buy-before-black-friday <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-stocks-to-buy-before-black-friday" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/ebay_sign_93270545.jpg" alt="Finding stocks to buy before Black Friday" title="" class="imagecache imagecache-250w" width="250" height="165" /></a> </div> </div> </div> <p>Thinking about playing the stock market to take advantage of the holiday uptick? Consider investing in these stocks to boost your gift-shopping budget. Or, just scrap it all and go on vacation. Merry Christmas to <em>you</em>!</p> <h2>1. UPS</h2> <p>It makes perfect sense that global-shipping giant United Parcel Service [NYSE: <a href="https://www.google.com/finance?q=NYSE:UPS">UPS</a>] would see a surge in stock prices as the height of shipping season approaches. A recent survey conducted by comScore reveals that <a href="http://fortune.com/2016/06/08/online-shopping-increases/">online shopping will increase this year</a> &mdash; to nobody's surprise &mdash; and that only means more business for UPS. According to independent trader and investor Tela Holcomb, UPS stock has risen from early November to early December for nine out of the last 10 years. Given data that even more packages than ever before will crisscross the country this year, 2016 should be a boon for business as well. She notes, however, that stock trends are based on historical data and should not be taken as investment advice; your personal decision on whether to invest should be supported by current stock charts.</p> <h2>2. Amazon</h2> <p>Amazon [NASDAQ: <a href="https://www.google.com/finance?q=AMZN&amp;ei=utctWImsKIW7ep7hpbAJ">AMZN</a>] has given department stores a run for their money and their stock price shows it. Like UPS, Amazon's stock has a trend of rising from early November to early December, nine out of the last 10 years, with the highest increase being over 11%, according to Holcomb.</p> <h2>3. eBay</h2> <p>If Amazon doesn't have what you're looking for when shopping for gifts, eBay [NASDAQ: <a href="https://www.google.com/finance?q=NASDAQ%3AEBAY&amp;ei=vtctWKHUGM_BeuzHp8gG">EBAY</a>] probably does &mdash; which is why each of these platforms continues to perform at peak levels during the holidays. Vic Patel is a professional trader and investor with over 20 years' experience in the Stock, Futures, and Foreign Exchange Markets, and he's particularly bullish about eBay in the short term going into Black Friday.</p> <p>&quot;Last year, eBay posted a healthy 4% gain from early November leading into Black Friday; I see a similar seasonal tendency for the stock this year as well,&quot; he says. &quot;This is especially likely given that the stock has been beaten down a bit over the last few months and is ready for a bounce upwards.&quot;</p> <h2>4. Priceline</h2> <p>The holiday period has a stronghold on many industries, including restaurants, retail, and travel. Which is why it stands to reason that during the most traveled period of the year &mdash; the day before Thanksgiving through New Year's &mdash; travel sites like Priceline [NASDAQ: <a href="https://www.google.com/finance?q=priceline&amp;ei=F9gtWNG1HdW_e8zjhtAF">PCLN</a>] start climbing.</p> <p>&quot;Analyzing changes in Priceline's stock price shows the stock has a trend of going up the last two weeks of November into the beginning of December,&quot; Holcomb says. &quot;With Thanksgiving being the day before Black Friday, it's no surprise their stock is up around this time.&quot;</p> <h2>5. Big 5 Sporting Goods</h2> <p>In a year that saw one of the biggest sporting goods store in the United States &mdash; Sports Authority &mdash; go belly up, it's a surprise (or maybe not, thanks to less competition) to see Big 5 Sporting Goods [NASDAQ: <a href="https://www.google.com/finance?q=BGFV&amp;ei=X9gtWLmuIo29e8LPoogO">BGFV</a>] projecting gains. But the company, with an e-commerce platform and brick-and-mortars limited to the western U.S., is dazzling investors. In fact, Forward View, an investment research provider, moved the company from a sell rating to a buy rating while increasing its target price to $20, up from $15, based on new modeling.</p> <h2>6. A Few Things You've (Maybe) Never Heard Of</h2> <p>The election of soon-to-be President Trump sent the market into a tailspin leading up to the results, but the Dow bounced back to post a six-day winning streak, closing at a <a href="http://www.cnbc.com/2016/11/14/us-markets.html">record high despite a tech fall</a>, according to CNBC, with Goldman Sachs [NYSE: <a href="https://www.google.com/finance?q=Goldman+Sachs&amp;ei=vtgtWKCWA8_BeuzHp8gG">GS</a>] and UnitedHealth Group [NYSE: <a href="https://www.google.com/finance?q=NYSE%3AUNH&amp;ei=1tktWJCsNYHweNWzqJgB">UNH</a>] contributing the most gains. Before the election, however, GoBankingRates predicted a few stocks poised to grow, including Applied Materials [NASDAQ: <a href="https://www.google.com/finance?q=AMAT&amp;ei=QdotWLHgLtSne9LWh4gB">AMAT</a>], Edwards Lifesciences [NYSE: <a href="https://www.google.com/finance?q=EW&amp;ei=YdotWInxEdSne9LWh4gB">EW</a>], ARRIS [NASDAQ: <a href="https://www.google.com/finance?q=ARRS&amp;ei=hNotWIiyJtSIe-KahcAH">ARRS</a>], Lam Research [NASDAQ: <a href="https://www.google.com/finance?q=LRCX&amp;ei=qNotWJGJF52ge_O4gpAP">LRCX</a>], and Northrop Grumman [NYSE: <a href="https://www.google.com/finance?q=NOC&amp;ei=0totWNmyK9-Se6q3nOAD">NOC</a>]. These stocks represent a wide range of industries &mdash; from entertainment and communication technology (ARRS) to aerospace and defense tech (NOC) &mdash; none of which are tied to the holidays outright. It's sometimes wise to look beyond the obvious.</p> <h2>The General Consensus</h2> <p>Invest in seasonal or holiday-driven companies to make the most out of this time of year. Get in and get out.</p> <p>&quot;Chances are if you're spending more than usual during the holidays, so is everyone else,&quot; says financial expert Dustin Jacobs, VP for marketing at BrightStar Credit Union. &quot;Use this to your advantage by buying stocks in companies that are most profitable during the time between Thanksgiving and New Year's like airlines including JetBlue, retailers like Target and Amazon, and transportation companies such as UPS and FedEx. Do it before the 'January Effect' kicks in and you'll be ready to ring in the New Year with a champagne toast to a temporary bull market.&quot;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/6-stocks-to-buy-before-black-friday">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-expensive-stocks-that-are-totally-worth-it">7 Expensive Stocks That Are Totally Worth It</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-you-need-to-start-flipping-items-for-cash-online">What You Need to Start Flipping Items for Cash Online</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-8-small-cap-value-investments-are-on-fire">These 8 Small Cap Value Investments Are on Fire</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/learn-how-to-invest-with-these-5-stock-market-games">Learn How to Invest With These 5 Stock Market Games</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Amazon big 5 sporting goods black friday bull market eBay holiday season priceline stock market UPS Fri, 18 Nov 2016 10:00:07 +0000 Mikey Rox 1835350 at http://www.wisebread.com 8 Signs an ETF Isn't Right for You http://www.wisebread.com/8-signs-an-etf-isnt-right-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-signs-an-etf-isnt-right-for-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/little_boy_money_71664445.jpg" alt="Finding signs that an ETF isn&#039;t right for you" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>In recent years, exchange traded funds, or ETFs, have become a common part of many retirement portfolios. They work much like mutual funds, but can be traded throughout the day and often have lower costs. But how do you know if an ETF makes sense for you? After all, there are <em>literally thousands </em>of ETFs available, all with unique characteristics and goals.</p> <p>Most financial advisers suggest that investors keep things simple by finding ETFs that track major benchmark indexes, such as the S&amp;P 500. They should generally have low fees and fit in with other investments in your portfolio, too.</p> <p>Here are some key ways to determine if an ETF isn't right for you.</p> <h2>1. It Has High Fees</h2> <p>Anytime you purchase a mutual fund or ETF, it's important to note how much of your money is going to fund managers and other expenses. High fees can take a big cut out of your overall earnings, and there's little evidence that ETFs with higher fees perform better than cheaper ones. It's possible to own very solid ETFs with expense ratios at 0.1% or lower. If your ETF's expense ratio is significantly higher, it may be time to invest in something else.</p> <p>&quot;Anything above 0.3%, and it gets a little excessive,&quot; says Justin Halverson of Great Waters Financial in Minneapolis.</p> <h2>2. You Don't Understand It</h2> <p>As ETFs have grown in popularity, they've also grown in number &mdash; and complexity. That means there are many &quot;boutique&quot; ETFs with very unique philosophies and goals. There are ETFs that zero in on very specific industries or market sectors. There are ETFs that do elaborate things involving leverage, or track obscure indexes. For most investors, these ETFs are complicated and unnecessary.</p> <p>&quot;You can get as fancy as you want with it,&quot; said Charlie Harriman, a financial adviser at Cloud Investments LLC in Huntsville, Alabama. &quot;We usually advise that investors stick with the staples and things they know.&quot;</p> <h2>3. It's Too Risky</h2> <p>Some of the unique ETFs mentioned above are designed to generate big returns in some cases, but there's a huge downside if markets go south. Some ETFs use leverage to potentially amplify returns by two or three times an underlying index &mdash; thus, they can amplify losses during downturns. The average investor who is saving for the long term does not need to take on additional risk with ETFs that are designed for short-term trading.</p> <h2>4. It's Too Conservative</h2> <p>It's important that your investments match up with your financial goals. This means that if you're a young investor, you probably don't need a bonds ETF, or an ETF with low-growth dividend stocks. These types of ETFs may help you avoid a big loss during a market downturn, but you'll never be able to amass the kind of wealth you need in retirement unless you get a bit more aggressive.</p> <h2>5. Its Holdings Overlap With Other Things You Own</h2> <p>Diversification is great, but sometimes you can go overboard. When you invest in an ETF, you are getting exposure to a wide range of stocks, and there may be other ETFs with similar holdings. For instance, an ETF that tracks the overall stock market may own a good chunk of Apple stock, and a tech-focused ETF may own a lot of Apple stock as well. So it may not necessarily make sense to own both. Be sure to check the list of holdings for each ETF you own in order to avoid redundancy in your portfolio.</p> <h2>6. You Can't Trade It for Free</h2> <p>Many discount brokerage firms allow account holders to trade certain ETFs without paying a commission. For example, Fidelity allows fee-free trades for all ETFs offered by iShares. By eliminating this commission, you could save upward of $7 on every stock purchase, which is a lot of money if you make frequent purchases. This is particularly advantageous for younger investors who prefer to invest a little at a time rather than one large sum.</p> <p>If you're looking at an ETF to buy but it's not available without paying a commission, consider switching to a similar ETF that is. If your broker does not offer commission-free trades on ETFs, maybe that's a good excuse to switch brokers.</p> <h2>7. It Doesn't Track an Index Very Well</h2> <p>Many ETFs are designed to track a specific benchmark index, such as the S&amp;P 500 or Russell 2000. If they do what they are supposed to, your returns will be closely aligned with the performance of these indexes. But some ETFs do it better than others. It's easy to find an ETF's &quot;tracking error,&quot; which measures the difference between an ETF's performance and the benchmark it's supposed to be tracking. Most ETFs will have a tracking error of less than a tenth of a percent.</p> <p>&quot;If you see a high tracking error, this could work out to an investor's benefit, but it may also be to their detriment,&quot; Halverson says.</p> <h2>8. It's Not Traded Very Heavily</h2> <p>The only way an ETF is sold is if there is a buyer. Likewise, you can't buy a stock if no one is selling. With most ETFs, it's easy to buy and sell because there is a large trading volume &mdash; meaning that there are plenty of buyers and plenty of sellers. And when there is a high volume, there is rarely a big spread between the &quot;bid&quot; and the &quot;ask&quot; prices. But what happens if an ETF has a low trading volume?</p> <p>Halverson said this could mean that the ask and bid prices are far apart, and it may be hard to complete a sale at the price you want. Most investors, he said, will find it easier and better financially to trade ETFs that are more commonly traded.</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-signs-an-etf-isnt-right-for-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-you-shouldnt-invest-like-warren-buffett">7 Reasons You Shouldn&#039;t Invest Like Warren Buffett</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/6-ways-to-invest-when-youre-in-debt">6 Ways to Invest When You&#039;re In Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-lessons-we-can-learn-from-baseball">8 Money Lessons We Can Learn From Baseball</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-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment ETFs exchange traded funds fees funds retirement risk trading Thu, 03 Nov 2016 09:30:25 +0000 Tim Lemke 1825852 at http://www.wisebread.com 5 Essentials for Building a Profitable Portfolio http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-essentials-for-building-a-profitable-portfolio" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/growing_money_trees_84090749.jpg" alt="Finding essentials for building profitable portfolio" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For many people, investing is the most complicated and intimidating aspect of managing money. But it doesn't have to be. Here are some of the essentials for building a successful investment portfolio.</p> <h2>1. Know What You're Investing For</h2> <p>Investing is best done with a purpose in mind. Investing for a child's <a href="http://www.wisebread.com/when-should-you-start-saving-for-your-child-s-education">future college costs</a> is not the same as investing for your retirement. You would use different investment vehicles &mdash; a 529-plan account or Coverdell Education Savings Account for college, and an <a href="http://www.wisebread.com/401k-or-ira-you-need-both">IRA or 401K</a> for retirement.</p> <h2>2. Know Your Time Frame</h2> <p>Investing is for goals you want to accomplish in five or more years. Anything shorter than that and you can't afford to take much, if any, risk, so you would be best served by a savings account.</p> <p>Still, a &quot;five or more years&quot; time horizon contains a wide range of options. Someone planning to retire in 10 years should invest quite differently than someone planning to retire in 30 years. The first person can't afford to take as much risk as the second person. By the same token, the second person can't afford the risk of playing it too safe.</p> <h2>3. Know Your Temperament</h2> <p>This has to do with how well you sleep at night when the stock market is in free fall. Vanguard has a decent <a href="https://personal.vanguard.com/us/FundsInvQuestionnaire">free assessment</a> that combines your investment time frame with your temperament to suggest an optimal asset allocation &mdash; that is, what percentage of your portfolio you should allocate to stocks and what percentage to bonds (or stock, or bond-based mutual funds).</p> <h2>4. Know How to Choose Specific Investments</h2> <p>If investing is the most complicated and intimidating aspect of managing money, choosing specific investments is the most complicated and intimidating aspect of investing. Very few people have the wherewithal to do this on their own. It's helpful to acknowledge that. As Clint Eastwood's Dirty Harry character noted, &quot;A man's got to know his limitations.&quot; Of course, the same is true for women!</p> <p>There's just too much to know. There are thousands of different investments to choose from. And it can be crazy confusing (and dangerous) to make these decisions based on the all-too-common articles about &quot;Last Year's Best-Performing Mutual Funds&quot; or &quot;Where to Invest to Take Advantage of Advances in Wind Power.&quot;</p> <p>The crucial decision you need to make is not so much about which investments to choose; it's about which investment process to use. Here are three options.</p> <h3>Go With a Target-Date Fund</h3> <p>The simplicity of such funds has made them tremendously popular. Most of the big mutual fund companies offer them. You just choose the fund with the year closest to the year of your intended retirement as part of its name (Fidelity Freedom 2050, for example). The fund is designed with what the fund company believes is the ideal asset allocation for someone with that retirement date in mind, and it even changes the allocation as you get closer to that target date, becoming increasingly conservative. It's a very simple process, but <a href="https://www.soundmindinvesting.com/articles/view/target-date-funds-the-devils-in-the-details">all target-date funds are not alike</a>. So, be informed.</p> <h3>Go With an Investment Adviser</h3> <p>He or she will get to know you and your goals and then tailor an investment strategy to you. Along the way, you will typically pay 1% of the amount of money you have the adviser manage for you each year. Also, advisers usually won't work with anyone with less than $100,000 to manage. If you go this route, ask friends for referrals and opt for a fee-based adviser (as opposed to one compensated by commissions) who works as a &quot;<a href="http://www.wisebread.com/who-to-hire-a-financial-planner-or-a-financial-adviser">fiduciary</a>.&quot;</p> <h3>Go With an Investment Newsletter</h3> <p>Whereas an investment adviser works with clients one-on-one, an <a href="https://www.soundmindinvesting.com/articles/view/what-investing-newsletters-do-that-financial-magazines-dont">investment newsletter</a> works with investors on a one-on-several thousand (or however many subscribers they have) basis. There are hundreds of investment newsletters, each with their own investment strategies. Subscribers gain access to the strategies along with the specific investment recommendations needed in order to implement the strategies. Subscription costs range from less than $200 per year to over $1,000 per year.</p> <h2>5. Know Some Market History</h2> <p>One of the biggest threats to your success as an investor can be seen in the mirror. When the market falls, it's easy to give in to fear and sell. When the market is booming, it's easy to give in to greed, and invest too aggressively.</p> <p>Far better to understand that the market cycles between bull markets and bear markets (growing markets and declining markets). Even within a specific year, there will be ups and downs.</p> <p>That's why it's so important to have a trusted investment selection process. With a good process in place, you should have some sense as to how your portfolio is likely to perform under a variety of market situations and you should be content to stay with it in good times and bad.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment advice college fund financial advisers money management portfolio retirement risk stock market target date funds Wed, 26 Oct 2016 10:00:11 +0000 Matt Bell 1820715 at http://www.wisebread.com 7 Expensive Stocks That Are Totally Worth It http://www.wisebread.com/7-expensive-stocks-that-are-totally-worth-it <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-expensive-stocks-that-are-totally-worth-it" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_84113845_MEDIUM.jpg" alt="these expensive stocks are worth the cost" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>So, you want to buy shares of stock from a familiar company, but are surprised to realize that shares are selling for hundreds, perhaps thousands, of dollars. As it turns out, some of the priciest stocks may also turn out to have the best value in the long run.</p> <p>High prices may be intimidating, but there's no need to fear them. Let's take a look at some of the most expensive stocks, and outline why they may still be worth buying.</p> <h2>1. Alphabet [NASDAQ: <a href="http://www.nasdaq.com/symbol/googl">GOOGL</a>]</h2> <p>Just one share of the company formerly known as Google will set you back more than $800. But don't look away from a company that has seen shares rise 16% in the last year, and now rivals Apple for the largest company on Earth. Alphabet's price-to-earnings ratio is 30, which is on the high side, but not outlandish for a company with strong revenue growth.</p> <h2>2. Priceline [NASDAQ: <a href="http://www.nasdaq.com/symbol/pcln">PCLN</a>]</h2> <p>Years ago, Priceline shares underwent a reverse split in order to avoid being delisted from the New York Stock Exchange. Now, shares are nearly $1,500 a pop. The popular travel booking company also owns Booking.com and Kayak, among others. Shares are up 12% this year, with analysts indicating the price could top $1,700 a piece.</p> <h2>3. NVR [NYSE: <a href="https://finance.yahoo.com/q?s=NVR">NVR</a>]</h2> <p>At more than $1,500 a share, this homebuilder has one of the highest stock prices around. But shares are actually down about 10% just in the last three months, so a rebound may be in order. The consensus from analysts is that NVR could trade closer to $1,700 by year's end.</p> <h2>4. Amazon [NASDAQ: <a href="http://www.nasdaq.com/symbol/amzn">AMZN</a>]</h2> <p>The world's leading online retailer consistently gets called out for its small profits, and is often deemed overpriced by analysts who look at its eye-popping price-to-earning ratios. But these proclamations have historically been followed by significant run-ups in share price. At more than $800, a share of Amazon isn't cheap. But would you bet against Amazon entering the holiday shopping season?</p> <h2>5. Berkshire-Hathaway [NYSE: <a href="http://www.google.com/finance?cid=4376">BRK</a>]</h2> <p>Do you have $210,000 laying around that you'd like to invest? That's what a <em>single </em>one of Berkshire's Class A shares will cost you. Class B shares are available for mere mortals like us for a mere $144. Is Berkshire too expensive? Buffett has missed some bets over the years, but shares are up about 9% this year, and have averaged a more than 11% annual gain in the last decade.</p> <h2>6. Apple [NASDAQ: <a href="http://www.nasdaq.com/symbol/aapl">APPL</a>]</h2> <p>At more than $117 a share, Apple isn't cheap. And many observers do wonder about the company's path in the post-Steve Jobs era. But this is still the company that makes the most popular smartphone in the world, and no company has a larger market capitalization.</p> <h2>7. Chipotle [NYSE: <a href="https://finance.yahoo.com/quote/CMG?p=CMG">CMG</a>]</h2> <p>There has been a lot of negative press around Chipotle after e-coli and norovirus outbreaks that sickened hundreds of people. The news sent share prices reeling, but but the company is working its way back. The company is trading at about $395 per share, a relative bargain compared to a year ago, when shares were well above $700. USA Today reported in September that there was &quot;still plenty of upside left in the stock.&quot; Assuming the company has a handle on its food safety issues, there may be a profit opportunity with Chipotle.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/7-expensive-stocks-that-are-totally-worth-it">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/6-stocks-to-buy-before-black-friday">6 Stocks to Buy Before Black Friday</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-stocks-every-recent-grad-should-own">10 Stocks Every Recent Grad Should Own</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/4-foolproof-ways-to-protect-your-money-from-inflation">4 Foolproof Ways to Protect Your Money From Inflation</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-you-shouldnt-invest-like-warren-buffett">7 Reasons You Shouldn&#039;t Invest Like Warren Buffett</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Amazon apple Berkshire Hathaway chipotle expensive stocks Google priceline profit returns shares value Mon, 24 Oct 2016 10:00:10 +0000 Tim Lemke 1818053 at http://www.wisebread.com 8 Money Lessons We Can Learn From Baseball http://www.wisebread.com/8-money-lessons-we-can-learn-from-baseball <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-money-lessons-we-can-learn-from-baseball" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/baseball_player_63715703.jpg" alt="Learning money lessons from baseball" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We're deep into baseball's postseason, and we'll soon be left to fend for ourselves in the long, cold winter. But even in the offseason, the National Pastime can teach us many good lessons, like, the value of working as a team, and how even the best people can fail more often than not.</p> <p>Baseball can teach us about money, too. When you examine the game, you can come away with some lessons that will help you manage your spending and your investments.</p> <p>Consider these truths about the game we love.</p> <h2>1. It's a Long Season</h2> <p>Do you get upset when your baseball team loses a game or two? Do you have trouble with the ups and downs of the season? When you're a fan of team, it's easy to forget that there are a <em>lot </em>of games to be played, and the only thing that matters is where you finish.</p> <p>Your investing approach should reflect a similar reality. Don't get emotional about a stock price being down on any individual day. Like a baseball team, the stock market can slump, but often rebounds. Keep your eyes on your long-term financial goals, and eventually you'll be popping Champagne just like a team that won the title.</p> <h2>2. Homers Are Great, But So Are Singles and Doubles</h2> <p>In baseball, you'd love to have a team that hits a lot of home runs. But you might be just as successful if you have a team that just gets on base and knocks in runs one by one. This is true when it comes to investing. While we'd all like to see that single stock that explodes and makes us rich, the reality is that most of your success will come from small, incremental gains that compound over time.</p> <h2>3. Protect Your Lead</h2> <p>Every good baseball team has a &quot;closer,&quot; or a pitcher who comes in late in the game to get the final outs. When investing, it's also smart to have a plan for protecting your investments when you approach retirement age. As you get older, it's wise to move away from growth stocks and other more volatile investments, and move toward bonds, stable dividend stocks, and cash. This way, your retirement fund will be protected even if there is a big downturn in the stock market.</p> <h2>4. It's Okay to Take a Risk</h2> <p>Sometimes in baseball, you need to try and run for home even though you might be tagged out. If you play too conservatively, you may not win. This is also true for investing. A young person who is investing for the long term will never get rich if they have a conservative portfolio. Most financial advisers recommend investing in mostly stocks when you're young, because the risk is usually outweighed by the potential for higher returns. Sure, you'll get burned sometimes. But more often than not, you'll come out ahead.</p> <h2>5. It's Simpler Than You Think</h2> <p>Baseball has a thick rule book, and it's not easy to master. But at it's core, it's pretty easy to understand. Throw the ball. Hit the ball. Catch the ball. And try to score more than your opponent. Money management and investing are simple things, too, even though they can seem intimidating. Spend less than you earn. Invest as much as you can, in things that mirror the overall performance of the stock market. Get the basics right, and you'll do fine.</p> <h2>6. Think Globally</h2> <p>Baseball may be an American sport, but it's an international game. It's played around the world, from the tropical ball fields of the Caribbean to busy cities like Tokyo. And Major League Baseball teams know that they need to look globally to find the very best talent. Your approach to money and investing should also take on an international approach. Consider investing in emerging markets that offer strong potential for growth. Take a look at currency trading, or even international commodities. There is money to be made if you look outside the United States to build your investment portfolio.</p> <h2>7. Limit Your Mistakes</h2> <p>No one's perfect, either in baseball or with their money. But frequent errors can mean the difference between winning and losing. In baseball, fielders want to catch the ball and throw it accurately. Batters want to avoid swinging at bad pitches. Pitchers want to avoid walking in the winning run.</p> <p>Your finances are just as vulnerable to being hurt by mistakes. Don't buy things you can't afford. Don't invest in things you don't understand. Don't raid retirement funds without understanding the consequences. There are many things you can do wrong to send your financial planning off the rails. With baseball and with your money, it's important to play smart.</p> <h2>8. Look for Value</h2> <p>The best-selling book <a href="http://amzn.to/2dxAyjC">Moneyball</a> by Michael Lewis outlined how the Oakland Athletics were able to field competitive teams despite having a lower payroll than most competitors. The book's core message was that the A's had developed ways to find players that were undervalued by the rest of the league. This desire to find &quot;value&quot; is a key part of money management. When looking to buy something, remember that expensive items aren't always the best. Look for a good combination of quality and price. When looking to purchase stocks, seek out companies that may be undervalued by the marketplace.</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-money-lessons-we-can-learn-from-baseball">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/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/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-you-shouldnt-invest-like-warren-buffett">7 Reasons You Shouldn&#039;t Invest Like Warren Buffett</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-signs-an-etf-isnt-right-for-you">8 Signs an ETF Isn&#039;t Right for You</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/best-online-sites-for-building-wealth">Best Online Sites for Building Wealth</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment analogies baseball money lessons retirement risk saving sports stocks teamwork Fri, 21 Oct 2016 09:01:03 +0000 Tim Lemke 1816943 at http://www.wisebread.com What Are Income Stocks? http://www.wisebread.com/what-are-income-stocks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-are-income-stocks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_investments_71091499.jpg" alt="Learning the basics of income stocks" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You may think that investing in stocks is all about share price increases over time. In reality, you may be surprised to find out that the price of some stocks can vary little over time and still provide an ever-increasing stream of income. These types of securities are known as income stocks.</p> <p>Let's review the seven things you need to know about income stocks and their ability to provide a high payout to investors.</p> <h2>1. They Pay a Dividend</h2> <p>The defining feature of an income stock is that it pays a regular and predictable dividend, which often increases over time. For example, Caterpillar Inc. [NYSE: <a href="https://finance.yahoo.com/quote/cat">CAT</a>], a leading manufacturer of construction, mining, and transportation equipment, has <a href="http://www.caterpillar.com/en/investors/stock-information/dividend-history.html">paid a dividend to its stockholders</a> every quarter since 1933. For the last 22 years, Caterpillar's cash dividend has consistently increased and it stands at $0.77 per share of common stock &mdash; up from $0.35 in 1996, and without adjusting for the two-for-one stock splits of 1997 and 2005.</p> <p>A predictable, steady, and ever-increasing stream of income makes income stocks attractive to those retirement savers who're close to retirement age.</p> <h2>2. They Are Often Large Companies</h2> <p>While income stocks can be found in many industries, they are most often part of the real estate, energy, utility, natural resource, and finance industries. One example of an income stock in the energy sector is Phillips 66 [NYSE: <a href="https://finance.yahoo.com/quote/PSX/">PSX</a>], which has been in the news due to its spinoff from ConocoPhillips back in 2012. It doubled its stock price in the first year after the spinoff, and attracted Warren Buffett's investment (a <a href="http://www.barrons.com/articles/buffet-bets-1-billion-more-on-phillips-66-1472470538">15.2% share of the company</a> as of late August 2016). (See also: <a href="http://www.wisebread.com/the-5-best-pieces-of-financial-wisdom-from-warren-buffett?ref=seealso">The 5 Best Pieces of Financial Wisdom From Warren Buffett</a>)</p> <p>The Houston-based multinational energy company generated $161.2 billion in revenue in 2014, a figure that is bigger than the GDP of some nations around the world. Since its 2012 spinoff, Phillips 66 has been consistently paying a quarterly dividend that started at $0.20 per share of common stock and stands now at $0.63 per share of common stock.</p> <h2>3. They Have Been in Business for a Long Time</h2> <p>Generally speaking, the less established a company, the more likely that company can experience extraordinary growth per quarter. Think of 12-year-old Facebook or 13-year-old Tesla, whose current stock prices are seven and 10 times, respectively, their original prices after going public. Both Facebook and Tesla would be considered growth stocks. On the other hand, income stocks are those of companies with a long history. Caterpillar and Phillips 66 were originally founded back in 1925 and 1917, respectively. (See also: <a href="http://www.wisebread.com/what-are-growth-stocks?Ref=seealso">What Are Growth Stocks?</a>)</p> <h2>4. They Are an Alternative to Fixed-Income Securities</h2> <p>If you have a 401K, chances are that you have a target-date fund. In 2014, 48% of 401K plan holders <a href="https://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&amp;content_id=3347">had target-date funds</a>, which gradually lowers exposure to risk as you get closer to retirement age and helps maintain a steady stream of income during your retirement years. However, dialing back your risk doesn't necessarily mean that you will stick to municipal bonds and money market accounts from now on.</p> <p>Legendary investor Peter Lynch said it best: &quot;Gentlemen who prefer bonds don't know what they're missing.&quot; The appeal of income stocks is that they provide a steady stream of income while providing some exposure to corporate profit growth. Many investors use the yield of a 10-year treasury bond rate as a benchmark to grade the performance of income stocks. As of October 10, 2016, the yield of a <a href="http://data.cnbc.com/quotes/US10Y">10-year treasury bond</a> was 1.77% and those from Phillips 66 and Caterpillar were 3.13% and 3.48%, respectively.</p> <h2>5. They Have Modest Annual Profit Growth</h2> <p>That being said, don't expect companies behind income stocks to have ambitious goals of profit growth. Due to its long business history, some income stocks may have limited future growth options and provide only a moderate annual profit growth. However, this is the main reason why these companies are able to pay a dividend in the first place. Since there may be no need to aggressively reinvest in new infrastructure, research, or development, then the company can afford to issue a dividend every quarter to its shareholders.</p> <h2>6. They Have Low Stock Price Volatility</h2> <p>Among the many statistics that analysts report on stock tables, <em>beta </em>is one of the most relevant ones, besides dividend and yield, to incomes stocks. (See also: <a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table?ref=seealso">Beginner's Guide to Reading a Stock Table</a>)</p> <p>Since the beta of the market as a whole is 1.0, a stock with a beta below 1.0 would move less than the market, and a stock with a beta above 1.0 would deviate more than the market. Often, income stocks have betas below 1.0. For example, machinery manufacturer Deere &amp; Company [NYSE: <a href="https://finance.yahoo.com/quote/DE/">DE</a>] has a beta of 0.63, and retailer Wal-Mart Stores Inc. [NYSE: <a href="https://finance.yahoo.com/quote/WMT/">WMT</a>] has one of 0.09.</p> <h2>7. They Are Available in Mutual Funds and Index Funds</h2> <p>Even though throughout this article we have only focused on individual companies, you can still buy a basket of several income stocks at the same time. You can do this through either a mutual fund or a low-cost index fund. One example of the second category is the Vanguard High Dividend Yield Index Fund Investor Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VHDYX">VHDYX</a>], which holds many income stocks, such as Microsoft, Exxon, Johnson &amp; Johnson, and General Electric.</p> <p>Two advantages of using index funds to include income stocks in your portfolio are diversification (e.g. 420 holdings in the mentioned index fund from Vanguard) and low cost (e.g. 0.16% annual expense ratio for the same index fund).</p> <h2>The Bottom Line</h2> <p>Before buying an income stock, make sure to evaluate it using your current investment strategy. While an income stock can offer you a way to get higher yields than those of treasury securities or certificates of deposit, you may be so far away from retirement age that you could afford a higher exposure to risk through value or growth stocks. Consult with your financial adviser to discuss more about your investment objectives and the appropriate ways to achieve those financial goals.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/what-are-income-stocks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table">Beginner&#039;s Guide to Reading a Stock Table</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment dividends fixed income securities growth income stocks index funds large companies mutual funds portfolio profits retirement stock market volatility Thu, 20 Oct 2016 09:30:23 +0000 Damian Davila 1815776 at http://www.wisebread.com What Are Growth Stocks? http://www.wisebread.com/what-are-growth-stocks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-are-growth-stocks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/coins_in_jar_82501487.jpg" alt="Learning what growth stocks are" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Growth. It's what you want if you're an investor, especially if you're many years away from retirement.</p> <p>Any investment portfolio should have a heavy dose of stocks that offer strong returns over time, from companies with solid earnings records. These are growth stocks. But what exactly is a &quot;growth&quot; stock? What are its characteristics, and how does it differ from other kinds of investments? And what are some ways to invest in them?</p> <p>Here are nine things you need to know about growth stocks and their ability to supercharge your portfolio.</p> <h2>1. It's All About Earnings</h2> <p>When seeking out quality growth stocks, it's key to look for the company's track record of earnings that are above the market average. The best companies will have reported consistent earnings growth quarter after quarter and year after year. A track record of five years in a row of growth is usually a good barometer, according to guidelines offered by Investor's Business Daily.</p> <h2>2. They Often Don't Pay a Dividend</h2> <p>When you buy growth stocks, you want to see the share price rise and don't care much about income. And that's good, because growth stocks generally don't pay out dividends to investors. Instead, these companies take whatever net earnings they have and reinvest them in research, new products, new business lines, infrastructure, and acquisitions. In other words, their cash is being used to make the company bigger.</p> <h2>3. They Are Often Smaller Companies</h2> <p>Many growth stocks fall into the category known as &quot;small cap,&quot; which is shorthand for saying a company has a small market capitalization (usually less than $2 billion). This small size means that there's the potential for quick growth. Smaller companies are often aggressively investing money back into the company to boost earnings and grow.</p> <h2>4. They Are Often Younger Companies</h2> <p>Generally speaking, the more established a company, the less likely they are to see supercharged growth on a quarterly basis. In fact, most companies see their fastest growth in the first decade after going public. Consider that Facebook has seen shares rise sevenfold since the summer after going public in 2012.</p> <h2>5. Their Stock Prices Don't Always Make Sense</h2> <p>For many growth stocks, share prices aren't always a reflection of the company's current value. Rather, their share price is based on what investors think a company may be worth in the future. In other words, the growth is often &quot;baked&quot; into the stock price already. Often, a growth stock will seem overpriced based on its price to earnings ratio. But with many growth stocks, the price to earnings ratio does not have much bearing on a company's price. In fact, many of the stock market's biggest success stories, including Apple and Amazon, have seen big run-ups even when price-to-earnings ratios were high.</p> <h2>6. Growth Comes With Risk</h2> <p>If you want growth, you're going to have to be comfortable with losing money once in awhile as well. Growth stocks tend to be more volatile than the broader market. In essence, the potential for growth is your reward for accepting some additional risk. That's why growth stocks aren't the best investments for someone who is close to retirement age.</p> <h2>7. You Can Buy Funds of Growth Stocks</h2> <p>If you're not sure which growth stocks to buy, there are mutual funds that have you covered. Most major brokerage firms offer the ability to invest in a wide range of stocks that are younger and growing more quickly than the rest of the market. Like the stocks within them, growth stock funds can be volatile, but rewarding for a patient investor. Top examples include the <a href="https://personal.vanguard.com/us/funds/snapshot?FundId=0023&amp;FundIntExt=INT">Vanguard U.S. Growth Portfolio</a> and the <a href="https://fundresearch.fidelity.com/mutual-funds/summary/316200203">Fidelity Growth Strategy Fund</a>. There are also exchange-traded funds, such as the <a href="https://www.blackrock.com/ca/individual/en/products/239562/ishares-growth-core-portfolio-builder-fund">iShares Growth Core Portfolio Builder</a>, which are often available to trade without a commission.</p> <p>One caveat is that there are often a plethora of confusing choices, including small-cap, large-cap, and mid-cap growth funds, and growth funds focused on specific industries. It's fine to own more than one of these funds, but it's best to research these funds first to ensure there is no overlap in the companies you are invested in.</p> <h2>8. They Are Not to Be Confused With Value Stocks</h2> <p>We often hear growth and value stocks mentioned together because they both offer great opportunities for investors to make money. But value stocks differ from growth stocks in that they are considered to be undervalued by the market, and thus offer a potential bargain for investors. Growth stocks are often overvalued and less of a bargain for investors, but have a stronger track record of earnings. Most financial advisers recommend holding a mix of growth and value stocks in your portfolio.</p> <h2>9. Look for Leaders and Innovators</h2> <p>Typically, the best growth stocks are those from companies that are leaders in their industries, and who have shown a penchant for innovation. Consider a company like Starbucks [NASDAQ:&nbsp;<a href="http://www.nasdaq.com/symbol/sbux">SBUX</a>], which is synonymous with coffee. Apple, Amazon, and Facebook are examples of solid industry leaders and great growth stocks. But it's also worth looking at fast-growing companies that aren't yet their industry leader. Under Armour [NYSE: <a href="https://finance.yahoo.com/q?s=UA">UA</a>] is one example of a company that isn't yet #1 but has seen better-than-average earnings and share growth in recent years.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/what-are-growth-stocks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table">Beginner&#039;s Guide to Reading a Stock Table</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/learn-how-to-invest-with-these-5-stock-market-games">Learn How to Invest With These 5 Stock Market Games</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying">9 Ways to Tell If a Stock is Worth Buying</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment dividends earnings growth stocks risk stock market Thu, 06 Oct 2016 09:00:08 +0000 Tim Lemke 1805691 at http://www.wisebread.com 9 Costly Mistakes DIY Investors Make http://www.wisebread.com/9-costly-mistakes-diy-investors-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-costly-mistakes-diy-investors-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_ripping_paper_69469761.jpg" alt="Man making costly mistakes DIY investors make" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>With the right approach and education, it's possible for people to handle their own investments. But it's also easy to make mistakes that could cost you large sums of money in the long run.</p> <p>If you're a do-it-yourselfer, ask yourself whether you're making any of these mistakes below. If so, it may be worth seeking professional advice from a certified financial planner.</p> <h2>1. Trading Without Considering Fees and Taxes</h2> <p>For many investors, it's fun to trade stocks. The actual buying and selling can be a bit of a rush, especially when things are going well. But all of that activity can come with a cost, in the form of transaction fees and capital gains taxes. If you are finding that the returns on your portfolio seem a bit lackluster, it may be because you're investing without taking these costs into account. More experienced investors and financial advisers understand how to avoid extra fees and maximize returns as a result.</p> <h2>2. Getting Emotional</h2> <p>Investing your own money can sometimes be hard on the psyche. You may go through stretches where you see your portfolio shrink. Stocks that you personally selected may not always perform the way you predicted. Markets can be volatile, and not everyone can stomach it. If you find yourself getting stressed out by the investing process or buying and selling based on emotion, you may want to consider having a financial adviser take over the reigns.</p> <h2>3. Not Investing Enough</h2> <p>When you invest on your own, you may only be guessing as to how much you need to save. And it's common for investors to feel a little skittish and invest too little if the market is down. A financial adviser may be more tuned into the appropriate level of risk an investor can take on, and will usually advise a more aggressive approach for someone far out from retirement.</p> <h2>4. Not Diversifying Enough</h2> <p>Most do-it-yourselfers understand the basics of diversification, and will invest in index funds that track the S&amp;P 500 or broader stock markets. And that's perfectly fine. But often, these funds are heavily weighted toward larger companies or certain industries. If you are investing only in basic index funds, you may not have good exposure to international markets or smaller companies, for example. There may be entire industries that will be underrepresented in your portfolio.</p> <p>To achieve true diversification, you can have an S&amp;P Index fund as a base, but should also look for funds and stocks that fill in the gaps.</p> <h2>5. Failing to Rebalance</h2> <p>You may think you're creating a diverse portfolio based on the investments you've selected. But have you checked the balances recently? Over time, portfolios can get out of whack if certain investments are performing better than others. For example, you may think you're investing in 50% large cap, 25% small cap, and 25% mid cap stocks. Until one day, you check your account and realize that small cap stocks make up 40% of the portfolio. Financial advisers will recommend when to rebalance, and offer advice on how to avoid taxes in the process.</p> <h2>6. Trying to Beat the Market</h2> <p>Some investors insist on doing things themselves, because they believe they are expert stock pickers and can beat the performance of the overall stock market. In most cases, they are wrong. Numerous studies have shown that even professional investment managers can't beat the market on a regular basis, and that most investors would be best off with a portfolio of index funds.</p> <h2>7. Falling in Love With Shiny New Things</h2> <p>Do-it-yourselfers can become enamored with whatever the hot stock is at the moment. They go for name brands and flash rather than looking closely at a balance sheet. They also tend to go with what's familiar, rather than doing some research and finding investments that are less well known but of sound quality.</p> <h2>8. Having No Backup Plan</h2> <p>If you are an older DIY investor, do you have a plan for what happens to your investments if you are incapacitated? Are you sharing your investment accounts with your spouse or other loved ones? Many DIY investors are too stubborn to seek help from anyone, and thus run into problems when they are no longer in a position to manage things themselves. It's fine to handle your own investments if you're confident enough to do so, but it's wise to have a plan for how things will be dealt with if you're no longer in charge.</p> <h2>9. Becoming Too Consumed</h2> <p>Realistically, the average person can handle their own investments while checking in only periodically each week. A properly balanced portfolio does not need a lot of maintenance. But investing can be like an addiction to some people, and it's possible to spend hours a day buying and selling and becoming obsessed with the movement of the markets. If you're finding that your investing is having a negative impact on your relationships and other aspects of your life, it may be best to back off and let someone else handle things.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment beat the market diversification DIY emotional investing fees financial advisers financial planning portfolio rebalancing stock market taxes Wed, 05 Oct 2016 10:30:08 +0000 Tim Lemke 1805247 at http://www.wisebread.com