Investment http://www.wisebread.com/taxonomy/term/4808/all en-US Best Money Tips: 5 Alternatives to Bitcoin http://www.wisebread.com/best-money-tips-5-alternatives-to-bitcoin <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-5-alternatives-to-bitcoin" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/bitcoin_cash_money_877508718.jpg" alt="Finding alternatives to Bitcoin" title="" 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 articles on alternatives to Bitcoin you should know about, how to get the best deal on a mortgage, and storage ideas for bathrooms.</p> <h2>Top 5 Articles</h2> <p><a href="https://www.moneyunder30.com/alternatives-to-bitcoin">5 Alternatives To Bitcoin You Should Know About</a> &mdash; Bitcoin is not the only cryptocurrency worth investing in. Smaller-scale investors may want to consider these alternatives, too. [PT Money]</p> <p><a href="https://www.moneytalksnews.com/8-golden-rules-mortgage-shopping/#at_pco=cfd-1.0">How to Buy a House: Getting the Best Deal on a Mortgage</a> &mdash; Are you thinking of buying a house or refinancing your existing mortgage? These tips can save you thousands of dollars. [Money Talks News]</p> <p><a href="https://unclutterer.com/2018/02/21/storage-ideas-bathrooms/">Storage ideas for bathrooms</a> &mdash; When you have a tiny bathroom, you need to be a little creative to maximize your storage space. [Unclutterer]</p> <p><a href="https://www.iwillteachyoutoberich.com/blog/how-to-give-advice-that-people-actually-take/">How to give advice that people actually take</a> &mdash; Put yourself in the other person's shoes when you give advice. Your advice will resonate more if they know that you can empathize with their situation. [I Will Teach You To Be Rich]</p> <p><a href="https://www.popsugar.com/smart-living/Cheap-Spring-Break-Destinations-44573676">10 Spring Break Destinations That Won't Break the Bank</a> &mdash; These wallet-friendly Spring break destinations are sure to satisfy your post-Winter wanderlust. [PopSugar Smart Living]</p> <h2>Other Essential Reading</h2> <p><a href="https://www.kiplinger.com/slideshow/taxes/T055-S003-suprising-things-that-are-taxable/index.html">10 Surprising Things That Are Taxable</a> &mdash; The IRS doesn't stop at wages and investment income when it taxes you. Scholarships, buried treasure, and even Olympic victories are taxable. [Kiplinger]</p> <p><a href="https://wallethacks.com/budgeting-strategies/">4 Different Budgeting Strategies to Try This Year</a> &mdash; No single budget strategy will work for everyone. To find the right one for you, you'll need to consider your goals, your stage in life, and whether or not you need to change your habits. [Wallet Hacks]</p> <p><a href="https://wealthyaccountant.com/2018/02/19/saving-the-world-and-yourself-one-frugal-act-at-a-time/">Saving the World (and Yourself) One Frugal Act at a Time</a> &mdash; Making just a few small changes in your daily life can have a positive impact on the environment and your wallet. [The Wealthy Accountant]</p> <p><a href="https://www.makingsenseofcents.com/2018/02/dont-compare-beginning-someone-elses-middle.html">Don&rsquo;t Compare Your Beginning to Someone Else&rsquo;s Middle</a> &mdash; Instead of comparing your path to the people around you, it's more important to focus on making your dream a reality. [Making Sense of Cents]</p> <p><a href="https://www.thesimpledollar.com/how-to-get-maximum-value-out-of-a-personal-finance-book/">How to Get Maximum Value out of a Personal Finance Book</a> &mdash; Learn how to choose a personal finance book that speaks to you and how to absorb the information so you can make meaningful changes to your financial life. [The Simple Dollar]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-5-alternatives-to-bitcoin">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-cryptocurrency-anyway">What Is Cryptocurrency, 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/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-surprising-truth-of-investing-mediocre-advice-is-best">The Surprising Truth of Investing: Mediocre Advice Is Best</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/learn-how-to-invest-with-these-5-stock-market-games">Learn How to Invest With These 5 Stock Market Games</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-millennials-can-do-right-now-for-an-early-retirement">8 Things Millennials Can Do Right Now for an Early Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment best money tips bitcoin Fri, 23 Feb 2018 09:30:05 +0000 Amy Lu 2108362 at http://www.wisebread.com 6 Questions All Rookie Investors Should Ask http://www.wisebread.com/6-questions-all-rookie-investors-should-ask <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-questions-all-rookie-investors-should-ask" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_boy_examines_money_falling_from_sky.jpg" alt="Young Boy Examines Money Falling from Sky" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The first time you got behind the wheel of a car, you were probably a little intimidated. The same can be true if you're just getting started with investing. Here are some questions that may be on your mind, along with answers designed to help you begin your investing journey with the knowledge you need to succeed.</p> <h2>1. Why should I invest?</h2> <p>Especially if you're young, investing might not seem very urgent. Investment goals, such as retirement, may seem distant and vague.</p> <p>The financial services industry has tried everything to get people to recognize the importance of investing for retirement, even using photo-enhancing software to show young people what they may look like when they're 65 or 70. A 2012 Merrill Edge study actually found the tactic somewhat effective in motivating people to save more for their later years.</p> <p>Assuming you don't have access to such technology, maybe the best way to find the motivation to invest is to consider the cost of waiting. Crunching the numbers just may be the wake-up call you need.</p> <h2>2. What's the harm in holding off a little while?</h2> <p>The sooner you start investing, the less you'll have to invest each month in order to meet your goals.</p> <p>Let's say you're 25 years old, plan to retire at age 70, and want to accumulate $1 million by then. Assuming a 7 percent average annual return, you would need to invest about $275 per month. Even waiting just five years will significantly increase that amount. Starting at age 30, you would need to invest about $361 per month in order to accumulate $1 million by age 70.</p> <p>Here's another way to think about it. If you invested $200 per month from age 25 until age 70 and generated an average annual return of 7 percent, you'd end up with about $733,804. Wait until age 30 to start investing $200 per month, and you'll end up with $512,663.</p> <p>That's amazing, isn't it? By investing for just five fewer years, you will invest just $12,000 less than if you had started at age 25. And yet, because of the power of compounding &mdash; more accurately, because of missing out on five years' worth of the power of compounding &mdash; you'll end up with about $221,000 less. That's a huge penalty for waiting. (See also: <a href="http://www.wisebread.com/11-investing-tips-you-wish-you-could-tell-your-younger-self?ref=seealso" target="_blank">11 Investing Tips You Wish You Could Tell Your Younger Self</a>)</p> <h2>3. How much should I invest?</h2> <p>To get a general sense about how much to invest each month, use the <a href="https://www.fidelity.com/calculators-tools/fidelity-retirement-score-tool" target="_blank">Fidelity Retirement Score</a> calculator. Once you run some initial numbers, you'll be able to see how changing some of your variables, such as how much to invest and when to retire, will impact your how much money you end up with.</p> <h2>4. Should I use my company's 401(k) plan or an IRA?</h2> <p>The key to answering this question is whether your employer offers a match on some of the money you would contribute to its 401(k) plan. If so, start there.</p> <p>In a typical arrangement, an employer will match your contributions up to 6 percent of your salary. If yours will contribute a dollar for every dollar you put in, that's a guaranteed 100 percent return on your money. If it will match 50 cents for every dollar you contribute, that's a guaranteed 50 percent return on your money. Don't miss out.</p> <p>If your employer doesn't offer a match, the decision depends on the investment options it offers. There are still some employers whose plans contain a strange mix of mutual funds with high fees (you should not be limited to funds with &quot;expense ratios&quot; higher than 1 percent). If that's the case with your employer's plan, you may be better off using an IRA. However, even with a solid 401(k) plan at your disposal, don't think an IRA isn't for you. Contributing to both plans can give you a further leg up in your retirement savings strategy. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401(k) or IRA? You Need Both</a>)</p> <h2>5. What should I invest in?</h2> <p>It used to be a lot more complicated and intimidating to figure out what investments to make. Today, target-date funds have simplified the process. By choosing a single mutual fund that has the year of your intended retirement date as part of its name, such as the Fidelity Freedom 2040 Fund, you'll gain a portfolio that's diversified across stocks, bonds, and other asset classes in a way that's appropriate for someone your age. As you get older, the fund will automatically adjust its investment mix, becoming more conservative as you near your target retirement date. (See also: <a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement?ref=seealso" target="_blank">What You Need to Know About the Easiest Way to Save for Retirement</a>)</p> <h2>6. What can I expect from my investments?</h2> <p>In short, you can expect that the ride will not always be smooth. Last year, the S&amp;P 500 generated a nearly 22 percent return, but in 2008 it <em>fell </em>37 percent.</p> <p>Investing always comes with risk, and there's no way to predict how each year will turn out. A solid approach is to build a diversified portfolio, perhaps through a target-date fund, and commit to staying with it in good years and bad.</p> <p>The longer you stay invested, the better your odds of success. As Morningstar documented in its 2017 Fundamentals for Investors report, from 1926 through 2016, 74 percent of one-year returns from the U.S. stock market were positive, 86 percent of five-year returns were positive, and 100 percent of 15-year returns were positive.</p> <p>As with so many things, the best way to learn about investing is to get started. Taking the steps described above should get you moving in the right direction.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-questions-all-rookie-investors-should-ask&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Questions%2520All%2520Rookie%2520Investors%2520Should%2520Ask%2520%25281%2529.jpg&amp;description=6%20Questions%20All%20Rookie%20Investors%20Should%20Ask"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Questions%20All%20Rookie%20Investors%20Should%20Ask%20%281%29.jpg" alt="6 Questions All Rookie Investors Should Ask" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/6-questions-all-rookie-investors-should-ask">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/8-things-millennials-can-do-right-now-for-an-early-retirement">8 Things Millennials Can Do Right Now for an Early Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-critical-401k-questions-you-need-to-ask-your-employer">8 Critical 401(k) Questions You Need to Ask Your Employer</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face in Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment 401(k) compound interest IRA new investors questions retirement savings returns rookies Tue, 06 Feb 2018 09:30:08 +0000 Matt Bell 2096590 at http://www.wisebread.com How to Invest in Mutual Funds http://www.wisebread.com/how-to-invest-in-mutual-funds <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-invest-in-mutual-funds" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/tree_growing_on_coins.jpg" alt="Tree growing on coins" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Mutual funds are an easy way to invest in a broad portfolio of stocks, bonds, and other securities. You don&rsquo;t need to spend a lot of time picking individual stocks and making trades. Just invest in a mutual fund, and the mutual fund takes care of managing an investment portfolio for you.</p> <p>There are thousands of mutual funds to choose from that contain different investment portfolios and fund features. Here are the most important types of mutual funds to consider to find the right ones for your portfolio.</p> <h2>Equity funds</h2> <p>Equity funds invest in stocks. You can choose an equity fund that specializes in certain types of stock investments, such as U.S. stock, international stock, growth stock, or value stock. Another variation is the size of companies that are targeted by the fund. Small-cap funds buy stock of smaller companies, mid-cap funds buy stock in midsize companies, and large-cap funds buy stock in large companies. Some equity funds specialize in stocks from specific sectors of the economy such as finance, energy, or health care.</p> <h2>Fixed income funds</h2> <p>Also known as bond funds, fixed income funds invest in debt issued by local and national governments and by large businesses. Bond funds are typically considered a lower risk alternative to stock investments, but offer less growth potential.</p> <h2>Balanced funds</h2> <p>Balanced funds invest in a mix of stocks and bonds. Many investors want to capture the growth potential of stock investments and the lower-risk income from bonds. A balanced fund provides a simple way to cover both stock and bond investments in a single fund.</p> <h2>Index funds</h2> <p>Index funds are designed to track a broader market such as the S&amp;P 500. The main advantage of index funds over equity funds is that they typically have very low fund expenses since index funds require almost no management. (See also: <a href="http://www.wisebread.com/why-warren-buffett-says-you-should-invest-in-index-funds?ref=seealso" target="_blank">Why Warren Buffett Says You Should Invest in Index Funds</a>)</p> <h2>Target-date funds</h2> <p>Target-date funds adjust their asset allocation mix over time, from more aggressive investments to more conservative choices as the target date approaches. These funds are usually named with a date that represents the retirement or target year that the investor expects to begin accessing the funds. For example, &ldquo;Freedom 2035&rdquo; would target the year 2035 to reach its most conservative investment position. (See also: <a href="http://www.wisebread.com/start-planning-now-for-when-your-target-date-fund-ends?ref=seealso" target="_blank">Start Planning Now for When Your Target-Date Fund Ends</a>)</p> <h2>How to select the best mutual funds</h2> <p>Once you have identified the best types of mutual funds for your investment goals, you will need to select the specific mutual funds you want to purchase. Some of the key criteria to consider when evaluating funds are:</p> <ul> <li> <p>Investment objective: Do you want an aggressive growth fund that takes higher risks to seek higher returns, or would you rather have a more conservative fund that will be more likely to protect your investment?</p> </li> <li> <p>Active vs. passive management: Do you want a fund with a fund manager making trades to try to maximize returns, or a passive fund that simply tracks a segment of the market?</p> </li> <li> <p>Fees (expense ratio): Funds with lower fees are best for maximizing the growth of your investment over time, but some investment types are more complex and tend to have higher fees. Actively managed funds have higher fees than passive funds and index funds.</p> </li> <li> <p>Performance record (return): While past performance does not predict future results, most investors tend to select funds with returns that have performed well compared to similar funds over the past one to five years.</p> </li> <li> <p>Management team tenure: Some investors prefer funds that have had a consistent management team for a number of years.</p> </li> </ul> <p>You can do research to find funds that meet your investment objectives using online research tools at your stock broker&rsquo;s website. Most brokers allow you to search for desired types of funds and review key information such as returns and fees. Some of the leading mutual fund brokerages include:</p> <ul> <li> <p>Fidelity</p> </li> </ul> <ul> <li> <p>Vanguard</p> </li> </ul> <ul> <li> <p>Merrill Edge</p> </li> <li> <p>TD Ameritrade</p> </li> <li> <p>E*TRADE</p> </li> <li> <p>Charles Schwab</p> </li> </ul> <p>In case you don&rsquo;t already have a broker, or if you want to check out a wider range of mutual fund offerings, here are some additional online mutual fund research tools to help you find and compare mutual funds:</p> <ul> <li> <p><a href="http://online.wsj.com/public/quotes/mutualfund_screener.html" target="_blank">Wall Street Journal Mutual Fund Screener</a></p> </li> <li> <p><a href="http://www.maxfunds.com/" target="_blank">Maxfunds</a></p> </li> <li> <p><a href="http://www.morningstar.com/funds.html" target="_blank">Morningstar</a></p> </li> <li> <p><a href="http://www.lipperleaders.com/" target="_blank">Lipper</a></p> </li> </ul> <h2>How to buy mutual funds</h2> <p>After you have done your research and have selected a mutual fund that you want to buy, there are two ways you can make the trade and buy into the fund through a brokerage:</p> <ul> <li> <p>Execute an exchange to sell funds or stocks you currently own and use the proceeds to purchase the mutual fund you want to buy.</p> </li> <li> <p>Transfer cash funds to your brokerage to execute a trade to buy the mutual fund you want.</p> </li> </ul> <p>You may be able to achieve tax advantages if you purchase mutual funds as part of an IRA or 401(k) retirement plan. After you buy a mutual fund, you should monitor the performance of the fund, its fees, and whether or not the fund is still a good fit for your investment portfolio on at least an annual basis.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-invest-in-mutual-funds&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Invest%2520in%2520Mutual%2520Funds.jpg&amp;description=How%20to%20Invest%20in%20Mutual%20Funds"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Invest%20in%20Mutual%20Funds.jpg" alt="How to Invest in Mutual Funds" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/how-to-invest-in-mutual-funds">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/4-simple-ways-to-conquer-your-fear-of-investing">4 Simple Ways to Conquer Your Fear of Investing</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/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-warren-buffett-says-you-should-invest-in-index-funds">Why Warren Buffett Says You Should Invest in Index Funds</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/mutual-funds-for-wise-bloggers">Mutual Funds for Wise Bloggers</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment actively managed equity index funds mutual funds passively managed risk target date funds Fri, 02 Feb 2018 09:00:06 +0000 Dr Penny Pincher 2095997 at http://www.wisebread.com 4 Ways to Keep Envy From Ruining Your Retirement Investments http://www.wisebread.com/4-ways-to-keep-envy-from-ruining-your-retirement-investments <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-to-keep-envy-from-ruining-your-retirement-investments" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/bad_news.jpg" alt="Bad news" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The stock market had a great year in 2017, with the S&amp;P 500 rising more than 19 percent. Did your portfolio do as well? If not, you may feel like you missed out. You may even be tempted to make some changes, going all in on headline-making companies that did well in 2017.</p> <p>But hold on. Just as scrolling through your social media feed can make you feel like you need to up your vacation game, reading about hot investments can tempt you to invest reactively instead of proactively, and that often does more harm than good.</p> <p>What's a person with investment envy to do? Read on.</p> <h2>1. Keep hot investments in perspective</h2> <p>If you pay any attention to investment news, you've seen plenty of headlines about the so-called FANG stocks, an acronym that represents Facebook, Amazon, Netflix, and Google (Alphabet). Other popular consumer-oriented companies include Apple and Microsoft. Each stock had a great 2017.</p> <p>Should those investments be part of <em>your </em>portfolio? Maybe, but the principles of wise investing would suggest buying them only as part of a diversified portfolio and only if you understand that what goes up quickly can also come down quickly.</p> <p>For example, in 2008, when the S&amp;P 500 fell 38 percent, many of these hot stocks also plummeted &mdash; some by more than 50 percent. (See also: <a href="http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying?ref=seealso" target="_blank">9 Ways to Tell If a Stock is Worth Buying</a>)</p> <h2>2. Keep a hot market in perspective</h2> <p>At the end of each weekday, there are news reports about how &quot;the market&quot; performed. In reality, such reports are usually about how the S&amp;P 500 or Dow Jones industrial average performed. Both are stock market indexes, but both are designed very differently &mdash; the S&amp;P 500 represents the collective performance of 500 of the largest U.S.-based public companies, and the Dow represents just 30 companies.</p> <p>The only investors for whom it would be fair to benchmark their portfolios against such indexes are those who invest solely in an S&amp;P 500 or Dow index fund.</p> <p>If you have other investments in your portfolio, you need to remember that &quot;the market&quot; is not the same thing as your particular portfolio. It's fine to view the market's performance as a general investing barometer. Just don't be envious if your portfolio doesn't perform as well, or overly confident if it performs better. (See also: <a href="http://www.wisebread.com/want-your-investments-to-do-better-stop-watching-the-news?ref=seealso" target="_blank">Want Your Investments to Do Better? Stop Watching the News</a>)</p> <h2>3. Keep your benchmark in mind</h2> <p>The best point of comparison to use when evaluating your portfolio's performance is a benchmark tailored to your age, goals, and risk tolerance. More specifically, it's the average annual rate of return that's part of your investment plan.</p> <p>If you don't have such a plan, it isn't that difficult to create one. Begin by completing <a href="https://retirementplans.vanguard.com/VGApp/pe/PubQuizActivity?Step=start" target="_blank">Vanguard's investor questionnaire</a>. It'll suggest an optimal asset allocation. From there, you can review the <a href="https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations" target="_blank">historical performance of portfolios</a> with various stock/bond allocations, which can help you choose a reasonable rate of return assumption for your own portfolio.</p> <h2>4. Get the best of both worlds</h2> <p>Once you know your optimal asset allocation, you can use index funds to create a diversified portfolio designed to share in some of the overall market gains, as well as the gains of individual hot investments.</p> <p>In fact, just investing in an S&amp;P 500 index fund enables you to do both. Of course, it gives you exposure to &quot;the market&quot; as defined by that index. But it also gives what may sound like a surprising level of exposure to the fast-growing individual stocks mentioned earlier.</p> <p>You see, the S&amp;P 500 is a &quot;market capitalization-weighted&quot; index, meaning each company that's included is represented based on the value of its outstanding shares. Because Apple, Alphabet, Microsoft, Facebook, and Amazon have done so well in recent years, they make up a disproportionate share of the index. For example, those five stocks account for nearly 13 percent of the Vanguard S&amp;P 500 index fund, VOO.</p> <p>However, even if your optimal asset allocation is 100 percent stocks, you'll probably want to diversify beyond an S&amp;P 500 mutual fund, perhaps including smaller companies through an extended market fund, and foreign companies through an international fund.</p> <p>Benchmarking your portfolio against headlines about this fast-growing sector or that hot investment will just cause you stress and may even hurt your returns. Instead, develop and follow a plan that includes a realistic assumed average annual return based on your circumstances and goals.</p> <p>Using the right benchmark will do wonders for your portfolio and your peace of mind.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-ways-to-keep-envy-from-ruining-your-retirement-investments&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Ways%2520to%2520Keep%2520Envy%2520From%2520Ruining%2520Your%2520Retirement%2520Investments.jpg&amp;description=How%20to%20Be%20Successful%20as%20a%20First-Time%20Manager"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Ways%20to%20Keep%20Envy%20From%20Ruining%20Your%20Retirement%20Investments.jpg" alt="4 Ways to Keep Envy From Ruining Your Retirement Investments" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/4-ways-to-keep-envy-from-ruining-your-retirement-investments">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/why-does-the-stock-market-keep-going-up">Why Does the Stock Market Keep Going Up?</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-mental-bias-is-harming-your-investments">This One Mental Bias Is Harming Your Investments</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-be-fooled-by-an-investments-rate-of-return">Don&#039;t Be Fooled by an Investment&#039;s Rate of Return</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-one-mediocre-investor-prospered-after-the-market-crash">How One Mediocre Investor Prospered After the Market Crash</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment dow jones industrial average envy gains hot stocks losses portfolios s&p 500 stock market Wed, 31 Jan 2018 10:00:06 +0000 Matt Bell 2087458 at http://www.wisebread.com 8 Questions to Ask Before Buying Any Stock http://www.wisebread.com/8-questions-to-ask-before-buying-any-stock <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-questions-to-ask-before-buying-any-stock" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/hand_holding_smartphone_with_stock_graph.jpg" alt="Hand holding smartphone with stock graph" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>At last count, there were nearly 4,000 publicly traded companies in the United States. That's a lot to choose from if you are an investor, so figuring out what stocks to buy can feel overwhelming.</p> <p>Before investing your hard-earned money into shares of a company, it's best to ask the right questions. Doing so could be the difference between owning a profitable investment or a bust. Here are some key questions to ask before making a stock purchase.</p> <h2>1. What does the company do?</h2> <p>This should be your very first question when buying a stock. It seems obvious, but sometimes people are so wowed by the buzz surrounding a company that they don't figure out the basics. if you plan to own shares of a company, you should have an idea of how it makes its money. If you don't have a good sense of the company's business model, how can you evaluate whether it's a good investment or not?</p> <p>Usually, you can get a solid understanding of a company by doing a modest amount of research. But there are some companies that are extraordinarily complex, and others that are even cagey about how they get revenue. If faced with one of these companies, it's probably best to hold off on buying shares.</p> <p>In fact, companies that have been opaque about how they earn money have proved to be some of the biggest busts in stock market history. Enron is perhaps the best example of this. (See also: <a href="http://www.wisebread.com/4-quick-ways-to-decide-if-a-company-is-worth-your-investment?ref=seealso" target="_blank">4 Quick Ways to Decide If a Company Is Worth Your Investment</a>)</p> <h2>2. What are the company's revenues and earnings?</h2> <p>There are many factors that drive a company's stock price, but one of the most important things is its financial performance. The two key figures to know are revenue &mdash; how much money the company brings in &mdash; and earnings, which is another term for profit. The higher these numbers, the better, but it's important to not analyze revenues and earnings in a vacuum. Compare these numbers to figures from the previous quarter and the same quarter a year prior. Also compare their performance to competitors in the industry.</p> <p>Additionally, investors should not only look at total earnings, but earnings per share, or EPS. So for example, if a company had $20 million in earnings and has 10 million shares, the earnings per share would be $2. Again, look at what's normal for the industry, and compare that to the EPS of the company you're considering investing in.</p> <p>Examining revenues and earnings will give you a good sense of the financial health of the company, and whether it's worth investing in.</p> <h2>3. What is its historical performance?</h2> <p>While it is true that past performance does not necessarily predict future returns, a long track record of good returns is a positive indicator for most stocks. If you come across a stock that has decades of consistent, solid returns, you can buy shares with some degree of confidence. A stock with a shorter track record of success may bring greater risk and uncertainty to investors.</p> <p>When evaluating a stock, take a look at the returns over the previous five- and 10-year periods. Go back even further if possible. Anything less than three years is not a large enough sample size to draw a good conclusion. (See also: <a href="http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying?ref=seealso" target="_blank">9 Ways to Tell If a Stock is Worth Buying</a>)</p> <h2>4. Does it pay a dividend?</h2> <p>Many companies choose to distribute a portion of their earnings to shareholders each quarter. These quarterly payments are called dividends, and they can be a powerful source of passive income for many investors. Healthy companies are able and willing to pay sizable dividends to shareholders, though some choose to keep their cash and reinvest it instead. Amazon is one example of a strong company that chooses to focus on growth rather than pay dividends.</p> <p>Generally speaking, companies that pay out hefty dividends tend to be more stable but don't grow as quickly. Utility companies usually fall into this category. If you are closer to retirement, you may wish to have more dividend stocks in your portfolio to protect your savings and replace income when you retire. If you are further away from retirement, you may be more inclined to eschew dividend stocks in favor of those that are more focused on growth.</p> <h2>5. What is its price-to-earnings ratio?</h2> <p>It's not easy to figure out whether a company's stock price is too high or too low. One helpful indicator, however, is the ratio of the stock price relative to its earnings per share. There is no magic ratio to look for, but you ideally want to avoid price-to-earnings ratios that are too high, because it could mean a stock is overpriced. Good P/E ratios can vary by industry; a growing tech company can have a P/E ratio over 20 and be sensibly priced, while a manufacturer may be overpriced with a ratio of 10.</p> <p>If you are researching a stock, take a look the P/E ratios of competitors in the same industry and the market overall. You may find a bargain stock, or determine that the shares you were poised to buy are too pricey. (See also: <a href="http://www.wisebread.com/make-smarter-investments-by-mastering-this-simple-ratio?ref=seealso" target="_blank">Make Smarter Investments by Mastering This Simple Ratio</a>)</p> <h2>6. What is its market capitalization?</h2> <p>Market capitalization is just a fancy term for size. It's the value of all the company's outstanding shares multiplied by the share price. So, a company with 10 million shares that sell for $100 each would have a market capitalization of $1 billion.</p> <p>Large-cap companies generally have market capitalizations of $10 billion or more. Mid-cap stocks have market capitalizations of $2 billion to $10 billion and small caps have market capitalizations of $300,000 to $2 billion.</p> <p>A well-rounded stock portfolio should have a good mix of larger companies with small and medium-sized firms as well. Larger companies tend to have more stable stocks, which are good for longer-term investing. Small companies, particularly in sectors like technology, can have higher returns in the short-term but may be more volatile. Understanding a company's size will help you grasp a stock's growth potential.</p> <h2>7. Does it operate domestically and internationally?</h2> <p>When researching a stock, it's helpful to get an understanding of where, geographically, the company gets its revenues. If a company has growing overseas operations, this can give you an idea of whether there is room for growth. After all, the U.S. makes up only about 5 percent of the world's population.</p> <p>A well-diversified portfolio should include some exposure to international markets. And if you own shares of U.S.-based companies with big overseas operations, you may not need to invest directly into international firms that you may not be as familiar with.</p> <h2>8. Does the company have a &quot;moat?&quot;</h2> <p>Warren Buffett, one of the world's most successful investors, often speaks of a company's &quot;moat.&quot; What is a moat? Well, we think of it as a body of water that protects a medieval castle, but in investing terms, it's anything that gives a company a competitive advantage and cushion to survive challenging times. A company like Walmart, for example, can thrive in both good economic times and in bad because it sells products with low prices. Facebook is another company with a wide moat, due to its massive edge in users over other social media companies.</p> <p>When considering a stock, understand that the larger the moat, the more resilient the company. And that's great for investors.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-questions-to-ask-before-buying-any-stock&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Questions%2520to%2520Ask%2520Before%2520Buying%2520Any%2520Stock.jpg&amp;description=8%20Questions%20to%20Ask%20Before%20Buying%20Any%20Stock"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Questions%20to%20Ask%20Before%20Buying%20Any%20Stock.jpg" alt="8 Questions to Ask Before Buying Any Stock" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-questions-to-ask-before-buying-any-stock">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying">9 Ways to Tell If a Stock is Worth Buying</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stabilize-your-portfolio-with-these-11-dividend-stocks">Stabilize Your Portfolio With These 11 Dividend Stocks</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table">Beginner&#039;s Guide to Reading a Stock Table</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/make-smarter-investments-by-mastering-this-simple-ratio">Make Smarter Investments by Mastering This Simple Ratio</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-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment dividends market capitalization moat performance p/e ratio price to earnings revenue shares stocks Tue, 30 Jan 2018 09:30:08 +0000 Tim Lemke 2090874 at http://www.wisebread.com 8 Things Millennials Can Do Right Now for an Early Retirement http://www.wisebread.com/8-things-millennials-can-do-right-now-for-an-early-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-things-millennials-can-do-right-now-for-an-early-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/this_team_is_built_for_success.jpg" alt="This team is built for success" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you're young, it's hard to think of retirement planning as a priority. You have barely entered the workforce; now you have to think about what to do when you've <em>stopped</em> working?</p> <p>But if you are of the millennial generation, the road to a comfortable retirement should begin now. And with the right moves, you may even be able to retire early. Consider these financial moves to supercharge your retirement plan.</p> <h2>1. Develop a net worth mindset</h2> <p>One of the keys to saving for a comfortable retirement is to focus on accumulating things that grow in value while reducing your liabilities.</p> <p>This means earning and saving as much money as possible while eliminating debt. It means investing and watching your money grow, through things like stocks and real estate. It means avoiding spending money on things that will lose financial value or have no value to begin with.</p> <p>This mindset will help you develop a high &quot;net worth,&quot; calculated by how much your assets exceed your liabilities. You can't retire unless you have a high net worth, and you can't get there unless you make the right financial choices &mdash; especially at an early age. (See also: <a href="http://www.wisebread.com/6-money-moves-to-make-if-your-net-worth-is-negative?ref=seealso" target="_blank">6 Money Moves to Make If Your Net Worth Is Negative</a>)</p> <h2>2. Open an IRA</h2> <p>If you have any earned income at all, you can open an individual retirement account (IRA), which allows you to invest in almost anything and enjoy tax savings along the way. With a traditional IRA, any money you invest is deducted from your taxable income. With a Roth IRA, contributions are taxed upfront, but any investment gains can be withdrawn tax-free when you retire. You will pay a penalty and taxes if you withdraw money before you turn 59&frac12;.</p> <p>These retirement accounts can be powerful saving vehicles if you have the discipline to set aside as much money as you can. The earlier you invest, the more time your money has to grow. (See also: <a href="http://www.wisebread.com/5-retirement-accounts-you-dont-need-a-ton-of-money-to-open?ref=seealso" target="_blank">5 Retirement Accounts You Don't Need a Ton of Money to Open</a>)</p> <h2>3. Put money in a 401(k)</h2> <p>If you are employed by a company, there's a good chance that you have access to a 401(k) or similar plan. Don't ignore your human resources representative when they hand you a stack of plan documents urging you to sign up.</p> <p>A 401(k) plan allows you to invest in a variety of mutual funds and other investments, and your company will often match your contributions up to a certain amount. Money you contribute is deducted from your taxable income. You should invest as much as you can into your 401(k), but it's imperative that you at least contribute enough to get the maximum in matching funds. Your contributions, coupled with the matching funds, can add up to millions of dollars by the time you decide to retire. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401K or IRA? You Need Both</a>)</p> <h2>4. Open a taxable brokerage account</h2> <p>There's no rule that says all your investments need to be in retirement accounts. Regular taxable brokerage accounts don't have the same tax advantages as IRAs or 401(k) plans, but they do offer other perks, chiefly the flexibility to withdraw money whenever you want it. This is especially key for someone looking to retire before age 59.</p> <p>Taxable brokerage accounts can be used to accumulate dividend stocks, bonds, or other investments that provide income that will allow you to retire early. (See also: <a href="http://www.wisebread.com/7-investment-accounts-all-30-somethings-should-have?ref=seealso" target="_blank">7 Investment Accounts All 30-Somethings Should Have</a>)</p> <h2>5. Get a side hustle</h2> <p>To accumulate enough money for an early retirement, you'll need a healthy and steady income. If your day job doesn't quite pay enough, look for other ways to generate cash. This may mean freelance writing or playing guitar at local coffee shops. Maybe it's tutoring math, working as a DJ, or doing ASMR videos on YouTube.</p> <p>If you're young, you have energy and freedom, and the ability to make some cash on the side. Earn it, invest it, and watch it help you retire for good from work at an early age. (See also: <a href="http://www.wisebread.com/14-best-side-jobs-for-fast-cash?ref=seealso" target="_blank">14 Best Side Jobs For Fast Cash</a>)</p> <h2>6. Learn to budget</h2> <p>It's simple: The only way to invest money is to save it, and the only way to save it is to spend less than you earn. This may be easier said than done, especially if you aren't making a lot of money early in your career. But it needs to happen.</p> <p>Start by tracking your spending so you know precisely where your money is going. Then create buckets for various categories of spending (rent, food, entertainment, etc.). Budgeting requires focus and discipline, but can be fun &mdash; and ultimately rewarding &mdash; when you see your savings grow. (See also: <a href="http://www.wisebread.com/9-ways-staying-on-budget-can-be-fun-really?ref=seealso" target="_blank">9 Ways Staying on Budget Can Be Fun (Really!)</a>)</p> <h2>7. Tackle that debt</h2> <p>You may have student loans. As a result, you may also have credit card debt. If this is weighing you down, it's time to do something about it or an early retirement will be impossible.</p> <p>Begin by going after some of the most onerous debt first &mdash; usually, this is the credit card debt with the highest interest rate. Once the debt is eliminated, you can begin to focus on actually saving and investing, rather than simply making ends meet. (See also: <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=seealso" target="_blank">The Fastest Method to Eliminate Credit Card Debt</a>)</p> <h2>8. Get insured</h2> <p>The ability to retire early is as much a product of avoiding disaster as accumulating wealth. It's hard to save and invest aggressively if you find yourself saddled with tens of thousands of dollars in medical bills, or expenses to replace items lost when your apartment flooded.</p> <p>You may think that health insurance is a waste of money because you are young and in good shape. You may think that you're a good driver and don't need comprehensive auto insurance. But if you truly want to gain financial independence and work toward an early retirement, you must be properly insured. Even if you have insurance now, review your policies to make sure you're covered at the right levels. Fail to do this, and you may find a single disaster will send your financial future off track. (See also: <a href="http://www.wisebread.com/15-surprising-insurance-policies-you-might-need?ref=seealso" target="_blank">15 Surprising Insurance Policies You Might Need</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-things-millennials-can-do-right-now-for-an-early-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Things%2520Millennials%2520Can%2520Do%2520Right%2520Now%2520for%2520an%2520Early%2520Retirement.jpg&amp;description=8%20Things%20Millennials%20Can%20Do%20Right%20Now%20for%20an%20Early%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Things%20Millennials%20Can%20Do%20Right%20Now%20for%20an%20Early%20Retirement.jpg" alt="8 Things Millennials Can Do Right Now for an Early Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-things-millennials-can-do-right-now-for-an-early-retirement">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/5-biggest-ways-millennials-risk-their-retirements">5 Biggest Ways Millennials Risk Their Retirements</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-perks-of-being-in-your-20s">The Financial Perks of Being in Your 20s</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/6-questions-all-rookie-investors-should-ask">6 Questions All Rookie Investors Should Ask</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-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-alternatives-to-a-401k-plan">5 Alternatives to a 401(k) Plan</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) budgeting compound interest extra income insurance IRA millennials net worth saving money side gigs taxable brokerage accounts young adults Wed, 24 Jan 2018 10:00:05 +0000 Tim Lemke 2084738 at http://www.wisebread.com 3 Easy Ways to Invest in Real Estate (Without Buying Real Estate) http://www.wisebread.com/3-easy-ways-to-invest-in-real-estate-without-buying-real-estate <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-easy-ways-to-invest-in-real-estate-without-buying-real-estate" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/residential_image.jpg" alt="Residential image" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When most people think about investing in real estate, they think of buying a home and renting it out. But, as I've found, being a landlord comes with plenty of less-than-desirable trade-offs. The good news is, you can invest in real estate without actually buying any property.</p> <h2>The downsides of being a landlord</h2> <p>Believe me, leasing out a house or apartment that you own is no picnic. Even when you purchase a perfect property in a pleasant place and screen for the right renters, you could be hit with surprises. I had to replace the ceiling in a home I own when an old radiator malfunctioned. Tenants have locked themselves out and needed my spare key. I've even had tenants just decide to stop paying the rent for a few months. Hiring a property manager could relieve the mental fatigue, but it also eats into your profits.</p> <p>Let's not forget, purchasing a prime piece of real estate presents an entirely different set of challenges. Getting a mortgage from a traditional bank requires a mountain of paperwork. Investment properties generally require a 20 percent down payment, and the process to locate and purchase the right property can be lengthy and time-consuming. While the financial benefits of leasing out your property are numerous and often attractive, the lifestyle component may stop some from taking the plunge.</p> <p>Want an alternative? Check out these three options.</p> <h2>Real estate investment trusts (REITs)</h2> <p>REITs are companies that own or finance income-producing real estate. Anyone can buy shares in publicly-traded REITs, just like you would any other stock. You can invest in REITs by buying shares in a particular REIT directly through an open stock exchange, or by investing in exchange-traded funds (ETFs) or mutual funds that specialize in real estate.</p> <p>When investing in REITs, you get all the benefits of capitalizing on real estate profits without the hassles of fixing leaking toilets, settling neighborly disputes, or chasing tenants for rent checks. The REITs do that for you and split the profits in exchange for your investment.</p> <p>Because REITs don't have to pay federal taxes as long as 90 percent of the profits are distributed to investors as income or dividends, REITs also tend to experience higher yields overall. (See also: <a href="http://www.wisebread.com/4-ways-to-protect-your-retirement-from-inflation?ref=seealso" target="_blank">4 Ways to Protect Your Retirement from Inflation</a>)</p> <h2>Real estate partnerships</h2> <p>In this scenario, you could work with a group of investors and other real estate professionals to tackle projects under the banner of a partnership or limited liability corporation. The business entity would purchase real estate and employ a property manager to oversee daily operations.</p> <p>This type of structure can work well and allow would-be investors to avoid the less glamorous work common in landlord circles. However, the arrangement should be set up with qualified legal guidance. A partnership agreement or written operating procedures should clearly define everyone's roles and responsibilities from the beginning.</p> <h2>Peer-to-peer lending platforms</h2> <p>Peer-to-peer lending platforms allow investors to lend money without the use of traditional financial institutions. But, typical P2P loans are usually not tied to collateral, and that might make some investors anxious.</p> <p>Instead, if you want to invest in real estate, try <a href="https://www.groundfloor.us/" target="_blank">Ground floor</a>, a platform that caters specifically to real estate investment. It combines the higher-yield advantages of peer-to-peer lending with the security of a collateralized investment for non-accredited investors &mdash; people like you and me. According to their website, their averaged annual returns are 10 percent. Loans are typically short-term &mdash; between six and 12 months.</p> <p>The world of real estate-backed crowdsourcing is growing and changing rapidly. As this type of investment matures, more players will likely emerge. <a href="https://www.crowddd.com/" target="_blank">CrowdDD</a> is an independent community of investors that ranks and reviews real estate crowdfunding platforms based on personal investment experience. This can be a helpful tool to review before making any investment decisions.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F3-easy-ways-to-invest-in-real-estate-without-buying-real-estate&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F3%2520Easy%2520Ways%2520to%2520Invest%2520in%2520Real%2520Estate%2520%2528Without%2520Buying%2520Real%2520Estate%2529%2520%25281%2529.jpg&amp;description=3%20Easy%20Ways%20to%20Invest%20in%20Real%20Estate%20(Without%20Buying%20Real%20Estate)"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/3%20Easy%20Ways%20to%20Invest%20in%20Real%20Estate%20%28Without%20Buying%20Real%20Estate%29%20%281%29.jpg" alt="3 Easy Ways to Invest in Real Estate (Without Buying Real Estate)" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/toni-husbands">Toni Husbands</a> of <a href="http://www.wisebread.com/3-easy-ways-to-invest-in-real-estate-without-buying-real-estate">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-you-hire-a-property-manager">6 Questions to Ask Before You Hire a Property Manager</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-there-such-a-thing-as-a-safe-investment">Is There Such a Thing as a &quot;Safe&quot; Investment?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-an-exit-strategy-can-make-you-a-better-investor">How an Exit Strategy Can Make You a Better Investor</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-alternatives-to-a-401k-plan">5 Alternatives to a 401(k) Plan</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-only-5-rules-you-need-to-know-about-investing-in-real-estate">The Only 5 Rules You Need to Know About Investing in Real Estate</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Real Estate and Housing commercial properties partnerships peer to peer lending profits property managers real estate investment trusts REITs rental properties Wed, 10 Jan 2018 10:00:06 +0000 Toni Husbands 2084281 at http://www.wisebread.com You Can Start Investing With a Lot Less Money Than You Think http://www.wisebread.com/you-can-start-investing-with-a-lot-less-money-than-you-think <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/you-can-start-investing-with-a-lot-less-money-than-you-think" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/paper_pie_chart_on_a_plate.jpg" alt="Paper pie chart on a plate" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Getting started in investing often presents a chicken or egg scenario. Investment companies don't make it easy on new investors because they charge fees on most transactions and they have high minimum purchase requirements for many mutual funds. How can you start investing if you have very little money to begin with?</p> <p>There <em>are </em>good options for new investors. If you are just getting started with investing and only have a small amount of cash to spare, you can get involved in the stock market in a number of ways. (See also: <a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing?ref=seealso" target="_blank">8 Money Moves to Make Before You Start Investing</a>)</p> <h2>Find commission-free investments</h2> <p>One of the tough things about investing when you have a small amount of money is that fees often take out a sizable chunk of your purchasing power. For example, if you want to buy two shares of Coca-Cola for $100 total, eTrade charges $6.95 for each trade. That means you're losing nearly 7 percent of your money right off the bat.</p> <p>Fortunately, many discount brokerage firms, including eTrade, Fidelity Investments, and others, offer many investments without a commission. Often, these commission-free investments are exchange-traded funds that allow you to gain ownership of a specific stock sector or class.</p> <h2>Seek funds with low minimum requirements</h2> <p>There is a perception out there that the best-performing mutual funds are only open to people willing to invest tens of thousands of dollars. But this isn't necessarily true. Most major mutual fund companies offer scores of great funds that are available to people with relatively small minimums. Charles Schwab has several funds that allow you to get started for $100, and there are others out there with minimums of under $1,000.</p> <p>Keep in mind, too, that even a minimum of $3,000 could be in reach for you with the right kind of planning. If you can put aside $250 a month, an entire world of mutual funds will be available to you by the end of the year.</p> <h2>Use your 401(k)</h2> <p>If you have a 401(k) or similar plan from your employer, you can direct as little as 1 percent of your paycheck into that account. So if you're making, say, $30,000 annually, that amounts to barely more than $12 each paycheck. It's not much, but it gets you started and may even be subject to a matching contribution from your company. We encourage you to contribute enough to get the maximum in matching funds, but every little bit helps. (See also: <a href="http://www.wisebread.com/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments?ref=seealso" target="_blank">A Step-by-Step Guide to Choosing 401(k) Investments</a>)</p> <h2>Buy fractional shares</h2> <p>Believe it or not, there are now ways to buy less than a full share of stock, using smartphone apps. <a href="https://www.stockpile.com/" target="_blank">Stockpile</a> allows you to spend as little as $5 and buy fractional shares of more than 1,000 ETFs and mutual funds. Another app called <a href="https://divy.com/" target="_blank">Divy</a> lets you buy partial shares for $10, with commissions of just 10 cents; and <a href="https://www.stashinvest.com/" target="_blank">Stash</a> has 40 ETFs available for a minimum investment of just $5. So for the price of just a couple cups of coffee, you can get started investing. And it's a great way to learn the basics of the stock market with little risk.</p> <h2>Try a subscription service</h2> <p>Another new area of investing comes from digital platforms that allow you to own shares, but through a monthly subscription model. <a href="https://www.motifinvesting.com/" target="_blank">Motif</a> is an online investment adviser that charges as little as $9.95 per month to automatically invest your money into a personalized portfolio centered around a theme, such as &quot;healthy and tasty&quot; (companies that sell organic and farm-raised food). <a href="https://www.folioinvesting.com/" target="_blank">Folio Investing</a> is a competitor that charges $29 per month and allows unlimited trading into as many portfolios as the investor wants.</p> <p>This subscription model eliminates unwanted fees and allows investors to get started with a relatively small amount of money. (See also: <a href="http://www.wisebread.com/everyones-using-spare-change-apps-are-they-really-worth-it?ref=seealso" target="_blank">Everyone's Using Spare Change Apps &mdash; Are They Really Worth It?</a>)</p> <h2>Seek low-priced stocks</h2> <p>Just because a stock is trading at a low price doesn't mean it's not a solid purchase. There are many good companies out there that consistently trade at under $15. In some cases, these companies have simply performed stock splits in order to give shareholders more shares at lower prices. (Companies will often do this to attract new investors.) In other cases, shares are low due to some bad news, but may be due for a rebound. Under Armour is one example of a big company with shares available for cheap; the athletic apparel company has struggled recently, with shares falling below $13, but shares were has high as $29 just one year ago.</p> <p>If you don't have a lot of money to invest, consider looking into shares of companies with low share prices. Just be sure to research the company's financials to see if it's a good investment.</p> <h2>Save to invest</h2> <p>If you don't have money to hit a minimum investment requirement, consider taking a two-step approach. Try to set aside as much money as you can into a special savings account, then once that account has accrued enough, go ahead and invest in that mutual fund. So for example, if you need $3,000 to invest in a certain Vanguard mutual fund, work to set aside $250 a month and see if you can accrue enough to get started investing by the end of the year.</p> <p>The drawback to this approach is that you are essentially delaying investing for a year or more. But, it's better to do this than become discouraged and do nothing at all. (See also: <a href="http://www.wisebread.com/the-only-8-rules-of-investing-you-need-to-know?ref=seealso" target="_blank">The Only 8 Rules of Investing You Need to Know</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fyou-can-start-investing-with-a-lot-less-money-than-you-think&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FYou%2520Can%2520Start%2520Investing%2520With%2520a%2520Lot%2520Less%2520Money%2520Than%2520You%2520Think.jpg&amp;description=You%20Can%20Start%20Investing%20With%20a%20Lot%20Less%20Money%20Than%20You%20Think"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/You%20Can%20Start%20Investing%20With%20a%20Lot%20Less%20Money%20Than%20You%20Think.jpg" alt="You Can Start Investing With a Lot Less Money Than You Think" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/you-can-start-investing-with-a-lot-less-money-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. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-questions-to-ask-before-buying-any-stock">8 Questions to Ask Before Buying Any Stock</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</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/158-free-investment-classes-from-morningstar-earn-rewards-while-you-learn">158 Free Investment Classes From Morningstar: Earn Rewards While You Learn</a></span> </div> </li> <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/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future">6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment commission-free fractional shares funds 401(k) new to investing stocks subscription services Tue, 09 Jan 2018 10:00:06 +0000 Tim Lemke 2083783 at http://www.wisebread.com How an Exit Strategy Can Make You a Better Investor http://www.wisebread.com/how-an-exit-strategy-can-make-you-a-better-investor <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-an-exit-strategy-can-make-you-a-better-investor" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/negative_business_chart_with_a_businessman.jpg" alt="Negative business chart with a businessman" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>While I am generally a big fan of buy and hold investing, I'm well aware that sometimes it makes sense to unload a bad investment. Similarly, there are times when it&rsquo;s smart to take some profits from an investment that has done well.</p> <p>But how do you know when to sell? Trying to find the right timing for the sale of a stock, mutual fund, or other investment is hard, but it helps if you have mapped out an exit strategy &mdash; a set of guidelines to give you a sense of when to sell.</p> <p>The right exit strategy can help you maximize profits from good investments and reduce losses on bad ones. If you are pondering whether to be a seller, ask yourself if any of these things apply to you or your investment.</p> <h2>It&rsquo;s in a bad industry</h2> <p>If you own shares of a company that&rsquo;s struggling, it&rsquo;s fine to wait and see if management can turn things around. But often, the company is in an industry that is in a downward spiral with no signs of recovery. It&rsquo;s hard to admit, but there are some business sectors that are simply dying as a result of changes to technology, consumer habits, or other reasons.</p> <p>Would you invest in a print newspaper chain, or a brick-and-mortar retailer? How about a coal mining operation? If you own shares of a company that&rsquo;s part of a shrinking industry with no signs of renewal, it&rsquo;s probably time to get out. (See also: <a href="http://www.wisebread.com/help-i-bought-a-stock-dud-what-now?ref=seealso" target="_blank">Help, I Bought a Stock Dud! &mdash; What Now?</a>)</p> <h2>It&rsquo;s priced unreasonably high</h2> <p>It&rsquo;s important to know when to sell a stock when it&rsquo;s a loser, but there are times when you should consider unloading a stock when it&rsquo;s performed exceptionally well. The point of owning a stock is to profit, so once a healthy profit has been reached, it&rsquo;s smart to at least consider taking your profits and investing them elsewhere. This is especially true when a stock is overpriced and potentially due for a fall.</p> <p>One way to determine if a stock is too hot is its price-to-earnings ratio. An average price-to-earnings ratio is between 20 and 25, though it can vary depending on industry. Ratios can go higher if investors are betting on future growth. But if the ratio is high and you&rsquo;re not confident of the growth path of the company, consider taking your profits and moving on. (See also: <a href="http://www.wisebread.com/make-smarter-investments-by-mastering-this-simple-ratio?ref=seealso" target="_blank">Make Smarter Investments by Mastering This Simple Ratio</a>)</p> <h2>You wouldn&rsquo;t consider buying the stock now</h2> <p>If you own a struggling stock, it&rsquo;s often important to ask yourself whether you would buy the stock today. It often makes sense to buy stock when it&rsquo;s priced very low if you believe it will rise and make you a profit over time. But if you reflect on a stock you own and realize that you&rsquo;d probably pass on buying if it was presented to you now, that&rsquo;s a sign that it may be time to unload. When crafting an exit strategy, note the lowest price at which you&rsquo;d be willing to buy a stock. Once shares dip to that point, consider selling.</p> <h2>Selling at a loss can help you save on taxes</h2> <p>If you&rsquo;ve been thinking about selling a losing stock but have felt uncertain about when to pull the trigger, consider using the sale to offset your gains and save on taxes. For example, let&rsquo;s say you sold some shares of one company and made $1,000 in profits. That $1,000 is subject to capital gains taxes. But if you sell a different set of shares at a loss, your tax liability will be reduced or even eliminated. This is called tax loss harvesting, and it&rsquo;s one way to feel less bad about the duds in your portfolio.</p> <h2>You&rsquo;re breaking the 10 percent rule</h2> <p>It&rsquo;s not so much a &ldquo;rule&rdquo; but a guideline that many financial planners use to prevent big losses. If you have an investment that has lost 10 percent of its value in a short amount of time, it may be wise to sell before it goes down further. You can even put in place a &ldquo;stop&rdquo; order that automatically sells a security once it hits a certain price.</p> <p>For example, if you buy Facebook stock at $180, consider setting up a stop order to automatically sell it at $162. By using a stop order, you have the peace of mind to know that the investment will sell even if you are not paying close attention. It&rsquo;s also possible to put in a sell order when a stock reaches a predetermined high point, so you can take profits without worry.</p> <h2>You&rsquo;re breaking the 1 percent rule</h2> <p>Under this rule, the idea is that you never want a single investment to cost you more than 1 percent of your total portfolio. So for example, if you have $100,000 saved in a 401(k), you don&rsquo;t want to lose more than $1,000 from a single stock or mutual fund. Having this approach will prevent one dud investment from ruining your overall retirement nest egg.</p> <h2>You&rsquo;re nearing the &ldquo;support&rdquo; and &ldquo;resistance&rdquo; levels</h2> <p>Technical analysts use the term &ldquo;support&rdquo; to refer to the low price that an investment has historically never dropped below. At the &ldquo;support&rdquo; price, investors have generally decided to buy in and have prevented the price from moving lower. However, if a security moves below the historic &ldquo;support&rdquo; level, it&rsquo;s a sign that there is more downward pressure and that things could get even worse for the investment. It&rsquo;s a good idea to sell at this point to avoid further losses.</p> <p>Similarly, the &ldquo;resistance&rdquo; level is the price at which a security has been historically unable to break through. If an investment keeps approaching the resistance line but isn&rsquo;t breaking through, it may be time to take your profits.</p> <h2>There are other good investments available</h2> <p>There are some instances when it&rsquo;s OK to stick with a subpar investment because there are few other good places to put your money. If interest rates are low and the market is performing badly, it might make sense to wait and see if an investment rebounds. But if you find yourself wishing you could put your money in other, better-performing investments, maybe it&rsquo;s time to sell. There is a cost to selling, but if you free up cash to purchase something that is more likely to net you a profit, you may end up doing better in the long run.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-an-exit-strategy-can-make-you-a-better-investor&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520an%2520Exit%2520Strategy%2520Can%2520Make%2520You%2520a%2520Better%2520Investor.jpg&amp;description=How%20an%20Exit%20Strategy%20Can%20Make%20You%20a%20Better%20Investor"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20an%20Exit%20Strategy%20Can%20Make%20You%20a%20Better%20Investor.jpg" alt="How an Exit Strategy Can Make You a Better Investor" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/how-an-exit-strategy-can-make-you-a-better-investor">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/make-smarter-investments-by-mastering-this-simple-ratio">Make Smarter Investments by Mastering This Simple Ratio</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/4-portfolio-blind-spots-that-are-ruining-your-investments">4 Portfolio &quot;Blind Spots&quot; That Are Ruining Your Investments</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-questions-to-ask-before-you-sell-a-stock-or-a-fund">10 Questions to Ask Before You Sell a Stock or a Fund</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-simple-ways-to-conquer-your-fear-of-investing">4 Simple Ways to Conquer Your Fear of Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bad stocks buying duds exit strategy price to earnings ratio profits selling stock market stocks Thu, 04 Jan 2018 09:30:11 +0000 Tim Lemke 2074014 at http://www.wisebread.com Why Playing It Safe With Your Money Is Actually Risky http://www.wisebread.com/why-playing-it-safe-with-your-money-is-actually-risky <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-playing-it-safe-with-your-money-is-actually-risky" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_chances.jpg" alt="Retirement chances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The stock market has had a good run lately, but all good things come to an end eventually. And many of us remember a time not too long ago when a big crash wiped out billions of dollars in investment gains.</p> <p>Fear of a downturn, however, should not be an excuse to get too conservative in your investment approach. While it may be tempting to avoid stocks and keep all your money in cash and bonds, there is a real risk that you may find yourself without enough saved for retirement.</p> <p>While many of us may view stocks as &ldquo;risky&rdquo; investments, the more risky move is to play it too safe. Here&rsquo;s why.</p> <h2>1. You may live a long time</h2> <p>It was once common for someone to work into their 60s and pass away in their 70s. It wasn&rsquo;t necessary to prepare for a retirement of more than 15 years or so. But now, there are many cases of people living into their 90s and beyond. In fact, it&rsquo;s not unheard of to have a retirement that lasts longer than your work life. Are you on track to save enough to last 30 or 40 years?</p> <p>Accumulating enough for this length of time requires the investor to expand their risk tolerance and invest largely in stocks, especially earlier in life. It&rsquo;s OK to shift to some cash and bonds later, but going too conservative will leave your nest egg short of what you need. (See also: <a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50?ref=seealso" target="_blank">7 Reasons to Invest in Stocks Past Age 50</a>)</p> <h2>2. Interest rates are low</h2> <p>You may be tempted to put money in a savings account or in certificates of deposit due to their safety. But bank interest rates and bond yields are still very low by historical standards. Consider that you&rsquo;ll be lucky to get a 1.5 percent annual yield from a savings account, while bond yields are between 1 and 3 percent. With rates this low, your money may barely grow faster than the rate of inflation if you don&rsquo;t invest in something more aggressive. It&rsquo;s fine to keep a sizable fund in cash in the event of an emergency, but keeping the bulk of your retirement fund in low-interest accounts is not the ticket to a comfortable retirement.</p> <h2>3. There&rsquo;s no pension to help you</h2> <p>We&rsquo;ve all heard stories of our parents and grandparents walking into retirement with a hefty pension that took care of them for however long they had left on Earth. Those days are gone. While many employers still contribute to retirement through 401(k) plans, their overall contribution is less than in the past, or at least partially dependent on you setting aside some of your own money. It&rsquo;s now up to the individual to set aside enough money for a comfortable retirement, and this may require taking some risk and investing in stocks with a potential for growth. Play it too safe, and you may find yourself short on cash later in life. (See also: <a href="http://www.wisebread.com/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do?ref=seealso" target="_blank">If You're Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do</a>)</p> <h2>4. You may end up helping your kids</h2> <p>You may envision your retirement as a time spent traveling with your spouse, lounging on beaches, and doing crossword puzzles. In truth, it may be all that, plus a hefty dose of financial and child care support for your kids. A survey from TD Ameritrade revealed that millennial parents receive an average $11,000 annually from their own parents in the form of financial assistance or free child care. While these older citizens are eager to help their kids, 47 percent of them do admit that they have to make sacrifices in their own life to offer this assistance.</p> <p>In planning for your retirement, are you taking into account the possible expense of helping out your own kids? This assistance can add tens of thousands of dollars to your retirement costs, so it&rsquo;s important to have an investment strategy that is aggressive enough to take these costs into account. (See also: <a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids?ref=seealso" target="_blank">Are You Ruining Your Retirement by Spoiling Your Kids?</a>)</p> <h2>5. Future benefits aren&rsquo;t guaranteed</h2> <p>You may be banking on Social Security and other government programs to help support you when you get older. We all hope they&rsquo;ll be in place when we retire, but the stability and future of those benefits is subject to the whims of our lawmakers. Social Security and Medicare both are facing long-term budget shortfalls, and many lawmakers have advocated for adjustments to benefits in order to ensure these programs remain solvent.</p> <p>It&rsquo;s impossible to predict what government benefits will exist for retirees decades into the future, but no one should assume they will remain as-is forever. Moreover, these benefits were never designed to support a robust, active retirement. By taking a more aggressive approach with your own saving and investing, you can accumulate enough to enjoy a good retirement regardless of what government benefits look like in the future. (See also: <a href="http://www.wisebread.com/5-sobering-facts-about-social-security-you-shouldnt-panic-over?ref=seealso" target="_blank">5 Sobering Facts About Social Security You Shouldn't Panic Over</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhy-playing-it-safe-with-your-money-is-actually-risky&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520Playing%2520It%2520Safe%2520With%2520Your%2520Money%2520Is%2520Actually%2520Risky.jpg&amp;description=Why%20Playing%20It%20Safe%20With%20Your%20Money%20Is%20Actually%20Risky"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Why%20Playing%20It%20Safe%20With%20Your%20Money%20Is%20Actually%20Risky.jpg" alt="Why Playing It Safe With Your Money Is Actually Risky" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/why-playing-it-safe-with-your-money-is-actually-risky">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/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</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-plan-for-a-forced-early-retirement">How to Plan for a Forced Early Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</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-claim-social-security-benefits-while-living-abroad">How to Claim Social Security Benefits While Living Abroad</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-longevity-is-changing-retirement-planning-and-what-to-do-about-it">5 Ways Longevity Is Changing Retirement Planning (And What to Do About It)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) plans benefits fear of investing growth inflation interest market downturns pensions risk social security Fri, 22 Dec 2017 10:00:06 +0000 Tim Lemke 2073022 at http://www.wisebread.com How to Pick Your First Stocks and Funds http://www.wisebread.com/how-to-pick-your-first-stocks-and-funds <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-pick-your-first-stocks-and-funds" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cartons_of_financial_investment_products.jpg" alt="Cartons of financial investment products" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know you need to start investing, but you&rsquo;re not sure where to begin. There are a million different investments, so how can anyone determine which to start with?</p> <p>There is no real wrong way to begin investing, but it helps to start in a familiar place and educate yourself about some of the most common stocks and mutual funds. Follow this advice, and you&rsquo;ll be well on your way to building a great investment portfolio.</p> <h2>Pick something you know</h2> <p>When just getting started, it helps to have some familiarity with the company you are investing in. So go with a company whose products or services you use every day. Maybe it&rsquo;s Starbucks, or Walmart. Perhaps it&rsquo;s Coca-Cola or Pepsi. Do you have an iPhone? Investing in Apple might make sense for you. By starting out with something you know, you&rsquo;ll have a greater interest in tracking the stock&rsquo;s movements and paying attention to the company&rsquo;s operations.</p> <p>It&rsquo;s also fun to know that when you buy something from the company, you may be indirectly boosting the stock price. Moreover, if you invest in something well known, it&rsquo;s likely to be an established company with some track record of success. (See also: <a href="http://www.wisebread.com/how-to-buy-your-first-stocks-or-funds?ref=seealso" target="_blank">How to Buy Your First Stocks or Funds</a>)</p> <h2>Listen to your grandfather</h2> <p>You may tune out when your granddad starts espousing the virtues of shopping at Sears. But there are many companies that were huge 40 years ago that are still big today. Think Coca-Cola, General Motors, General Electric, IBM, or McDonald&rsquo;s. These are still &ldquo;blue chip&rdquo; stocks that have shown consistent, solid shareholder returns over time.</p> <p>In many cases, these companies don&rsquo;t even do what they originally did when your grandfather was your age. But that&rsquo;s OK. If your granddad has invested in a stock for decades and is living comfortably in retirement, it&rsquo;s probably a solid stock. Following your grandfather&rsquo;s advice is a great way to familiarize yourself with &ldquo;large cap&rdquo; stocks that include some of the world&rsquo;s biggest companies. (See also: <a href="http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying?ref=seealso" target="_blank">9 Ways to Tell If a Stock is Worth Buying</a>)</p> <h2>Go after growth</h2> <p>The entire point of investing is to see your money grow, right? So it&rsquo;s a good idea to familiarize yourself with growth stocks. These are stocks that represent companies poised to see strong earnings growth over time, and are often in fast-growing industries, such as technology. Growth stocks will often have earnings and cash flow that are higher than the average company, and will often have some sort of competitive advantage that gives it an edge in the marketplace.</p> <p>Famous tech companies including Apple, Netflix, and Alphabet are well-known growth investments. Smaller companies can offer great growth stocks as well, because their size allows for rapid increases in share value. Keep in mind, however, that growth stocks can often carry higher risk than other investments. (See also: <a href="http://www.wisebread.com/what-are-growth-stocks?ref=seealso" target="_blank">What Are Growth Stocks?</a>)</p> <h2>Find a good dividend stock</h2> <p>When learning to invest, it&rsquo;s important to know that stocks cannot only grow in value, but provide you with some income along the way. Many stocks will pay out a portion of their income to shareholders in what is known as a <em>dividend</em>. Getting your first dividend payment can be very exciting. This is real money that a company gives you each quarter simply for being a shareholder. And many companies will shell out dividends at a rate much higher than interest from the bank.</p> <p>When researching the best dividend-producing companies, look up how much the company will pay quarterly for each share of stock. That amount relative to the company&rsquo;s stock price is known as the <em>dividend yield</em>. A good dividend yield, coupled with solid financials and some growth in share price, can make for a great company to invest in.</p> <p>To find good dividend stocks, research the list of &ldquo;dividend aristocrats.&rdquo; These are companies that have managed to increase their dividend payments for 25 years or more. They include Procter &amp; Gamble, Exxon-Mobil, and AT&amp;T.</p> <h2>Invest in &ldquo;The Market&rdquo;</h2> <p>If you&rsquo;re confused about what stocks or funds to purchase, why not invest in everything? Or at least a small piece of everything. There are many mutual funds and exchange-traded funds that are designed to mirror the performance of the broader stock market or major indexes like the S&amp;P 500. You won&rsquo;t necessarily &ldquo;beat the market&rdquo; with these investments, but you&rsquo;ll see your investments move with the overall stock market, and get exposure to a wide range of companies in various industries.</p> <p>These investments are often available with very low fees, as well. Good examples of these kinds of investments include the iShares Core S&amp;P Total U.S. Stock Market ETF [NYSE: ITOT], Vanguard Total Market ETC [NYSE: VTI], or T. Rowe Price Equity Index 500 Fund [NYSE: PREIX].</p> <h2>Look for value</h2> <p>One of the most basic pieces of investment advice you&rsquo;ll receive is to &ldquo;buy low and sell high.&rdquo; At its core, this means it&rsquo;s smart to find investments that are undervalued and have a strong potential to grow and make you a profit over time. These &ldquo;value&rdquo; stocks aren&rsquo;t always easy to find, but they have driven the portfolios of some of the world&rsquo;s most successful investors, including Warren Buffett.</p> <p>There are several key things to look for when searching for value stocks. First, it&rsquo;s important to understand why a stock may have a low price. Often, it&rsquo;s because the company is not doing well financially. But sometimes, a stock price can fall for reasons that have nothing to do with company performance, in which case it may be poised to rebound.</p> <p>A company&rsquo;s price-to-earnings (P/E) ratio is another thing to consider. You can determine this ratio by dividing a stock's earnings by its stock price. A low P/E ratio compared to other stocks may indicate it&rsquo;s undervalued. (See also: <a href="http://www.wisebread.com/make-smarter-investments-by-mastering-this-simple-ratio?ref=seealso" target="_blank">Make Smarter Investments by Mastering This Simple Ratio</a>)</p> <p>If you are unsure of what value stocks to buy, consider mutual funds that zero in on value stocks. Popular options include the Vanguard U.S. Value Fund [NYSE: VUVLX] and the T. Rowe Price Value Fund [NYSE: TRVLX].</p> <h2>Understand competitive advantage</h2> <p>There are some companies that are just kicking butt. Their edge over their competitors is as vast as the Pacific Ocean, and they are practically synonymous with the industries they are in. Some investors refer to this as a &ldquo;moat.&rdquo; A company with a wide &ldquo;moat&rdquo; is often viewed as having a large enough competitive advantage to withstand any operating hiccup or economic downturn.</p> <p>Think Amazon in the e-commerce sector, or Facebook in the area of social media. Alphabet, the parent company of Google, also leaves most of its competitors in the dust, and Walmart dominates the traditional retail sector.</p> <p>If you&rsquo;re looking to buy one of your first stocks, consider any company that seems to be just crushing the competition. You may not be able to get shares on the cheap, but you&rsquo;ll be getting ownership in a company poised to make you money over time.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-pick-your-first-stocks-and-funds&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Pick%2520Your%2520First%2520Stocks%2520and%2520Funds.jpg&amp;description=How%20to%20Pick%20Your%20First%20Stocks%20and%20Funds"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Pick%20Your%20First%20Stocks%20and%20Funds.jpg" alt="How to Pick Your First Stocks and Funds" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/how-to-pick-your-first-stocks-and-funds">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-be-fooled-by-an-investments-rate-of-return">Don&#039;t Be Fooled by an Investment&#039;s Rate of Return</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-investing-tips-you-wish-you-could-tell-your-younger-self">11 Investing Tips You Wish You Could Tell Your Younger Self</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-9-best-performing-mutual-funds-of-the-2000s">The 9 Best Performing Mutual Funds of the 2000s</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment advice dividends growth stocks mutual funds new investor returns stock market value stocks Tue, 19 Dec 2017 09:00:07 +0000 Tim Lemke 2073021 at http://www.wisebread.com 5 Alternatives to a 401(k) Plan http://www.wisebread.com/5-alternatives-to-a-401k-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-alternatives-to-a-401k-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/stacks_of_coins_in_bank_notes_with_white_eggs.jpg" alt="Stacks of coins in bank notes with white eggs" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The status of 401(k) plans has been in the news a lot recently, as part of the wider discussion about tax reform on Capitol Hill. While it does appear that tax benefits for the popular employer-sponsored retirement plans will remain unchanged for now, even the prospect of change has left some people feeling unsettled about what to do with their money moving forward.</p> <p>To be clear, a 401(k) plan remains a very powerful tool to help you save for retirement, especially if your company is generous in matching contributions. But if you are feeling confused or are not happy with what your current 401(k) plan offers, there are some other options available to help you build a retirement fund. Here's the skinny on a handful of 401(k) alternatives.</p> <h2>1. Roth IRA</h2> <p>A Roth Individual Retirement Account (IRA) is a popular option among people who don't have access to a 401(k) or other retirement plan through their employer. With a Roth, you can contribute up to $5,500 annually ($6,500 if over age 50), and since you contribute with post-tax dollars, the gains on those investments can be withdrawn tax-free when you retire. Roth IRAs are popular due to the flexibility to choose your own investments. It's also possible to use the account for certain emergency costs, such as medical bills or a home threatened by foreclosure, and you can even use it as a college savings account, though there may be penalties and taxes if you withdraw gains before age 59 &frac12;. (See also: <a href="http://www.wisebread.com/using-your-roth-ira-as-an-emergency-fund-ever-a-good-idea?ref=seealso" target="_blank">Using Your Roth IRA as an Emergency Fund &mdash; Ever a Good Idea?</a>)</p> <p>A Roth IRA is a good alternative to a 401(k) for those who don't have access to one. Even if you do have a 401(k), sometimes a Roth IRA is a better option, such as in cases when an employer does not offer matching contributions, or the fund choices are expensive or limited. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401(k) or IRA? You Need Both</a>)</p> <p>Roth IRAs are also useful because you can contribute as long as you have earned income; other retirement plans require you to begin making withdrawals by age 70 &frac12;.</p> <h2>2. Traditional IRA</h2> <p>A traditional IRA is similar to a Roth IRA, but the tax advantages are more in line with a 401(k). In this case, any contributions to the account are deducted from your taxable income up front; you will be required to pay taxes on the gains when you retire.</p> <p>It's entirely possible and sensible to have both a traditional IRA and a Roth IRA in order to get tax advantages both now and later. Note that with a traditional IRA, you must start taking required minimum distributions starting at age 70 &frac12;.</p> <h2>3. Taxable brokerage account</h2> <p>There are no tax advantages to opening a good old-fashioned, regular, taxable brokerage account. But you do get flexibility that can't be offered by a 401(k) or IRA. With a regular taxable account, you can invest in whatever you want and buy and sell whenever you want without any early withdrawal penalties, though you will pay taxes on any gains. This type of brokerage account is great if you want to buy dividend stocks to boost your income, or use the investments for something other than retirement.</p> <h2>4. Peer-to-peer lending</h2> <p>This is a relatively new investment option that allows people to connect online with borrowers and collect interest income. Through peer-to-peer lending sites such as Lending Club and Prosper, you become a lender and loan money to someone in need of cash, profiting from the interest on that loan.</p> <p>With peer-to-peer lending, lenders can earn considerably more than what they might earn from interest from the bank, and may even outpace stock market returns, depending on the riskiness of the loans they buy. But there is always some risk that the borrower will default. And keep in mind that interest from peer-to-peer lending is taxed as normal income, rather than investment gains. (See also: <a href="http://www.wisebread.com/everything-you-need-to-know-about-peer-to-peer-investing-with-lending-club?ref=seealso" target="_blank">Everything You Need to Know About Peer-to-Peer Investing With Lending Club</a>)</p> <h2>5. Stick your money in the bank</h2> <p>Putting your money into a savings account is always an option, though not the best one on this list. These days, interest rates are so low that in many cases the growth of your savings will barely outpace inflation. You may be able to find better-than-average rates at some online banks or by opening a certificate of deposit, but there's no chance you'll be able to match the returns of the stock market over the long term. It's fine to use a bank account for your emergency fund, but for long-term savings, look elsewhere.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-alternatives-to-a-401k-plan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Alternatives%2520to%2520a%2520401%2528k%2529%2520Plan.jpg&amp;description=5%20Alternatives%20to%20a%20401(k)%20Plan"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Alternatives%20to%20a%20401%28k%29%20Plan.jpg" alt="5 Alternatives to a 401(k) Plan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/5-alternatives-to-a-401k-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-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-millennials-can-do-right-now-for-an-early-retirement">8 Things Millennials Can Do Right Now for an Early Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/yes-you-can-pay-for-education-with-an-ira">Yes, You Can Pay for Education With an IRA</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/money-a-mess-try-this-personal-finance-starter-kit">Money a Mess? Try This Personal Finance Starter Kit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) banking gains peer to peer lending Roth IRA saving money savings account taxable brokerage account traditional ira Mon, 18 Dec 2017 09:30:10 +0000 Tim Lemke 2070181 at http://www.wisebread.com 5 Lucrative Climate Change Investments That Can Help Save the World http://www.wisebread.com/5-lucrative-climate-change-investments-that-can-help-save-the-world <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-lucrative-climate-change-investments-that-can-help-save-the-world" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/businessmen_with_plants.jpg" alt="Businessmen with plants" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We all want to do better to help our environment. Most of us know about small changes we can make, such as driving less or recycling more, to reduce the threat of climate change. But what if you want to do more? What if you could use your investment dollars to help fight climate change's impact on the world?</p> <p>You can do this. Impact investing, which yields both a financial and social return, is increasing in popularity. Once considered an investment option only for people with significant financial means, impact investing is becoming more accessible to middle income earners. Here are five options that are worthy of your consideration if you want to take care of your own finances and the planet. (See also: <a href="http://www.wisebread.com/a-simple-guide-to-socially-responsible-investing?ref=seealso" target="_blank">A Simple Guide to Socially Responsible Investing</a>)</p> <h2>1. Motif Investing's Climate Change Index Fund</h2> <p>Motif's <a href="https://www.motifinvesting.com/motifs/climate-change" target="_blank">Climate Change Index Fund</a> is comprised of 25 stocks that include companies in clean energy, energy management, agriculture, clean water distribution, carbon emissions reduction, and waste management. Over the past year, the fund has had a return rate of 31.5 percent. In addition to the Climate Change investment option, Motif also has investment options that focus on fair labor practices and ethical corporate behavior.</p> <h2>2. Etho Climate Leadership Index</h2> <p><a href="https://ethocapital.com/performance-ecli-us/" target="_blank">Etho Climate Leadership</a> is the first index of its kind to be fully divested from fossil fuels. It selects the most carbon efficient companies across a wide variety of industries. In addition to eliminating fossil fuels, it has also eliminated investments from tobacco, weapons, and gambling. The index undergoes a rigorous screening process of its investments that is based on ESG (environment, social, and governance) performance data and incorporates expertise from global NGO (nongovernmental organization) partners.</p> <h2>3. Fidelity's U.S. Sustainability Index Fund</h2> <p>Fidelity created the <a href="https://fundresearch.fidelity.com/mutual-funds/summary/31635V422" target="_blank">U.S. Sustainability Index Fund</a> to give its investors access to domestic companies that have strong sustainability profiles. Currently, the fund's top holdings include Microsoft, Johnson &amp; Johnson, and Alphabet (Google). This fund has low expenses and a medium risk rating. Because it's new this year, this fund doesn't have deep historical performance data. However, it has provided an 11.70 percent lifetime return since its inception in May 2017.</p> <h2>4. Vanguard's FTSE Social Index Fund</h2> <p>Vanguard offers a host of socially responsible investment funds. Over the past decade, its <a href="https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=0213" target="_blank">FTSE Social Index Fund</a> has seen peaks and troughs in its performance &mdash; though this year it has provided the best return in its history at 20.41 percent.</p> <h2>5. Wunder Solar Funds</h2> <p><a href="https://www.wundercapital.com/?utm_source=electrek&amp;utm_medium=display&amp;utm_content=sponsoredstory&amp;utm_campaign=sept17" target="_blank">Wunder Capital</a> is a different breed of investment vehicle than the others mentioned above. For a minimum $1,000 investment, any investor can contribute to Wunder's efforts to loan money to small- and medium-sized businesses that want to install solar energy systems. The return has varied between 6 percent and 8.5 percent, depending upon the fund the Wunder investor chooses. This year alone, Wunder has financed 50 installations. Those 50 installations have yielded 15.2 megawatts of solar energy. What kind of impact does this change have on the environment? This carbon offset in this year alone is equivalent to:</p> <ul> <li> <p>14,248,648 pounds of burned coal.</p> </li> <li> <p>1,502,503 gallons of gasoline consumed.</p> </li> <li> <p>8,476,000 pounds of waste.</p> </li> <li> <p>12,640 acres of U.S. forests.</p> </li> <li> <p>2,821 cars driven.</p> </li> </ul> <p>These are just a handful of ways that you can use your investment dollars to provide you with a financial return while helping to fight climate change at the same time. As always, before investing it's wise to consult an investment professional so that you understand the risk/reward ratios of different options and to receive comprehensive advice on all of the investment options available to you.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-lucrative-climate-change-investments-that-can-help-save-the-world&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Lucrative%2520Climate%2520Change%2520Investments%2520That%2520Can%2520Help%2520Save%2520the%2520World.jpg&amp;description=5%20Lucrative%20Climate%20Change%20Investments%20That%20Can%20Help%20Save%20the%20World"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Lucrative%20Climate%20Change%20Investments%20That%20Can%20Help%20Save%20the%20World.jpg" alt="5 Lucrative Climate Change Investments That Can Help Save the World" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christa-avampato">Christa Avampato</a> of <a href="http://www.wisebread.com/5-lucrative-climate-change-investments-that-can-help-save-the-world">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/how-to-invest-in-mutual-funds">How to Invest in Mutual 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/6-ways-climate-change-could-affect-your-money">6 Ways Climate Change Could Affect Your 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/8-industries-that-could-benefit-from-climate-change">8 Industries That Could Benefit From Climate Change</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/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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-warren-buffett-says-you-should-invest-in-index-funds">Why Warren Buffett Says You Should Invest in Index Funds</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment climate change global warming green living impact investing index funds socially responsible investment solar energy Mon, 11 Dec 2017 09:30:09 +0000 Christa Avampato 2068118 at http://www.wisebread.com Don't Be Fooled by an Investment's Rate of Return http://www.wisebread.com/dont-be-fooled-by-an-investments-rate-of-return <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dont-be-fooled-by-an-investments-rate-of-return" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/investor_compares_quotes_from_newspaper_and_tablet.jpg" alt="Investor compares quotes from newspaper and tablet" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you invest, you are looking for return. You want your money to grow over time, preferably at a rate that will allow you to achieve your financial goals.</p> <p>An investment's rate of return can be a deceptive thing, however. The amount of money that an investment has made in the past isn't a guarantee of future returns. Moreover, these returns by themselves don't tell you a whole lot about what you are investing in.</p> <p>Learning how to analyze an investment's returns &mdash; and understanding its limitations &mdash; will help you on the path to financial freedom. Just remember these key facts about an investment's return when examining it.</p> <h2>Short time frames don't tell you much</h2> <p>&quot;Hey, this mutual fund went up 29 percent last year! Woo hoo!&quot; That's great, but what did it do the year before? And the year before that? How has it performed over the last decade? Looking at the rate of return for a single year is not particularly useful, as any investment can have a hot 12 months. To get a sense of how an investment may perform in the future, it helps to have a long record of performance to examine. Fortunately, most brokerages and financial websites have comprehensive information on historical returns, so you're not simply looking at the performance of the last year.</p> <h2>It offers no information on the type of investment</h2> <p>It's great if an investment has a solid rate of return, but that should not be the only consideration when looking to buy shares. If you are buying a stock, you need to ask yourself key questions aside from just looking at performance. What industry does the company operate in? How big is the company? Does it operate internationally? If you're talking about a mutual fund, what is the investment mix? Answering these questions will help you understand whether you already own similar investments, and whether it makes sense to add them to your portfolio.</p> <h2>It's almost useless without context</h2> <p>Let's say you come across a mutual fund that earned a 9 percent return last year. You might think that is pretty good, right? Well, it doesn't look so good when you consider the S&amp;P 500 returned 11.96 percent. Information on returns is only meaningful when it is paired with information about the broader stock market, comparable investments, and specific indexes. A small cap ETF, for example, should be examined alongside the Russell 2000 index. A mutual fund focused on technology should be compared to prominent technology indexes. Fortunately, most brokerage firms and financial websites do provide this, so it's important to analyze market returns using that context.</p> <h2>It does not always factor in all costs</h2> <p>If you purchase a mutual fund or ETF, a certain portion of your investment is taken in expenses and fees. While mutual fund returns are usually reported net of expenses, not every cost is included in this calculation. Many funds have sales charges and commissions (also known as loads) that you pay when buying and selling. Your brokerage firm may also charge a commission to execute the trade. This can reduce your overall return. The good news is that there are many good no-load mutual funds out there, and many can be traded without a commission, depending on the broker.</p> <p>One more caveat regarding costs. Capital gains taxes will also reduce your balance when you sell. Be sure to factor in these costs when examining an investment's rate of return.</p> <h2>It does not offer detail on volatility</h2> <p>Let's say you have a stock that rose in value from $50 to $90 in five years. The annualized return on that stock is 16 percent. But that does not tell you whether the stock's performance has been consistent or wildly up and down.</p> <p>For example, during that five-year period, that stock may have risen 20 percent, then dropped 25 percent, then risen 44 percent, dropped 10 percent, and finally rose 53 percent. That's pretty volatile, and may be outside the comfort zone of many investors even though the overall return is good. To get a better picture of the investment's performance, you need to look at the returns from each individual year, but even that offers no insight into price swings within any given year.</p> <h2>It can't answer the question &quot;Why?&quot;</h2> <p>An investment's rate of return may be the crucial piece of information you need to know before investing, but there's a lot that it doesn't tell you. Perhaps most importantly, it does not offer any insight into <em>why </em>an investment's price moved up or doing during a certain period.</p> <p>Investment values go up and down for a variety of reasons, not all of them related to company performance. Perhaps a retailer saw its shares fall sharply during one quarter due to a series of natural disasters. Perhaps another company saw shares rise dramatically because of hype over its Super Bowl commercial. Returns on investment are crucial to know, but if you are an investor, it's important to do your own homework to understand why a price went up or down. Doing so will help you better understand how an investment may perform in the future.</p> <h2>It gives you no information on fundamentals</h2> <p>An investment's historical rate of return can give you insight into how it might perform in the future. But the company's actual financial performance may be even more important. It's not enough to just examine an investment's return. You should also look at company balance sheets, analyze earnings reports, and look at things like cash flow, debt, and price-to-earnings ratio. This will help you understand whether an investment's price is justified. Examples abound of companies that saw share prices skyrocket based on speculation although earnings weren't there to support it.</p> <h2>It tells you nothing about taxes</h2> <p>Let's say you invested $1,000 in a company stock and it earned an annual return of 9 percent a year over five years. That means you'll end up with $1,450 when you sell, right? Well, not exactly. Remember that unless you are investing in a tax-advantaged account such as a Roth IRA, the government takes its share when you sell. Assuming that you'll be taxed at the long-term capital gains rate of 15 percent, suddenly, that 9 percent annual return became something closer to 7 percent. Keep this in mind when trying to calculate how much money you'll actually walk away with.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fdont-be-fooled-by-an-investments-rate-of-return&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FDont%2520Be%2520Fooled%2520by%2520an%2520Investments%2520Rate%2520of%2520Return.jpg&amp;description=Dont%20Be%20Fooled%20by%20an%20Investments%20Rate%20of%20Return"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Dont%20Be%20Fooled%20by%20an%20Investments%20Rate%20of%20Return.jpg" alt="Don't Be Fooled by an Investment's Rate of Return" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/dont-be-fooled-by-an-investments-rate-of-return">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</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/11-investing-tips-you-wish-you-could-tell-your-younger-self">11 Investing Tips You Wish You Could Tell Your Younger Self</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</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-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</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-one-mediocre-investor-prospered-after-the-market-crash">How One Mediocre Investor Prospered After the Market Crash</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment balance sheet bonds fees mutual funds rate of return returns roi s&p 500 stock market stocks volatility Fri, 08 Dec 2017 10:00:07 +0000 Tim Lemke 2068609 at http://www.wisebread.com 4 Simple Ways to Conquer Your Fear of Investing http://www.wisebread.com/4-simple-ways-to-conquer-your-fear-of-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-simple-ways-to-conquer-your-fear-of-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/businessman_cowering_on_blue_blackboard_background.jpg" alt="Businessman cowering on blue blackboard background" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're nervous about investing in the stock market, you're not alone. Stock ownership in the U.S. is down, and a recent poll indicates that frightening memories of the last bear market may be to blame.</p> <p>According to a Gallup survey, just 54 percent of U.S. adults own stocks, including those owned through mutual funds that people invest in via their 401(k) or other retirement accounts. That's down from 62 percent who owned stocks before the last bear market. During that devastating downturn, which began at the end of 2007 and ran through early 2009, the market fell by more than 50 percent. In part, Gallup blames the decline in stock ownership on that painful, fearful time.</p> <p>&quot;It appears the financial crisis and recession may have fundamentally changed some Americans' views of stocks as an investment,&quot; the company stated on its website. &quot;The collapse in stock values in 2008 and 2009 seems to have left a greater impression on these people than the ongoing bull market that has followed it, as well as research showing the strong historical performance of stocks as a long-term investment.&quot;</p> <p>If that sounds like you, here are some suggestions for overcoming your concerns. (See also: <a href="http://www.wisebread.com/how-to-get-over-these-5-scary-things-about-investing?ref=seealso" target="_blank">How to Get Over These 5 Scary Things About Investing</a>)</p> <h2>1. Develop a healthy fear of not investing</h2> <p>If it's safety you're after, there are few safer places to put your money than a bank. Because deposits are insured by the Federal Deposit Insurance Corporation, you could put up to $250,000 in a bank account and rest easy knowing that if the bank went out of business, the federal government would make sure you got your money back.</p> <p>While a bank account can be a good place to keep some savings for emergencies, right now many banks are paying just .01 percent interest, making them a horrible place to pursue long-term goals like retirement.</p> <p>For example, let's say you're 30 years old and deposit $10,000 at .01 percent interest. In 40 years, your $10,000 will have turned into &mdash; wait for it &mdash; $10,040. That's right. After 40 years, you will have made just $40 on your 10 grand. And once you factor inflation into the mix, the buying power of your $10,000 will have taken a big step backward.</p> <p>Let's say you earn 7 percent interest instead. In 40 years, your $10,000 will have turned into $150,000. And 7 percent is a very conservative assumption since the stock market's long-term average annual return has been 10 percent.</p> <p>So, instead of being fearful about investing, it is more logical to be fearful about not investing.</p> <h2>2. Learn a little market history</h2> <p>Many of the mistakes investors make are due to their emotions. If the market falls, some people get scared and pull money out of the market, usually to their detriment. A little knowledge of market history can help you stay the course.</p> <p>The longer you keep money in the market, the more likely you are to make money. When Morningstar analyzed the stock market's performance during each one-, five- and 15-year period from 1926 to 2016, it found that 74 percent of the one-year periods showed positive returns, 86 percent of the five-year periods generated gains, and 100 percent of the 15-year periods were up. In other words, based on 90 years of history, if you stay in the market for at least 15 years, it's a virtual certainty that you will make money.</p> <p>Putting time on your side is also the key to surviving a significant market downturn. According to Morningstar, someone with $100,000 invested in the stock market at the beginning of 2007 would have lost nearly half that amount by early 2009. Brutal, right? However, if they had stayed invested, by January 2017 their portfolio would have been worth nearly twice its value on January 2007. Despite that horrible downturn, their average annual return over those 10 years would have been nearly 7 percent. (See also: <a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market?ref=seealso" target="_blank">How the Risk Averse Can Get Into the Stock Market</a>)</p> <h2>3. Start small</h2> <p>If you have a chunk of money to invest but just can't work up the courage to hit &quot;buy,&quot; consider investing a little at a time through dollar-cost averaging. The idea is very simple. Just take the total amount (let's say $12,000), divide by the number of months you plan to invest (let's use 12), and invest that amount at the same time every month ($1,000 per month).</p> <p>If the market has a good month, your money will buy fewer shares. If the market has a bad month, your money will buy more. You never have to worry about getting the timing just right. By spreading your investments over a year a more, you minimize the risk of losing a lot of money through an immediate downturn. (See also: <a href="http://www.wisebread.com/is-dollar-cost-averaging-the-right-strategy-for-you?ref=seealso" target="_blank">Is Dollar Cost Averaging the Right Strategy for You?</a>)</p> <h2>4. Keep it simple</h2> <p>Investment terminology can be confusing. Diversification. Asset allocation. What does it all mean? You can put these helpful concepts to work without qualifying for a job on Wall Street by investing in a super simple target-date fund.</p> <p>Because they are mutual funds, target-date funds are inherently diversified &mdash; that is, the money you invest is spread out among multiple stocks, bonds, or other investments. And they take care of asset allocation decisions for you. That means they are designed with an appropriate mix of stocks and bonds for someone your age. They even automatically adjust that mix as you get older, tilting their stock/bond allocation more toward bonds to make your portfolio appropriately more conservative as you near your intended retirement date.</p> <p>It's understandable that the last bear market may have dampened your enthusiasm for the stock market. However, the market continues to offer most people their best opportunity for building wealth. The steps described above should help you wade back into the investment waters without fear.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-simple-ways-to-conquer-your-fear-of-investing&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Simple%2520Ways%2520to%2520Conquer%2520Your%2520Fear%2520of%2520Investing.jpg&amp;description=4%20Simple%20Ways%20to%20Conquer%20Your%20Fear%20of%20Investing"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Simple%20Ways%20to%20Conquer%20Your%20Fear%20of%20Investing.jpg" alt="4 Simple Ways to Conquer Your Fear of Investing" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/4-simple-ways-to-conquer-your-fear-of-investing">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</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/dont-be-fooled-by-an-investments-rate-of-return">Don&#039;t Be Fooled by an Investment&#039;s Rate of Return</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50">7 Reasons to Invest in Stocks Past Age 50</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment allocation bonds dollar cost averaging fears losing money not investing risk stock market stocks target date funds Wed, 06 Dec 2017 09:30:11 +0000 Matt Bell 2066563 at http://www.wisebread.com