Investing Information
Archived Posts from this Category
The Importance of Saving
Posted by Bryan on 20 Aug 2008 | Tagged as: Investing Basics, Investing Information, Investing Tips, Investment Ideas, Money Management
How can ordinary, even low-income, if not poor, people become rich? The answer to that question is as simple as it is mandatory: Start by saving and investing something regularly, even if it is a modest amount, in anticipation of big returns in the future. Saving and budgeting is the most important part of investing. If you spend more than you earn, you will always be broke.
Your persistent savings will add up with time. One hundred dollars saved each year will cause your total savings to rise from $100 to $1,000 in ten years. However, your net worth (or financial wealth) should grow, over time, by much more than the sum of your savings. This is because of the power of compound interest. This means that you should expect to receive on your savings some rate of interest (or return or appreciation) each year. If you leave the interest in your account, your interest will “compound” because you will then receive in subsequent years interest on your savings, plus interest on the interest that you received in previous years.
Again, if you save $100 for ten years and receive an interest rate of 10 percent, your total savings with interest will grow from $100 the beginning of the first year to $210 the second year ($100 of savings the first year plus $10 of interest on the first year’s savings plus $100 of new savings), to $331 the beginning of the third year, on to $1,594 the beginning of the tenth year. In short, with compound interest you will have close to 60 percent more in net worth at the beginning of the tenth year than you would have had from the savings alone.
You can imagine with “interest on interest”—or compounded interest—your net worth will build progressively more rapidly with each passing year. With sufficient savings, enough patience, and a reasonable rate of interest on your savings (or return on your investments), you can imagine that your net worth (and resulting income level) in the future will be the envy of those who have chosen to spend all their income year after year on many things they could do without, or do with less of.
To dramatically illustrate just how powerful compound interest can be in building wealth, suppose that you are a newly minted twenty-two-year- old college graduate, with a starting salary of, say, $30,000 a year, and you salt away a mere $2,000 the first year, and only the first year, on your job (which means that you will then save only 6.6 percent of your annual pre- tax income that one year).
Assume that you are able to secure an annual rate of return on the investment (above the inflation rate) of 15 percent until retirement. Amazingly, your onetime investment will be worth, in the purchasing power of today’s dollars, $814,774 at age sixty-five and over $1.64 million at age seventy.
Organizing Your Debts In Writing
Posted by Bryan on 15 Aug 2008 | Tagged as: Investing Basics, Investing Information, Investing Tips, Money Management
Today you’re going to write down everything you owe your creditors. That’s right, everything— from your student loans, to mortgages, to credit card debt, medical bills, auto loans, etc. On a piece of paper, make a complete list of your obligations and here’s what you should write or type out on the sheet: Include the name and phone number of each creditor, your account number, the interest rate you pay, the total balance due, and the minimum monthly payment.
Why Torture Yourself Listing All Your Bills? You need this information in black and white to get a realistic picture of where you are. This info will also help you later when it’s time to negotiate with creditors or collection agencies. Again, write down everything that you owe, even including credit cards that might have only $100 on them. Don’t make the mistake of leaving those “small” bills out because “Oh, I’m going to pay that one off this month anyway.” Just write down everything you actually owe as of today.
Many people have a rough idea about how much they owe their creditors. But there’s no substitute for having true, accurate numbers - not guesstimates. To fill in the proper figures on your written sheet, or your computer spreadsheet, you’ll have to go find your most recent statements and invoices from your creditors. Take as much time as you need today to collect all this data. It’s a crucial step in you getting your finances together.
It’s also a good idea to call the companies you owe and ask for the latest information about your debt, especially if you’re looking at statements that are more than a month old. Even if the statements are current, you should call your creditors because some of the information on those statements may have changed. For instance, you may have charged additional items since the closing date on your credit card statement, so now your debt is actually greater than your current statement indicates. Also, you may have had a teaser rate or a lower interest rate in the past, and maybe that interest rate has now jumped. Whatever the case, you need to have the most accurate information that is currently available.
A Wake-Up Call: How Much Do You Owe? The next step is for you to add up all your debts. For some of you, seeing your total debt in black and white may be a scary thing: a wake up call to how deeply you are in financial bondage. For others, seeing your total debt may offer relief: perhaps you don’t owe as much as you feared. Whatever the situation, don’t panic. Remember, you’re on the path to financial freedom now and if your goal is to get to “Zero Debt” status, keep plugging along - it will happen, and sooner than you think!
Savings and Money Market Accounts Explained
Posted by Bryan on 15 Aug 2008 | Tagged as: Investing Information, Investing Tips, Investment Ideas, Mutual Funds
Savings and money market accounts can be found at banks. Money market funds are available through mutual fund companies. All are lending investments based on short-term loans and are about the safest in terms of risk to your investment among the various lending investments around.
Relative to the typical returns on growth-oriented investments, such as stocks, the interest rate (also known as the yield) paid on savings and money market accounts, is low but does not fluctuate as much over time.
Bank savings accounts are backed by the federal government through Federal Deposit Insurance Corporation (FDIC) insurance. If the bank goes broke, you still get your money back (up to $100,000). Money market funds are not insured. Should you prefer a bank account because your investment (your principal) is insured? No. Savings accounts and money market funds have almost equivalent safety, but money market funds tend to offer higher yields.
The 1987 Stock Market Correction
Posted by Bryan on 07 Aug 2008 | Tagged as: Investing Information, Investment History, Stock Market
There have been many stock market corrections, and it seems as though we are in the middle of one now. Below is a discussion about the 1987 correction in the stock market.
The events of October 19, 1987, at the time, were looked upon as a full-fledged stock market crash. In retrospect, no depression or even a recession was sparked by this dramatic fall in prices, but the event is historic nonetheless. One of the aspects that made it so memorable is the fact that to this day, no one really knows what caused it. There are many different theories as to the reason of the correction, but its all speculation.
The ’87 correction, known now as Black Monday was the first ever global stock market crash. The final numbers are staggering, with the Hong Kong stock exchange losing over 45 percent of its value, the Australian stock market losing almost 42 percent of its value, the UK lost over 26 percent, while the New York Stock Exchange lost 22.6 percent.
The October 1987 fall ended up being the second biggest single day percentage drop in the history of the stock market. The biggest one day decline happened in 1914 when the Dow Jones lost just over 24 percent. This drop was attributed to the fact that the market had been closed for four months due to World War I prior to that day. The biggest point loss in history was the first day of trading after the attacks of September 11th, when the Dow lost over 680 points.
Starting in mid-August of that year, the Dow began to correct itself. A series of 100+ point drops plagued the market over the next two months, but the drops were always followed by recoveries. Even days before the October 19 drop, there had been a major dip, and the next day, stocks were back up. It wasn’t until the Black Monday collapse that stocks went down and stayed there.
Possible causes for the crash are usually broken down into a few different categories, including market psychology, illiquidity, overvaluation and program trading. Other possible causes for the correction are attributed to a major storm in the UK which happened on the previous Friday. The storm did not allow traders in the UK to finish their days work and this caused many in the US and around the world (especially in Hong Kong where the crash first started to happen) to sell.
While time has shown the events of October 1987 weren’t quite as bad as some had feared, dramatic market corrections are a part of investing and while they can be terrifying when they happen, they shouldn’t take a savvy investor by surprise.
Investing In Metals Tips
Posted by Bryan on 10 Jul 2008 | Tagged as: Investing Information, Investing Tips, Investment Ideas
Precious metals is an area that many would not have considered in their investment portfolio. Dee has provided 8 tips to assist those who wish to invest in precious metals.
Investing in Precious Metals - 8 Tips
When most people think of “investing” they think of things like stocks and bonds and Certificate of Deposits (CDs) with high interest rates. Of course, with the economy where it is, it might be more prudent for investors to start looking into investing in precious metals. If you haven’t invested in anything before, here are a few tips for investing in precious metals.
1. Gold is the most popular precious metal to invest in, though there are others (silver, and platinum) available, which makes gold the most volatile in terms of price. The more something is traded, the less predictable its future worth. Gold can be bought as bullion or gold bars, or as coins. If you plan on purchasing gold, or any precious metal, make sure you have a safe, or safety deposit box. Don’t talk about your investments in precious metals you never know who could over hear the conversation. Gold is untraceable if it gets stolen.
2. Platinum, while not as popular as gold is actually the more precious metal and is usually worth several times as much as gold. Platinum is used for electrical contacts, dentistry, coating for the nose cone of rockets, laboratory equipment as well as jewelry.
3. Before deciding to invest money, it is a good idea to learn about the different types of precious metals that are available. Typically people trade not in the metal itself but in items formed from the metal-bars, and special coins.
4. Make sure that you shop around. There are metal deals both online and off and while the market has one price for the precious metals, individual dealers might have their own mark up rates.
5. Learn how to really look at bars and coins fashioned from your precious metals. Imperfections, the design and the overall condition of the bars and coins will affect the buying and selling price of your investment.
6. Because precious metals fluctuate so much in price, they should not be the only thing you invest in. Of your total investment portfolio, precious metals should only make up ten percent-maximum.
7. Precious metals, while they should only make up ten percent of your portfolio, are some of the safest things to invest in because they keep their value, even in the event of political or cultural problems. A bar of gold can’t declare bankruptcy thereby destroying the value of your investment.
8. Don’t think of buying precious metal jewelry as an investment. Fashion dictates the value of a piece as much as the gold content. Retailers mark up the jewelry 50% from wholesale prices. And wholesalers mark up 50% from the manufacturer. A gold bracelet costing $1000 retail may only have a value of $100 as gold. If you’re thinking of buying antique gold jewelry buy it for its value as an antique not as a precious metals investment.
These are just a few tips to help you get started in the area of investing in precious metals. When you are ready to start investing, your broker and precious metals dealers will have plenty of information to help you make informed choices.
|
Interested in investing in Real Estate Dee Power is the author of several nonfiction books including The Making of a Bestseller, Attracting Capital from Angels, and Inside Secrets to Venture Capital. Dee’s hobbies include gardening Article Source: http://EzineArticles.com/?expert=Dee_Power |
Investing In Developing Countries
Posted by Bryan on 07 Jul 2008 | Tagged as: Investing Information, Investing Tips, Investment Ideas, Mutual Funds, Overseas Investing
Investments in developing countries, such as China, India and Russia have been very profitable over the decade. Rodrigo wrote the article below and he seems to think that this will still be the case for the 21st century. I definitely have investments in China, Russia and India through Landau Securities.
The Countries of the Future, Or Where to Invest and Make Money!
The United States has experienced significant growth rates in the last 150 years. Over this period, America has gone from a small farming economy to the greatest power in the globe, with significant gains for its citizens in quality of life. Today, the average American family has too many cars, TVs, computers, and a huge amount of debt!!! How much more can they still continue to buy? To whom are companies selling their products?
Business owners have realized this problem years ago, and therefore “globalization” was created. Well, not exactly created, but 20 years ago the American government, supported by its largest corporations, started to push the concept of “open markets” into developing countries. The idea, as said, was that poor countries should be selling metals, oil and food to industrial countries, who would process these materials and, in return, sell back industrial products to the poor countries, which required significant capital and skilled labor (at much, much higher prices by the way). This way, American companies could benefit from the enormous consumer markets available in developing countries. Oh, almost forgot: many of the products that poor countries could produce, like food, would not be able to be sold in the United States, not to displease some of the voters (called farmers) of the government.
As things progressed, American companies realized that if the U.S. would let commodities come in, why not take advantage also of much cheaper labor prices in these countries and relocate the manufacturing operations of some of the factories they did not want, like coal and steel? This way these companies could make much more money selling to the same crowed!!! Later on, as workers were also trained on other types of jobs, other industries also relocated to countries like China, Malaysia, Indonesia, Vietnam and Korea.
But the U.S. still had services businesses to generate jobs … until the internet made it much easier to provide services online and countries like India and even Ireland took part of that cake too.
But what do countries like Brazil, Russia, India and China have in common and why is so many people talking about them? And what does that has to do with the story above?
These countries have a large population, underserved, eager to buy, eager to increase their quality of life. And with more jobs relocating from industrial to developing countries, they now have the means to buy more stuff.
The countries that will be able to sustain high and consistent growth rates over the next decades will be these same countries with big domestic consumer markets. China growing in manufacturing, India in services, and Russia and Brazil producing the resources that the new world needs to grow. This is the new order of the 21st century. And where there is a market, there are companies willing to serve it.
If you want to invest in companies that will sell more, make more money, grow faster, you have to invest in companies that are selling to these markets, to these consumers.
Brazil is a democracy, de-regulated market, a peaceful country, no meaningful natural disasters, no ethnic or religious tensions, and rich in natural resources. It is a country that experienced significant progress in the last decade, and yet has a lot to come. If you pick the right industries, the right companies and the right investments, your returns can be very, very significant.
|
Rodrigo Lowndes is a partner in private equity firm Emerging Capital. He was previously a managing director and president of Morgan Stanley & Co. in Brazil. He currently publishes a site with investment ideas on Brazil, http://www.investing-in-brazil.com/ Article Source: http://EzineArticles.com/?expert=Rodrigo_Lowndes |
Unusual Investment Options
Posted by Bryan on 03 Jul 2008 | Tagged as: Investing Basics, Investing Information, Investing Tips, Investment Ideas
Many people think of the stock market, real estate and mutual funds when considering investing, but there are many other forms of investments that can be made. The article below, written by James, discusses some of the more unusual types of investments that are available.
There are many choices to be made when looking for investment options. Let’s look at some of the more unusual ones.
Art Investment.
Art work, be it sculptures or paintings have an investment value. The buyer must do research into the work and look for quality and significance. These two factors are the main contributors to artwork that can appreciate in value. Investors should consult with art dealers and valuations must be undertaken by reputable firms before purchase. This type of investment is usually for the longer term and can be rewarding.
Antique Investments
Antiques are investments which already have a value because of there age and significance. The valuation becomes the critical point in deciding the purchase price. Some are over valued and the profit is already factored into sale price. The time that they are held by the investor will determine the appreciated value. Some antiques are to be found in dealer shops whilst others can be located at clearing sales, auctions and garage sales. It is important to have a historical knowledge of the antique before purchase as this often helps in deciding its resale price.
Motor Vehicles
Older motor vehicles are now becoming collector items and can appreciate because of their scarcity and uniqueness. Restoration is often a major part of the valuation and can cost a lot of money. Parts and labour input involved often mean the investor has to allow for ongoing costs until the restoration is complete. The rewards can often be double the initial investment cost.
Sports Memorabilia
As sports heroes come and go, some are remember forever for their greatness. Investing in memorabilia that covers their feats can be rewarding. Items such as frames sports clothes, bats and balls used by the hero and signatures all retain value to the collectors and the sports fanatics. These trophies can increase in value with time and can be a good investment for the wise. Know your sports history and invest with confidence.
Basically, any item that can increase in value with the passage of time can be looked at as an investment. Some of the more unusual items have the most resale value and appreciate the quickest. Always be on the lookout for such items and try to increase your knowledge about them as you look. By joining clubs and participating in hobby activities you will often learn more about such items than you will from a book.
There are lots of options within this category of unusual investments and we have only covered a few basic ones here. Investments principles are not just limited to property and shares but can be applied to anything that has value. Appreciation of those items that make investments means research and lots of foot work to gain an advantage on other investors. For more information on investment options go to http://www.investmentoptions.freedvd.com.au. Good luck with your search.
|
James McInnes is a professional share market trader and investment entrepreneur, with many years experience trading the Australian Share market. You can visit his site at http://www.investmentoptions.freedvd.com.au/ for further information on trading the Australian Share Market Article Source: http://EzineArticles.com/?expert=James_Mcinnes |
Where Has the U.S. Dollar Gone?
Posted by Bryan on 10 Nov 2007 | Tagged as: Investing Basics, Investing Information, Investing Tips
Mr Guild has written an interesting article about the current state of the US dollar. It certainly has been on the decline. When investing offshore, currency rates can have a huge impact on returns. Companies from other countries that have had a large percentage of their sales in the US are now feeling the pinch. MGW on the Australian stock market is an example of this. I personally have some investments in managed funds that are tied to the $US, however the importance comes when I intend to sell them. The decline in the US dollar has lowered the profits of some of these funds from my perspective. Anyway, I hope that you find the article below useful.
I don’t know if any of you know the old blues song from the 1930’s that goes “Once I lived the life of a millionaire…spending my money…I didn’t care. Taking my friends out for a mighty good time…buying bootleg liquor, champagne and wine. But then ooh…I fell so low…Had no friends and had no place to go…”
Today, it is as if the same song is being sung by the U.S. dollar. The U.S. dollar is being deserted one friend after another. One would expect the dollar to rally after its big decline, but it doesn’t. WHY?
More and more countries that have aligned their currencies to the U.S. dollar are re-examining the so called U.S. dollar peg.
China is being forced to do so by European and U.S. pressure. Hong Kong speculators are attacking the Hong Kong dollar peg to the U.S. dollar and forcing the Hong Kong government to defend it at great expense.
The six Middle East countries pegged to the U.S. dollar (Saudi Arabia, Kuwait, UAE, Bahrain, Oman and Qatar) that export a lot of oil and have historically tied their currencies to the U.S. dollar. This group has decided to institute a single currency by 2010.
Many other oil exporting nations have been interested in being paid Euros for their energy.
The new rich nations of the world that sell raw materials, or manufactured goods, are all wondering about the big buildup in dollars in their portfolios, and what they will do to diversify their risk. In addition to causing a decline in the value of their holdings, having too many dollars causes other problems.
When-non dollar nations accumulate large quantities of U.S. dollars, they must sterilize them to avert inflation (this is often done by buying U.S. dollar denominated debt). If the dollars are used to buy goods, it can end up importing inflation (especially if they buy goods from non dollar based countries that are rising in price).
Although the dollar can rally at any time, until the U.S. starts to face its fiscal and trade deficit problems, and the U.S. economy finds a bottom to the credit crisis…the currency will remain ‘Under Pressure’…(a popular 80’s pop song for those readers who may not be familiar with 1930’s blues tunes).
CHINA AND SOME OTHER SOVEREIGN WEALTH FUNDS ARE RAMPING UP THEIR STRATEGIC INVESTING IN METALS, ENERGY AND COMPANIES
Their focus is on acquiring mineral resources, energy resources and investments in private equity houses, where they can get big and cheap stakes in companies.
Today, it was announced that China is seeking to make major investments in a large number of private equity firms. This is logical, and it follows the pattern that they have set in the last few years. They have been accumulating MINERAL AND ENERGY assets in Africa and Latin America.
They do not mind investing in countries with corrupt governments or wars going on. They are more than happy to invest in stable African and Latin American countries like Tanzania, Kenya, Uganda, Brazil, Peru and others to secure raw materials. They are after nickel, coal, zinc, copper, iron ore, oil and precious metals.
Political risk is not their big concern. Their big concern is to get the raw materials to allow 300 million more Chinese (in the case of China), and countless more in other countries make the transition from countryside subsistence farming to urban dwelling and its blue and white collar jobs.
No wonder precious metals, base metals and energy continue to rise…the demand continues to grow. We estimate that there will be continued demand for years to come.
BETTER LATE THAN NEVER
The IEA (International Energy Agency) hints that its new crude oil forecast (to be announced soon) will be much higher than the previous price forecasts have been. Failing to buy the peak oil thesis for a long time, the IEA has been making low-ball estimates of global energy prices for the whole five years we have been shouting about higher oil prices. This was because they believed what the oil producing countries told them. Of course, the oil producing countries had a vested interest in trying to sell the world that they could increase production and keep oil prices down so consumption would stay high.
Now even the IEA has seen through this paper thin argument, and will announce that oil prices can go much higher because the amount of oil which can be produced in the world has PEAKED.
OUR THEMES
We remain gratified that our themes have worked out so well, and we continue to see most of them working in future months.
Energy-We are certain that energy which we predicted years ago could go to $100 by 2008 will get there soon. What then? At this juncture we believe that alternative energy and foreign energy companies may be more attractive than U.S. energy providers. We have investments in energy companies operating in Australia, Canada, India, Africa, the North Sea, Norway, South America and the Mid East. We continue to own oil, natural gas, uranium and renewable energy investments in the energy sector.
Base Metals-Although we remain bullish on base metals long term, for the short term we are concerned that a weak U.S. economy will cause base metals stocks to move sideways. We will not emphasize base metals stocks for the next few months for this reason.
Precious Metals and Currencies-The weakness in the U.S. dollar mentioned above is extremely salutary for gold and non U.S. currencies, and we remain very positive on them for the coming months. We own both gold royalty companies and the metal itself. We own several non-U.S. currencies, including the Canadian Dollar, British Pound, among others.
India-India has recently changed the investment regime for foreign investors. This may cause a short-term decline in Indian stocks, which we would be delighted to see. We believe that India holds huge promise over the long-term and we would like a lower price at which to add to our Indian positions.
China-China is best played through Hong Kong, and this has been a very successful area for us. We will use any market corrections (which usually appear at least once a year) to add to our Hong Kong based positions in Chinese companies.
Singapore and other fast growing countries-Here again we plan to wait and add on market corrections.
We look forward to your comments and we thank you for listening.
——————————————————————————–
These articles are for informational purposes only and are not intended to be a solicitation, offering or recommendation of any security. Guild Investment Management does not represent that the securities, products, or services discussed in this web site are suitable or appropriate for all investors. Any market analysis constitutes an opinion that may not be correct. Readers must make their own independent investment decisions.
The information in this article is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject Guild Investment Management to any registration requirement within such jurisdiction or country.
Any opinions expressed herein, are subject to change without notice. In addition, there are many market, currency, economic, political, business, technological and other risks that are beyond our control. We make reasonable efforts to provide accurate content in these articles; however, some content and some of the assumptions, formulas, algorithms and other data that impact the content may be inaccurate, outdated, or otherwise inappropriate. In addition, we may have conflicts of interest with respect to any investments mentioned. Our principals and our clients may hold positions in investments mentioned on the site or we may take positions contrary to investments mentioned.
Guild’s current and past market commentaries are protected by copyright. Apart from any use permitted under the Copyright Act, you must not copy, frame, modify, transmit or distribute the market commentaries, without seeking the prior consent of Guild.
About the author:
Mr. Guild founded Guild in 1971. Prior to founding the company he was an analyst at a bank and a hedge fund. Mr. Guild is a recognized expert in the areas of international investing and economics. He has been a writer and speaker on economic issues for 30 plus years and has been widely quoted in the world media. He holds a BA in economics and an MBA with highest honors. For more company information please visit http://www.guildinvestment.com
Article Source: http://EzineArticles.com/?expert=M._Guild
Retirement Plans
Posted by Bryan on 20 Sep 2007 | Tagged as: Investing Information
Most people use investments to create enough wealth to retire comfortably, so although writing about retirement plans is not directly related with investing, it is indirectly related. Many people retire too early, while others retire too late. I hope that you find this article helpful for your retirement plans.
Three Critical Decisions about Your Retirement Wise retirement planning is not all numbers. There is a huge emotional component to it, reflecting the fact that retiring involves one of life’s most profound periods of change. No one really knows in advance how he or she will weather the process. That is why some people enter a period of prolonged depression, convinced that once a career ends, useful living stops, too.
For others, the transition is so easy that anyone observing them might think such individuals were born to retire. At any rate, three crucial decisions that many pre-retirees must make vividly display the mix of financial and emotional elements. They are:
1. Knowing when you should retire.
2. Sizing up an early-out offer from your employer.
3. Deciding between taking a lump-sum pension and an annuity.
Recent studies indicate that about 25% of retirees are unhappy, primarily because they had not been ready to retire. For some, the decision had not been theirs to make. But in general, at the end of a long career most people think they are headed for freedom and do not stop to consider whether the free time they’ll have will lie heavy on them or be the prolonged vacation they envision.
Retirement planners say that six months or so after quitting work, reality sets in. To make sure that retirement is a welcome reality, weigh carefully the decision to call it quits. Look for the two prime signals that you are ready to retire: (1) You find it harder and harder to keep your mind on your work; and (2) You view retirement not as a passive vacation, but as an active adventure.
Be honest with yourself and admit just how rigid you might be in your life as it is at present. The more averse you are to change, the more you will have to work on making the transition bearable. If your employer provides retirement planning seminars, take advantage of them. They are apt to address emotional as well as financial issues. If such seminars are not available, seek them elsewhere, perhaps through community groups.
If you are planning to retire, then I recommend looking at this retirement suggestion.
