Should you Borrow Money to Invest?

This is a question I hear asked often… is there ever a good reason to borrow money to invest it? Some people figure if they could borrow $10,000 at five percent interest and then invest it with a return of ten percent they should come out ahead. In theory, this does sound possible. In realty, there can be a whole different story. The main problem is the risk involved in this type of venture, especially if you are borrowing more than you could easily pay back from a savings account. If your investment crashes and doesn’t bring you the desired … Continue reading →

Asset Allocation

The basic concept of diversifying your assets is found in the classic saying, “don’t put all your eggs in one basket.” If you have all your eggs in one basket and a large rock falls on it, all the eggs crack. Needless to say, if you have all your money in one company’s stock and that company goes out of business… your money cracks as well. The meaning of asset allocation is the spreading out of your money over lots of different kind of investments. Good examples of these assets include stocks, bonds, and savings accounts. You should spread your … Continue reading →

Investment Risks

My husband and I had a recent conversation the other day about investments I thought would be interesting to share. We discussed that there are two kinds of risks with investing. Most people think there is only one kind of risk… The first risk is the obvious one, market volatility. When newbie investors launch into the stock market this is the risk that scares them. Will the value of my portfolio go down? Can I lose money? With any stock investment strategy, there is the potential to lose money, yes. Nevertheless, playing it safe is also a risk. The second … Continue reading →

What is the Dow?

The Dow Jones is such a part of every American’s vocabulary, but how many of us know exactly what it is? Most people know it is an indicator of our economy and that it has something to do with the stock market, which are both true. Let’s explore it even further than that. First, the Dow is not the only market indicator, but it is the most widely used by the average investor and the media. Other market averages commonly used are the S&P 500 and the Russell 2000. For an active investor, it is important to watch all three. … Continue reading →

Fee Based vs. Commission Based Financial Managers

When it comes to money advisors and managers, there are really two main types: fee based and commission based. While most people hate to pay someone to manage their money, the reality is… these individuals are doing a job and need a way to make a living. Which one should you chose? First, accept the fact that if you hire someone to do something, you will have to pay them. Commission based money managers can be as expensive or more than fee based. Often the main difference is how you pay them. Commission based planners and stockbrokers take their money … Continue reading →

Super Bowl Tip

Did you watch the Super Bowl? So did millions of other people. Do you remember the ads? Well, so do most people. The companies that have the cash to buy a Super Bowl ad win big audiences. Therefore, they are companies we all should watch closely. I read an interesting tip in my local paper, that smart investors look at the advertising in the Super Bowl to pick the companies to invest. This is not a bad tip in my mind. You can take this concept to a different level. These companies are doing well and their big-ticket advertising should … Continue reading →

Big Week for Money

If you have been following the news, you will note that there have been many big changes to the economy this week. There are many signs that our country is heading for a recession and the government is trying to balance. These sorts of actions are very interesting as we head into the next election. They also affect our own pocketbooks. After months of gradual decline, the stock market had a large drop this week. Since October, the S&P has dropped 16%, the Dow dropped 15% and the Nasdaq is down 20%. All three of these indicators are not good … Continue reading →

Asset Allocation Chart

I received the coolest chart in the mail today from T. Rowe Price, so I had to share. They call it their Asset Allocation Chart; it is a quick tool to help you decide how to manage an investment portfolio depending on the timeframe you will need the money. What I liked in particular about this simple chart, was it went beyond the basic retirement portfolio and offered some advice on shorter-term investments as well. If you are not already an account holder at T. Rowe Price, I am sure you could call them to have one sent to you. … Continue reading →

Avoid Greed

Too often, when we are dealing with money, we lose to greed. What exactly is greed and how can it hurt? Greed is an emotion that surfaces almost unknowingly. It is an exciting feeling that can overtake us, influencing our ability to be practical and logical. If you have ever played a slot machine, you most likely have experienced greed. Once you hit that first jackpot, the rush you feel, as those coins fall into the bin, is greed raising its ugly head. If you could collect your winnings and walk away… you have fought the evil greed monster. Most … Continue reading →

Selecting a Mutual Fund

The key to investing is to diversify. The best-diversified investment is a mutual fund. The way a mutual fund works is the fund manager selects a huge assortment of stocks to make up the fund. Therefore, it is an easy way to invest money in a variety of individual companies. In general, different mutual funds perform differently based on the market sector they are a part of and the “luck” or talent of the fund manager. Given this, how do you select a mutual fund for you? Whether it is for your children’s college education, retirement or even shorter-term investment … Continue reading →