Category: Fundamental


3 Tips To Investing Your Money

Filed Under: Fundamental by Bill — Comments Off
July 13, 2010

Are you new to investing money especially when it comes to saving for your retirement?  If so in this article I am going to give three investing tips that will help you out along the way to become a better investor.

Invest In The Proper Places

The first tip to investing your money is putting it in the right place.  A lot of people who save money will put it in bank CDs or money market accounts.  The reason you don’t want to do this is because these types of accounts don’t earn high enough returns to justify saving for the long term.

On the other had I suggest saving your your money in an IRA or Roth IRA that invest the money into a mutual fund.  With mutual funds you will see much higher returns and earnings.  However once you have the money in the proper places it’s also vitally important that you don’t take the money out either.   I once knew a guy who pulled money out of his retirement account to get IRS tax debt relief and it ended up costing him big with the tax penalties.

Dollar Cost Average  Your Money

Next you need to dollar cost average your money when you invest it.  For example if you had $5000 and you invested it all at one time and the going share price was $12 a share you would have only bought 417 shares.

However if you would have spread the money out over 5 years and in the first year you paid $12, year 2 paid $10, in year 3 paid $8, in year 4 paid $5, and year 5 paid $10, you would have average around $9 a share instead.  This would of allowed you to buy 556 shares, which would have been 139 more shares.

Diversify Your Dollars

Finally, you have to diversify your money.  This is the process of were you spread you money over several different funds instead of just investing it in just one fund.  The reason this is better is because each fund will do different things.

For example, small cap funds are mainly invested in business that just getting started and are much more susceptible to risk.  On the other hand you also have large cap companies which are very large stable companies and as a result are less risky.

When getting started investing, look to invest into several different funds that will spread your risk and allow you to stay safe but also allows you to take some risk which could help you earn those higher returns.

Tags: ,
Permalink

How to Find the Highest Dividend Paying Stocks

Filed Under: Fundamental by Bill — Comments Off
June 29, 2010

Investing in the highest dividend paying stocks has its advantages and disadvantages. The high yields can provide a nice stream of income that can help supplement ones income. On the other hand, stocks with high yields tend to carry a much higher risk.

Whether you are looking to capitalize on high yields or want to know which dividend stocks to avoid, there are several ways to search for them. Investors can use the following criteria to help them identify the highest dividend paying stocks.

  1. High Dividend Payout Ratio – Companies with a high dividend payout ratio (over 60% – 70%) usually makeup the highest dividend paying stocks. While most blue chip stocks keep their payout ratios (the amount of earnings used to payout the dividend) less than 50%, the highest dividend paying stocks are above that mark. Instead of using earnings for growing the organization, these companies increase their payout which drives up the dividend yield.
  2. Income Trusts – Income trusts operate exactly how they are named. Most of the highest dividend paying stocks come from either real estate income trusts (REITs) or from energy trusts. Both types of trusts operate with a vision of maximizing shareholder dividends and payout accordingly.
  3. Monthly Dividends – The highest dividend paying stocks normally distribute their payments each month instead of quarterly or annually. The majority of these companies have very high payout ratios with a main focus on providing income to shareholders. As a result, the companies choose to pay their dividends more frequently on a monthly basis.

Final Thoughts

Chasing the highest dividend stocks can prove to be a risky venture if an investor does not realize the limitations of these kinds of investments. Including a few of these types of investments, however does help an investor balance their portfolio and add a steady stream of income.

Searching for certain characteristics can help locate a group of the highest dividend paying stocks which can then be further analyzed. Look for stocks that pay monthly dividends as a starting point. In addition, investors can find high yield investments from income trusts as well as looking for companies with a high dividend payout ratio.

Building a solid portfolio of blue chip companies with a few high dividend paying stocks mixed in will certainly perform above expectations overtime.

Tags: , , , , , , , , ,
Permalink

Examining High Return Investments

Filed Under: Fundamental by Bill — Comments Off
June 29, 2010

High Return Investments involve a higher risk factor. This becomes an important point to consider since the profits you make must justify the risk factor involved.  These risks could be market risk, government policy risk, credit risk or something else also.

It is a good idea to consult a professional when you are considering high return investments. Since there is a high risk factor involved, it’s very important to choose someone with excellent capability of managing your hard earned money. The market is all about evaluating numbers and it’s of prime importance that the person you hire has the skill it needs to generate growth and profit from these numbers. Only the best trained and experienced people can understand these confusing market situations to achieve capital growth while managing the factor of risk well.

Just like the person you choose to help you get high returns from your stock market investing, it is also very important to choose the correct investments for you. One of the very popular investment methods is Mutual Funds. Though, these do not usually give you more than a 10-15% profit whereas, the downside swings could be as much as 30%. Hence, the risk involved is much larger in proportion to the profits guaranteed.

Real Estate has, however, proved itself to be one of the best high return investment methods. The ratio between risk and reward is balanced and most of the times, a profit is guaranteed if you choose the location carefully. Another similar high return investment is in purchasing land. This can give you profits similar to real estate or even larger at times. Land is a limited resource and has fast become the best investment method. Specially, in areas where lands are being developed fast, there is scope of making spectacular profits. Hence, investing in real estate or even purchasing land has a lesser risk factor involved than mutual funds and gives you a guarantee of much higher profits. Most times you make double the returns than you invested and sometimes even more. The very simple trick is to invest wisely and always keep in mind the perfect location.

Permalink

People Should Not Overlook The Risk In Stocks

Filed Under: Fundamental by Bill — Comments Off
June 28, 2010

The stock market is intimidating for someone who is thinking about buying stocks for the first time. There are so many terms that are confusing and you really need to learn a lot before you start buying stocks and investing your hard earned money.

The stock market is a place where people have made millions. But it is also a place where people have lost their life fortunes as well. Unlike investing in Treasury bills or bank CD’s, stock carry risk and you need to understand and be able to accept that risk. If you know you are going to need the money you have to invest, it is best to stay away from stocks.

The real risk that exists in the market was clearly evident to everyone a couple of years ago when the Dow was almost cut in half in a matter of months. People all over the country lost their retirement money and now find themselves having to work way past 60 just to survive. Older workers are having to fight to hold on to jobs they don’t really want just because they lost so much in the market.

Stock investing is, therefore, not for anyone who cannot stomach risk. Your holdings will go up and down everyday and if you cannot handle that, then you need to be in something a little safer. You can get FDIC insurance with most interest bearing investments but you don’t have that with stocks. In exchange for the lack of any security though, you have the chance for much greater gains.

Anyone buying stocks for the first time should do it gradually until they get the hang of it. You will never be able to learn all you need to know in a short time and you should proceed carefully and cautiously while you learn how the market works. Stocks go up and down based solely on people’s perceptions of their value so it is something that is hard to wrap your head around. You should not expect to be able to learn everything right away and know that it may take you many years before you are comfortable investing in stocks.

Tags: ,
Permalink