Investment http://www.wisebread.com/taxonomy/term/4808/all en-US 9 Silly Reasons People Don't Invest (But Should) http://www.wisebread.com/9-silly-reasons-people-dont-invest-but-should <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-silly-reasons-people-dont-invest-but-should" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/businessman-thinking-483626649-small.jpg" alt="businessman thinking" title="businessman thinking" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Over the years, I've come across a lot of people who have never invested. For many people, it's due to lack of knowledge or a feeling of intimidation, and those are usually things they learn to overcome. But I've also heard some rather silly reasons for choosing not to get started, and many of them have made me cringe. (See also: <a href="http://www.wisebread.com/6-common-excuses-for-not-saving-money?ref=seealso">6 Common Excuses for Not Saving Money</a>)</p> <p>Here are some actual reasons people have cited for choosing not to invest their money.</p> <h2>1. &quot;I Have Very Little Money to Invest&quot;</h2> <p>If you are truly living below the poverty line or have large quantities of debt, investing may not be for you right now. But it's easy to get started investing even with just a few bucks. Most discount brokerages will let you trade for less than $10, and you can purchase even just a single share of a mutual fund or company. In most cases, there are no account minimums.</p> <p>If you have a 401(k) plan from your employer, consider contributing just 1% of your gross income. Over time, look to increase that to take advantage of your full company match, if one is offered.</p> <p>It's also important to take a hard look at your finances and spending. You may think you have no cash to invest, but chances are you can find some just by making a few lifestyle changes.</p> <h2>2. &quot;I Don't Want to Lose Money&quot;</h2> <p>This is not to suggest that no one has ever lost money in the stock market. Of course, it's possible to lose a lot of money in a short amount of time. But over the long term you will almost always recoup any losses and go on experience significant gains. The average return of the S&amp;P 500 since the early 20th Century is more than 9%. If you are patient, you'll be fine.</p> <h2>3. &quot;I Don't Plan to Stay With This Company for Very Long&quot;</h2> <p>I had a co-worker at an old job who refused to sign up for the company's 401(k) plan because he didn't feel like he'd be working at the company for a long time. This is extremely flawed thinking, because it fails to acknowledge the major advantage of 401(k) plans, which is that you get to take your money with you even if you leave. These plans are unlike pension plans, which do require you to stay with the company a certain number of years.</p> <p>By failing to contribute to a company retirement plan, you may be giving up a company match, <em>which is free money</em>.</p> <p>Now, it's important to note that many companies have vesting requirements, which means you may have to give the company's contributions back if you leave prior to a certain amount of time. But even then, employers are required to be 100% vested within six years.</p> <h2>4. &quot;I'm Self-Employed and Don't Have Access to a Company Retirement Plan&quot;</h2> <p>If you work for yourself, or if your employer doesn't offer a retirement plan, there are other ways to invest and still get tax breaks and other benefits through an Individual Retirement Account (IRA.) A Roth IRA allows anyone with earned income to contribute up to $5,500 per year, and the money can be withdrawn tax free when they retire. A traditional IRA works in reverse; you pay taxes when you withdraw the money, but the contributions are deducted from your taxable income. In addition, there are other, tax-advantaged retirement options for the self-employed (SEPs and SIMPLEs), which, while more complicated than vanilla IRAs, can be set up by a financial planner pretty easily.</p> <p>Even after you contribute the maximum into these accounts, it's easy to open a brokerage account and invest in almost anything you want. Start by putting money into a low-cost Index Fund or the stock of a big company you are familiar with. Eventually you'll realize that even if you don't have a pension or 401(k), you can set yourself up for a great retirement or boost your overall income.</p> <h2>5. &quot;I'd Rather Use the Money to Buy&hellip; Stuff&quot;</h2> <p>If you have some extra money, you're almost always best off investing it rather than spending it on stuff. Investments usually increase in value. Physical items you buy rarely do. Of course, I am not suggesting people should deprive themselves of all material possessions. (And yes, there are some things like real estate that can increase in value and can be viewed as investments.)</p> <p>But in general, when on the fence between investing and purchasing something, you'll be better off in the long run if you invest. In fact, some of the most successful investors are people who earned relatively modest incomes but also lived below their means and were therefore able to invest.</p> <h2>6. &quot;I'm Young. I'll Worry About It Later&quot;</h2> <p>Every day you postpone investing will cost you money. The earlier you start, the better off you'll be, due to the value of compounding returns. Consider a person who is age 40 and begins investing with $10,000, adding $100 per month. Assuming an annual return of 9%, they will have about $163,000 at age 63. A person who makes the same investments but starts at age 30 will end up with $406,000. That's almost triple the money just from starting 10 years earlier.</p> <h2>7. &quot;I Earn a Ton of Money Now. No Need to Think About It&quot;</h2> <p>How stable is your job? How comfortable are you that you can support your lifestyle if your income takes a nose dive?</p> <p>If you currently have a high income, investing aggressively can help keep your family secure even if things go bad. Stocks and other investments that aren't in retirement accounts can be sold in the event of a financial emergency. Look for dividend-yielding stocks that can offer additional income that won't go away if you're laid off. The point is: Never assume you've got it made.</p> <h2>8. &quot;My Folks Are Rich. I Don't Need to Worry About It&quot;</h2> <p>If you have relatives that are well-off and you're expecting an inheritance, then you are fortunate. But there are few guarantees in life. Stories abound of people who believed their parents were wealthy, only to find out they were actually neck-deep in debt. And we've all heard stories of children unexpectedly cut out of the parents' will for one reason or another. Furthermore, estate taxes and legal fees can eat up more of an inheritance than many people bargain for, and you'd be surprised how quickly the circumstances of life can deplete a nest egg. Take control of your own finances by investing as if no one has promised you anything.</p> <h2>9. &quot;I'd Rather Give My Money Away&quot;</h2> <p>Guess what? Even if you are that awesome type of person who would rather give away every penny they own than become rich, investing is for you. Charities absolutely love getting stocks and other investments as donations, because they often will increase in value, further helping them carry out their missions. In short, your giving power is usually higher when you donate investments instead of simply cash. (Your donation is usually tax deductible, too.) Many discount brokerage firms <a href="http://www.fidelitycharitable.org/">such as Fidelity</a> will help you set up a special account for giving.</p> <p><em>Have you ever heard a silly reason for not investing? Share it with us below!</em></p> <a href="http://www.wisebread.com/9-silly-reasons-people-dont-invest-but-should" class="sharethis-link" title="9 Silly Reasons People Don&#039;t Invest (But Should)" rel="nofollow">ShareThis</a><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-silly-reasons-people-dont-invest-but-should">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> <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/how-to-save-26000-in-5-years-or-less">How to Save $26,000 in 5 Years or Less</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/4000-8000-or-even-453500-in-5-years-a-low-risk-investment-plan">$4,000, $8,000, or Even $453,500 in 5 Years: A Low-Risk Investment Plan</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment 401(k) investing retirement plans saving Mon, 10 Nov 2014 14:00:09 +0000 Tim Lemke 1252176 at http://www.wisebread.com 7 Occasions When You Should Definitely Hire a Financial Advisor http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-occasions-when-you-should-definitely-hire-a-financial-advisor" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/financial-advisor-153824915-small.jpg" alt="financial advisor" title="financial advisor" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Laying out a few hundred dollars for a financial advisor can seem like money down the drain if everything is going smoothly. (See also: <a href="http://www.wisebread.com/9-signs-you-need-to-fire-your-financial-planner?ref=seealso">9 Signs You Need to Fire Your Financial Planner</a>)</p> <p>Until it isn't. Life's road bumps pop up, and good and bad things that happen can lead to financial problems or opportunities that you weren't prepared for. Here are seven occasions when a financial advisor should be called in to help.</p> <h2>1. Ruinous Debt</h2> <p>We're not talking about having payments for a credit card lapse for a month, but deep debt where you're having difficulty deciding which bills to pay and which to put off each month. This is a case where you don't want to have to pay a financial advisor &mdash; whether it's a one-time fee or percentage of assets that they manage. Instead, go somewhere such as the <a href="https://www.nfcc.org/index.php">National Foundation for Credit Counseling</a> or look for <a href="http://www.usa.gov/topics/money/credit/debt/out-of-control.shtml">local nonprofit agencies for free help</a>. At the very least, get help setting up a budget.</p> <h2>2. Career Change</h2> <p>Hopefully, this is an opportunity to earn more money and therefore put more money aside in a retirement account. A financial advisor can help you pick a retirement account that's right for you.</p> <p>Young people with the potential for increasing their assets who are starting their careers should seek a financial planner, says Eric Roberge, a fee-only certified financial planner in Boston and founder of <a href="http://beyondyourhammock.com/">Beyond Your Hammock</a>. This is especially true for a single person earning at least $75,000 a year or a couple earning $150,000 because they should have more money to invest, Roberge says.</p> <h2>3. Sudden Wealth</h2> <p>An inheritance, insurance payout, lump-sum pension payment, divorce settlement, lottery winning, or any other sudden influx of new money can burn a hole in a pocket, says Mike Sena, a certified financial planner at <a href="http://www.whitestreetadvisors.com/">White Street Advisors</a> in Roswell, GA. It can be tempting to splurge a little &mdash; or a lot. Instead, seek advice on how best to use your windfall now &mdash; and for years to come.</p> <h2>4. Death in the Family</h2> <p>The death of a close relative can be a key time to get financial help. You could face tax implications or need help with estate planning, for example.</p> <p>Roberge had a client who didn't seek his advice after her father died with a $600,000 annuity she inherited, and she took some money out of the annuity. She ended up having to pay a $40,000 tax bill, which Roberge says he could have helped her avoid.</p> <h2>5. Passing on a Family Business</h2> <p>Your parents and grandparents may want you to continue running the family business when they die, but you may not. This is a conversation that a financial advisor can help with early, says <a href="http://charleskochel.com/">Charles Kochel</a>, a wealth advisor for a fee-only Registered Investment Advisor in Arkansas. Kochel specializes in helping farmers transfer the family farm from one generation to the next.</p> <p>&quot;A major concern of a large family farm is legacy planning,&quot; he says. &quot;The issue is usually lack of communication. Multigenerational farmers assume the next generation will want to come back home, after college, and manage the farm or the assumption is that farming may prove too costly.</p> <p>&quot;A series of conversations needs to take place, often emotional and uncomfortable,&quot; Kochel says. &quot;A family meeting and ongoing proactive conversations help monitor the wants and needs of the entire legacy.&quot;</p> <p>The family will likely evolve over the years, and a financial advisor can help systemize the process and create an ongoing conversation that will move the estate planning beyond a one-time event.</p> <h2>6. Big Drop in the Stock Market</h2> <p>If your portfolio includes stocks, a financial advisor can help you come up with a financial plan, and stick to it.</p> <p>&quot;Most people think they can handle their own investments, but when the stock market drops, they start second-guessing their plan,&quot; says Tyler Gray, a financial planner at <a href="http://www.sageoakfinancial.com/">Sage Oak Financial</a> in Tulsa, OK.</p> <p>In 2008-09, for example, &quot;you had a lot of people who pulled out of the market at the worst possible time because they didn't have an advisor to help them stay disciplined,&quot; Gray says. &quot;The worst part is that many of these folks never got back in the market and have missed out on a lot of growth over the last five years.&quot;</p> <h2>7. Growing Family</h2> <p>Whether you're getting married or having children, it's best to have a financial conversation ahead of time, Sena suggests. New couples merging finances or planning for a baby and all of the costs that go into raising a child should have a financial plan.</p> <p>&quot;In general, anyone who is not meeting or exceeding their life and financial goals should work with an advisor,&quot; White says. &quot;Most of us are simply too close to our money to be objective.&quot;</p> <p>For better or worse, major life events can cause people to rethink their lives and plan for the future. Planning for a financial future should be part of many major events in life.</p> <p><em>Have you ever sought advice from a financial planner? What prompted you? Was the advice worthwhile and helpful? Please share in comments!</em></p> <a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor" class="sharethis-link" title="7 Occasions When You Should Definitely Hire a Financial Advisor" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/aaron-crowe">Aaron Crowe</a> of <a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">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/intimidated-by-retirement-investing-get-professional-help">Intimidated by Retirement Investing? Get Professional Help!</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/is-this-hidden-cost-sapping-your-retirement-savings">Is This Hidden Cost Sapping Your Retirement Savings?</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-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> <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-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 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/how-to-make-the-most-of-your-401K">How to Make the Most of Your 401K</a></span> </div> </li> </ul> </div> </div> </div> </div> Debt Management Investment Retirement debt financial planner financial planning investing retirement Mon, 03 Nov 2014 13:00:04 +0000 Aaron Crowe 1248279 at http://www.wisebread.com How to Get Over These 5 Scary Things About Investing http://www.wisebread.com/how-to-get-over-these-5-scary-things-about-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-get-over-these-5-scary-things-about-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/tired-stock-trader-505697487-small.jpg" alt="tired stock trader" title="tired stock trader" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I was never scared to invest.</p> <p>The moment I had discretionary income, I started investing. I paid no attention to market moves until <a href="http://en.wikipedia.org/wiki/Black_Monday_(1987)">Black Monday, October 19, 1987</a>. At the time, my husband owned stock in his employer and we lost hundreds of dollars in one day. And after that? We kept investing. Though spooked by this major downturn, we persisted and today remain happily invested. (See also: <a href="http://www.wisebread.com/6-basics-you-must-know-before-you-start-investing?ref=seealso">6 Basics You Must Know Before You Start Investing</a>)</p> <p>Don't let fear prevent financial success, and take a minute to think about whether you harbor and of these five common (but ultimately counterproductive) fears about investing.</p> <h2>1. You Can Lose Money Quickly</h2> <p>Even if you invest in market-index funds that track the market, you can lose money quickly if the entire market falls in value. Unlike the interest credited to your savings account, gains in the stock market are not linear with steady growth over time. Instead, your investments may decline before growing.</p> <p>No one can consistently predict when the stock market as a whole or individual shares of a company's stock will rise or fall. So, whether you are a beginning investor or a seasoned one, you will experience drops in the value of your investments, often dramatic ones in a short period of time.</p> <p><strong>Fight the fear</strong>: Invest to build wealth over the long term, not to make fast money in the short term. Never invest cash that you need to pay expenses.</p> <h2>2. You Have a Large Position in Your Company's Stock and the Share Price Plunges</h2> <p>One of the scariest investment scenarios is the sudden drop of your employer's stock when shares comprise the majority of your wealth.</p> <p>For example, retirees of Lucent Technologies went from millionaire status to nearly penniless when shares fell to $0.55 in 2002 from a high of $84 in the late 1990s. Similarly, employees who held Enron in their 401(k) plans and ESOPs (employee stock ownership plans) experienced major losses when the company declared bankruptcy.</p> <p><strong>Fight the fear</strong>: Realize that company stock is not inherently bad, just inherently risky as a major component of your wealth. After all, Microsoft and Google employees became wealthy after receiving company stock through <a href="http://www.nytimes.com/2007/11/12/technology/12google.html?pagewanted=all&amp;_r=0">stock options</a> and profit-sharing programs. Just remember to diversify your holdings by investing 401(k) dollars in market-index or similar funds and making outside investments in other stocks.</p> <h2>3. You Will Invest in Something You Don't Understand</h2> <p>You may have heard that you should never invest in anything you don't understand. Even billionaire <a href="http://money.usnews.com/money/blogs/on-retirement/2010/10/26/why-you-need-to-invest-in-what-you-know">Warren Buffett refused to invest in tech stocks</a> because he didn't grasp how technology companies made money.</p> <p>But understanding often <em>follows</em> action. So, if you are a beginning investor, you may purchase shares of a mutual fund that tracks the S&amp;P 500 without fully comprehending what you are buying. Later, you may notice that the fund value increases on the days that this index rises and decreases on the days that it falls. Eventually, you grasp the correlation; now you are (finally) putting money in investments you understand.</p> <p><strong>Fight the fear</strong>: Educate yourself about investing before making a move. Then, start by investing small amounts with a trusted brokerage firm until you feel comfortable with the process; pay attention to your investments to gain understanding. Stay away from investments that are portrayed as high return, low risk, complex, and/or available to an exclusive list of people as these are likely to be speculative investments at best or fraudulent schemes at worst.</p> <h2>4. You Will Make Mistakes</h2> <p>No one likes to make mistakes, particularly ones that involve losing money. But if you are an investor, you will misjudge market direction, buy overpriced shares, sell investments when they still have potential to grow, etc. You just will.</p> <p><strong>Fight the fear</strong>: Don't berate yourself if an investment doesn't behave as expected. Note your rationale for making a decision, track your results, pinpoint the sources of mistakes, learn from the experience, and move on. Also, realize that your goal is to build wealth, not perfectly time each transaction. Selling shares at a gain (even if the stock price continues to climb), for example, may be the right action to take, given your financial situation.</p> <h2>5. You Will Brag About an Investment, Which Then Slips</h2> <p>After you master investing basics, you will likely begin to feel more confident as an investor. So, you might start evaluating and then investing in individual stocks or actively-managed funds in addition to market-index funds.</p> <p>On a good day, week, or month, you may make hundreds or thousands of dollars and boast about your achievements to friends. Soon, though, the price of your picks may fall and you feel foolish for bragging. Being discovered as an average investor or a flawed one is scary.</p> <p><strong>Fight the fear</strong>: Realize that you will make mistakes and great stocks will slip, even when you buy shares at an excellent price. Discuss the economy, investment styles, and the performance of publicly-held companies with friends or coworkers. But avoid broadcasting specific investment moves.</p> <p>Do you still think investing is scary? Well, you could be safe and put money in a traditional savings account or certificate of deposit. Sadly, though, annual interest of 1% or less means that the buying power of your <a href="http://www.npr.org/2013/05/22/184201335/instead-of-snoozing-in-savings-let-s-put-5-000-to-work">money is unlikely to keep pace with inflation</a>.</p> <p>But if you take risks, you have the opportunity to participate in the growth of the economy, which has historically yielded greater returns than safer investments. Sure, investing mistakes can be haunting. But staying on the investment sidelines and having little wealth when you retire is even scarier.</p> <p><em>How did you overcome your fear of investing? And if you are still afraid, what are you afraid of?</em></p> <a href="http://www.wisebread.com/how-to-get-over-these-5-scary-things-about-investing" class="sharethis-link" title="How to Get Over These 5 Scary Things About Investing" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/how-to-get-over-these-5-scary-things-about-investing">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/3-steps-to-getting-started-in-the-stock-market-with-index-funds">3 Steps to Getting Started in the Stock Market With Index Funds</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-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-silly-reasons-people-dont-invest-but-should">9 Silly Reasons People Don&#039;t Invest (But Should)</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-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> <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/non-financial-investments">Non-financial investments</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment fear investing investment losses Mon, 27 Oct 2014 13:00:06 +0000 Julie Rains 1242975 at http://www.wisebread.com Smart Investors Have These 6 Traits — Do You? http://www.wisebread.com/smart-investors-have-these-6-traits-do-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/smart-investors-have-these-6-traits-do-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/businessman-76762845-small_0.jpg" alt="investor" title="investor" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's hard to be a good investor. By some estimations, only 20% of people involved in the investment business are <a href="http://wiki.fool.com/Percentage_of_People_Successful_in_the_Stock_Market#Performance">successful in their own investing endeavors</a>.</p> <p>And while there are careers' worth of research and education that go into making savvy investments, in the end, much of it may come down to character traits.(See also: <a href="http://www.wisebread.com/a-lot-of-people-dont-understand-what-an-investment-really-is-do-you?ref=seealso">A Lot of People Don't Really Understand What an Investment Is &mdash; Do You?</a>)</p> <p>So check out this list of characteristics successful investors must have, and see how you stack up before hitting the market.</p> <h2>1. Smart Investors Are Patient</h2> <p>To be successful in investing, you need to be patient. In general, the market rises slowly, and you have to be willing to take the long view of your investments in order to see them grow. If you believe in an investment and you have done your research on it enough to know that it's a wise buy, then you have to be willing to wait to see your return.</p> <p>A lot of investors, especially new investors, fall into the trap of checking on their investments several times a day. It's hard to be patient when you're seeing all the little rises and falls that many investments take every day. So keep yourself away from the computer if you can, or at least limit the number of times a day you check in.</p> <h2>2. Smart Investors Are Planners</h2> <p>Before they even buy an investment, smart investors have a plan. They know what their ultimate goals are and they have some idea of how they want to get there. They know the benefits and drawbacks of different types of investments, and they know how to choose between them. To a certain extent, they also have contingency plans. They know how to access money if they need it, and they know what they will do if the market crashes or a particular strategy doesn't play out.</p> <p>If you don't feel confident in making your own plan, it can be worthwhile to consult with an investment professional you trust. While this will cost something, it gives you the chance to get an opinion from someone who has more training than you do. If you're wary of getting a biased opinion, interview several professionals before you decide who to work with. Make sure you feel like you can trust someone before you take their financial advice.</p> <h2>3. Smart Investors Are Disciplined</h2> <p>Smart investors know that their plan is better than any impulsive ideas they might have with their money, and they have the discipline to absorb those ideas and stick with their plan anyway. They know that something that looks too good to be true probably is, and they know that their plan is probably better in the long run, anyway. These investors keep their long term goals in view whenever they're thinking about their money, and they don't do anything that might keep them from achieving those goals.</p> <p>If you struggle with discipline or you aren't sure you will be able to stick with your plan, find an investing buddy. This can be a spouse or a close friend. It should be someone who you feel safe sharing your financial situation with. Then, you commit to talking to them about anything before you make a change to your investments or strategy. This can help you think long enough to realize something might not be a good idea, and it gives you a chance to have accountability for making good choices.</p> <h2>4. Smart Investors Are Ambitious</h2> <p><a href="http://www.bbc.com/capital/story/20140805-ambition-born-or-bred">Ambition helps you find success</a> in many parts of life, and investing is no different. Ambitious investors are willing to take as much risk as they can afford, so they can reap a maximum benefit when their investments pay off. They push the envelope in order to achieve their goals, because their goals are high and there isn't a better way to achieve them. This also pushes smart investors to stay in the game and enhance their understanding of what works and what doesn't, so they can do what they set out to do.</p> <p>If you struggle with ambition, start working on developing positive feelings about yourself. People who feel good about themselves are more likely to be ambitious. This makes a lot of sense. When you feel good about who you are, you will feel good about what you can do, both now and in the future. If you don't feel good about who you are, you won't be ambitious because you will feel like there's no way you can achieve those goals.</p> <h2>5. Smart Investors Are Adaptable</h2> <p>A smart investor needs to be able to adapt to changing market conditions, new trends, and different ways of doing business. They need to be able to evaluate these in light of their long term plan, to decide when, how, and to what extent they should incorporate new things into their overall investment strategy.</p> <p>But wait? Didn't I just say that investors need to commit to their strategy in spite of distractions? Smart investors know the difference between a fleeting trend and a new way of doing business that is around to stay. Sometimes this means observing for a while before they jump in. Other times, it means trusting their intuition, and that of any investment advisors or friends they might have. It also means jumping in in a smart way &mdash; this can mean starting small, investing only a small portion of their overall money in something new, and being able to articulate how the new ties in with the old and enhances their investment plan.</p> <h2>6. Smart Investors Trust Their Intuition</h2> <p>Intuition can be a testy thing, but smart investing means, sometimes, trusting in a way of knowing that is separate from rational understanding. This is different than trusting in your wishes or your hopes or your dreams. Intuition seems to be an alternate way of knowing things, a way of seeing problems and solutions that cuts through a lot of the clutter that &quot;thinking rationally&quot; can provide, and knowing an answer without necessarily knowing how you got there. That doesn't mean that something known intuitively doesn't make sense, but that <a href="http://www.oprah.com/spirit/The-Science-of-Intuition">the knower won't necessarily know how it makes sense</a>.</p> <p>If you don't yet know which of your thoughts are intuition and which are hopes, dreams, or wishes, take some time before you make decisions based on it. Instead, note the ideas that you have, the things that seem to stand out or financial decisions that seem like they might be a good idea even though they're different from your usual way of operating. Then keep track of how those decisions play out. Over time, you'll learn which impulses are intuition and which ones come from some other internal place.</p> <p><em>Do you consider yourself a smart investor? What trait do you have that makes you a better investor?</em></p> <a href="http://www.wisebread.com/smart-investors-have-these-6-traits-do-you" class="sharethis-link" title="Smart Investors Have These 6 Traits — Do You?" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/smart-investors-have-these-6-traits-do-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-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/financial-tricks-to-master-for-a-happier-life">Financial Tricks to Master for a Happier Life</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/is-paying-off-your-mortgage-early-costing-you-money">Is Paying Off Your Mortgage Early Costing You Money?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds">3 Steps to Getting Started in the Stock Market With Index Funds</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-dumb-little-things-you-need-to-stop-saying-today">9 Dumb Little Things You Need to Stop Saying Today</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment Personal Development habits investing money management Tue, 14 Oct 2014 13:00:04 +0000 Sarah Winfrey 1235003 at http://www.wisebread.com The 5 Best Reasons to Start Investing in Bonds Now http://www.wisebread.com/the-5-best-reasons-to-start-investing-in-bonds-now <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-5-best-reasons-to-start-investing-in-bonds-now" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/us-bonds-470563411-small.jpg" alt="us bonds" title="us bonds" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Everyone talks about investing in stocks, but smart investors do not ignore bonds. Read on, and maybe you'll agree that it's high time you start bonding with bonds thanks to these five basic bond benefits. (See also: <a href="http://www.wisebread.com/4000-8000-or-even-453500-in-5-years-a-low-risk-investment-plan?ref=seealso">A Low-Risk Investment Plan</a>)</p> <h2>1. Diversification</h2> <p>Bonds can increase your financial safety by diversifying your portfolio because <a href="http://www.bloomberg.com/quote/INDU:IND">stocks</a> are <a href="http://finance.yahoo.com/q/bc?s=%5EVIX+Basic+Chart">prone to volatility</a> while <a href="http://www.bloomberg.com/quote/BUSC:IND">bonds </a>tend to be more stable.</p> <p>By holding bonds, in addition to stocks and other investments, you're not putting all your eggs in one basket. Although stocks can go up, they can also go down &mdash; sometimes a lot.</p> <p>Plus, <a href="http://wiki.fool.com/When_Do_Stock_&amp;_Bond_Prices_Move_in_Opposite_Directions%3F">bonds often do better</a> when stocks are doing badly. While stocks represent ownership in companies, bonds are essentially loans. Governments, utilities, and companies issue, or sell, bonds when they want to borrow money. When you buy a bond, you're lending money to them. The values of the two investments are based on different factors. In times of uncertainty, investors flee stocks and buy safe, high-quality bonds. In times of economic growth, investors typically buy stocks but increasing interest rates can push bond prices down.</p> <h2>2. Steady Income</h2> <p>Bonds can provide consistent income, a great benefit for retirees. Unless the borrower defaults, investors will be paid, typically twice a year. On the other hand, companies are under no obligation to pay stock owners a dividend.</p> <h2>3. Liquidity</h2> <p>Most bonds, especially those of large companies and the U.S. government,&nbsp;offer liquidity, meaning they can easily be converted to cash. Popular bonds can easily be sold if the investor needs the money for another purpose and wants to cash out.</p> <h2>4. Legal Protections</h2> <p>Bond holders are more likely than stock investors to get their money back if a company goes bankrupt. In a bankruptcy court, bond investors have priority over shareholders in claims on the company's assets. Structured bonds get first priority over unsecured and subordinate bonds.</p> <h2>5. Tax Benefits</h2> <p>Some government bonds offer tax benefits, especially beneficial for high-income earners in states with high income taxes. Interest from municipal bonds, or &quot;munis,&quot; is not subject to federal taxes. And investors generally don't pay state or local taxes on interest from municipal bonds in their own state.</p> <h2>And Now for the Risks</h2> <p>Bonds are attractive for the reasons noted above, but they are not without risk.</p> <h3>Interest Rate Risk</h3> <p>Rising interest rates pose a risk to all types of bonds. When interest rates go up, the value of bonds go down. That's because investors prefer to buy new bonds with higher yields, rather than older bonds with lower rates.</p> <p>Detractors say interest rate risk is a major risk. If rates rise and you sell a bond, you will lose money. But remember if you keep the bond until its maturity, you continue getting interest payments and then get your principal back as expected as long as the issuer doesn't default.</p> <h3>Default or Credit Risk</h3> <p>Default or credit risk is the risk that the company or city (remember Detroit?) could go bankrupt and not make payments. Naturally, companies regarded as riskier pay higher rates, while those seen as safer, like the U.S. government, pay lower rates. Investors can gauge default risk by examining ratings from credit rating agencies like <a href="https://www.spratings.com/">Standard &amp; Poor's</a> and <a href="https://www.moodys.com/">Moody's</a> and mitigate risk by creating a diversified portfolio.</p> <h3>Fun With Funds</h3> <p>Since most people don't have enough money to buy a slew of bonds, they instead <a href="http://www.marketwatch.com/story/how-to-choose-a-bond-fund-1306503164924">buy bond mutual funds</a>, frequently through employer-sponsored 401(k) plans that allow them to commit small amounts over time. These funds offer professional management and diversification by pooling the money of many investors.</p> <p>For your first bond fund, experts typically recommend a <a href="http://individual.troweprice.com/public/Retail/Mutual-Funds/Domestic-Bond-Funds/Benefits/Choosing-the-Right-Bond-Fund">blended fund</a> holding a mix of different types of bonds, such as government, corporate and international bonds, and bonds with a range of maturities.</p> <p>Don't just jump on a fund with the highest yield. That probably means it's highly risky. You don't need to completely avoid risk, but it's important to know what you're getting into.</p> <p>Look at the fund's credit risk by checking the percentage of AAA bonds it holds versus lower-rated and non investment-grade bonds.</p> <p>Longer duration means greater sensitivity to interest rate risk.</p> <p>Most importantly, consider its <a href="http://www.sec.gov/answers/mffees.htm">fees and expenses</a>, including back-end redemption fees.</p> <h3>A Few More Bond Basics</h3> <p>You know the benefits, you know the risks. But before you get out your checkbook, you should also understand some essential facts and definitions about bonds and what determines their value. Knowing about coupon rates, maturities, yields and prices, and how they are inter-related, is key to understanding the investments.</p> <p>The <em>coupon rate</em> is the interest rate the bond issuer (the borrower) pays the investor (the lender).</p> <p>The <em>maturity</em> is when the bond term ends and investors get their principal back &mdash; in other words, when the loan ends. Bonds maturing within five years are considered short-term bonds. Those maturing in 10 years or more have long terms.</p> <p>Because of changing interest rates, when bonds trade they frequently sell at <em>premium</em>, or more than its face value, or at a <em>discount</em>, or less than its face value.</p> <p>Bond prices are expressed as a percentage of its face value, also called <em>par value</em>. For instance, one with a par value of $1,000 selling for 90 is worth $900.</p> <p>The <em>nominal yield</em> is the same as the coupon. But the <em>current yield</em>, a more important figure, is the yearly interest divided by what the investor paid for it. For example, a $1000 bond with a coupon rate of 5% that was purchased at a discount of 90 would have a current yield of 5.5%.</p> <p>And finally, <em>yield to maturity</em>, a more advanced calculation, is used to compare different bonds. It takes into account the bond's price and assumes it's held until maturity.</p> <p><em>Have you added bonds to your portfolio?</em></p> <a href="http://www.wisebread.com/the-5-best-reasons-to-start-investing-in-bonds-now" class="sharethis-link" title="The 5 Best Reasons to Start Investing in Bonds Now" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/michael-kling">Michael Kling</a> of <a href="http://www.wisebread.com/the-5-best-reasons-to-start-investing-in-bonds-now">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/mutual-funds-for-wise-bloggers">Mutual Funds for Wise Bloggers</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds">3 Steps to Getting Started in the Stock Market With Index Funds</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-guide-to-online-brokers-for-investing-newbies-and-beyond">A Guide to Online Brokers for Investing Newbies (and Beyond)</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-is-a-lipper-average-and-why-should-we-care">What Is a Lipper Average, and Why Should We Care?</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/your-401-k-is-not-an-investment">Your 401(k) is not an investment</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment bond funds bond terms bonds mutual funds Fri, 10 Oct 2014 13:00:05 +0000 Michael Kling 1230392 at http://www.wisebread.com 12 Wacky (and Not-So-Wacky) Investment Strategies That Actually Work http://www.wisebread.com/12-wacky-and-not-so-wacky-investment-strategies-that-actually-work <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/12-wacky-and-not-so-wacky-investment-strategies-that-actually-work" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/couple-finances-140303971-small.jpg" alt="couple finances" title="couple finances" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There's no single right or wrong way to invest. If there was, we'd all be insanely rich and would not need to read great websites like this one.</p> <p>The most tried-and-tested approach to investing is to buy and hold. In other words, get into the market as early as you can and don't exit until you absolutely need the money. (See also: <a href="http://www.wisebread.com/5-investing-basics-that-can-make-you-rich?ref=seealso">5 Investing Basics That Can Make You Rich</a>)</p> <p>But not everyone follows that approach. In fact, some people have some truly off-the-wall strategies for growing their portfolio. Here's a look at some of the most common investment approaches, plus a few other more unusual strategies.</p> <h2>Value Investing</h2> <p>In simple terms, this is all about finding stocks that you believe are underpriced. If you have faith in a company's underlying financial strength, you should not be overly worried about its stock price. In fact, you may view this as an opportunity to purchase shares of a great company at a bargain. The key to value investing is to have some understanding of a company's financials and the true reasons why Wall Street may be undervaluing it. Warren Buffett is a big proponent of value investing, and he's done pretty well for himself.</p> <h2>Dollar-Cost Averaging</h2> <p>This is a long-term approach to investing that is founded on the premise that it's foolish to try and time the market. If you invest a specific amount of money on a consistent basis &mdash; $200 per month, for example &mdash; you'll be able to buy more shares when the market goes down and fewer when it goes up. This makes your portfolio less vulnerable to major market drops, but perhaps it's biggest attribute is that it allows disciplined, steady savings.</p> <h2>Lump Sum Investing</h2> <p>This is the counterargument to dollar-cost averaging. A 2012 report from Vanguard suggested that placing a lump sum of money into the markets will result in a <a href="https://pressroom.vanguard.com/content/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf">higher return than dollar-cost averaging (DCA)</a> about two-thirds of the time. There are supporters in the lump sum and DCA camps, but both are based on three key principles: invest as much as you can, invest early, and invest for the long haul.</p> <h2>Contrarian Investing</h2> <p>This is very similar to value investing, but takes things a step further. Contrarian investors will not only look for value, but embrace stocks that are truly being beaten up by investors, analysts, and the financial media. In other words, if everyone else hates a stock, a contrarian investor will see it as an opportunity.</p> <h2>Top Down Investing</h2> <p>The premise behind this strategy is to look at the big picture of how the economy or overall markets will perform, then determine the sectors that should be expected to do well as a result. Then, you purchase shares in the best-performing companies in that sector. For example, let's assume that everyone is predicting mortgage rates to drop in the near future. A top down investor might then surmise that homebuilder stocks will benefit as a result. Thus, the investor will buy shares in the most well-regarded homebuilder.</p> <h2>Bottom Up Investing</h2> <p>This works in reverse to top down investing. Bottom up investors aren't too concerned with macroeconomic factors. Instead, they will perform rigorous research about individual companies, and will usually look for companies with specific criteria, such as a low price-to-earnings ratio or a certain rate of earnings growth. Bottom up investors generally believe that good companies are good investments, regardless of how the broader economy is faring.</p> <h2>Dogs of the Dow</h2> <p>In simple terms, this strategy calls for investors to find the 10 blue-chip stocks with the highest dividends relative to their stock prices. The theory is that dividends are a more reliable indicator of a company's true worth, and that companies with high dividends but low prices should be poised to rebound. There is some evidence to suggest this strategy can generate some nice returns, but it is not without its critics, who argue that it's no better than investing in the broader stock market. Moreover, this strategy can result in a lot of buying and selling of stocks, which may result in fees and taxes. (Forbes <a href="http://www.forbes.com/sites/johntobey/2014/01/08/ditch-dogs-of-the-dow-the-mutts-have-bad-genes-improper-breeding-and-false-papers/">published this takedown</a> of the strategy earlier this year.)</p> <h2>Reverse Glide</h2> <p>The conventional wisdom surrounding retirement planning is to gradually adjust your portfolio to be more conservative as you approach retirement age. This means moving away from stocks and into safer investments like bonds and cash. There is an inherent logic to this strategy, as no one wants to see their nest egg drop in value significantly just as they retire. But there are some advisors who say it's okay to stay aggressive with your investments even as you age. Rob Arnott of Research Associates claims that his analysis shows that someone starting in bonds and gradually moving into stocks <a href="https://www.researchaffiliates.com/Our%20Ideas/Insights/Fundamentals/Pages/F_2012_Sep_The_Glidepath_Illusion.aspx">will end up with a greater sum of money</a> in the end.</p> <p>So who's right? Well, this is a source of considerable debate, but most advisors say it's best to take your own risk tolerance into account when choosing a strategy. And, ultimately the goal should be to put aside enough assets so that either strategy leaves you enough to retire comfortably.</p> <h2>Sell in May, Go Away</h2> <p>This investment approach is based on the idea that the bulk of the stock market's gains take place between the fall and spring. The strategy suggests exiting the markets (or at least taking a more conservative posture) in May, and then returning in October or November. The reviews on this approach are mixed, with advisors generally saying that the stock market is too unpredictable for this to work on a consistent basis. Some observers say it works, <a href="http://www.ritholtz.com/blog/2012/05/sell-in-may-and-go-awayexcept-in-election-years/">but not in election years</a>. Advisors do agree that this strategy of exiting and reentering the market can result in capital gains taxes and fees. So it's worth analyzing your own portfolio to determine whether it makes sense.</p> <h2>Invest Like a Billionaire</h2> <p>If folks like Warren Buffett and Carl Icahn have made billions in the stock market, why don't people just do what they do? There's an argument to be made that an easy way to wealth is to simply have your portfolio mirror that of the world's wealthiest investors.</p> <p>Last year, Direxion created an exchange traded fund based on its &quot;iBillionaire Index,&quot; containing 30 of the S&amp;P 500 stocks most favored by billionaire investors. So, you can literally invest like a billionaire without a whole lot of effort.</p> <p>You may do well with this investment strategy. After all, billionaire investors are often quite skilled at finding solid, long-term investments. But it's important to remember that they may have access to investments not available to us mere mortals, and their goals, risk tolerances and time horizons may differ.</p> <h2>Astrological Investing</h2> <p>Do you make decisions based on complex planetary charts and the signs of the Zodiac? Then this investing strategy is for you! There is, believe it or not, a devoted following to this investment approach, which assumes that the movement of the solar system affects the movement of the markets. Is it possible to time the markets based on heavenly knowledge? There's not a lot of of evidence that this is an effective approach, though <a href="http://www.forbes.com/sites/kenrapoza/2012/02/20/can-planets-affect-your-portfolio/">the author of one astrological investing newsletter claims to have rightly predicted</a> when the market would bottom out in 2009, according to Forbes.</p> <h2>Collectibles</h2> <p>There's always a segment of the population that seeks to find wealth not from traditional markets, but the buying and selling of collectibles and other physical items. From autographed baseballs to Star Wars figurines, there are huge markets out there for all kinds of things. One person is now trying to sell a single card from Magic: The Gathering on eBay for $100,000.</p> <p>There's not a ton of evidence to show that investing in collectibles is any more lucrative than putting cash in the stock market, but we all seem to know of a guy who sold his comic book collection for a million bucks.</p> <p><em>Do you follow any of these investment strategies? Another? Please share in comments!</em></p> <a href="http://www.wisebread.com/12-wacky-and-not-so-wacky-investment-strategies-that-actually-work" class="sharethis-link" title="12 Wacky (and Not-So-Wacky) Investment Strategies That Actually Work " rel="nofollow">ShareThis</a><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/12-wacky-and-not-so-wacky-investment-strategies-that-actually-work">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-investing-in-companies-you-hate-can-make-you-rich">Here&#039;s How Investing in Companies You Hate Can Make You Rich</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-simply-investing-in-companies-you-love-can-make-you-rich">Here&#039;s How Simply Investing in Companies You Love Can Make You Rich</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/3-steps-to-getting-started-in-the-stock-market-with-index-funds">3 Steps to Getting Started in the Stock Market With Index Funds</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-silly-reasons-people-dont-invest-but-should">9 Silly Reasons People Don&#039;t Invest (But Should)</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment buy and hold investing investment strategies Warren Buffett Thu, 25 Sep 2014 13:00:05 +0000 Tim Lemke 1220772 at http://www.wisebread.com Best Money Tips: The Investing Edition http://www.wisebread.com/best-money-tips-the-investing-edition <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-the-investing-edition" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/couple-reading-newspaper-76132865-small.jpg" alt="couple reading newspaper" title="couple reading newspaper" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found some of the best articles from around the web on investing.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.popsugar.com/smart-living/What-Best-Way-Learn-About-Investing-35404491">What Grocery Shopping Can Teach You About Investing</a> &mdash; Did you know you can think of stocks, bonds, and cash as different investing groups? [PopSugar Smart Living]</p> <p><a href="http://www.moneytalksnews.com/2014/09/03/how-to-get-into-the-stock-market-safely/">How to Get into the Stock Market Safely</a> &mdash; To get into the stock market safely, spread your risk and manage your exposure to stocks. [Money Talks News]</p> <p><a href="http://www.moneyunder30.com/invest-just-50-a-month">How Investing Just $50 a Month Can Kick-start Your Retirement</a> &mdash; If you only have $50 a month to invest, remember that it can add up over time due to compoud interest. [Money Under 30]</p> <p><a href="http://www.bargaineering.com/articles/kids-money-teach-teen-investing.html">Kids and Money: Teach Your Teen About Investing</a> &mdash; It is important to share your investment philosophy with your teen so they can be better educated about investing. [Bargaineering]</p> <p><a href="http://www.thesimpledollar.com/the-problem-with-hot-investments/">The Problem with &quot;Hot&quot; Investments</a> &mdash; Next time you read an article on &quot;hot&quot; investments, remember that it was probably written or influenced by a salesman. [The Simple Dollar]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.freemoneyfinance.com/2005/06/investing_for_b.html">Investing for Beginners</a> &mdash; Beginning investors should remember that time is their biggest ally. [Free Money Finance]</p> <p><a href="http://www.moneycrashers.com/strategies-investing-for-retirement/">4 Crucial Strategies You Need When Investing for Retirement</a> &mdash; When investing for retirement, make minimizing your tax liabilities one of your strategies. [Money Crashers]</p> <p><a href="http://www.kiplinger.com/article/investing/T052-C016-S002-7-stocks-to-buy-and-hold-for-the-next-15-years.html">7 Stocks to Buy and Hold for the Next 15 Years</a> &mdash; If you are looking into stocks for the long run, consider Netflix or Apple. [Kiplinger]</p> <p><a href="http://parentingsquad.com/should-parents-invest-in-roth-iras">Should Parents Invest in Roth IRAs?</a> &mdash; While Roth IRAs enable your money to grow tax free, you do have to pay taxes upfront. [Parenting Squad]</p> <p><a href="http://www.creditsesame.com/blog/gluten-free-investing/">Growing Your Financial Portfolio: Are You Gluten-Free Investing?</a> &mdash; It is important to define your goals and time frame of your investments. [Credit Sesame]</p> <a href="http://www.wisebread.com/best-money-tips-the-investing-edition" class="sharethis-link" title="Best Money Tips: The Investing Edition" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-jacobs">Ashley Jacobs</a> of <a href="http://www.wisebread.com/best-money-tips-the-investing-edition">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds">3 Steps to Getting Started in the Stock Market With Index Funds</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-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-silly-reasons-people-dont-invest-but-should">9 Silly Reasons People Don&#039;t Invest (But Should)</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/non-financial-investments">Non-financial investments</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment best money tips investing Mon, 22 Sep 2014 19:00:06 +0000 Ashley Jacobs 1205460 at http://www.wisebread.com You May Be Putting Your Retirement Money in the Wrong Place http://www.wisebread.com/you-may-be-putting-your-retirement-money-in-the-wrong-place <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/you-may-be-putting-your-retirement-money-in-the-wrong-place" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/man-reading-newspaper-122577774-small.jpg" alt="man reading newspaper" title="man reading newspaper" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For many investors, their primary &mdash; if not only &mdash; retirement investment account is their workplace 401(k) plan. But if you also have an IRA, perhaps because you rolled over the balance of a workplace plan from a former employer, it's important to make sure your account is at the best broker. Making that determination depends mostly on the size of your portfolio, the types of investments you prefer, and how much trading you do. (See also: <a href="http://www.wisebread.com/begin-your-investing-career-right-with-some-mutual-fund-basics?ref=seealso">Begin Your Investment Career Right With Some Mutual Fund Basics</a>)</p> <p>Let's take a look at some of the variables.</p> <h2>Portfolio Size</h2> <p>If you're just getting started with investing, the minimum amounts required to open a brokerage account (where you'll be able to open an IRA and buy and sell stocks, mutual funds, and other types of investments) are a good starting point for choosing a broker.</p> <p>Several brokers require no minimums for opening an account, including TD Ameritrade, E*TRADE, and ShareBuilder. At Fidelity, the minimum to open an IRA is usually $2,500, but if you commit to investing $200 per month automatically, you can open an account with your first $200.</p> <h2>Preferred Investments</h2> <p>What types of investments do you want to make and how often do you plan to trade? The main investment choices are stocks or mutual funds.</p> <h3>Stock Investing</h3> <p>While I recommend mutual funds over individual stocks for most people because funds are inherently diversified and therefore usually less risky, if you prefer stocks you can usually find a broker running a promotion for a certain number of free trades. For example, OptionsHouse is offering 150 commission-free trades for those opening a new account. After that, their commission is a low $4.75 per trade. TradeKing's stock commissions are almost as low at $4.95 per trade.</p> <p>It doesn't take much money to invest in stocks since you can buy as little as one share. For example, as of this writing, one share of Microsoft could be purchased for a little over $45 plus commission. Of course, you'll need to invest in more than one company in order to be adequately diversified, so the lower the trading fees the better.</p> <h3>Mutual Fund Investing</h3> <p>All mutual funds have minimum initial investment amounts that need to be taken into account, often starting at $1,000. In many cases, you'll also pay a transaction fee (commission). However, this is an area where brokers distinguish themselves by offering a number of no transaction fee (NTF) funds. Fidelity, Schwab, and Scottrade are some of the leaders here. Fidelity, for example, offers nearly 3,000 NTF funds. The fee for investing in most of the other funds offered through Fidelity's platform is $49.95, although some cost $75.</p> <p>To make up for the fee income they forego by offering NTF funds, brokers typically charge a short-term trading fee if you sell certain NTF funds within 60 to 180 days. For its funds that such fees apply to, Fidelity's short-term period is 60 days, which is the shortest short-term trading period I'm aware of. If you sell any of those funds more quickly than that, you'll pay a fee of $75. Schwab's and Scottrade's short-term holding period is 90 days. TD Ameritrade requires that you hold some of its funds for at least 180 days.</p> <p>If you're a buy-and-hold investor, short-term holding period restrictions may not matter to you. But if your <a href="http://www.soundmindinvesting.com/visitor/2013/oct/level2.htm">investment strategy</a> calls for a certain amount of trading throughout the year, such restrictions, and the potential fees involved, can make a big difference.</p> <p>If you're strictly an index fund investor and are partial to the low-cost funds offered by Vanguard, the company that invented index funds, open your account there. The vast majority of Vanguard's mutual funds and exchange-traded funds are commission-free. You can buy Vanguard's funds through other brokers, but you'll usually have to pay a commission for doing so.</p> <h3>Exchange-Traded Funds</h3> <p>ETFs are considered a type of mutual fund since they hold multiple stocks or other funds. However, they are bought and sold in a fashion similar to stocks. Investors can purchase a single share, for example, and the commission structure is typically the same as what a broker charges for stocks. Here, too, some brokers offer a number of no-commission ETFs. Schwab, for example, offers over 100 ETFs that may be bought or sold without paying a fee. Fidelity offers 80. Some brokers charge a short-term redemption fee if you sell a commission-free ETF within a certain time frame.</p> <p>Stocks and funds. If you invest in both stocks and mutual funds, you'll want a broker that charges a reasonable commission for stock trades and offers a wide assortment of no transaction fee mutual funds. Whereas ShareBuilder offers both types of investments and charges just $6.95 per stock trade, its lineup of NTF mutual funds is very limited. In this situation, Fidelity, Schwab, or Scottrade may be better options.</p> <p>As you can see, there are lots of choices when it comes to brokerage houses, and this represents only a framework for making an informed choice. See if account minimums apply to you and make sure you understand the fees involved for making the types of investments you prefer and for trading them as frequently as you plan to. Be sure to look at more than just the commission schedule, understanding short-term holding period requirements as well.</p> <p><em>If you have investments outside of a work 401(k), where do you keep them? Please share in comments!</em></p> <a href="http://www.wisebread.com/you-may-be-putting-your-retirement-money-in-the-wrong-place" class="sharethis-link" title="You May Be Putting Your Retirement Money in the Wrong Place" rel="nofollow">ShareThis</a><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/you-may-be-putting-your-retirement-money-in-the-wrong-place">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> <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-silly-reasons-people-dont-invest-but-should">9 Silly Reasons People Don&#039;t Invest (But Should)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/intimidated-by-retirement-investing-get-professional-help">Intimidated by Retirement Investing? Get Professional Help!</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment 401(k) investing IRA retirement retirement saving saving Thu, 28 Aug 2014 13:00:11 +0000 Matt Bell 1196855 at http://www.wisebread.com 7 Ways Investing Sucks (and Why You Should Do It Anyway) http://www.wisebread.com/7-ways-investing-sucks-and-why-you-should-do-it-anyway <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-ways-investing-sucks-and-why-you-should-do-it-anyway" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/couple-financial-trouble-178554212-small.jpg" alt="couple financial trouble" title="couple financial trouble" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Okay, so you're thinking about investing, but you're finding it all to be bit annoying. Too much confusing information. Too much risk. Too many hidden costs. Yeah, investing kinda sucks.</p> <p>But here's the thing. You have to do it. It's not really an optional thing anymore if you want to build wealth over the long term. (See also: <a href="http://www.wisebread.com/10-investing-concepts-to-ignore-and-10-to-follow?ref=seealso">10 Investing Concepts to Follow</a>)</p> <p>Let's take a look at some of the biggest problems with investing, and why you should do it anyway.</p> <h2>1. It Can Be Confusing and Scary at First</h2> <p>If you're new to investing, you will probably find yourself overwhelmed by it all. There's a lot of special lingo and confusing terms, and you may have no idea how to even get started. You're afraid your money may disappear, and besides, the notion of saving for retirement seems ridiculous when you're young.</p> <h3>Why You Should Invest Anyway</h3> <p>Fear is normal, but you should not let it be an obstacle to getting started. When done sensibly, investing is a tremendous avenue to building financial security and wealth. And it's best to get started as soon as you can.</p> <p>Start slowly by investing a modest amount of money in a 401(k) plan or individual retirement account. Educate yourself about the basics of individual stocks and mutual funds. Read a few annual reports and a prospectus or two. And don't be afraid to seek advice. Find a certified financial planner who can help you get started for a relatively small fee. If you open an account with a discount broker such as Fidelity or Charles Schwab (a good idea), advice is often included at no cost, and these firms offer useful self-help videos and webinars. Get started. You won't regret it. (See also: <a href="http://www.wisebread.com/begin-your-investing-career-right-with-some-mutual-fund-basics?ref=seealso">Begin Your Investing Career Right</a>)</p> <h2>2 . It Takes Time to Manage</h2> <p>True, you'd rather be living your life than worrying about stocks, bonds, mutual funds, and earnings reports. Every moment you spend watching the stock market is one less moment playing with your kids, watching a ballgame, or working on your novel.</p> <h3>Why You Should Invest Anyway</h3> <p>It's not as time-consuming as you think. A simple, balanced portfolio of stocks, bonds, and mutual funds doesn't require a lot of maintenance once you're all set up. If you are investing for retirement, you could go weeks without even checking your balance (and it's probably healthier for you mentally, too.)</p> <h2>3. It Might Take Away From Your Day-to-Day Living Expenses</h2> <p>If you decide to direct 5% of your salary to your 401(k), that's money you won't have available to spend. You'll have 5% less cash to do things like pay the rent, go out to eat, or take a vacation. And that stinks.</p> <h3>Why You Should Invest Anyway</h3> <p>If you <em>don't</em> sock that money away, you'll likely have a terrible retirement. The key is to invest as much money as you can and adjust your lifestyle accordingly. Learn to live more frugally if you have to. You'll survive, and your future self will thank you.</p> <p>Investing for the long haul is the best approach, but you can also boost your income now through dividends and capital gains.</p> <h2>4. You May Lose Money in the Short Term</h2> <p>Investing comes with risk. Any money you place in the stock market or other investments could decline in value, as anyone who endured the financial crisis of 2008 and 2009 can attest. And losing money sucks.</p> <h3>Why You Should Invest Anyway</h3> <p>There may be years in which the markets take a dive, but it's important to know that the S&amp;P 500 <a href="http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html">has averaged a return of more than 9% annually</a> since 1928. The key here is to avoid day-to-day market watching and take a long-term approach to investing. Don't think about how a stock or mutual fund has performed over the last week or even the last year. Think about how it will perform between now and when you want to retire. The longer you invest, the more likely you are to see your money grow substantially. (This is also an argument in favor of getting started as early as you can.) (See also: <a href="http://www.wisebread.com/using-time-horizons-to-make-smarter-investments?ref=seealso">Using Time Horizons to Make Smarter Investments</a>)</p> <p>It's important to note that you'll be protected against big losses if you have a diversified portfolio. Index funds are a great way to invest in the broader stock market and protect yourself against wild price swings. If you want to invest in individual stocks, buy shares of large, diversified companies that offer strong historical returns.</p> <p>If you are getting close to retirement, financial advisors suggest changing the mix of your investment portfolio to include safer investments like bonds and CDs.</p> <h2>5. Fees</h2> <p>Just about every time you invest, someone takes a small portion of your money. You might pay something like $9 every time you trade. If you invest in mutual funds, the managers of those funds might take a percentage point or two for their expenses.</p> <h3>Why You Should Invest Anyway</h3> <p>Over time, market returns usually more than offset any fees you pay. And you can avoid paying high fees in many cases. Discount brokers including Vanguard, Fidelity, and Charles Schwab offer well-performing Index funds with expense ratios of a tenth of a percent or even less. Also keep an eye out for investments that can be traded without a commission. (Fidelity, for instance, allows investors to trade its iShares Exchange Traded Funds <em>at no charge</em>.)</p> <h2>6. Taxes</h2> <p>Wait, so I have to pay normal taxes on my salary, and then I have to pay 15% or more in taxes on any capital gains and dividends from the money I choose to invest? This sucks!</p> <h3>Why You Should Invest Anyway</h3> <p>You wouldn't forego your salary because you have to pay taxes on it, would you? The same goes for investments. But it's important to know that even though the taxman likes to take his chunk, it's fairly easy to avoid or reduce the amount you pay. When you invest in a 401(k) or traditional IRA, the amount you contribute is deducted from your taxable income. If you contribute to a Roth IRA, you can withdraw your money as well as the capital gains tax-free when you retire. Other accounts, such as 529 College savings plans and similar education accounts can also allow you invest tax-free and have other tax benefits.</p> <p>There are other ways to avoid paying too much in taxes. It's worth a visit to your accountant to find the best way to invest and keep more of the money you earn.</p> <h2>7. You May Have to Wait to Get Your Money</h2> <p>One of the tough things about saving for retirement is that you often can't access your money until you reach a certain age. Most individual retirement accounts and 410(k) plans will not let you withdraw money before age 59&frac12; without paying a 10% penalty. You might have hundreds of thousands of dollars in an account, but you'll get stung if you withdraw that dough early.</p> <h3>Why You Should Invest Anyway</h3> <p>For most people, the primary goal of investing is to build wealth for retirement. It's important to understand that retirement planning is a marathon, not a sprint. Leaving your money alone for a long time will help it grow. Consider that if you invest $100 a month from now until 2039, you'll have about $221,000 based on average market returns. Keep going until 2045, and you'll have $356,000. That's right, an extra five years in this scenario will land you 65% more money. So embrace the wait. Waiting is your friend.</p> <p><em>What's keeping you from investing? Let us know in comments, and we'll see if we can't convince you why you should anyway.</em></p> <a href="http://www.wisebread.com/7-ways-investing-sucks-and-why-you-should-do-it-anyway" class="sharethis-link" title="7 Ways Investing Sucks (and Why You Should Do It Anyway)" rel="nofollow">ShareThis</a><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-ways-investing-sucks-and-why-you-should-do-it-anyway">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> <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/intimidated-by-retirement-investing-get-professional-help">Intimidated by Retirement Investing? Get Professional Help!</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-silly-reasons-people-dont-invest-but-should">9 Silly Reasons People Don&#039;t Invest (But Should)</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment 401(k) investing IRA retirement Mon, 18 Aug 2014 09:00:06 +0000 Tim Lemke 1185370 at http://www.wisebread.com Here's How Investing in Companies You Hate Can Make You Rich http://www.wisebread.com/heres-how-investing-in-companies-you-hate-can-make-you-rich <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-how-investing-in-companies-you-hate-can-make-you-rich" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/investment-78819470-small.jpg" alt="investment" title="investment" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's often been said that one simple and effective investment strategy is to invest in companies you know and like.</p> <p>This is a good approach to getting a solid return on your portfolio, but it's worth noting that investors can also make money taking an opposite approach. (See also: <a href="http://www.wisebread.com/heres-how-simply-investing-in-companies-you-love-can-make-you-rich?ref=seealso">Here's How Investing in Companies You Love Can Make You Rich</a>)</p> <p>Strange as it may sound, &quot;buy what you hate&quot; may also be an effective investment philosophy when you examine the long-term investment gains on companies with negative reputations.</p> <p>Simply put: A company's popularity (or lack thereof) is not always reflected in its balance sheet. In fact, some companies may make great investments due to their ruthless focus on profits above most other considerations. Moreover, some companies may be disliked because of their dominant position in the market.</p> <p>Here's a look at some companies that many Americans seem to hate, but that still offer better-than-average investment returns.</p> <h2>Your Cable Company</h2> <p>On the popularity scale, cable companies rate somewhere in between dentists and waiting in line at the DMV. A typical person's Facebook feed is likely rife with complaints about high prices and shoddy customer service their local cable TV co provides. In fact, Comcast [NASDAQ: CMCSA] and Time Warner Cable [NYSE: TWC] were <a href="http://bgr.com/2014/05/20/comcast-twc-customer-satisfaction-survey-study/">recently named two of the most-hated companies in America</a> by the University of Michigan's Ross School of Business.</p> <p>But if you've invested in either of these companies, you probably have made out very well, as they offer television and high-speed Internet services that many Americans can't seem to live without.</p> <p>Comcast started out as a small cable provider in Philadelphia and is now one of the nation's largest companies, with revenues of more than $64 billion in 2013. Its share price has risen 200% since 2004, compared to 130% for the NASDAQ as a whole.</p> <p>Since being spun off from Time Warner in 2009, Time Warner Cable has seen share prices rise nearly 400%.</p> <p>Comcast in February announced it would seek to buy Time Warner Cable in a $45 billion deal that is pending regulatory approval. If it goes through, expect shareholders to make out well.</p> <p>Other cable companies including Verizon [NYSE: VZ] and AT&amp;T [NYSE: T] have lagged behind the S&amp;P 500, but offer some of the highest dividends around.</p> <h2>Exxon Mobil [NYSE: XOM]</h2> <p>This company gets blamed for everything from global warming to the high cost of gasoline. But even as Americans are starting to drive less and use more fuel-efficient cars, ExxonMobil has continued to rake in the dough, reporting revenues of $420 billion in 2013. Share prices have risen more than 125% in the last decade, well outpacing the S&amp;P 500.</p> <h2>Halliburton [NYSE: HAL]</h2> <p>Often ranked among America's most hated companies, Halliburton was criticized after being awarded a multi-billion dollar contract for work related to the Iraq war. It also pleaded guilty to destroying evidence related to the Deepwater Horizon explosion in 2010.</p> <p>But controversy has not been bad for investors. Halliburton, which offers products and services for the oil and gas industries, has seen its stock price rise nearly 340% in the last decade.</p> <h2>Monsanto [NYSE: MON]</h2> <p>This St. Louis-based company is the world's largest producer of seeds, and has engineered patented products resistant to herbicides. But it is enemy number one among those opposed to genetically modified foods. Decades before entering the seed business, it produced controversial chemical products including DDT.</p> <p>But hated or not, Monsanto has grown acres and acres of money for its investors.</p> <p>Despite a growing movement toward organic foods, Monsanto has seen profits soar and in the last ten years, the company's stock has risen nearly 600%.</p> <h2>Tyco International [NYSE: TYC]</h2> <p>In the early part of the last decade, Tyco was the poster child for ugly corporate excess.</p> <p>In 2002, then-CEO L. Dennis Kozlowski was forced to resign after throwing a massive birthday party for his wife, complete with an ice sculpture of Michaelangelo's David and a private concert from Jimmy Buffett. He was later convicted in 2005 of crimes related to an unauthorized bonus of more than $80 million. (He was released from jail this past January.)</p> <p>It was an ugly period for the company, but investors who hung on to shares of Tyco since then have been rewarded. Tyco International has been split numerous times in the last decade, with investors winding up with shares of several well-performing companies including Pentair, TE Connectivity, Covidien, and ADT. Investors can now boast of a diverse set of holdings that includes exposure the industrial supplies, electronics and medical device industries.</p> <p>Tyco is an example of how corporate scandals are not always an indicator of the strength of a company's underlying business.</p> <h2>McDonald's [NYSE: MCD]</h2> <p>Opinions about McDonald's are certainly mixed, at best. The fast food chain has been blamed for everything from the nation's obesity problem to keeping wages low for workers. But it's still the beefiest restaurant chain in the world, serving 68 million customers a day. McDonald's remains one of the most valuable brands in the world, and pulled in $28 billion in revenue in 2013. In the last decade, McDonald's shares have gone up 250%.</p> <p><em>Would you ever consider investing in a company you hate?</em></p> <a href="http://www.wisebread.com/heres-how-investing-in-companies-you-hate-can-make-you-rich" class="sharethis-link" title="Here&#039;s How Investing in Companies You Hate Can Make You Rich" rel="nofollow">ShareThis</a><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/heres-how-investing-in-companies-you-hate-can-make-you-rich">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-wacky-and-not-so-wacky-investment-strategies-that-actually-work">12 Wacky (and Not-So-Wacky) Investment Strategies That Actually Work</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-simply-investing-in-companies-you-love-can-make-you-rich">Here&#039;s How Simply Investing in Companies You Love Can Make You Rich</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/3-steps-to-getting-started-in-the-stock-market-with-index-funds">3 Steps to Getting Started in the Stock Market With Index Funds</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment buy and hold investing investment strategy Warren Buffett Mon, 11 Aug 2014 13:07:23 +0000 Tim Lemke 1179248 at http://www.wisebread.com How to Turn $25 a Week Into Almost $7000 in 5 Years http://www.wisebread.com/how-to-turn-25-a-week-into-almost-7000-in-5-years <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-turn-25-a-week-into-almost-7000-in-5-years" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/investment-consultant-181985834-small.jpg" alt="investment consultant" title="investment consultant" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to Bankrate, certificates of deposit with a 5-year maturity (as of 7/18/14) offer a meager 1.74% growth rate &mdash; hardly anything to brag to your friends about. What do you do if you want to make your money grow even more? (See also: <a href="http://www.wisebread.com/4000-8000-or-even-453500-in-5-years-a-low-risk-investment-plan">A Low Risk Investment Plan</a>)</p> <p>One option could be to invest in the stock market. But with such a short time frame as five years, stocks may not be your best option.</p> <p>Instead, a more suitable investment would be to invest in bonds.</p> <p>Specifically, to invest in <em>bond funds</em>.</p> <h2>Why Bond Funds?</h2> <p>Bonds are a more suitable investment than stocks for a shorter period (like five years) because they don't usually fluctuate in value as much as stocks in the short term. They're more conservative, but they won't crater your savings in the short term, either.</p> <p>All of this means that you have a smaller chance of losing your money, and a greater chance of growing your money steadily.</p> <p>So how much could your money grow by investing in bonds? (Bonds are just loans to the government or a company, where you get regular interest payments and the return of your money after a period of time.)</p> <p>According to author and Chartered Financial Analyst <a href="http://www.portfoliosolutions.com/portfolio-solutions-30-year-market-forecast-for-investment-planning-2014-edition/">Rick Ferri</a>, bonds are expected to grow at a rate of 5% over the next 30 years. <a href="http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html">Historically</a>, they've grown at a rate of about 5% as well.</p> <p>With those figures in mind, by investing $25 every week for 5 years &mdash; at a growth rate of 5% &mdash; your money <a href="http://www.treasurydirect.gov/BC/SBCGrw">will grow to $6,694.84</a> ($194.84 more than if you'd just stuffed it in a mattress) and more if you take the advice below to invest via a Roth IRA.</p> <h2>Choosing Your Bond</h2> <p>The first step is to find an investment company to partner with.</p> <p>These days, there are many companies to choose from. But with minimum requirements often ranging from $1,000 to $3,000, not many will let you invest with a relatively small amount of money.</p> <p>Fortunately, there is one that does, and that company is Schwab. Here's how you can get started investing with them.</p> <h3>Buying Bonds Through Schwab</h3> <p>The first step is to open an <a href="http://www.schwab.com/public/schwab/investing/accounts_products/accounts">investment account</a>. You can open your account online, or have someone help you through the process by calling an 800 number.</p> <p>If you're eligible, choose a <a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Amount-of-Roth-IRA-Contributions-That-You-Can-Make-for-2014">Roth IRA</a>. That's because bonds are best held in a tax-advantaged account such as a Roth. (Check out the &quot;Tax efficiency of bonds&quot; section of this article on <a href="http://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement">fund investing</a> for a more in-depth explanation as to why). Doing so will allow your earnings to escape Federal tax and grow to $6,928.94.</p> <p>After you've opened up an account, your next step is to choose the bond fund. Although there are many to choose from, this one is probably your best bet: <a href="http://www.schwab.com/public/schwab/investing/investment_help/investment_research/mutual_fund_research/mutual_funds.html?path=%2FProspect%2FResearch%2Fmutualfunds%2Fsummary.asp%3Fsymbol%3DSWLBX">Schwab Total Bond Market Fund</a></p> <p>This portfolio provides the proper asset allocation and diversification needed to build long-term wealth. It's the same fund recommended by the many Bogleheads who invest using a <a href="http://www.bogleheads.org/wiki/Three-fund_portfolio#Other_than_Vanguard.2C_Boglehead-style">Three Fund Portfolio</a>. The Bogleheads are a community of people dedicated to helping others achieve returns far greater than those achieved by the average investor.</p> <p>Now that you have both an account and an investment, the next step is to add money to it.</p> <h2>How Much to Invest</h2> <p>To invest in the bond fund, you need to start with $100. And to continue growing your money, each additional investment needs to be a minimum of $100.</p> <p>Here's how to do it.</p> <p>First, save $25 each week. (See also: <a href="http://www.wisebread.com/101-ways-to-save-money-around-the-house">101 Ways to Save Money Around the House</a>)</p> <p>Need ideas on how to do this? Consider these:</p> <ul> <li>Buy your groceries in bulk and split the food costs with your friends.</li> <li>Rent a video instead of going to the movies.</li> <li>Carpool/walk/bike to work.</li> <li>Bring your own lunch.</li> <li>Make your own coffee.</li> </ul> <p>After one month, you'll have saved $100. Using this money, open your account, choose the bond fund, and start investing with that $100.</p> <p>The next step is to make this automatic, so that you no longer need to think about it. Set up an automatic monthly transfer of $100 (from the $25 you're saving each week). You can make this happen easily through direct deposit, using their Automatic Investment Plan.</p> <p>After your automatic system is set up, all you need to do is sit back and watch your money grow.</p> <p><em>So what would you do with $7,000 in five years? Please share in comments!</em></p> <a href="http://www.wisebread.com/how-to-turn-25-a-week-into-almost-7000-in-5-years" class="sharethis-link" title="How to Turn $25 a Week Into Almost $7000 in 5 Years" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/darren-wu">Darren Wu</a> of <a href="http://www.wisebread.com/how-to-turn-25-a-week-into-almost-7000-in-5-years">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/laddering-for-higher-more-stable-returns">Laddering for higher, more stable returns</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds">3 Steps to Getting Started in the Stock Market With Index Funds</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> <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-silly-reasons-people-dont-invest-but-should">9 Silly Reasons People Don&#039;t Invest (But Should)</a></span> </div> </li> </ul> </div> </div> </div> </div> Banking Investment bonds direct deposit investing Thu, 07 Aug 2014 13:00:06 +0000 Darren Wu 1177364 at http://www.wisebread.com Here's How Simply Investing in Companies You Love Can Make You Rich http://www.wisebread.com/heres-how-simply-investing-in-companies-you-love-can-make-you-rich <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-how-simply-investing-in-companies-you-love-can-make-you-rich" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/couple-stock-listings-78454812-small.jpg" alt="couple stock listings" title="couple stock listings" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Putting money in the stock market can seem scary and overwhelming, but there's an approach to making money that even the newest investor can understand. It's also a philosophy followed by some of the most wealthy market gurus.</p> <p>When it comes to choosing individual stocks, top investors <a href="http://www.forbes.com/sites/agoodman/2013/09/25/the-top-40-buffettisms-inspiration-to-become-a-better-investor/2/">including Warren Buffett </a>and Peter Lynch advise people to invest in what they know and like.</p> <p>The logic behind &quot;invest in what you like&quot; is quite simple. If people like a product or service, they will buy it. Lots of happy customers means more revenue, and thus a growing stock price. (See also:<a href="http://www.wisebread.com/what-makes-a-company-an-attractive-investment?ref=seealso"> What Makes a Company an Attractive Investment?</a>)</p> <p>A look at Fortune's' <a href="http://fortune.com/worlds-most-admired-companies/">list of most admired companies</a> could also be a list of some of the best stocks to invest in over time. Nearly all of the firms have seen returns outpacing the broader stock market in recent years.</p> <p>Here's a look at some well-liked companies and their returns for investors.</p> <h2>Coke and Pepsi</h2> <p>Coca-Cola [NYSE: KO] is one of the most iconic American companies, and one of the world's most valuable brands. PepsiCo [NYSE: PEP] isn't too far behind. The companies placed first and second, respectively, <a href="http://www.mediapost.com/publications/article/229924/coca-cola-pepsi-lead-corebrands-most-respected.html">in a CoreBrands survey </a>that sought to determine the most respected brands. These are enormous companies with product lines full of things people love, from soft drinks to Doritos to Quaker Oats.</p> <p>Investors in Pepsi have seen the company's shares rise about 75% in the last decade, while Coke's prices have gone up about 70%. (It should be noted that Buffett's Berkshire Hathaway owns about 9% of Coca-Cola.) Returns from these companies mirror the S&amp;P 500. Long-term investors have done well and should continue to do well over time with these firms.</p> <h2>Yum! Brands [NYSE: YUM]</h2> <p>Pizza Hut? Taco Bell? KFC? You're talking about three of the most popular restaurant chains in the world. If you eat at these places all the time, why not invest in the parent company?</p> <p>After being spun off from Pepsi back in 1997, Yum! Brands has become a truly international phenomenon, getting nearly 70% of its revenues from overseas. It already operates more than 3,800 restaurants in China, and its latest move has been to bid for Little Sheep Group, a popular hot-pot chain in the world's most populated country. In the last 10 years, Yum! share prices have risen more than 300%, or more than triple the S&amp;P 500.</p> <h2>Apple [NYSE: APPL]</h2> <p>When people camp out for days to get their hands on your new products, you know you're on to something. It's been a little while since Apple blew anyone away with a new device, but anyone who invested in this company early made a killing. Shares since 2004 have risen nearly 2,000%, making it one of the best performing stocks in recent years.</p> <h2>Google [NASDAQ: GOOG]</h2> <p>One of the few companies to rival Apple in the tech space, Google went public in 2004 and has been a gangbuster ever since. The company dominates the search engine space, and its Android mobile platform has spawned numerous viable competitors to Apple's iPhone.</p> <p>Early investors in Google would have seen shares rise nearly 1,000% over the decade, and there's almost no window of time when Google's share prices haven't greatly outperformed the S&amp;P 500.</p> <h2>Disney [NYSE: DIS]</h2> <p>Who doesn't love Mickey Mouse and Co.? This company is an entertainment behemoth, with properties that include ABC and ESPN, Pixar and Marvel Entertainment, and 11 parks and resorts. In the last decade, Disney investors have seen a 250% return, with much of that gain in the last five years.</p> <h2>Starbucks [NASDAQ: SBUX]</h2> <p>If you can't get through the day without a tall caramel macchiato, you're not alone. Starbucks has leveraged America's coffee addiction and seemingly placed a coffeeshop at every corner. The Seattle-based chain now boasts quarterly sales of nearly $4 billion, and investors have been jumping for joy even without the aide of caffeine. An investor who bought Starbucks stock in 2004 has seen prices rise more than 230%, or nearly double that of the NASDAQ.</p> <h2>Nike [NYSE: NKE]</h2> <p>This company helped bring along the fitness craze more than 40 years ago and hasn't slowed down since. Athletic shoes and apparel is a competitive market, but Nike has consistently managed to shine, as partnerships with top athletes Michael Jordan, LeBron James, and Tiger Woods have proven to be lucrative. In the last decade, shares of Nike have risen more than 300%, or nearly four times that of the S&amp;P 500.</p> <p><em>Can you think of any other well-regarded companies that are also great long-term investments? Please share in comments!</em></p> <a href="http://www.wisebread.com/heres-how-simply-investing-in-companies-you-love-can-make-you-rich" class="sharethis-link" title="Here&#039;s How Simply Investing in Companies You Love Can Make You Rich" rel="nofollow">ShareThis</a><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/heres-how-simply-investing-in-companies-you-love-can-make-you-rich">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-wacky-and-not-so-wacky-investment-strategies-that-actually-work">12 Wacky (and Not-So-Wacky) Investment Strategies That Actually Work</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-investing-in-companies-you-hate-can-make-you-rich">Here&#039;s How Investing in Companies You Hate Can Make You Rich</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/3-steps-to-getting-started-in-the-stock-market-with-index-funds">3 Steps to Getting Started in the Stock Market With Index Funds</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment buy and hold companies you love investing Warren Buffett Mon, 04 Aug 2014 13:00:05 +0000 Tim Lemke 1173259 at http://www.wisebread.com $4,000, $8,000, or Even $453,500 in 5 Years: A Low-Risk Investment Plan http://www.wisebread.com/4000-8000-or-even-453500-in-5-years-a-low-risk-investment-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4000-8000-or-even-453500-in-5-years-a-low-risk-investment-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/investment-plan-179003978-small.jpg" alt="investment plan" title="investment plan" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>How much can an investor accomplish in five years? Among the many possible answers, we're going to focus on two in this article: how much you could earn if you needed to use the money you invested at the end of those five years ($4k or $8k), and how much you could accomplish if those five years were used to give you a head start on a longer-term investment program ($453,500). (See also: <a href="http://www.wisebread.com/how-to-save-26000-in-5-years-or-less?ref=seealso">How to Save $26,000 in 5 Years or Less</a>)</p> <p>Ready? Let's go.</p> <h2>A Five-Year Goal</h2> <p>Let's say you wanted to buy a house in five years and planned to spend the time between now and then building a down payment. Or maybe you realized your car had another five years left in it and you were planning to buy a replacement in five years.</p> <p>Five years or less is a tough time horizon for an investor. It's not enough time to take much risk because if the market heads south, you don't have time to recover. On the other hand, tucking money into a super safe bank savings account isn't very appealing. Brick and mortar banks are offering just a small fraction of one percent as an &quot;interest&quot; rate. An <a href="http://www.wisebread.com/banks-still-offering-free-checking-and-great-interest-rates">online bank is a better choice</a>, but not by much.</p> <h3>&quot;Bond Funds. Short-Term Bond Funds.&quot;</h3> <p>So, what's a five-year investor to do? If Britain's most famous fictional spy were an investment, he would respond: &quot;Bond funds. <a href="http://money.usnews.com/funds/mutual-funds/rankings/short-term-bond">Short-term bond funds</a>.&quot;</p> <p>In essence, bonds are debt investments, as strange as that sounds. When governments, companies, and other entities want to raise money, one way they can do so is by issuing bonds. Investors send them money and the issuing organization promises to pay the money back with interest.</p> <p>Among investments, bonds are on the safer side of the risk spectrum. However, investors can lose money with bonds if the issuing organization goes belly up. And, while this gets a little complicated &mdash; and boring &mdash; if you invest in bonds through a bond mutual fund, rising interest rates usually hurt bond fund values, especially long-term bond funds (those holding bonds that are due to be repaid a long time from now) &mdash; hence, my emphasis on short-term bond funds as a viable place to invest today for a five-year goal.</p> <h2>Recent Bond Fund Performance</h2> <p>Sound Mind Investing did <a href="http://www.soundmindinvesting.com/visitor/2012/sept/level4.htm">an analysis of bond fund returns</a> using various Vanguard funds, looking at all of the one-, three-, and five-year holding periods over the course of 25 years. Its analysis looked at six different bond fund &quot;portfolios,&quot; with the one- to six-fund groupings designed to satisfy a range of risk appetites. Since each one consisted solely of bond funds, they were all, by definition, relatively low-risk.</p> <p>The most conservative portfolio generated an average annual return of about 6% across all of the one-, three-, and five-year periods studied. The most aggressive portfolio generated an average annual return of about 8% across all of the periods.</p> <p>Interestingly, none of the worst five-year annualized returns were negative. So, while past performance never guarantees future performance, it would be reasonable to assume a 6% annual return using bond funds to invest for your five-year goal.</p> <h3>$400 a Month</h3> <p>That means, if you invested $400 per month over the course of five years and were able to achieve a 6% average annual return, your $24,000 investment ($400 per month for five years) would turn into $27,908 &mdash; or nearly a $4,000 return.</p> <p>Even better, if you had $24,000 to start with and could put the full amount to work using bond funds, assuming the same 6% annualized return, it would turn into about $32,370 &mdash; or a more than $8,000 return.</p> <h2>A Five-Year Head Start on a Much Bigger Number</h2> <p>Now let's look at this five-year time frame through a different filter. Let's say you're 20 years old, graduated early, and are starting your first full-time job. Your employer offers a 401(k) retirement savings plan that includes a generous dollar-for-dollar match on whatever you contribute up to 6% of your $48,000 annual salary (just a touch over the <a href="http://www.glassdoor.com/Salaries/average-entry-level-salary-SRCH_KO8,19_IP5.htm">national median of $42,000</a> for entry level positions).</p> <p>At first, you think you'll wait a while before taking part in the plan. You have some things you want to buy, some trips you'd like to take. And besides, you figure, you're young; you have plenty of time to save for an abstract goal like retirement when you're older.</p> <p>Indeed, when you're 25, you finally start investing 10% of your salary. Assuming a very reasonable 7% average annual return, a 3% annual pay raise, and including your employer's match, by the time you're 65, you will have a nice nest egg of about $1,690,500.</p> <p>But what if you decided to start setting aside 10% of your salary from your first day on the job? Keeping all the other assumptions the same, by age 65, you would have over $2,144,000.</p> <p>Wow.</p> <p>By starting five years earlier, you would have contributed $26,250 more, but you would end up with $453,500 more!</p> <h3>Target-Date Funds</h3> <p>To accomplish that, you could take an extremely simple approach of using a target-date fund, a type of fund that is now commonly available in workplace retirement plans.</p> <p>While <a href="http://www.investopedia.com/articles/retirement/07/life_cycle.asp">target-date funds are not perfect</a>, they make some of the most important investment decisions for you.</p> <p>For example, all you have to do is choose a fund with the year of your intended retirement date as part of its name (2060, again assuming you're 20 years old and want to retire at age 65). Since you have a long time to invest, a typical 2060 fund would be aggressively invested in mostly stocks. As you get older, it will automatically adjust this mix, adding bonds to become more conservative.</p> <p>So, how much can you accomplish as an investor in five years? It depends on whether you need to use the money at the end of that time frame or simply use that time frame to get a head start on a longer investment program. Either way, you can accomplish a lot.</p> <p><em>What financial goals have you set for the next five years? How are you planning to reach them? Please share in comments!</em></p> <a href="http://www.wisebread.com/4000-8000-or-even-453500-in-5-years-a-low-risk-investment-plan" class="sharethis-link" title="$4,000, $8,000, or Even $453,500 in 5 Years: A Low-Risk Investment Plan" rel="nofollow">ShareThis</a><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/4000-8000-or-even-453500-in-5-years-a-low-risk-investment-plan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-13"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-silly-reasons-people-dont-invest-but-should">9 Silly Reasons People Don&#039;t Invest (But Should)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-26000-in-5-years-or-less">How to Save $26,000 in 5 Years or Less</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/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-lot-of-people-dont-understand-what-an-investment-really-is-do-you">A Lot of People Don&#039;t Understand What an Investment Really Is. Do You?</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment bond funds goals investing saving Wed, 23 Jul 2014 13:00:05 +0000 Matt Bell 1164533 at http://www.wisebread.com This One Thing Will Get You to $1 Million (Tax-Free!) http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/this-one-thing-will-get-you-to-1-million-tax-free" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/retirement-savings-163904331-small.jpg" alt="retirement savings" title="retirement savings" class="imagecache imagecache-250w" width="250" height="146" /></a> </div> </div> </div> <p>We're surrounded by financial advice, often in the form of lists containing 10 (or 25! or 50!) things you can do to help solve a particular problem. While much of this information is useful, it can also be overwhelming. Where do you begin? On what things should you focus your efforts?</p> <p>I'd suggest starting with the end in mind &mdash; with your ultimate goal &mdash; and let that guide you to the highest priority activities to help you achieve it. For most of us the end goal is financial independence, and that requires accumulating enough wealth to no longer rely on income from a job. (See also: <a href="http://www.wisebread.com/just-saving-isnt-enough-how-cash-flow-allocation-helps-you-retire?ref=seealso">How Cash Flow Allocation Helps You Retire</a>)</p> <p>Okay, here's where focusing on the highest impact activities comes in. For most Americans, only two financial items generate around 80% of their wealth: real estate and retirement savings. Let's tackle one of them, retirement savings. If you get that one thing right then hundreds of other, lower impact activities won't matter much.</p> <h2>Retirement Savings</h2> <p>So let's begin. What are some typical sources of retirement savings?</p> <ul> <li>Your employer (in the form of a 401(k), 403(b) or similar program, or in rare instances a pension).<br /> &nbsp;</li> <li>The government (Social Security retirement payments).<br /> &nbsp;</li> <li>Yourself.</li> </ul> <p>Unfortunately, the first two sources are becoming increasingly uncertain, so let's narrow our focus even further, on the one retirement savings source where you have complete control: Yourself.</p> <p>IMPORTANT! Before proceeding, I would strongly suggest that if your employer offers a matching 401(k) or similar program that you contribute an amount that gets you the maximum match. What we're addressing in this article will <em>supplement</em> that 401(k) savings plan, if you're lucky enough to have one.</p> <p>Alright, so what one thing that you have control over can get you to $1 million in retirement savings, tax free? Drum roll, please&hellip;.</p> <h2>It's a Roth IRA</h2> <p>Contribute $200 per month into a Roth IRA (where earnings on the account and withdrawals after age 59&frac12; are tax-free).</p> <p>That's it! Simple, isn't it?</p> <p>Actually, yes, it is simple. That's the beauty of it. But it does require meeting a few conditions.</p> <h3>1. Invest the Money in Stocks</h3> <p>You have the option of putting your Roth IRA contributions to work in one or a combination of investments such as bonds, treasuries, CDs, money market funds, and stocks. Unlike bonds, treasuries, and especially CDs or money market funds, stock market returns have historically outpaced inflation by a comfortable margin. Over the past 50 years stock funds invested in large companies have yielded a return of 9.2%. Over the past <a href="http://usatoday30.usatoday.com/money/perfi/columnist/krantz/story/2011-10-17/rate-of-return-for-stocks/50807868/1">20 years it's been 7.9%</a>. For our purposes, to be conservative I will assume an average return of 7.5%.</p> <h3>2. Stick With It!</h3> <p>Religiously. Even obsessively, if that's what it takes. Make that $200 contribution without exception every month until it becomes automatic. In fact, setting it up as an automatic transfer from each paycheck is the best way to go. That way you never see the money and therefore never miss it.</p> <h3>3. Wait</h3> <p>This is where the magic occurs. After contributing long enough you'll reach a threshold, where your total saved amount starts to achieve a dramatic upward trajectory due to compounding.</p> <h2>The Power of Compounding</h2> <p>To illustrate the magical power of compounding, consider the story of the king and the court jester. Legend has it that a long, long time ago a court jester's heroic act saved his king. The king was so moved by the jester's bravery that he offered to give the jester anything he wanted. The jester asked for one cent, doubled each day for a month. &quot;That's all?&quot; said the king. The wish was granted. (See also: <a href="http://www.wisebread.com/10-easy-ways-to-supercharge-your-retirement?ref=seealso">10 Easy Ways to Supercharge Your Retirement</a>)</p> <p>Halfway through the month the balance grew to only $164. But during the final week it started its rapid rise &mdash; it passed the threshold &mdash; and spiked upwards, ending the month at over $5.3 million.</p> <p><img width="605" height="303" src="http://www.wisebread.com/files/fruganomics/Whelan Chart.png" alt="" /></p> <p>As you can see in graph, it took some time for the small initial amount to grow. Eventually, though, the balance grew large enough so that with each doubling it started shooting up very rapidly. That's the threshold you want to reach. But to do so you need to start early &mdash; i.e. NOW!</p> <h2>How Long Will It Take?</h2> <p>So, how long are we talking about to reach this magic threshold? If you start at age 21 and your $200 monthly Roth IRA contributions grow at 7.5%, then you will reach $1 million, tax-free, at age 67, which is the current target age for receiving full Social Security retirement benefits if you were born after 1960.</p> <p>What if you were to start saving at age 31 instead of 21? Then your total will only be $360,000. Big difference. That's because you didn't quite reach the threshold where compounding really starts to kick in. But still not bad.</p> <p>Now I'm guessing that not everyone who reads this is 21 years old, so you're probably thinking &quot;What can I do to make up for lost time?&quot; Here are some ideas:</p> <ul> <li>At $200 per month your total annual contribution will be $2,400 but for most households the maximum annual Roth contribution is $5,500, so if you can afford it double your monthly contribution until you're caught up.<br /> &nbsp;</li> <li>If you have money in a savings account, consider transferring up to $3,100 from it to supplement your $2,400 annual amount.<br /> &nbsp;</li> <li>You can reach your annual contribution limit by transferring money from a tax-deductible account (such as a traditional IRA) to a Roth in the same year. (Check with a financial or tax professional to be sure you understand the rules for this kind of transfer.)<br /> &nbsp;</li> <li>Getting a tax refund? Put all or a portion of it into the Roth account.<br /> &nbsp;</li> <li>Take advantage of the Roth IRA &quot;float&quot; period, which allows you to count contributions made until April 15th towards the previous year's total.<br /> &nbsp;</li> <li>Over time, as your earnings grow and you can afford more than $200 per month, increase that monthly contribution by $50 or $100 or more. Consider having all or part of your annual raise in salary automatically added to your monthly Roth contribution.</li> </ul> <p>At a time when a slew of financial information and advice seems to be coming at us from all directions it's easy to feel overwhelmed. You don't need to be. Take back control by keeping things simple and focusing on this one activity. As you approach your golden years and reach the threshold, you'll be glad you did.</p> <p><em>Have you taken this one simple step toward putting aside money for retirement?</em></p> <a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free" class="sharethis-link" title="This One Thing Will Get You to $1 Million (Tax-Free!)" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/keith-whelan">Keith Whelan</a> of <a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-14"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-silly-reasons-people-dont-invest-but-should">9 Silly Reasons People Don&#039;t Invest (But Should)</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-valid-reasons-not-to-contribute-to-your-401k">6 Valid Reasons Not to Contribute to Your 401(k)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-false-allure-of-compound-interest">The False Allure of Compound Interest</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/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment Retirement 401(k) compound interest investing Roth IRA saving Mon, 14 Jul 2014 09:00:05 +0000 Keith Whelan 1157120 at http://www.wisebread.com Trading Options Is a Sound Investment (and It's Simpler Than You Think!) http://www.wisebread.com/trading-options-is-a-sound-investment-and-its-simpler-than-you-think <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/trading-options-is-a-sound-investment-and-its-simpler-than-you-think" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/stock-trading-465464871-small.jpg" alt="stock trading" title="stock trading" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>It's nice to have options.</p> <p>You know, choices. It's good to have them. We seem to feel safer, more secure, and more in charge when we have more than one possible path set before us. (See also: <a href="http://www.wisebread.com/6-basics-you-must-know-before-you-start-investing?ref=seealso">6 Basics You Must Know Before You Begin Investing</a>)</p> <p>Wouldn't it be nice to feel all of those things about your investments, too?</p> <p>These feelings are part of the reason that some people choose to invest in securities called, amazingly enough, <em>options</em>.</p> <p>If you haven't heard of an option before, you aren't alone. I hadn't heard much about them either, until a couple of months ago. But my family has recently started investigating ways to broaden our horizons, financially speaking, and options are&hellip; well&hellip; an option that we have come up with.</p> <p>Intrigued? Read on to discover the basics of what we have learned.</p> <h2>What Are Options?</h2> <p>At it's most fundamental, buying an option means that you are purchasing the right to buy or sell a security at a certain price on or before a certain date. It sounds confusing, but actually it's pretty straightforward.</p> <h3>Buying a Call</h3> <p>Let's say you want to buy a particular stock at $50 a share, but it currently costs $75. If you're pretty sure the stock's price will fall (or you're willing to bet that it will), you can pay to have the choice to buy it if the price goes down to $50 within a certain amount of time (a week, two weeks, 30 days, etc.). This is called <em>buying a call</em>.</p> <h3>Buying a Put</h3> <p>On the other hand, maybe you purchased a stock at $100 a share, and you think it might soon fall significantly. You can buy the right to sell your stock at a certain price (like, before it bottoms out), if the stock does lose value within a particular time frame. This is called <em>buying a put</em>.</p> <p>In actual practice, buying options can be much more complicated than this. People link all sorts of puts and calls into one trade, so that several (or many!) conditions have to be met for them to be able to exercise their option. This can provide additional investment security, if you know what you're doing.</p> <p>There are also different types of calls and puts, like the covered call and the cash-secured put, to name only a couple.</p> <p>Even with all the possible layers of complexity that options offer, buying a basic call or a put is pretty straightforward. The best way to learn the ins and outs of complex options trades is to trade alongside someone who has experience. Offer to help them with their research in exchange for some investing mentorship. If you don't know anyone like this, <a href="http://www.investopedia.com/simulator/">practice online with fake money</a> before you actually risk anything.</p> <h2>The Pros of Trading Options</h2> <p>If the possible complexity of the trades doesn't scare you off, trading options has a lot of things going for it.</p> <h3>Less Risk</h3> <p>When you buy an option, you are committing less of your own money up front, which means that you are risking less. An option is considered a fairly dependable form of hedging your investments, so it can help you save money in the long run.</p> <p>Of course, an option can be used poorly, too. You still expose yourself to risk if you don't know what you are doing, or if you jump into options investing without researching the securities involved in your trade.</p> <h3>Flexibility</h3> <p>When you buy an option, you're buying just that: a choice. Most of the time, you don't have to follow through if the deadline comes and you choose not to (though, in some cases, if you commit to selling at a certain price, then you must sell when the security hits that price). This expands the horizons of your investing, because you can basically wait and see what happens while maintaining the right to act if you so choose.</p> <h3>Low Capital Required</h3> <p>If you don't have the money to make a dent in the stock market, options investing can give you the chance to still play the game. In fact, many people start with amounts as low as $1,000, learning how options function and working their way up to larger and larger trades as they come to understand what they're doing. As long as you have at least a bit of money that you're willing to use, options trading can give you the opportunity to make more.</p> <h3>Make Money off Volatility</h3> <p>If you think the market is going to be moving around a lot, options are a way to make money off of that movement. Similarly, if you see the market beginning to move (up or down, it doesn't matter), you can use options to take advantage of that. Thus, market loss doesn't have to mean loss for everyone. After all, options were part of Warren Buffett's investing strategy in the recent economic downturn.</p> <h2>The Cons of Trading Options</h2> <p>Many people find that the benefits of investing in options outweigh the risks, but it's still smart to know what those risks are before you jump in.</p> <h3>Tax Rate</h3> <p>Most of the money you gain from options trading will count as short-term capital gains on your taxes, which face a higher tax rate than money held longer. This means that you could end up losing money even if you make money, which would be awful. Some options software will automatically calculate these taxes, so you have a better chance of making money.</p> <h3>Forecasting Is Hard</h3> <p>It's almost impossible to know exactly what the market is going to do, even if you have done good research and you have some experience. While you are only liable for the cost of purchasing the option even if you're wrong, being wrong a lot can add up and can end up being costly.</p> <h3>Liquidity Problems</h3> <p>A security has high liquidity if there are a lot of buyers and sellers in the market for it. You want this for the securities involved in your options trades. Without this liquidity, you can run into problems where the bid-ask spread, which is the difference between what a buyer is willing to pay and what a seller is willing sell, is large. That usually means that you are more likely to end up losing your money.</p> <p>You can usually get a sense of the liquidity of a particular security using several different methods, which should help you avoid this problem.</p> <p>In the end, options trading has a steep learning curve and can be just about as difficult as you want to make it. On the other hand, getting started is pretty easy, and you can make some significant money even if you don't understand every detail. So evaluate the pros and cons, do some research on your own, and decide if it's right for you.</p> <p><em>Have you ever considered trading options? Please share your experience in comments.</em></p> <a href="http://www.wisebread.com/trading-options-is-a-sound-investment-and-its-simpler-than-you-think" class="sharethis-link" title="Trading Options Is a Sound Investment (and It&#039;s Simpler Than You Think!)" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/trading-options-is-a-sound-investment-and-its-simpler-than-you-think">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. 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