Category: Fundamental


Finding Yield In A Low-Return Environment

Filed Under: Fundamental by Bill — Comments Off
March 18, 2010

It happens every time interest rates hover in the basement:  investors hungry for income search for creative (and usually risky) ways to get more yield in their portfolio.  Many of the traditional havens of income-oriented investors (like financial stocks and real estate) have been hit hard.  Nonetheless, it’s still possible to earn a decent yield in today’s market with investment bonds rates so low.

Reaching For Yield

FDIC Insured CD’s usually aren’t the first thing that comes to mind when you think of “high yield,” but it’s still possible to find a decent-yielding CD, and CD’s do have certain advantages not shared by many other investments (such as FDIC insurance).  The key to finding the highest interest CD is to use website like Bankrate.com or BestCashCow.com to scour the internet for deals nationwide so you are no longer limited by what your local banks are offering.

Municipal bonds are another oft-overlooked investment.  The best municipal bonds are save and currently pay taxable-equivalent yields significantly above what U.S. treasury bonds are currently paying.  It is true that some states, such as California, are in dire financial straits and are in danger of defaulting on their bonds, but most states are still relatively healthy, and diversification can help minimize these default risks.

Real Estate Investment Trusts (REITS) are perennial favorites of income investors, and thanks to massive losses in the real estate bust, now sport a reasonable yield.  Most REIT experts would like to see them yielding in the 6-7% range, but the mid 4′s are a far cry better than the lows seen at the peak of the real estate bubble.  REIT dividends also have the advantage of rising with inflation over long periods of time.

Financial Stocks are risky, no doubt about that.  But the banks who managed to survive the crisis are likely to benefit tremendously from the industry consolidation.  Wells Fargo, for example, got Wachovia for an absurdly-low price.  Risk-tolerant investors will likely be richly rewarded for picking through the wreckage of the financial sector.  This is probably best done through a mutual fund or ETF, though.

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Stock Investing Guide For Beginners

Filed Under: Fundamental by Bill — Comments Off
February 22, 2010

Investing in stocks is certainly where the majority of investors see a large return. This guide is meant to help the most basic individuals determine how and what the best strategies are for stock investing.  It is not comprehensive but certainly will be a good first step.

There are many ways in which you can start to invest in stocks; it doesn’t mean that you have to open up an account with Ameritrade or any other brokerage firm.  Investment professionals can help to steer you in the right direction and for a small commission of the portfolio they will manage the funds that you send them.

Let’s begin by looking at some of the first few basic things you will need for this guide.  The best way to start investing is to consider diversification and that into multiple funds so as to minimize long and short term risks.

When considering what stock funds to pick, there are 2 main criteria that you should keep in mind.  First, is the fund focus on Large, Mid, Small or Micro-Cap?  Second, is the fund focused on Growth, Value or both?

From here you no have 9 different categories to choose from.  Some of these include, but are not limited to: Small, Mid, large Cap and Blended.  Each of these will vary and so mixing and matching this again focuses on diversification.

When looking at what qualifies a different type of stock you can consider the following: Large Cap – These are going to be your GE or Walmart type stocks; MidCap – These will be your fast growing companies that are bursting on the scene and are for investors with a growth need.  Small Cap or Micro-Cap stocks are not for the risk adverse, but again are for those looking to investing with a company at the ground level; with the hopes of seeing great returns. There is always an option to choose one of the best performing index funds. For risk averse investors, it is an easy choice to get one of those best large cap funds.

As you see there are a number of ways in which you can invest in stock funds and a variety of categories that these fit into.  Taking time to review all these options will help you to see better performance in your portfolio.

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Learn How to Invest Properly

Filed Under: Fundamental by Bill — Comments Off
February 15, 2010

Investments are enticing because you can get a lot of money but there’s also the danger of losing some money too.  Obviously, no one likes to lose money but when you can make some good money through investing, then it can definitely pay off.  The way to put the odds in your favor is to follow financial planning tips, and invest in stuff that has lower risks than other opportunities.  Obviously, the market is going to fluctuate every single day, but if you can learn to get through the lows, then you’ll probably be able stay in for the large gains.

Despite what some people say, you really can’t control the market, but it’s still possible to invest properly without being able to control everything.  Make sure that you aren’t going in blindly, instead make sure you’re researching potential stocks and the products that company makes.  Finding stocks that have long term growth are better choices than brand new stocks that may be very volatile.

Also make sure that you have sound thinking when making a financial decision or when you’re about to invest.  If you’re wanting profits, then you’ll probably want to just get out once the stock starts dipping, rather than hope for a better high.

When it comes down to it, investing is all about how good your timing is.  Some people aren’t willing to cut their losses and end up losing even more because of it.  And, some people also get greedy and try to stay when a stock price is high because they’re hoping for even more money.

The wisest investing advice you can get is to never invest money that you can’t afford to lose, no matter how sure the advice is.  Many people take out loans or borrow money other ways because of a “sure stock tip” and when that tip ends up failing, they’re in debt and have a whole other set of issues.  Only invest money that you’re okay with losing.

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Reading The Details Of Your Fixed Annuity Contract

Filed Under: Fundamental by Bill — Comments Off
January 27, 2010

The importance of properly reading your fixed annuity contract cannot be understated. The nuances between companies, contracts, and products requires you to have an eye for detail. The subtle differences between one contract to the next can make the difference between thousands and thousands of dollars for you down the road. For this reason you should always read the fine print and fully understand the financial product you are placing your hard-earned money with.

The fixed annuity can be tricky enough without having to pour through page upon page of detailed descriptions. There are a couple of statutes that you should try and look for in your contract, and be certain that you are receiving what you believe you are receiving.

The first thing to fully understand in a fixed annuity contract is the surrender terms. Annuities are notorious for having steep surrender charges. An annuity can be an excellent financial planning product when incorporated into a well-developed financial plan, but can have devastating effects for a fly-by-night investor. Once you purchase your annuity product, you should understand that it will be difficult and expensive to pull your money out of the contract prematurely. Determine what the surrender charges for your specific contract, and understand the effects of pulling your money out early.

Another important feature of annuity products that you want to make sure you understand is the interest rate on the account. The account may have a somewhat variable interest rate, depending upon market conditions. Determine what the minimum expected interest rate is, and any special conditions to any other interest rates. You may determine that the annuity will not perform as well as you would like during the current economic conditions.

If fine combining over the details of financial products is not your strong suit, make sure that you consult with a properly trained and licensed professional. Have them walk you through the details of the contract, and do not let them sell you on anything without them first explaining both the pros and cons of the contract.

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