portfolio http://www.wisebread.com/taxonomy/term/7611/all en-US The Easiest Way to Invest in the World's Biggest Companies http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-easiest-way-to-invest-in-the-worlds-biggest-companies" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/invest_money_476336804.jpg" alt="Learning how to invest in the biggest companies" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Here's a classic way to build up an investment portfolio: Regularly invest modest amounts of money in growing companies. Do that for a few decades, reinvesting the dividends as you go along, and &mdash; if you've picked the right companies &mdash; you will end up with sizable holdings. Perhaps even real wealth.</p> <p>If you want a diversified portfolio, and you really should, there are a lot of cheap ways to get one. Any number of mutual funds will let you open an account with a modest initial deposit, and the minimums for subsequent investments are quite reasonable for even a small saver.</p> <p>But what if you don't like someone else's idea of a diversified portfolio? What if you have some strong opinions about which companies are worth investing in, and out of the thousands of mutual funds available, none of them focuses on those companies? What if you really want to invest in specific companies picked by you?</p> <p>One option would be to open an account at an online brokerage and make your purchases there. That will work great if you have ample money to invest. But what if your free cash for investing is small?</p> <p>Even small investments can add up to a lot of money, if you've got both time and a good annual return working for you. If the companies you pick can average an 8% annual return for 40 years, just $20 a week will build to a fortune of over $300,000.</p> <p>But the online brokerage solution is no good for investments that small, because of commissions. Even the cheap online brokers charge $5 on a trade, and plenty of them charge closer to $10 &mdash; there's half your investment gone right there.</p> <p>Fortunately, there's an alternative that's tailor-made for this situation: Direct Stock Purchase Plans, or DSPPs.</p> <h2>Direct Stock Purchase Plans</h2> <p>Back in my day they were called Dividend Reinvestment Plans, or DRIPs, but they're basically the same thing: Big companies hire somebody &mdash; usually the stock transfer agent &mdash; to create and manage accounts that let individuals buy small quantities of stock &mdash; usually for no commission &mdash; and reinvest their dividends.</p> <p>It's a win for the investor, because they get to invest in the stock for free. It's a win for company, because they get a dependable stream of new capital, and a stable base of shareholders who are aren't likely to sell out at the first sign of bad news or to go chasing after the next hot trend.</p> <p>Besides charging no commissions, they also solve another problem for the very small investor: the cost of whole shares. Suppose you want to invest $20 out of every paycheck, but the stock you want to buy is $63 a share. It would take you four paychecks to save up enough money to buy one share. With a DSPP you'd get 0.317 shares with the first contribution, and a similar amount each paycheck after.</p> <h2>Things to Know</h2> <p>There are a few caveats.</p> <p>First, only certain companies go to the trouble and expense of offering a DSPP. Happily, as suggested by the title of this article, they're mostly the largest companies on the U.S. stock exchanges. The web has plenty of lists of companies that offer DSPPs or DRIPs. Alternatively, if you know which company you're interested in, go to the company website and look for a link like &quot;investors&quot; or &quot;shareholder information.&quot; If there's a direct investment program, you'll find the information about it there.</p> <p>Second, buying stocks this way &mdash; through numerous small purchases &mdash; may make figuring your taxes a lot more complicated in the years that you sell. (This may be less true than it used to be, now that brokers are required to track your cost basis for you.)</p> <p>Third, be aware that these sort of plans don't offer the services of a broker. They are basically just for accumulating shares in one specific company. They will probably let you shift from reinvesting your dividends to receiving them in cash, something you might want to do when you retire and will be living off your investments. They usually let you take delivery of your stock (if at some point you want to transfer it to a regular broker) or sell it (if you have found a better investment, or need the money to live on). They won't let you borrow against it, they won't have cash management tools, they won't be interested in holding any other shares you own, or selling you bonds, or advising you on other investment opportunities.</p> <p>Fourth, investing in just one company won't give you a diversified investment portfolio. You'd need a dozen carefully chosen companies to get something reasonably diversified. Of course, as an adjunct to some well-diversified mutual funds, a DSPP in a company that does very well, can provide a considerable boost to your total return, without completely unbalancing your portfolio.</p> <h2>History</h2> <p>Plans like these used to be a much bigger deal. Especially before 1975 (when minimum commissions were abolished), but continuing right up until Internet brokers got big in the 1990s, the costs to trade stocks were high enough that it was completely impractical for a small investor to gradually accumulate shares in a growing company. Investing in individual stocks was a game only for the wealthy.</p> <p>It's generally not important these days, but there's a technical difference between DRIPs and DSPPs. Back in the day DRIPs usually required that you purchase your first share from a broker (or acquire it some other way, such as by inheriting it). Then you could reinvest dividends, or even make additional cash purchases of shares, but that first share had to come first.</p> <p>Starting in the mid-1990s, the SEC relaxed some rules, making it practical for companies to offer DSPPs that could sell you your first share, as well as shares beyond that.</p> <p>It's kind of a technical point, but that's the difference between the two kinds of plan.</p> <h2>Small Versus Tiny Investors</h2> <p>With internet brokers, even a fairly small investor can buy and sell stocks. You need a certain amount of capital &mdash; a few thousand dollars &mdash; to make it possible to buy a round lot of 100 shares and to make the $5 or $10 commission a small enough percentage of your total investment.</p> <p>But if you're a tiny investor &mdash; if your investable capital is only a few hundred dollars &mdash; something like a DSPP makes it possible for even the smallest investors to accumulate sizable portfolios through frequent, modest investments made over a long period of time.</p> <p>It's what they were designed for.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/slow-drip-into-investing">Slow DRIP into investing</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-weirdest-etfs-you-can-buy">The 10 Weirdest ETFs You Can Buy</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment direct stock purchase plans dividend reinvestment plans DSPP large companies portfolio small investors stock market Mon, 28 Nov 2016 10:00:06 +0000 Philip Brewer 1839210 at http://www.wisebread.com 5 Essentials for Building a Profitable Portfolio http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-essentials-for-building-a-profitable-portfolio" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/growing_money_trees_84090749.jpg" alt="Finding essentials for building profitable portfolio" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For many people, investing is the most complicated and intimidating aspect of managing money. But it doesn't have to be. Here are some of the essentials for building a successful investment portfolio.</p> <h2>1. Know What You're Investing For</h2> <p>Investing is best done with a purpose in mind. Investing for a child's <a href="http://www.wisebread.com/when-should-you-start-saving-for-your-child-s-education">future college costs</a> is not the same as investing for your retirement. You would use different investment vehicles &mdash; a 529-plan account or Coverdell Education Savings Account for college, and an <a href="http://www.wisebread.com/401k-or-ira-you-need-both">IRA or 401K</a> for retirement.</p> <h2>2. Know Your Time Frame</h2> <p>Investing is for goals you want to accomplish in five or more years. Anything shorter than that and you can't afford to take much, if any, risk, so you would be best served by a savings account.</p> <p>Still, a &quot;five or more years&quot; time horizon contains a wide range of options. Someone planning to retire in 10 years should invest quite differently than someone planning to retire in 30 years. The first person can't afford to take as much risk as the second person. By the same token, the second person can't afford the risk of playing it too safe.</p> <h2>3. Know Your Temperament</h2> <p>This has to do with how well you sleep at night when the stock market is in free fall. Vanguard has a decent <a href="https://personal.vanguard.com/us/FundsInvQuestionnaire">free assessment</a> that combines your investment time frame with your temperament to suggest an optimal asset allocation &mdash; that is, what percentage of your portfolio you should allocate to stocks and what percentage to bonds (or stock, or bond-based mutual funds).</p> <h2>4. Know How to Choose Specific Investments</h2> <p>If investing is the most complicated and intimidating aspect of managing money, choosing specific investments is the most complicated and intimidating aspect of investing. Very few people have the wherewithal to do this on their own. It's helpful to acknowledge that. As Clint Eastwood's Dirty Harry character noted, &quot;A man's got to know his limitations.&quot; Of course, the same is true for women!</p> <p>There's just too much to know. There are thousands of different investments to choose from. And it can be crazy confusing (and dangerous) to make these decisions based on the all-too-common articles about &quot;Last Year's Best-Performing Mutual Funds&quot; or &quot;Where to Invest to Take Advantage of Advances in Wind Power.&quot;</p> <p>The crucial decision you need to make is not so much about which investments to choose; it's about which investment process to use. Here are three options.</p> <h3>Go With a Target-Date Fund</h3> <p>The simplicity of such funds has made them tremendously popular. Most of the big mutual fund companies offer them. You just choose the fund with the year closest to the year of your intended retirement as part of its name (Fidelity Freedom 2050, for example). The fund is designed with what the fund company believes is the ideal asset allocation for someone with that retirement date in mind, and it even changes the allocation as you get closer to that target date, becoming increasingly conservative. It's a very simple process, but <a href="https://www.soundmindinvesting.com/articles/view/target-date-funds-the-devils-in-the-details">all target-date funds are not alike</a>. So, be informed.</p> <h3>Go With an Investment Adviser</h3> <p>He or she will get to know you and your goals and then tailor an investment strategy to you. Along the way, you will typically pay 1% of the amount of money you have the adviser manage for you each year. Also, advisers usually won't work with anyone with less than $100,000 to manage. If you go this route, ask friends for referrals and opt for a fee-based adviser (as opposed to one compensated by commissions) who works as a &quot;<a href="http://www.wisebread.com/who-to-hire-a-financial-planner-or-a-financial-adviser">fiduciary</a>.&quot;</p> <h3>Go With an Investment Newsletter</h3> <p>Whereas an investment adviser works with clients one-on-one, an <a href="https://www.soundmindinvesting.com/articles/view/what-investing-newsletters-do-that-financial-magazines-dont">investment newsletter</a> works with investors on a one-on-several thousand (or however many subscribers they have) basis. There are hundreds of investment newsletters, each with their own investment strategies. Subscribers gain access to the strategies along with the specific investment recommendations needed in order to implement the strategies. Subscription costs range from less than $200 per year to over $1,000 per year.</p> <h2>5. Know Some Market History</h2> <p>One of the biggest threats to your success as an investor can be seen in the mirror. When the market falls, it's easy to give in to fear and sell. When the market is booming, it's easy to give in to greed, and invest too aggressively.</p> <p>Far better to understand that the market cycles between bull markets and bear markets (growing markets and declining markets). Even within a specific year, there will be ups and downs.</p> <p>That's why it's so important to have a trusted investment selection process. With a good process in place, you should have some sense as to how your portfolio is likely to perform under a variety of market situations and you should be content to stay with it in good times and bad.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment advice college fund financial advisers money management portfolio retirement risk stock market target date funds Wed, 26 Oct 2016 10:00:11 +0000 Matt Bell 1820715 at http://www.wisebread.com What Are Income Stocks? http://www.wisebread.com/what-are-income-stocks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-are-income-stocks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_investments_71091499.jpg" alt="Learning the basics of income stocks" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You may think that investing in stocks is all about share price increases over time. In reality, you may be surprised to find out that the price of some stocks can vary little over time and still provide an ever-increasing stream of income. These types of securities are known as income stocks.</p> <p>Let's review the seven things you need to know about income stocks and their ability to provide a high payout to investors.</p> <h2>1. They Pay a Dividend</h2> <p>The defining feature of an income stock is that it pays a regular and predictable dividend, which often increases over time. For example, Caterpillar Inc. [NYSE: <a href="https://finance.yahoo.com/quote/cat">CAT</a>], a leading manufacturer of construction, mining, and transportation equipment, has <a href="http://www.caterpillar.com/en/investors/stock-information/dividend-history.html">paid a dividend to its stockholders</a> every quarter since 1933. For the last 22 years, Caterpillar's cash dividend has consistently increased and it stands at $0.77 per share of common stock &mdash; up from $0.35 in 1996, and without adjusting for the two-for-one stock splits of 1997 and 2005.</p> <p>A predictable, steady, and ever-increasing stream of income makes income stocks attractive to those retirement savers who're close to retirement age.</p> <h2>2. They Are Often Large Companies</h2> <p>While income stocks can be found in many industries, they are most often part of the real estate, energy, utility, natural resource, and finance industries. One example of an income stock in the energy sector is Phillips 66 [NYSE: <a href="https://finance.yahoo.com/quote/PSX/">PSX</a>], which has been in the news due to its spinoff from ConocoPhillips back in 2012. It doubled its stock price in the first year after the spinoff, and attracted Warren Buffett's investment (a <a href="http://www.barrons.com/articles/buffet-bets-1-billion-more-on-phillips-66-1472470538">15.2% share of the company</a> as of late August 2016). (See also: <a href="http://www.wisebread.com/the-5-best-pieces-of-financial-wisdom-from-warren-buffett?ref=seealso">The 5 Best Pieces of Financial Wisdom From Warren Buffett</a>)</p> <p>The Houston-based multinational energy company generated $161.2 billion in revenue in 2014, a figure that is bigger than the GDP of some nations around the world. Since its 2012 spinoff, Phillips 66 has been consistently paying a quarterly dividend that started at $0.20 per share of common stock and stands now at $0.63 per share of common stock.</p> <h2>3. They Have Been in Business for a Long Time</h2> <p>Generally speaking, the less established a company, the more likely that company can experience extraordinary growth per quarter. Think of 12-year-old Facebook or 13-year-old Tesla, whose current stock prices are seven and 10 times, respectively, their original prices after going public. Both Facebook and Tesla would be considered growth stocks. On the other hand, income stocks are those of companies with a long history. Caterpillar and Phillips 66 were originally founded back in 1925 and 1917, respectively. (See also: <a href="http://www.wisebread.com/what-are-growth-stocks?Ref=seealso">What Are Growth Stocks?</a>)</p> <h2>4. They Are an Alternative to Fixed-Income Securities</h2> <p>If you have a 401K, chances are that you have a target-date fund. In 2014, 48% of 401K plan holders <a href="https://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&amp;content_id=3347">had target-date funds</a>, which gradually lowers exposure to risk as you get closer to retirement age and helps maintain a steady stream of income during your retirement years. However, dialing back your risk doesn't necessarily mean that you will stick to municipal bonds and money market accounts from now on.</p> <p>Legendary investor Peter Lynch said it best: &quot;Gentlemen who prefer bonds don't know what they're missing.&quot; The appeal of income stocks is that they provide a steady stream of income while providing some exposure to corporate profit growth. Many investors use the yield of a 10-year treasury bond rate as a benchmark to grade the performance of income stocks. As of October 10, 2016, the yield of a <a href="http://data.cnbc.com/quotes/US10Y">10-year treasury bond</a> was 1.77% and those from Phillips 66 and Caterpillar were 3.13% and 3.48%, respectively.</p> <h2>5. They Have Modest Annual Profit Growth</h2> <p>That being said, don't expect companies behind income stocks to have ambitious goals of profit growth. Due to its long business history, some income stocks may have limited future growth options and provide only a moderate annual profit growth. However, this is the main reason why these companies are able to pay a dividend in the first place. Since there may be no need to aggressively reinvest in new infrastructure, research, or development, then the company can afford to issue a dividend every quarter to its shareholders.</p> <h2>6. They Have Low Stock Price Volatility</h2> <p>Among the many statistics that analysts report on stock tables, <em>beta </em>is one of the most relevant ones, besides dividend and yield, to incomes stocks. (See also: <a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table?ref=seealso">Beginner's Guide to Reading a Stock Table</a>)</p> <p>Since the beta of the market as a whole is 1.0, a stock with a beta below 1.0 would move less than the market, and a stock with a beta above 1.0 would deviate more than the market. Often, income stocks have betas below 1.0. For example, machinery manufacturer Deere &amp; Company [NYSE: <a href="https://finance.yahoo.com/quote/DE/">DE</a>] has a beta of 0.63, and retailer Wal-Mart Stores Inc. [NYSE: <a href="https://finance.yahoo.com/quote/WMT/">WMT</a>] has one of 0.09.</p> <h2>7. They Are Available in Mutual Funds and Index Funds</h2> <p>Even though throughout this article we have only focused on individual companies, you can still buy a basket of several income stocks at the same time. You can do this through either a mutual fund or a low-cost index fund. One example of the second category is the Vanguard High Dividend Yield Index Fund Investor Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VHDYX">VHDYX</a>], which holds many income stocks, such as Microsoft, Exxon, Johnson &amp; Johnson, and General Electric.</p> <p>Two advantages of using index funds to include income stocks in your portfolio are diversification (e.g. 420 holdings in the mentioned index fund from Vanguard) and low cost (e.g. 0.16% annual expense ratio for the same index fund).</p> <h2>The Bottom Line</h2> <p>Before buying an income stock, make sure to evaluate it using your current investment strategy. While an income stock can offer you a way to get higher yields than those of treasury securities or certificates of deposit, you may be so far away from retirement age that you could afford a higher exposure to risk through value or growth stocks. Consult with your financial adviser to discuss more about your investment objectives and the appropriate ways to achieve those financial goals.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/what-are-income-stocks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment dividends fixed income securities growth income stocks index funds large companies mutual funds portfolio profits retirement stock market volatility Thu, 20 Oct 2016 09:30:23 +0000 Damian Davila 1815776 at http://www.wisebread.com 9 Costly Mistakes DIY Investors Make http://www.wisebread.com/9-costly-mistakes-diy-investors-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-costly-mistakes-diy-investors-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_ripping_paper_69469761.jpg" alt="Man making costly mistakes DIY investors make" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>With the right approach and education, it's possible for people to handle their own investments. But it's also easy to make mistakes that could cost you large sums of money in the long run.</p> <p>If you're a do-it-yourselfer, ask yourself whether you're making any of these mistakes below. If so, it may be worth seeking professional advice from a certified financial planner.</p> <h2>1. Trading Without Considering Fees and Taxes</h2> <p>For many investors, it's fun to trade stocks. The actual buying and selling can be a bit of a rush, especially when things are going well. But all of that activity can come with a cost, in the form of transaction fees and capital gains taxes. If you are finding that the returns on your portfolio seem a bit lackluster, it may be because you're investing without taking these costs into account. More experienced investors and financial advisers understand how to avoid extra fees and maximize returns as a result.</p> <h2>2. Getting Emotional</h2> <p>Investing your own money can sometimes be hard on the psyche. You may go through stretches where you see your portfolio shrink. Stocks that you personally selected may not always perform the way you predicted. Markets can be volatile, and not everyone can stomach it. If you find yourself getting stressed out by the investing process or buying and selling based on emotion, you may want to consider having a financial adviser take over the reigns.</p> <h2>3. Not Investing Enough</h2> <p>When you invest on your own, you may only be guessing as to how much you need to save. And it's common for investors to feel a little skittish and invest too little if the market is down. A financial adviser may be more tuned into the appropriate level of risk an investor can take on, and will usually advise a more aggressive approach for someone far out from retirement.</p> <h2>4. Not Diversifying Enough</h2> <p>Most do-it-yourselfers understand the basics of diversification, and will invest in index funds that track the S&amp;P 500 or broader stock markets. And that's perfectly fine. But often, these funds are heavily weighted toward larger companies or certain industries. If you are investing only in basic index funds, you may not have good exposure to international markets or smaller companies, for example. There may be entire industries that will be underrepresented in your portfolio.</p> <p>To achieve true diversification, you can have an S&amp;P Index fund as a base, but should also look for funds and stocks that fill in the gaps.</p> <h2>5. Failing to Rebalance</h2> <p>You may think you're creating a diverse portfolio based on the investments you've selected. But have you checked the balances recently? Over time, portfolios can get out of whack if certain investments are performing better than others. For example, you may think you're investing in 50% large cap, 25% small cap, and 25% mid cap stocks. Until one day, you check your account and realize that small cap stocks make up 40% of the portfolio. Financial advisers will recommend when to rebalance, and offer advice on how to avoid taxes in the process.</p> <h2>6. Trying to Beat the Market</h2> <p>Some investors insist on doing things themselves, because they believe they are expert stock pickers and can beat the performance of the overall stock market. In most cases, they are wrong. Numerous studies have shown that even professional investment managers can't beat the market on a regular basis, and that most investors would be best off with a portfolio of index funds.</p> <h2>7. Falling in Love With Shiny New Things</h2> <p>Do-it-yourselfers can become enamored with whatever the hot stock is at the moment. They go for name brands and flash rather than looking closely at a balance sheet. They also tend to go with what's familiar, rather than doing some research and finding investments that are less well known but of sound quality.</p> <h2>8. Having No Backup Plan</h2> <p>If you are an older DIY investor, do you have a plan for what happens to your investments if you are incapacitated? Are you sharing your investment accounts with your spouse or other loved ones? Many DIY investors are too stubborn to seek help from anyone, and thus run into problems when they are no longer in a position to manage things themselves. It's fine to handle your own investments if you're confident enough to do so, but it's wise to have a plan for how things will be dealt with if you're no longer in charge.</p> <h2>9. Becoming Too Consumed</h2> <p>Realistically, the average person can handle their own investments while checking in only periodically each week. A properly balanced portfolio does not need a lot of maintenance. But investing can be like an addiction to some people, and it's possible to spend hours a day buying and selling and becoming obsessed with the movement of the markets. If you're finding that your investing is having a negative impact on your relationships and other aspects of your life, it may be best to back off and let someone else handle things.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment beat the market diversification DIY emotional investing fees financial advisers financial planning portfolio rebalancing stock market taxes Wed, 05 Oct 2016 10:30:08 +0000 Tim Lemke 1805247 at http://www.wisebread.com How Too Much Investment Diversity Can Cost You http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-too-much-investment-diversity-can-cost-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_suit_thinking_53925384.jpg" alt="Man wondering if too much investment diversity can cost him" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Financial experts agree that you shouldn't to put all your eggs in one basket. But just like with everything else in life, moderation is essential to truly reap the benefits of diversification. Spread out your investment funds into too many funds and you'll end up with a subpar portfolio bogged down with excessive charges and, even worse, potentially more risk than you're willing to bear. Here are four warning signs that you may have your investments in too many baskets &mdash; and how to fix it.</p> <h2>1. Paying Too Much in Investment Fees</h2> <p>The more that you branch out of plain vanilla investments, the more likely that you'll end up paying more investment charges and fees. Take, for example, the portfolio that Warren Buffett has <a href="http://www.berkshirehathaway.com/letters/2013ltr.pdf">laid out in his will</a>: &quot;Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&amp;P 500 index fund.&quot;</p> <p>Let's take a look at the potential investment fees of such a portfolio.</p> <p>Since the Oracle of Omaha prefers Vanguard and chases low fees, let's assume that both investments are in index funds. It's safe to assume that he meets the $10,000 minimum investment required for the Vanguard Admiral index funds. So, he allocates 90% of his portfolio to the Vanguard 500 Index Fund Admiral Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VFIAX/?p=VFIAX">VFIAX</a>], which has a 0.05% expense ratio, and 10% of his portfolio into the Vanguard Short-Term Government Bond Index Fund Admiral Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VSBSX?p=VSBSX">VSBSX</a>], which has a 0.10% expense ratio. For a $10,000 portfolio, Buffett would pay $55 in investment fees.</p> <p>If Buffett were to start diversifying into other types of investments, he would very likely run into higher expense ratios. For example, the Vanguard New York Long-Term Tax-Exempt Fund Admiral Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VNYUX/?p=VNYUX">VNYUX</a>] has a 0.12% expense ratio (despite its $50,000 minimum investment requirement!) and the Vanguard Interm-Tm Corp Bd Index Admiral [Nasdaq:&nbsp;<a href="http://finance.yahoo.com/quote/VICSX/?p=VICSX">VICSX</a>] has a 0.25% purchase fee on top of its 0.10% expense ratio. Assuming that he were to allocate 50%, 30%, 10%, and 10% to the New York muni bond fund, S&amp;P 500 index fund, short-term government bond index fund, and the intermediate-term corporate index fund, respectively, Buffet would pay $220 on investment fees!</p> <p><strong>How to Fix It: </strong>Calculate your current total of investment fees across all your holdings. If the total is above what you're willing to pay (a useful rule of thumb is that anything beyond 1% of your total investment is too much), then it's time to focus your investments in lower-cost options.</p> <h2>2. Rebalancing Portfolio More Often</h2> <p>Speaking of fees, there is a higher chance that you'll run into more of them when you hold lots of investment categories. In the 90%-stocks-and-10%-bonds portfolio example, you only need to keep track of two funds. This means that figuring out when your portfolio is no longer meeting your target asset allocations is straightforward &mdash; and you may not need to do it as often. For example, you could set a target to rebalance when 80% of your portfolio is in stocks and 20% in bonds.</p> <p>On the other hand, spreading your money out too thin can complicate keeping track of asset allocations and make you trade more often. Here's an example: Assuming a target 3.5% allocation in an emerging markets index fund, big market swings could force you to buy or sell many times throughout the year, triggering many charges. From front-end loads to back-end loads, there are plenty of investments to keep an eye on. And yes this even applies to 401K accounts! (See also: <a href="http://www.wisebread.com/watch-out-for-these-5-sneaky-401k-fees?ref=seealso">Watch Out for These 5 Sneaky 401K Fees</a>)</p> <p><strong>How to Fix It: </strong>Tabulate how much you're incurring in fees on top of the regular annual expense ratios of your portfolio holdings. If that percentage is too high, or consistently increasing throughout the years, you need to consolidate your portfolio into fewer holdings.</p> <h2>3. Experiencing Diminishing Returns</h2> <p>Of course, you might be thinking that the extra returns of a very diversified portfolio may more than compensate for those additional fees and charges.</p> <p>Let's bust that investment myth.</p> <p>In a joint-study by The Wall Street Journal and Morningstar, the portfolio that generated the highest return over a 20-year period was a 70-30 mix of U.S. stocks and bonds, yielding a <a href="http://www.wsj.com/articles/is-your-portfolio-too-diversified-1408032582">9.1% annualized return</a>. A portfolio with 40% in U.S. stocks, 20% in U.S. bonds, 10% in foreign developing market stocks, 10% in international bonds, and the rest in a mix of investments, including emerging market stocks, commodities, and hedge funds, yielded only an 8.8% annualized return.</p> <p><strong>How to Fix It: </strong>Measure each of your funds against its respective benchmark. If an investment has been missing the benchmark for too many quarters or years, it may be time to cut that fund loose.</p> <h2>4. Owning Too Much of the Same or Wrong Type of Investments</h2> <p>Another issue with putting many eggs in many baskets is that you can unintentionally end up with more eggs than you thought in a particular basket or, worse, a wrong basket.</p> <p>Let's assume that you hold an index fund tracking the S&amp;P 500. As of August 8, 2016, that means that your portfolio would hold about 3.08% on Apple Inc, 2.40% on Microsoft Corporation, and 1.53% on Facebook Inc. Class A shares. If you were to also hold an index fund on the technology sector, you'll probably end up increasing your holding on each one of those investments. For example, the Vanguard Information Technology Index Fund Admiral Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VITAX/?p=VITAX">VITAX</a>] has those same three stocks among its top four largest holdings.</p> <p>Additionally, if you're open to throwing more money around investments, you could end up buying some investments that fail to meet your investment objectives. Remember the late 1990s dot-com bubble? How about 2008's housing bubble? During those times, too many individual and institutional investors were buying financial instruments that they shouldn't have been purchasing. If you force yourself to allocate 5% &quot;somewhere,&quot; then you could end up with the wrong type of investment.</p> <p><strong>How to Fix It: </strong>First, read the prospectuses of your mutual funds and other accounts and understand their actual holdings. Using this information, you can spot whether or not you hold too much of the same investment. Second, review your investment objective (ie; income vs growth) and evaluate whether or not your current investment funds qualify for that objective.</p> <h2>The Bottom Line</h2> <p>Holding all of your money in a single stock is definitely not a good idea because it would have a 49.2% average standard deviation (a measure of risk). At 20 stocks, your portfolio risk is reduced to 20%. However, every additional stock added to your portfolio will only further decrease your portfolio risk by about 0.8%.</p> <p>The evidence suggests that due to greater returns, very marginal risk reductions, and lower fees over time, you would be better off with simpler diversification on stocks and bonds. Some financial advisers suggest that when you have more than <a href="http://money.usnews.com/money/personal-finance/mutual-funds/articles/2011/02/17/diversification-can-you-have-too-much-of-a-good-thing">20 stocks or mutual funds</a>, you're actually minimizing returns instead of maximizing them. So, before adding that extra holding, keep in mind that an index fund tracking the S&amp;P 500 is already splitting your investment into 500 baskets!</p> <p><em>How many different types of investments is too many?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/learn-how-to-invest-with-these-5-stock-market-games">Learn How to Invest With These 5 Stock Market Games</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-an-etf-isnt-right-for-you">8 Signs an ETF Isn&#039;t Right for You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment fees portfolio rebalancing returns risk stock market too diverse warning signs Thu, 25 Aug 2016 10:30:14 +0000 Damian Davila 1778732 at http://www.wisebread.com 8 Money Moves to Make Before You Start Investing http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-money-moves-to-make-before-you-start-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/coins_growing_plants_67145371.jpg" alt="Finding money moves to make before you start investing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I'm a staunch advocate for investing &mdash; especially if the alternative is piling up money in a savings account just to have &quot;savings.&quot; Savings are great, but you only need so much in that offensively low-interest account. Put the excess to work, hopefully making even more money out of your investment. Before you take that plunge, however, there are a few financial matters you need to mind.</p> <h2>1. Organize Your Budget and Expenses</h2> <p>If you're considering making an investment &mdash; whatever it may be &mdash; you should have a solid handle on how much money is coming in and going out on a monthly basis. You want to make sure you can afford the investment without teetering on the edge of debt, but this also is a good time to find any weak spots in your budget so you can address them accordingly. Online money-tracking services like Mint.com can make this task much easier on you, and help you stay on track over the long term.</p> <p>&quot;When you know where your money goes, you are in control and can be thoughtful about aligning spending with priorities,&quot; says Carla Dearing CEO of SUM180, an online financial planning service. &quot;Mint, for example, gives you complete access to your data through the website and your mobile device, whether you use iOS or Android. Better yet, Mint keeps an eye on your money for you. It even sends alerts to remind you to pay your bills or when you go over budget.&quot;</p> <h2>2. Get That Emergency Fund in Order &mdash; Stat!</h2> <p>In almost every &quot;money moves&quot; article I write, the &quot;emergency fund&quot; usually pops up somewhere. That's because it's a critical and indispensable part of your overall financial picture. You should have a sizable cushion in the bank to cover life's little mishaps, and that &quot;should&quot; becomes a &quot;must&quot; when you add investing to the equation. If you don't have an emergency fund, you have no business investing &mdash; bottom line.</p> <p>Just how much dough are we talking for an emergency fund to be considered satisfactory? Six times your monthly expenses, according to Dearing.</p> <p><strong>&quot;</strong>Be disciplined about saving a little every month until your emergency fund is where it needs to be, even if it means sacrificing little luxuries once in a while,&quot; she says. &quot;Remember to replenish the account every time you use it. Having your cushion ready whenever you need it will give you a great sense of security and freedom. It will also free you up to work on other savings goals without getting derailed by unexpected expenses.&quot;</p> <h2>3. Pay Off Your High-Interest Debts</h2> <p>You don't need to be completely out of debt before you start investing. Many financial advisers argue that you should be debt free before you start investing, but that's just not true. Most people don't pay off their homes for up to 30 years, and you wouldn't want to wait that long before you start a retirement fund.</p> <p>You should, however, pay off your high-interest debts. They'll drag you down faster than the Titanic.</p> <p>&quot;Whether it's a credit card or student loan, it doesn't make any sense to invest and make a market average return of 7% annually while you're paying 20% on credit debt,&quot; says Nick Braun, founder of a pet insurance company. &quot;Pay off your high-interest debts first, then start using excess income to save for the future.&quot;</p> <p>See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=article">Fastest Way to Pay Off Your Credit Card Debt</a></p> <h2>4. Contribute to Your Retirement Savings</h2> <p>Retirement savings <em>is</em> an investment. It may not seem like it now, because what you're funding seems so far away &mdash; but you'll see it as such when you reach retirement age. Which is why, before you start throwing money at other investment opportunities, you need to invest in yourself. If you don't have a retirement account set up yet, make that a priority. If you have one currently, like a 401K, for instance, take advantage of free, pretax contribution opportunities where available, like matching funds from your employer. Then max those contributions out so you don't miss a single cent.</p> <h2>5. Contribute to an HSA</h2> <p>If you have a health insurance policy that comes with a qualifying Health Savings Account, take full advantage of it and fully fund it.</p> <p>&quot;Most contributions are tax-deductible, and withdrawals to pay qualifying medical expenses &mdash; at any time in life &mdash; are tax-free,&quot; explains Kevin Gallegos, vice president of Freedom Financial Network in Phoenix. &quot;These accounts are essentially emergency funds devoted to health care costs, and so savings have a double benefit of tax relief and savings.&quot;</p> <h2>6. Refinance Your Student Loans</h2> <p>Are student loans holding you back from building your savings or investment accounts or from making other types of investments? Free up some of your budget by <a href="http://www.wisebread.com/should-you-refinance-your-student-loan?ref=internal">refinancing your loans</a> for a lower monthly payment.</p> <p>&quot;The average Class of 2016 graduate owes more than $37,000 in student loan debt,&quot; says financial expert Michael Blattman, professor at University of Maryland. &quot;With 43 million borrowers nationwide, Americans owe nearly $1.3 trillion in student loan debt. Individually, this crushing debt delays borrowers' life decisions, such as getting married, investing in the stock market, buying a house, or having children. Collectively, it's hampering the U.S. economy.&quot;</p> <p>You don't, however, have to be part of these statistics. Take back some of your financial freedom by making a call to your loan provider(s) to discuss refinance options that are right for you.</p> <h2>7. Get Started on a Taxable Investment Portfolio</h2> <p>After you've maxed out your retirement accounts, Dearing suggests starting a taxable investment portfolio. You can get started investing with just a few simple steps.</p> <p>To get set up, call one of the high-quality, low-fee money management companies, like Vanguard, Fidelity, or T. Rowe Price, tell them about yourself, and ask them to tell you what type of account or fund you need, and what minimum investment requirements apply. These companies, which are the gold standard in the financial services industry, are extremely knowledgeable and committed to serving their clients (who, in the case of Vanguard, are also their shareholders).</p> <p>&quot;Companies like this get you started with a comprehensive, diversified, low-cost fund that will serve you well as a beginning investor,&quot; says Dearing. &quot;Follow their recommendations and you won't go wrong.&quot;</p> <h2>8. Set Savings Goals for Your Taxable Investment Portfolio</h2> <p>Once you have your taxable investment portfolio established, set goals &mdash; $10,000, then $25,000 and, eventually, $100,000.</p> <p>&quot;When you are just starting out, choose one or two tax-advantaged funds, like the Vanguard Total Stock Market ETF or the Vanguard Small Cap Index ETF, or similar index funds,&quot; Dearing suggests. &quot;These passively managed funds do a minimum amount of buying and selling &mdash; what the industry calls 'churning' &mdash; which translates into significantly less taxable investment income for you to deal with each year. They also tend to outperform most actively managed mutual funds over time.&quot;</p> <p>Revisiting the goal aspect of this equation, it helps to have a contribution target in place so you have a solid idea of what you're trying to achieve. Likewise, make sure that it's a goal that you <em>can</em> achieve. $10,000 may take a while to reach, but you can do it. If that goal is too steep for you right now, start smaller. There's no harm in that. The most important part of this is that you set the bar just high enough to accomplish it and be motivated by your success to continuing striving further.</p> <p><em>Do you have additional suggestions on money moves to make before investing? I'd love to hear your thoughts in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment advice emergency funds health savings account money moves Paying Off Debt portfolio retirement savings stock market student loans Wed, 17 Aug 2016 09:00:08 +0000 Mikey Rox 1771628 at http://www.wisebread.com How to Tell if Your 401K Is a Good or a Bad One http://www.wisebread.com/how-to-tell-if-your-401k-is-a-good-or-a-bad-one <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-tell-if-your-401k-is-a-good-or-a-bad-one" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_thinking_laptop_88870639.jpg" alt="Woman learning how to tell if her 401K is good or bad" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you work for a company, there's a good chance that your employer offers a 401K plan. (Some organizations offer 403b plans, which operate similarly.) These funds give you the chance to invest in a series of mutual funds and other investments, with the added benefit that any money you contribute is deducted from your taxable income.</p> <p>Not all 401K plans are the same, however, and there is a wide range in the amount of expenses and the quality of investments offered.</p> <p>It's not easy to immediately know if your 401K plan is a good one, and whether it's worth putting money into. But here are some things to examine.</p> <h2>Do You Get a Company Match?</h2> <p>Arguably the most positive aspect of a 401K plan is the ability of companies to match a certain percentage of employee contributions. Typically, a company might agree to contribute up to 5% of a worker's earnings, if the worker does the same. This match is essentially free money, so it usually makes participating in the 401K plan a no-brainer, even when the plan is otherwise subpar.</p> <p>If your company does not <a href="http://www.wisebread.com/401k-or-ira-you-need-both" target="_blank">contribute to your 401K plan</a> or offer a match, you'll want to examine other characteristics of the plan to determine whether it's worth it to contribute. You may find that contributing to a traditional or Roth IRA is a better alternative.</p> <h2>Examine the Investment Options</h2> <p>A 401K plan is only as good as the investment options in them. There's no perfect menu, but a strong plan is anchored by one or two mutual funds that mirror the broader stock market. These are called &quot;index&quot; funds, because they are designed to mirror the performance of a specific index, such as the S&amp;P 500. A good plan will also have some large-cap, mid-cap, and small-cap funds, and the ability to access international and real estate investments. Older investors will want to see a selection of quality bond funds.</p> <p>You'll want to look for a diverse array of investments, but there is a point at which more options aren't necessarily better.</p> <p>&quot;More funds can just confuse you,&quot; said Ralph Grauso, founder of ASC Financial. &quot;You don't need three different types of large-cap growth funds.&quot;</p> <h2>Check the Fees</h2> <p>One of the most common criticisms of 401K plans is that they often contain funds with high expenses. The best 401K plans should offer access to the lowest cost funds available.</p> <p>Management fees, plan operating expenses, and other costs can take a chunk out of your returns without you even being aware. Over time, that can lead to tens of thousands of dollars in lost earnings. A survey by AARP noted that 80% of 401K plan participants don't know what they are paying in fees. Most information on fees is available by reading plan and fund documents, but you may still have to do some digging.</p> <p>&quot;If you're investing for 30 years or more, those fees are going to take a huge chunk of your money,&quot; Grauso said.</p> <p>Grauso said it's best to find funds with expense ratios of less than 1%. Index funds are particularly low in cost because they are not actively managed, and often perform better than managed funds anyway, he said. Look for low-cost index funds from a broker such as Vanguard, and stay away from niche funds with high costs.</p> <h2>Study the Fund Performance</h2> <p>Ultimately, you want to put your money in funds that will generate a nice return and help you develop a sizable nest egg. Predicting future performance is not possible, but you can get a good sense of the quality of a fund by examining its long-term performance.</p> <p>Look at five-year and 10-year returns, and compare them to a comparable benchmark. (For example, a large-cap fund should be compared to a large-cap index.) It's also worth comparing funds to the overall performance of the stock market and the S&amp;P 500. If the fund has historically generated returns that are in line with or better than the overall stock market &mdash; especially after fees are taken into account &mdash; that's a good sign. Stay away from funds that appear to underperform the market and their respective benchmarks.</p> <h2>Who Is the Custodian?</h2> <p>When employers set up 401K plans, they partner with a company that actually manages the plans and many of the investments. Usually, it's with a brokerage firm such as Fidelity, Vanguard, or Charles Schwab.</p> <p>The best 401K plans will be managed by companies who have the expertise and ability to offer quality investment options with low fees, easy online account access, and research. It is worth noting that these custodians manage not only the plans, but many of the mutual funds in them, and that is often viewed as a conflict of interest. If it seems like the custodian is favoring their own underperforming plan in favor of a better plan from another company, that's a bad sign.</p> <h2>Look for Institutional Class Shares</h2> <p>There are many high-quality mutual funds that are unavailable to average investors unless they can meet very high account minimums. But, investors can often access these funds through their 401K plans, because companies can guarantee a sizable combined investment from their employees. Mutual fund companies will often waive fees and other expenses if certain investment levels are met. These funds are often advertised as &quot;institutional class,&quot; or &quot;premium class,&quot; and usually it translates into very low-cost funds for the investor. Fidelity's 500 Index Fund Premium class, for instance, has an expense ratio of just .045%.</p> <h2>Is There a Self-Directed Option?</h2> <p>A typical 401K plan will allow investors to put their money in any of about a dozen mutual funds. But some will offer the ability for account holders to take a more active role, through self-directed brokerage accounts. This is a good option for those wishing to have more direct control over their investing, though evidence is mixed on whether this actually results in higher returns for the investor.</p> <h2>Is It Wrapped in an Annuity?</h2> <p>Many 401K plans have an annuity option, in which earnings are disbursed in the form of monthly payments. This is a nice option to have, as it ensures a steady stream of income in retirement. However, some plans are &quot;wrapped&quot; in an annuity contract that is often expensive and with minimal benefit to the investor.</p> <p><em>How good is your 401K?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/how-to-tell-if-your-401k-is-a-good-or-a-bad-one">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-your-retirement-is-on-track">8 Signs Your Retirement Is on Track</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-only-8-rules-of-investing-you-need-to-know">The Only 8 Rules of Investing You Need to Know</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/is-this-hidden-cost-sapping-your-retirement-savings">Is This Hidden Cost Sapping Your Retirement Savings?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement index funds investing portfolio retirement stocks Fri, 05 Aug 2016 09:00:12 +0000 Tim Lemke 1764992 at http://www.wisebread.com 8 Signs Your Retirement Is on Track http://www.wisebread.com/8-signs-your-retirement-is-on-track <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-signs-your-retirement-is-on-track" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_retirement_accounts_78210119.jpg" alt="Couple finding signs their retirement is on track" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You feel like you're a diligent saver, and are doing all you can to ensure you have a comfortable retirement. But how do you know if you're doing things right? It's hard to predict how much money you'll need, and it seems impossible to know if you're on the right track when retirement is years or even decades away.</p> <p>Thankfully, there are some easy ways to tell if your retirement planning is sound. If your portfolio has most or all of these characteristics, keep up the good work and don't fret!</p> <h2>1. Most of the Funds Are in Tax-Advantaged Accounts</h2> <p>When saving for retirement, it's important to place your money in accounts that shield you from paying unnecessary taxes. A 401K is a common plan offered by employers that allows you to contribute and invest in a variety of different mutual funds. Any money you contribute will be deducted from your taxable income. It's also possible to invest in a Roth IRA, which allows you to invest and avoid paying taxes on any gains. If all or most of your money is in these accounts, you'll be saving thousands of dollars and will have a much higher net return on your investments.</p> <h2>2. You've Been Contributing Heavily</h2> <p>It's hard to know exactly how much you should put into your retirement accounts, but &quot;as much as you can&quot; is usually good advice. If you're maxing out your allowable contributions to 401K or IRA plans (or both), you're probably doing quite well. For 401K plans, you can contribute up to $18,000 annually. IRA plans can accept $5,500 in contributions each year. Even if you're not maxing out these accounts, contributing enough to take advantage of your employer's match of 401K contributions is one good threshold to hit. As much as people like to talk about stock market gains helping them get rich, the truth is that your portfolio's value is helped a lot more by the amount you're contributing in the first place.</p> <h2>3. You've Seen Steady Growth Over Time</h2> <p>Take a look at your portfolio's performance on a line chart. Are you generally seeing an upward trend, without a lot of wild ups and downs? Does it seem like your savings is steadily growing over time, even during periods when the stock market is not doing well? A good retirement portfolio should generally be free of volatility, and see steady gains as time goes on.</p> <h2>4. Your Projections Look Good</h2> <p>No one knows how the stock market will perform in the future, but you can make some reasonable assumptions based on historical market returns. The S&amp;P 500 has seen average annual growth of about 7% since 2006, and annual average gains are even higher the farther you go back. If your portfolio's performance has been in line with these annual averages, you're probably in good shape, as long as you're contributing a significant amount.</p> <p>It may be possible to project how much money you'll have in retirement by taking the amount you have now, then adding your contributions and the annual average return through your retirement year.</p> <h2>5. Your Investments Are Focused on Growth</h2> <p>Unless you are close to retirement, your portfolio should be heavy on investments that promise growth over the long term. This means a big dose of stocks, rather than bonds or cash. Small cap and value stocks should be a driver of most retirement portfolios, as they often promise the most growth potential.</p> <p>It's tempting to want to be conservative with your investments, because stocks can be risky, and no one likes to feel vulnerable to a bad day in the stock market. But building a large retirement next egg requires you to overcome your fears and recognize the positive historical returns of stocks.</p> <h2>6. Your Portfolio Is Well-Balanced</h2> <p>It's always a good exercise to examine your investments to see if you are too heavily invested in any one sector or asset class. Sometimes, your portfolio can get out of whack, and will require rebalancing of your assets. If you are working hard to keep your investments nicely balanced, you'll likely be shielded from any major swings in the market and should see solid growth over time. There is one caveat here, which is that buying and selling during rebalancing could have tax implications, so you'll want to weigh the costs and benefits each time you're considering it.</p> <h2>7. You're Not Paying Too Much in Fees</h2> <p>A robust retirement portfolio should probably contain some mutual funds and/or exchange traded funds (ETFs). But these investments often come with management fees, commissions, transaction fees and other costs. A typical investor pays about 1.5% in fees, according to Rebalance IRA. That could add up to thousands of dollars over time. To avoid losing money to fees, look for investments with very low expense ratios, and those that trade without a commission. Low-cost investments often outperform those with higher expense ratios anyway. So if the costs in <a href="http://www.wisebread.com/stabilize-your-portfolio-with-these-5-bond-funds" target="_blank">your retirement portfolio</a>&nbsp;are low, that's one more thing you're doing well.</p> <h2>8. You Haven't Spent Any of It</h2> <p>There may be times in your life when you'll be tempted to withdraw money from your retirement accounts to pay for other expenses. There's a cost to doing this; any money taken early from these accounts is subject to being taxed, and you'll have to pay a 10% early withdrawal penalty if you take money early from a 401K. And of course, on top of these penalties and taxes, you'll lose out on any future growth this money might have accrued. If you've been diligent about not touching your retirement savings early, you'll be in much better financial shape than if you had raided these funds.</p> <p><em>How's your retirement looking?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-signs-your-retirement-is-on-track">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-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-online-brokerages-for-your-ira">5 Best Online Brokerages for Your IRA</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/15-retirement-terms-every-new-investor-needs-to-know">15 Retirement Terms Every New Investor Needs to Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-threats-to-a-secure-retirement">9 Threats to a Secure Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement contributions ETFs growth index funds investing on track portfolio stocks tax advantaged Thu, 28 Jul 2016 09:00:11 +0000 Tim Lemke 1760749 at http://www.wisebread.com Are You Choosing the Right Fund for Your Portfolio? http://www.wisebread.com/are-you-choosing-the-right-fund-for-your-portfolio <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/are-you-choosing-the-right-fund-for-your-portfolio" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_reading_newspaper_75921495.jpg" alt="Learning if mutual funds are better than ETFs" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>With a market of over $30 trillion, mutual funds are some of the most popular investments. But the $3 trillion ETF (<a href="http://www.wisebread.com/the-10-weirdest-etfs-you-can-buy" target="_blank">Exchange Traded Fund</a>) market is catching up quickly. So, what <em>are </em>ETFs? How do they differ from mutual funds? And are they right for you? Here's what you need to know:</p> <h2>Mutual Funds 101</h2> <p>When you invest in an individual stock, the success of your investment is completely dependent upon the success of that one company. But when you invest in a mutual fund, your money is diversified. It's pooled with many other investors' money and then invested in many companies, based on the design of the fund or the decisions of the fund manager.</p> <p>It's the same with bonds and bond funds, or real estate and real estate funds.</p> <p>Think of an exchange-traded fund as a close cousin of a mutual fund. It, too, manages a pool of money from many investors, spreading it among many investments. But there are some very important differences between ETFs and mutual funds.</p> <h3>ETFs Are Priced Throughout the Day</h3> <p>When you enter an order to purchase a mutual fund, the order will fill at the end of the day, after the value of all of its underlying assets are tallied.</p> <p>ETFs, on the other hand, can be bought and sold throughout the day like stocks. When you enter an order to purchase an ETF, your order will typically be filled very soon after entering the order at a price very close to the price you saw when you placed the order.</p> <p>That's one of the main reasons why ETFs were created. On October 19, 1987, a day now known as &quot;Black Monday,&quot; the U.S. stock market fell by nearly 23%. Mutual fund investors who wanted to sell their shares couldn't until all the damage had been done. Three years later, the first ETF was launched, giving investors all of the diversifying benefits of a mutual fund but the flexibility to buy or sell throughout the trading day.</p> <h3>ETFs Have Lower Expenses</h3> <p>Exchange-traded funds tend to have lower operating expenses than mutual funds, and that lower cost structure is passed along to investors in the form of lower expense ratios. For example, Vanguard's S&amp;P 500 index <em>mutual fund</em> (ticker symbol VFINX) has an expense ratio of .16%. If you invest $1,000 in the fund, $1.60 will go toward fund expenses. That's already very low. However, if you invest in Vanguard's S&amp;P 500 <em>exchange-traded fund</em> (ticker symbol VOO), you'll pay an even lower expense ratio of .05% &mdash; or 50 cents per $1,000 invested.</p> <h3>ETFs Have Lower Minimums</h3> <p>Many mutual funds have minimum initial investment amount requirements. Common amounts range from $250 to $3,000, but some funds require as much as $10,000.</p> <p>With ETFs, the minimum investment amount required is the cost of one share. If you wanted to invest in Vanguard's VFINX mutual fund, you'd need to come up with at least $3,000 for your initial investment. However, getting started with what, in essence, is the ETF version of the same fund, VOO, would cost only about $190 &mdash; the price of one share when this article was written.</p> <h2>Which Is Better?</h2> <p>There are three main factors that can help you decide whether to go with a mutual fund or an exchange-traded fund.</p> <h3>Availability</h3> <p>You may not have a choice. Some 401K plans don't yet include ETFs in the investment options they make available to participants. If that's true with your workplace plan, you'll have to go with one or more of the available mutual funds.</p> <h3>Strategy</h3> <p>While the ETF universe is growing rapidly, there are still many more mutual funds. So, it could be that the investment strategy you're following calls for the use of a particular mutual fund and there are no suitable ETF substitutes.</p> <h3>Cost</h3> <p>If you're following an investment strategy that calls for the use of a particular fund that's available as a mutual fund or an ETF, check on each one's expense ratio. It's very likely that the ETF will cost less, making it the better choice.</p> <h2>One Last Consideration</h2> <p>Some critics say ETFs can get investors in trouble by encouraging more trading. They argue that because the funds can be bought and sold throughout the day, they'll tempt otherwise conservative investors to take undue risk and turn them into roll-the-dice day-traders.</p> <p>But that's like arguing that because <em>some </em>people get into car accidents, <em>no one </em>should be allowed to drive. If you follow the rules of the road for wise investing &mdash; if you're a long-term investor, not a short-term trader &mdash; ETFs can be a very efficient, cost-effective investment vehicle.</p> <p><em>So, which is it for you? Mutual fund or ETF?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/are-you-choosing-the-right-fund-for-your-portfolio">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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-10-weirdest-etfs-you-can-buy">The 10 Weirdest ETFs You Can Buy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-build-an-investment-portfolio-for-under-5000">How to Build an Investment Portfolio for Under $5000</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-everyone-should-know-about-the-commodities-markets">8 Things Everyone Should Know About the Commodities Markets</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-investment-mistakes-we-all-make">11 Investment Mistakes We All Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bonds commodities comparisons ETFs exchange traded funds mutual funds portfolio stock market Wed, 27 Jul 2016 09:30:36 +0000 Matt Bell 1757851 at http://www.wisebread.com Should You Invest in Start-Ups? http://www.wisebread.com/should-you-invest-in-start-ups <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/should-you-invest-in-start-ups" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/people_working_together_000061670306.jpg" alt="Learning the risks and rewards of investing in startups" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Can regular people even invest in those high-flying startups? Should they?</p> <p>Some of the biggest and most valuable companies today were startup businesses in someone&rsquo;s garage or dorm room not that long ago. Apple, Google, Facebook, and eBay are spectacular startup success stories that come to mind. A small investment in a startup in its early stages can quickly grow to be worth millions of dollars. How can a regular person invest in a startup? And is it worth the risk? (See also:&nbsp;<a href="http://www.wisebread.com/starting-your-dream-business-is-easier-than-you-think-heres-how?ref=seealso" target="_blank">Starting Your Dream Business Is Easier Than You Think &mdash; Here's How</a>)</p> <h2>How Startups Grow &mdash; And When to Invest</h2> <p>Initial funding for most startups comes from the founders of the business themselves. A brand new startup has no product, no customers, and usually lacks a detailed business plan. You can see why it is hard to find anyone besides the founders who are interested in investing in a brand new business.</p> <p>As the startup gets rolling, additional investments to get the company growing may come from friends and family. By this time, the founders have clarified their business plan at least enough to be able to explain their business concept to others and are making progress toward launching a profitable product or business. This stage of startup financing is often the best opportunity for a small investor to get involved, since the startup is often strapped for cash. A little bit of investment can buy a lot of equity in a startup at this point.</p> <p>The next funding stage for startups is typically &ldquo;angel&rdquo; investors. Angel investors are successful local business people familiar with the business area of the startup. They have significant assets, are willing to take a risk with some of their money in exchange for a big potential payoff. Investing in a startup as an angel investor is another opportunity for a regular person to invest in a startup, although the level of investment required at this stage of development is significantly higher than in the earlier days of the startup.</p> <p>As the startup grows, the next step up for financing is venture capital. The venture capital stage of funding often involves millions of dollars of investment in exchange for a substantial amount of equity in the startup. Venture capitalists require extensive documentation of financial records and intellectual property ownership in addition to a rock solid business plan and time commitments from key personnel.</p> <p>After one or more rounds of venture capital investment, the startup may sell stock through an initial public offering (IPO), raising more capital to support growth and business development. At this point, the business is no longer a startup, but is an established corporation. If you invested in a startup that reaches IPO, you are going to be rich!</p> <h2>How Risky Is Investing in a Startup?</h2> <p>An unfortunate fact is that most startups fail within a few years, for a number of reasons. Sometimes startups simply run out of cash and have to close shop because they can&rsquo;t pay their bills. A key contributor may decide to pursue another opportunity and effectively pull the plug on any chance for the startup to survive. The anticipated market can fail to materialize. Technical issues can derail a key product launch and doom a startup to failure.</p> <p>Many personal finance advisors do not recommend holding individual company stock and instead recommend to diversify by holding funds consisting of many stocks. This strategy reduces the risk that your investment in an individual stock will be ruined by an Enron-style meltdown. Investing in a startup is much more risky than holding individual company stock in an established company.</p> <p>If you invest in a startup, there is a good chance will lose your money. The startup may fail before you have a chance to sell your equity and make a return on your investment, or even get your principal back. However, there is a small chance you could make a lot of money if the startup you invest in is successful. If you are interested in a high risk, high reward investment opportunity, then investing in a startup may be right for you.</p> <h2>How to Find a Startup for Investment</h2> <p>Investing in a startup takes a lot of work to find the right business opportunity. You need to find a startup that has a good chance to succeed based on the people involved and the business opportunity.</p> <p>Some people who invest in startups have a motto: &ldquo;Bet on the jockey, not the horse.&rdquo; This means to look for company founders who have experience working in the type of business they are trying to start and have a track record of success rather than focusing on the details of the business plan of a startup. The business plan will likely change a lot in the early days as obstacles pop up, and talented people will have a better chance to find a way to succeed anyway.</p> <p>Look for connections with startups at business development centers or business incubators in your community or at nearby universities. Another place to learn about local startups is to watch for stories about inventors developing a new product or startup businesses in your local newspapers or on TV news reports. Once you start meeting entrepreneurs, they can often introduce you to others who may be a good match for the startup investment opportunity for you are seeking.</p> <h2>How to Invest in a Startup Without Risking Your Money</h2> <p>If you are interested in getting the upside potential of a startup investment but the high risk makes you uncomfortable, consider contributing sweat equity to the startup instead of money. You may be able to convert your time and skills into equity in a startup, keeping your cash safe.</p> <p>Most startups have tons of work to do as they launch initial products and seek sales, but not enough cash to hire many workers. A cash-strapped startup may be interested in taking your labor in exchange for some equity in the business. You might be able to commit to working a certain number of hours per week for a year in exchange for ownership of a percentage of the startup. If you have relevant experience or connections with potential investors, the founders will be more interested in taking you on as a partner to help the startup grow.</p> <p><em>Would you be willing to invest time or money in a startup for a chance at a big reward?</em></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/should-you-invest-in-start-ups">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-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> <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/5-easy-ways-to-start-green-investing">5 Easy Ways to Start Green Investing</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-july-is-a-great-month-for-stocks">5 Reasons July Is a Great Month for Stocks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tesla-six-flags-and-9-other-adventure-stocks-worth-investing-in">Tesla, Six Flags and 9 Other Adventure Stocks Worth Investing In</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment entrepreneurs high reward high risk investors new businesses portfolio small businesses startups stocks Mon, 25 Apr 2016 10:30:06 +0000 Dr Penny Pincher 1691585 at http://www.wisebread.com Stabilize Your Portfolio With These 11 Dividend Stocks http://www.wisebread.com/stabilize-your-portfolio-with-these-11-dividend-stocks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/stabilize-your-portfolio-with-these-11-dividend-stocks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_stocks_rising_000022607854.jpg" alt="Man stabilizing portfolio with these dividend stocks" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're an income investor looking to stabilize your portfolio, or just want a little extra cash, dividend-paying stocks are a often a great thing to own. With interest rates still historically quite low, you can get yields that are more than three or even four times what a bank might pay.</p> <p>But which dividend stocks are the best? There are many great options, but I like to look for <a href="http://www.wisebread.com/4-quick-ways-to-decide-if-a-company-is-worth-your-investment">companies with a solid track record</a> of paying and even increasing dividends, along with some potential for share price growth.</p> <p>Here are 11 dividend stocks that are worth a look right now.</p> <h2>1. Caterpillar</h2> <p>This is a very solid company that is trading near its 52-week low. But it hasn't backed off its quarterly dividend, paying out 77 cents per share. Buy now, and there's a good chance you'll see growth in both dividends and share value.</p> <h2>2. Mattel</h2> <p>With a current dividend yield of more than 6%, investors could do a lot worse than Mattel. Shares are down 25% over the last year, but have rebounded nicely in October, suggesting that buying now could offer a growth opportunity.</p> <h2>3. AT&amp;T</h2> <p>Full disclosure: I own shares of AT&amp;T stock, and it's a pretty boring stock when it comes to growth. But sometimes boring is good, especially when you can generate a 5.5% dividend yield like right now. The company recently completed its merger with DirecTV, which could give shares a bump.</p> <h2>4. Merck</h2> <p>Shares of this big pharmaceutical company have risen about 6% over the last month, suggesting that they'll end a tough year on a high note. Merck is a consistent payer of its dividends, currently dishing out a solid 45 cents per share each quarter, for a yield of nearly 3.5%.</p> <h2>5. Tanger Factory Outlet Centers</h2> <p>People will be looking for bargains during the holidays, so don't be surprised if this retail REIT has a good November and December. While shares dipped to a 52-week low in August, they've rebounded since and are in positive territory for 2015. Tanger, which operates 43 outlet malls in 23 states, pays out 29 cents per share quarterly, or a yield of about 3%.</p> <h2>6. ExxonMobil</h2> <p>Oil stocks have been hammered in 2015, but this is still a large and healthy company, with shares that can be had for relatively cheap. Exxon always pays a dividend and always increases it each year. A payout of nearly $3 per share annually means a yield of 3.5% right now, and there's the potential for an increase in share value.</p> <h2>7. Johnson &amp; Johnson</h2> <p>After dipping to a 52-week low in August, shares of JNJ have regained almost all their value. And that's good, because this has been one of the most solid dividend producers for decades. Investors can enjoy a solid 75 cents per share each quarter, for a yield of about 3% annually, from this big health care company.</p> <h2>8. Ford</h2> <p>People are back to buying cars, and Ford is expected to have a great 2016, with earnings expected to rise about 14% next year. You can bet that the company will maintain or even increase its current dividend of 15 cents per share. Right now, investors can grab a dividend yield of 3.8% from Ford shares.</p> <h2>9. Procter and Gamble</h2> <p>As a seller of consumer products that people around the world use every day, P&amp;G is one of those companies that you assume will be around forever. It's a stable bet and has a nice quarterly dividend of 66 cents per share, for an annual yield of 3.44%. Buy shares, hold them for decades, and be happy.</p> <h2>10. Yum! Brands</h2> <p>The operator of KFC and Taco Bell restaurants recently upped its quarterly dividend to 46 cents per share, representing a yield of about 2.5%. The company is expected to see big growth overseas, especially in China, and analysts expect earnings to jump by about 13% in 2016.</p> <h2>11. HSBC</h2> <p>This large bank has a dividend yield of 6.26%, one of the highest in its industry. Normally, yields of that size are a red flag that a cut is due, but that may not necessarily be true for HSBC, which is still on track to generate enough surplus capital to meet its obligations to shareholders. Shares hit a 52-week low at the end of September, but have rebounded since.</p> <p><em>Do you hold any dividend stocks in your portfolio? Which?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/stabilize-your-portfolio-with-these-11-dividend-stocks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/how-to-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> <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/tesla-six-flags-and-9-other-adventure-stocks-worth-investing-in">Tesla, Six Flags and 9 Other Adventure Stocks Worth Investing In</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-reasons-july-is-a-great-month-for-stocks">5 Reasons July Is a Great Month for Stocks</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment dividends good yields portfolio shares stocks Thu, 12 Nov 2015 13:15:15 +0000 Tim Lemke 1606470 at http://www.wisebread.com Tesla, Six Flags and 9 Other Adventure Stocks Worth Investing In http://www.wisebread.com/tesla-six-flags-and-9-other-adventure-stocks-worth-investing-in <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/tesla-six-flags-and-9-other-adventure-stocks-worth-investing-in" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_merry_go_round_000036168672.jpg" alt="Couple finding adventure stocks to invest in" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Sometimes it's fun to spice up your investment portfolio with something more exciting than index funds and <a href="http://www.wisebread.com/the-10-weirdest-etfs-you-can-buy">ETFs</a>. Why not get truly adventurous and invest in companies that are in the business of fun?</p> <p>You can invest in everything from ski resorts in Colorado to roller coasters in Orlando by purchasing shares of these stocks, which are both &quot;adventurous&quot; and potentially lucrative to investors. Many of these companies are on a big growth path, and though some have been battered recently, they may offer good value now.</p> <p>Go and invest, and have fun!</p> <h2>1. Disney [<a href="http://finance.yahoo.com/q?s=DIS">NYSE: DIS</a>]</h2> <p>When you buy shares of Disney, you're buying more than a stake in Disney World and Disneyland. You're getting part of a massive entertainment business that includes movie studios, television networks, and franchises including a little something called <em>Star Wars. </em>It's hard to argue against a 27% rise in share price over the last 52 weeks, after Disney's net income rose 22% to $7.5 billion in 2014.</p> <h2>2. Six Flags [<a href="http://finance.yahoo.com/q?s=SIX">NYSE: SIX</a>]</h2> <p>No theme park operator in North America owns more attractions. With 18 parks, Six Flags is a moneymaking behemoth, generating $1.2 billion in revenue last year. Shares are up 26% in the last 52 weeks, and the company has a nice dividend yield of 4.5%. Not bad considering they exited bankruptcy in 2010.</p> <h2>3. GoPro [<a href="http://finance.yahoo.com/q?s=GPRO">NYSE: GPRO</a>]</h2> <p>Someone is cashing in off those crazy skiing and skateboarding trick videos. It's been a volatile first year for the action camera manufacturer after going public in the middle of 2014. Shares are down quite a bit from their all-time high back in October, but have risen sharply since hitting a low this past spring. Revenue in the second quarter rose to $419 million, a 72% increase. GoPro has been aggressive in introducing new products, including possible 3D and drone cameras, so investors should have a lot to be excited about.</p> <h2>4. Orbital ATK [<a href="http://www.marketwatch.com/investing/stock/oa">NYSE: OA</a>]</h2> <p>This is the company formed in February from the merger of Alliant Techsystems and Orbital Sciences. It's involved in all kinds of space-related work, including the development of rockets, satellites, commercial space flight, and defense electronics. The company got some bad publicity last year after the unmanned Antares rocket exploded shortly after liftoff, but share prices are now approaching $80 per share, just shy of their all time high set in March.</p> <h2>5. VF Corporation [<a href="http://finance.yahoo.com/q?s=VFC">NYSE: VFC</a>]</h2> <p>This company owns many top clothing brands, including some that are synonymous with the outdoors. The North Face, Smartwool, and Timberland are easily recognizable to most hikers and climbers, and Reef is one of the top surfing brands. VF is a $12 billion company, and shares are now trading near their 52-week high.</p> <h2>6. Tesla [<a href="http://finance.yahoo.com/q?s=TSLA">NASDAQ: TSLA</a>]</h2> <p>This maker of high-end electric vehicles certainly gets a lot of buzz, along with its charismatic founder, Elon Musk. Shares have dipped this year, as investors have grown a bit impatient with a lack of profits. But this is a company that saw $955 million in revenue in the last quarter, a 25% increase year-over-year. Tesla has great brand recognition and a &quot;cool&quot; factor that can't be dismissed, and is on the cutting edge of battery technology and addressing some of the world's most pressing environmental problems. Expect some volatility with this stock, but patient investors should be rewarded over time.</p> <h2>7. Wolverine Worldwide [<a href="http://www.google.com/finance?cid=39047">NYSE: WWW</a>]</h2> <p>You may not be familiar with this parent company, but you know its brands &mdash; Stride Rite, Sperry, Keds, Saucony, and Merrell. Wolverine Worldwide reported record revenue of $630 million in the most recent quarter, which is good news for a company that's needed it. Last year, Wolverine said it would close about 140 stores by the end of 2015. Another 55 will close over the next five years as lease terms end. With its reorganization on track, now may be the time to buy.</p> <h2>8. Harley-Davidson [<a href="http://www.google.com/finance?cid=16754">NYSE: HOG</a>]</h2> <p>The popular motorcycle manufacturer hasn't had the easiest time in recent years, as the strong dollar has made overseas competitors more attractive. Sales dropped 1.4% in the last quarter compared to the same quarter a year ago, and net income dropped 15%. Shares are down about 9% this year, but don't be too hard on Harley-Davidson, as the company has a lot going for it. Its profit margins are good, and it consistently pays out increasing dividends, now offering a yield of more than 2.1%. Many analysts rate Harley-Davidson stock a &quot;buy,&quot; and the company's shares may actually be undervalued at the moment.</p> <h2>9. Vail Resorts [<a href="http://finance.yahoo.com/q?s=MTN">NYSE: MTN</a>]</h2> <p>We may not always be able to jump into the fresh powder whenever we want, but investing in this company gives us a little taste of winter adventure. Vail owns some of the top mountain resorts in North America, including Vail and Breckenridge in Colorado, and Park City Mountain Resort in Utah. In June, Vail closed on the sale of Perisher, the largest mountain resort in Australia. Shares are trading above $110, near a 52-week high, as the company reported third quarter revenues of $579 million, a 6.7% increase over the same period a year ago.</p> <h2>10. Black Diamond [<a href="http://finance.yahoo.com/q?s=BDE">NYSE: BDE</a>]</h2> <p>Based in Salt Lake City, Black Diamond designs and makes many of the essential equipment used by climbers, mountain bikers, and other adventurous people. It just reported record sales of $35.1 million in the second quarter of 2015. It is projecting an 11% increase in sales in 2015. Now Black Diamond is considering a sale of the entire company, or separate sales involving the Black Diamond and POC brands. Such a sale could benefit shareholders, if a corporate buyer is willing to pay a premium.</p> <h2>11. International Speedway Corporation [<a href="http://www.nasdaq.com/symbol/isca">NASDAQ: ISCA</a>]</h2> <p>NASCAR fans can get in on the action with shares of this Daytona, Florida company, which owns many of the most popular racetracks and other entertainment facilities. Shares are up more than 7% in the last year, though recent quarterly figures have sent share prices down. ISCA reported revenue of $160.4 million for the most recent quarter, down from $190 million from the same period last year. Shares are trading at about $33 now, but Wall Street analysts think ISCA is due to rebound, setting price targets of more than $40.</p> <p><em>Do you own any of these adventuresome stocks?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/tesla-six-flags-and-9-other-adventure-stocks-worth-investing-in">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-investments-that-usually-soar-during-the-summer">7 Investments That Usually Soar During the Summer</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> <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/should-you-invest-in-start-ups">Should You Invest in Start-Ups?</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-reasons-july-is-a-great-month-for-stocks">5 Reasons July Is a Great Month for Stocks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stabilize-your-portfolio-with-these-11-dividend-stocks">Stabilize Your Portfolio With These 11 Dividend Stocks</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment adventure portfolio space stocks theme parks Fri, 21 Aug 2015 13:00:33 +0000 Tim Lemke 1527005 at http://www.wisebread.com 5 Reasons July Is a Great Month for Stocks http://www.wisebread.com/5-reasons-july-is-a-great-month-for-stocks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-reasons-july-is-a-great-month-for-stocks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_working_beach_000040378062.jpg" alt="Man realizing July is a great month for stocks" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you think traders are off summer vacationing, think again. There's a lot of action in the markets during the summertime, particularly in July, which makes it a great time to <a href="http://www.wisebread.com/10-signs-a-stock-is-about-to-tank">rebalance your portfolio</a> &mdash; or pull the trigger on the trades you've been scheming about. No doubt, timing the market perfectly is practically impossible. But the historically well-performing month of July is better than many for making positive returns.</p> <p>Read on for our roundup of reasons why July is a great months for stocks.</p> <h2>1. School's Out</h2> <p>Okay, so we lied. Some traders really<em> are</em> on vacation in the summer. But that's good news for you. Here's why: While they're off teaching their toddlers to swim, surf, and make sand castles, the market's value tends to drift higher from where it should be.</p> <p>&quot;During&hellip; summer, professional investors are collectively less focused on news and as a result, information is incorporated into stock prices more slowly,&quot; MIT researcher Lily Fang said. This effect is particularly strong for negative information because taking advantage of negative news by, for instance, short-selling, is more difficult and requires close attention &mdash; a scarce resource in July. &quot;Think about how traders spend their summers,&quot; Fang said. &quot;They're on the beach with their kids. They're traveling overseas with their friends. They're rightfully enjoying the holidays and as a result not paying as much attention to market news.&quot;</p> <p>Just beware of the &quot;after holiday effect.&quot; Stock prices tend to do the <a href="https://mitsloan.mit.edu/newsroom/press-releases/2014-school-holiday-breaks-global-stock-lily-fang.php">worst in September</a> &mdash; when summer vacation's over &mdash; because investors' kids are back in school and they once again have the time to monitor the markets obsessively, according to Fang's research.</p> <h2>2. Midsummer Rules Dow Jones</h2> <p>The Dow Jones industrial average has posted a <a href="http://www.cnbc.com/2015/06/30/the-hottest-stocks-of-july.html">positive July return</a> in seven of the last 10 years. The average gain during that time span was almost 2%. That's a pretty spectacular indication that July is the golden time on the Dow to invest.</p> <h2>3. Historic S&amp;P Data Shows Positive Returns</h2> <p><a href="http://www.moneychimp.com/features/monthly_returns.htm">July's market returns</a> have been up 35 of the last 60 years since 1950, according to S&amp;P 500 data. The average return over that period was 0.8%. That's pretty good, but the kicker is that in recent years the month has performed even better. Since 2005, July has had six up years with an average return of 1.6%. A whopping 80% of all trades have been positive in the last decade on the S&amp;P 500 Energy Sector. So if you're planning to invest in July, you'll do well to pick an energy industry stock.</p> <h2>4. Nasdaq Comes Alive, Too</h2> <p>The Nasdaq composite, which averages a 2.1% gain for the month of July, has posted a positive return in six of the last 10 years.</p> <h2>5. Chinese Stocks Bounce Back</h2> <p>For the last five years, the MSCI China index has been one great big slump in the first six months of the year, typically losing about 10% of its value. Ouch. But July has proven to be the <a href="http://www.telegraph.co.uk/finance/personalfinance/investing/11322368/Investment-calendar-2015-Tips-and-tricks-to-play-stock-market-trends.html">bounce back month</a>, marking the start of a season of strong returns that more than make up for those earlier losses. In 2014, the index fell 3% in the first six months, but then gained more than 10% starting in July.</p> <p>&quot;There is no denying that a pattern has emerged in Chinese equities in the last few years,&quot; said Damien Fahy of the consumer website Money to the Masses. &quot;Its roots lie in the Chinese New Year and corresponding government stimulus which tends to rally markets.&quot; Although this July has been unusually tough for Chinese stocks to date, the month isn't over yet.</p> <p><em>Do you invest in July? Why or why not?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/5-reasons-july-is-a-great-month-for-stocks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> <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/should-you-invest-in-start-ups">Should You Invest in Start-Ups?</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/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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tesla-six-flags-and-9-other-adventure-stocks-worth-investing-in">Tesla, Six Flags and 9 Other Adventure Stocks Worth Investing In</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Dow Jones NASDAQ portfolio positive returns s&p stocks summer vacation Thu, 23 Jul 2015 13:00:09 +0000 Brittany Lyte 1499559 at http://www.wisebread.com The 10 Weirdest ETFs You Can Buy http://www.wisebread.com/the-10-weirdest-etfs-you-can-buy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-10-weirdest-etfs-you-can-buy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_reading_newspaper_000019458258.jpg" alt="Woman investing in weird ETFs but probably shouldn&#039;t" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you read Wise Bread often, you'll know we're big fans of exchange traded funds, known as ETFs. They are great vehicles for broadening and diversifying your portfolio, and offer some advantages over mutual funds. (See also: <a href="http://www.wisebread.com/8-ways-etfs-can-put-more-money-in-your-pocket-than-mutual-funds?ref=seealso">8 Ways ETFs Can Put More Money in Your Pocket Than Mutual Funds</a>)</p> <p>But as ETFs have grown in popularity, they've also grown in number. And that means there are some very strange ETFs out there. Being weird doesn't make an ETF bad, necessarily, but all too often these unique ETFs are too specialized or complicated to be useful to the average investor. And many of them just aren't good performers.</p> <p>Here's an examination of some of the weirder ETFs out there, with reasons why you shouldn't bother investing in them.</p> <h2>1. High Volatility or Beta ETFs</h2> <p>These ETFs give you exposure to companies that are uniquely sensitive to the ups and downs of the market. Examples include Powershares' S&amp;P 500 High Beta Portfolio ETF [<a href="http://finance.yahoo.com/q?s=SPHB">SPHB</a>] or its High Beta Emerging Markets Portfolio ETF [<a href="http://finance.yahoo.com/q;_ylt=AltJGS9tP77yDaNAPbL0lWpzAcAF?uhb=uhb2&amp;fr=uh3_finance_vert_gs&amp;type=2button&amp;s=EEHB">EEHB</a>]. In theory, these ETFs can help you make more money when markets rise, but it could also mean bigger losses during bear markets. If you're investing for the long term, your goal should be to smooth out the ups and downs, not embrace wild swings. Unless you enjoy getting ulcers, stay away from these ETFs.</p> <h2>2. Inverse ETFs</h2> <p>The idea here is that you are betting against an index, so you can make money during a bear market. Perhaps it makes sense for a short-term investor, but it does not make sense for the typical investor looking to grow wealth over the long term. It's true that stock market can take a nosedive from time to time, but it's very hard to predict exactly when. Over time, markets go up, so let that guide your investment strategy.</p> <h2>3. ETFs for Obscure Countries</h2> <p>For the average investor, there's really no good reason to own an ETF centered solely on, say, Qatar. Look instead to ETFs with a broad exposure to international and emerging markets. The iShares Total International ETF [<a href="https://www.ishares.com/us/products/244048/ishares-core-msci-total-international-stock-etf">IXUS</a>] is a good one, as is the iShares Emerging Markets ETF [<a href="http://www.ishares.com/us/products/244050/ishares-core-msci-emerging-markets-etf">IEMG</a>].</p> <h2>4. Leveraged ETFs</h2> <p>A leveraged ETF can help you get amplified returns, because they take advantage of borrowed money. Think of it as a simpler way to trade on margin. Popular leveraged ETFs include the Daily S&amp;P 500 Bull 3x ETF [<a href="http://finance.yahoo.com/q?s=SPXL">SPXL</a>] and the Ultra S&amp;P 500 ETF from ProShares [<a href="http://www.proshares.com/funds/sso.html">SSO</a>]. Leveraged ETFs aren't bad, but they're not great for a typical investor who's looking for steady and long-term growth. That's because any time you're trying to boost returns through borrowing, you may also see amplified losses.</p> <h2>5. Ultra-Specific Sector ETFs</h2> <p>It's sensible to try and diversify your portfolio by investing in a mix of sectors, such as energy, health care, and technology. But it's possible to get too crazy with it. An ETF for the broad materials sector is fine, but there's no need to delve deep into the agribusiness sector. A general energy ETF will help your portfolio, but do you need specific exposure to solar companies? The impact of these investments could be positive, but relatively miniscule, so don't complicate things for yourself.</p> <h2>6. Advisorshares GlobalEcho Fund [<a href="http://advisorshares.com/fund/give">GIVE</a>]</h2> <p>There's nothing wrong with socially responsible investing, but it's probably best to stay away from this particular ETF, which focuses on investments &quot;that may technologically, socially, and environmentally impact the earth positively.&quot; The ETF's performance is up barely more than 1% in 52 weeks, and its expense ratio of 1.61% is far higher than most ETFs. To find better performance and lower expenses, consider investing in iShares MSCI KLD 400 Social Index Fund [<a href="https://www.ishares.com/us/products/239667/ishares-msci-kld-400-social-etf">DSI</a>] instead.</p> <h2>7. S&amp;P 500 VIX Short-Term Futures ETF [<a href="http://finance.yahoo.com/q?s=VXX">VXX</a>]</h2> <p>I have to admit, I don't really understand this ETF. And I doubt most investors will. Dow Jones says the ETF &quot;utilizes prices of the next two near-term VIX futures contracts to replicate a position that rolls the nearest month VIX futures to the next month on a daily basis in equal fractional amounts.&quot; Got it? Me neither. But I do understand price performance, and this ETF has lost nearly all of its value over the years. Stay away.</p> <h2>8. Market Vectors Gaming ETF [<a href="http://finance.yahoo.com/q?s=BJK">BJK</a>]</h2> <p>This is an ETF that tracks the performance of some of the largest casino companies, including MGM Grand, Las Vegas Sands, and Galaxy International. Many of these aren't bad companies, per se, but this far too specialized an ETF for most investors. Not to mention, anyone who did invest in this ETF in recent years hasn't exactly hit the jackpot. Shares are down 27% over the last three years, and are up just 6% in three years.</p> <h2>9. Exchange Traded Managed Funds</h2> <p>Part of the attraction to ETFs is that they are passively managed and their investments are clearly advertised. But there is a new push for approval of managed ETFs, or ETMFs. In theory, these investments have a chance to outperform an underlying index because they are actively managed. But there's a growing body of evidence that asset managers can't beat the market on a consistent basis. You're better off with an ETF that's simpler and more transparent.</p> <h2>10. Yorkville High Income Infrastructure MLP Index ETF [<a href="http://www.yetfs.com/ymli.aspx">YMLI</a>]</h2> <p>This ETF tracks the movements of select energy infrastructure master limited partnerships. That's a mouthful, and it's pretty unlikely the average investor needs anything that specialized in their portfolio. What's more, this particular ETF has an astonishingly high expense ratio of 5.91%.</p> <p><em>Do you have any unique or interesting ETFs in your portfolio?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/the-10-weirdest-etfs-you-can-buy">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/are-you-choosing-the-right-fund-for-your-portfolio">Are You Choosing the Right Fund for Your Portfolio?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-an-etf-isnt-right-for-you">8 Signs an ETF Isn&#039;t Right for You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment ETFs exchange traded funds portfolio risks stock market Wed, 15 Jul 2015 13:00:12 +0000 Tim Lemke 1484611 at http://www.wisebread.com Why Everyone Needs a Portfolio of Work http://www.wisebread.com/why-everyone-needs-a-portfolio-of-work <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-everyone-needs-a-portfolio-of-work" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/portfolio.jpg" alt="potfolio of pictures" title="A portfolio is crucial in this market" class="imagecache imagecache-250w" width="250" height="168" /></a> </div> </div> </div> <p>The job market is going through a major shift. Employers have a huge pool of prospects to pick from, and they're being especially picky about who they hire. So if you want to land the job of your dreams (or any job, really), you have to stand out. And I'm not talking about <a href="http://www.youtube.com/watch?feature=player_detailpage&amp;v=aZVcXRcEJfI#t=43s">scented resumes</a>. (See also:&nbsp;<a href="http://www.wisebread.com/stupid-things-to-put-in-your-cover-letter">Stupid Things to Put in&nbsp;Your Cover Letter</a>)</p> <h2>What Is a Portfolio?</h2> <p>You probably saw the word &quot;portfolio&quot; in the title of this post and thought to yourself:</p> <blockquote><p>I'm not a designer or a copywriter; I don't need a portfolio! I'm a lawyer for crying out loud...this doesn't apply to me! And how the hell am I supposed to pronounce this guy's last name anyway?</p> </blockquote> <p>To you I say, &quot;Whoa, Nelly!&quot; Calm down.&nbsp;This is the kind of old-world thinking that will get you nowhere.&nbsp;</p> <p>In order to stand out, you have to look at things a little differently. Instead of spending all that time on your resume (which <em>is</em> important, but only to a certain extent), you need to put together a package that showcases what you've done and what you can do.</p> <p>That's the goal of having a portfolio &mdash; to showcase your skills and past accomplishments.</p> <h2>What About a Resume?</h2> <p>Your resume is a one-page summary of your past work experience....ZZZZZ. Pretty boring, isn't it? Even if you've done exciting work in the past, it's going to be really tough to get that across in a bullet or two.</p> <p>Besides, all resumes pretty much look the same. Especially if you're sifting through 34 of them and it's 5:14 p.m.</p> <p>Your portfolio, however, is your playground. Here's a list of things you should include:</p> <ul> <li>Websites you worked on</li> <li>Projects you were a part of&nbsp;</li> <li>Events you had even a minor role in</li> <li>Things you made (apps, catalogs, events, etc.)</li> <li>People you worked with</li> <li>A blog you started and write for (blogging <a href="http://www.thewriterscoin.com/blogging-more-money-better-job/" target="_blank">got me a better job</a>)</li> <li>Skills you picked up or perfected</li> </ul> <p>Think of the coolest, most exciting stories you can possibly think of and focus on one or two of those. Then make sure that you actually contributed or learned something, because otherwise you'll just look like a passive observer.</p> <p>Go heavy on the pictures and on the links, so potential employers can go as deep as they want on this stuff.</p> <p>After looking at it, employers should be thinking, &quot;Wow, this person is pretty interesting and has some serious skills we could use here.&quot;</p> <h2>How to Build It</h2> <p>It doesn't have to be complicated, but this is your chance to show off, so don't hesitate to put some time and effort to make this look as good as it can be.</p> <p>I know what you're thinking &mdash; &quot;But Mr. P, I don't know anything about creating a website! I don't know how to use Photoshop! How am I supposed to put one of these together?&quot;</p> <p>Time to get creative. It doesn't matter how you come up with this nifty package of cool stuff you've done or great skills you have, what matters is that you get it across. That means you can use any of these:</p> <ul> <li>PowerPoint</li> <li>Word</li> <li><a href="http://prezi.com/">Prezi</a></li> <li>WordPress</li> <li>Dreamweaver</li> </ul> <p>It may sound lame to send in a file built in Word, but Word can do some cool stuff if you put the time in.</p> <p>And the fact that you were able to create something visually interesting that's also effective is a much better way to say &quot;Proficient in MS Word&quot; on your boring <a href="http://www.wisebread.com/new-year-new-resume">old resume</a>.</p> <p>Now go out there and <a href="http://www.thewriterscoin.com/an-epiphany-about-work-life-and-getting-older/">make something you're proud of</a> that will showcase your talent and your skills.</p> <p>Your next job may depend on it.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carlos-portocarrero">Carlos Portocarrero</a> of <a href="http://www.wisebread.com/why-everyone-needs-a-portfolio-of-work">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-times-of-year-to-start-a-job-search">The Best Times of Year to Start a Job Search</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-get-the-job-without-saying-a-word">How to Get the Job Without Saying a Word</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-effective-ways-to-make-yourself-more-employable">6 Effective Ways to Make Yourself More Employable</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-use-snapchat-in-your-job-search">How to Use Snapchat in Your Job Search</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-careers-you-dont-need-a-ton-of-experience-to-start">9 Careers You Don&#039;t Need a Ton of Experience to Start</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Job Hunting portfolio resume self-promotion Thu, 03 May 2012 10:24:10 +0000 Carlos Portocarrero 926000 at http://www.wisebread.com