Posts Tagged ‘ money management ’

You are Solely Responsible for Your Investing Success

Guest Post

It is quite unfortunate that the majority of investors approach investing with the mind set that they need to find stocks that will provide the greatest return in the shortest possible time. The entire day trading industry is built upon this need for instant gratification. Brokers are all too happy to fill this need by offering low trading commissions and beautiful charting and trading tools. As is often the case, constant portfolio turnover and churn is where the real money is for the brokers. “Making it up in volume” may not work for Detroit any more, but it works very well for the discount brokerage industry.

Investors who get seduced by these tools and the hope of a quick profit, tend to significantly under perform the market. Step back for a moment and consider this: The total market return (for example an index such as S&P 500) is the sum of the returns of all the individual investors in that market, institutional investors such as funds, less the commissions and fees they pay out to their brokers.

The problem is that of the three main participants in the market, individual investors are the only ones who are completely dependent on good stock picking for their profits:
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Developing Investment Strategies

Guest Post

Reaching a point when you can grow your money via investments is an exciting time. But there are many factors that affect investors’ decisions. These are normally guided by investment strategies, which are influenced by investment goals, risk tolerance, and your future needs for capital.

There are three basic types of investment strategies: growth investing, income investing and value investing, with the greatest thing separating them generally being the level of risk involved. Many younger investors have greater tolerance to risk as they can bank on having more time to make up losses, while investors closer to retirement may favour a conservative approach that’s protective towards their assets.

The basic investment strategies

Growth investors look for companies in markets that traditionally have high earnings and take risks buying stock from promising start-ups in the hope that the companies will grow into industry leaders. Value investors, by contrast, search for stocks that might have been overlooked by the market. Undervalued as opposed to low priced, these stocks represent a good deal to savvy investors. Income investing is a more conservative strategy that targets companies that consistently pay out high stock dividends.
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10 Ways to Be Rich without being Wealthy

By Kevin M

Have you ever noticed that some people who have little money seem to live very well—they almost seem to be…rich? Have you also noticed that many people who are rich in terms of money seem to struggle? There are definite reasons for that, and it’s mostly a matter of personal choice. It’s not that money isn’t important; it’s more that we should never measure wealth solely in terms of money.

When we do we can sink ourselves into a Catch-22 that we can never win. After all, how much money will ever be enough? Being rich is more about the quality of a person’s life than it is a certain salary or portfolio level, but only if we dare to consider the alternatives.

I’ve come up with a list of 10 forms of wealth—all of them non-monetary in nature—that can lead to a rich life and require very little emphasis on having or earning a lot of money.
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Nine Reasons Why Buy-and-Hold Can Never Work

Beyond Buy-and-Hold #62

By Rob Bennett

I often observe that Buy-and-Hold can never work. I get the feeling that a lot of people think I am exaggerating. No. I really mean that. This article sets forth nine reasons why it is so.

1) Buy-and-Holders don’t know when they are doing well or doing poorly.

The key to success in many types of life endeavor is learning from feedback. Because Buy-and-Holders don’t adjust their portfolio values to show the effect of valuations, the feedback they receive is often misleading.

I was warning people back in 2002 that going with a high stock allocation at the price levels that applied at the time was a terrible mistake. The usual response I received from Buy-and-Holders was “I’m doing just fine.” Huh? Buy-and-Hold was a disaster in the late 1990s. It took stock prices to the most insanely high levels ever seen in history. Yet Buy-and-Holders were not aware of the problem because they were viewing the numbers on their portfolio statements as legitimate.
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Ten Great Ways to Use Credit Card Rewards

Guest Post

Many frugal experts will shy readers away from using credit cards because it can be easy to overspend. But credit card rewards can actually help you save.

Here are ten ways to use credit card rewards to benefit you:

1) Statement credits: Some cards, like the American Express Blue Sky card, allow you to use your points as a statement credit toward qualified travel purchases, including any flights, hotels, or car rentals. If you do any traveling at all, this is a useful reward that is basically like cash toward your statement.

2) Gas rebates: A straightforward reward for something you always use, gas rebates can be an easy way to make sure you are using your points for something you will use.

3) Fund your IRA: Some cards will deposit your cash rewards directly into an investment account or 529 college fund. For example, the Fidelity Rewards American Express Card will make a $50 deposit for every $2,500 in purchases.
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Self-Employment and Being Frugal– Is There a Connection?

By Kevin M

In previous posts I’ve suggested that frugality can be counter productive if it keeps you hyper-focused on saving money at the expense of increasing your income. There is a very definite “siege mentality” that is inherent in frugality, and if taken too far it can lead to a process in which you’re constantly working to lower your cost of living but never moving forward in any real way.

Today I’d like to look at the flip side of this thinking. In this post I’d like to examine an area where properly channeled frugality can create business opportunities.

Last week I had lunch with my friend Jay and we got to talking about the possibility of a connection between self-employment and being frugal. Jay himself was the inspiration for the question—and for this post. In addition to having a very successful business, one he quite literally built from the ground up, Jay has never held a job. His entire career has been a process of moving from one entrepreneurial venture to another and sometimes juggling two or more at the same time. Oh, and yes, Jay is also very frugal. I don’t mean cheapskate frugal, but more along the line that frugality is a part of who he is.

Have you ever known anyone like this? I’ve known several. Make that many! That’s what leads me to believe that there might be a connection between self-employment and frugality. I’m not sure whether frugality sets the stage for self-employment, or if being self-employed makes one frugal out of necessity. But I’m willing to guess that there are certain characteristics of the frugal that make it easier for them to be self-employed.

What are those characteristics?
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How can air miles credit cards get me travelling further?

Guest Post by Mike Brains

When choosing a credit card, many people will go for the cards that offer the best rewards. One of the most common rewards offered by credit card providers is air miles. This can help you save money when booking holidays or business travel.

Ever time you make a purchase using an air miles credit card, you will accumulate points. These can be used to book flights for free. Also, many credit card providers offer a large amount of air miles for taking the card, before you even make any purchases.

Saving money with an air miles credit card

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Are “Stealth” Expenses Killing Your Budget?

By Kevin M

Do you ever find yourself wondering—perhaps when you look at your paycheck or even your W2–I make a good living, why don’t I have more money saved up?

You might look at your income and your regular expenses and think that you should be saving more, but somehow it all seems to just disappear, almost as if there are termites gnawing away at both your wallet and your checking account. And perhaps there are a few termites infesting your finances. Call them “stealth expenses”—stealth because we usually underestimate them—if we even notice them–expenses because that’s just what they are.

We all have fixed expenses that we know only too well—house payments, car payments, student loan and credit card payments. There are also day-to-day survival expenses, like groceries and gas. We’re very familiar with all of these, but it’s those others, the variables, that slowly suck the life out of a budget. Those are the stealth expenses, the ones that aren’t always so easy to measure or even to prepare for.

”Where does all my money go?”

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Your Retirement Plan Is In More Trouble Than You Realize

Beyond Buy-and-Hold #54

By Rob Bennett

It’s Sunshine Rob here again to bring you more happy face news on the wonders of Buy-and-Hold. The topic of today’s sermon is: Your Retirement Plan Is In More Trouble Than You Realize.

Everyone knows that we have experienced a Lost 12 Years in the stock market. Stock prices are today close to where they were at the top of the bubble. Investors have earned a small gain from the receipt of dividends but most of that has been eaten up by inflation. We have essentially been standing still.

All acknowledge that that’s bad news. But few realize how bad.

Twelve years doesn’t sound like all that long a time. Most of us have life expectancies of perhaps 80 years. We certainly never wanted to go 12 years without seeing the numbers on our retirement portfolios increase, but into every life some rain must fall. My sense is that the general feeling is that this too will pass.
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