Ordinary People Making Substantial Investments

By Molly Wider
We see it on the news almost every day. Someone somewhere invested one dollar and made a million. Okay, that may be a little exaggerated but the point is we often hear of such 'investments'. Maybe someone you know picked up a great piece of memorabilia at a garage sale only to find out it's worth thousands of dollars, or perhaps you know someone who just happened to buy a handful of stocks for the first time in their life to have it quadruple in value overnight.
Whatever the case and whatever the type of investment, there are many smart ways to make money. It does not always have to appear so 'luck of the draw'. With today's low interest rates, it is not an absurd thought to get a bank loan for investment purposes. If one does the math on borrowing versus return, it could well be worth your while. The key, however, will be to diversify.
Another key to successful investing is staying power. Putting a larger sum of your investment dollars into illiquid assets can help diversify, but to do this with success, you must have the means to wait out the market cycles. People who invest this way have the financial advantage of staying power, which not all regular or small time investors have. According to George Padula, a wealth manager with Back Bay Financial Group, Inc., "Ordinary investors who want to have these asset classes in their portfolio can do so via liquid open-end mutual funds and ETFs."
According to the Capgemini and Merrill Lynch Global Wealth Management 2010 World Wealth Report, the high-net-worth investors of the world have learned the value of diversifying. An average portfolio will look something like this:
Stocks: 29 per cent Bonds: 31 per cent Cash: 17 per cent Real estate: 18 per cent (excluding primary residence, but including undeveloped land, farm land, commercial and residential real estate as well as Real Estate Investment Trusts (REITs). *This 18% is projected to fall to 14% in the 2011. Alternative investments: 5% (that includes things like foreign currencies and venture capital)
Padula also notes, "Alternatives and real estate have low correlations to traditional equities and thus can add diversification to a portfolio. The wealthy do seem to be diversified. Investors need to balance their goals and risks and not allocate riskier assets to goals that require more stable funding, and likewise, not use short-term funds to hopefully fund long-term goals such as retirement."
There is a lot of advice to be had on successful investing. Whether you're a first time investor, a small time investor or investing is your only means of professional income, diversifying and investing wisely remain to be the two agreed upon keys to remaining ahead.

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To Invest Or Not to Invest? That is the Question

 By Cindy Block
With all of the media attention given to the unemployment rate, the foreclosure rate, the drop in the real estate market, and the credit freeze, you almost wouldn't believe that the United States has a functioning middle class anymore. Well, there is still a middle class and even though we're very grateful to have equity in our homes and money in our savings accounts, the recent economic shakeup has us scared stiff.
So stiff, in fact, that people are sitting on their money these days and doing nothing with it. While it seems like a good time to invest in real estate, every time you think the market has bottomed out, you watch in wonder while the prices drop even lower. While the stock market needs money to get up and moving again, who wants to be the guinea pig who invests optimistically only to watch their savings crash through the floor?
But at the same time, the banks have essentially frozen the interest rates on savings accounts, so the longer your money sits in an account, the less it's actually worth. It's a terrible time in the American economy to be sure.
But the truth is that people who have the strength and wherewithal to get in on both the market and real estate at this time will eventually profit from their "project payday." But where do you get the strength to put your money in this kind of circumstance? From knowledge.
With real estate, every Joe and Jane Doe with an ounce of interest is studying the market. The figures on the past ups and downs and future projections are as detailed as they will ever be. Unlike during the bubble, the risk of falling prey to a real estate scam at this time is very slim. Banks are not willing to give up the money unless the deal is decent, and if anything is rubbing you the wrong way about a real estate deal, there's probably five more condos on the block you can look into.
With the stock market, more than every people are trying to empower themselves without having to fully rely on what other people are telling them to do. Ameritrade, Etrade, Scott Trade - they all have many comprehensive programs to teach you the ins and outs of investing. Ameritrade even has Investools, an entire program dedicated to stock market education.
While it's true that you should rely on no one thing to help you determine your investing future - sure, while Ameritrade's Investools might seem great, no one can guarantee a definite project payday in the stock market - a whole bunch of things resulting in knowledge and awareness of what you're dealing with, are a lot more likely to help you avoid the scam and make some sound investments at a good time.

If you would like more info check out additional Investools and Project Payday reviews. Article Source: http://EzineArticles.com/?expert=Cindy_Block

When You Invest

By Syafiq Shaidi We are constantly seeking the right time to invest our money. This is, so that we get to maximise our returns in the future. When you read the papers or tabloids, there will be countless ads calling you to invest. If property investment is the thing, you jump. If the stock market is doing well, you jump.
However, the timing is all that matters. You may have read countless books on Warren Buffett on how he chooses to hold a certain investment for long periods of time. Preferably forever. The difference between him and you can never be more distinct. Questions you should ask yourself would be:
1. Do I have the holding power, ( e g: cash)should might investment turn negative.
2. Have I chosen the right company, industry or country?
3. When do I exit or rebalance my portfolio to take advantage of other opportunities?
If you have invested in property in 1997, it would have taken you at least 13 years just to break even, which is now. You would have bought it at a high price. In investment terms, you're buying the high.
Similarly, if you have bought stock and shares at the height of the economic boom in 2007, chances are, you might be in a loss right now figuring out the best time to get out.
Do you wish you could know a better way on when to invest in anything?
A simple rule adopted by Warren Buffett (the world's richest Investor) is,
" be greedy when others are fearful and be fearful when others are greedy ".
As long as you do not follow the herd, the chances of exposing yourself to risk is greatly reduced. You sell properties at the high. You buy when property prices are low. It is common sense. Unfortunately, it's not so common anymore. Now, people are rushing to bid for the best property sites. There's nothing wrong with that if you are in it for the long term. However, taking your time and having a relook at your investment objectives is a sure-fire way to lead you to investing success.
What professional investors do to the stock market is different from the rest. They buy the low. That means they buy when others are in sheer panic. They buy when the economy is gloomy. They buy when everything is at a bargain. A rule of thumb is to look at the P/E ratio of stocks and indices. A P/E ratio is a n abbreviation of price-to-earnings ratio. When you look at a particular stock listing, look out for this number. Anything that is well below 15 is worth buying. That does not mean that you take into account only that and it will start giving you a fortune. What I am saying here is that it gives you a gauge on how undervalued the company or index is. As at January to March 2009,the P/E ratios of most companies were around 6-8.That's greatly undervalued!
Stock indices like the Dow Jones Industrial index, S&P 500, Nasdaq, STI and many others were well below 15.
If you were to put your money during this times, you would have made at least a 40% gain on your investments in less than a year. For your information, at the height of the economic boom in 2007,most companies were having P/E ratios of around 60!
Definitely not a good time to buy but a good time to sell. Whatever goes up, will eventually come down. Therefore when the market goes down, we want to know when it is really an opportunity to invest. If you wait for a good time for the opportunity to present itself, your returns will be spectacular rather than modest.
So now, you know the very basic thing to look out for before you invest. As my teacher once told me, "never buy the high, never sell the low".
The P/E ratios on average at the point of writing is about 20.Then again, it still is an opportunity depending on where you're investing in. If you remember the pointers, you will know what needs to happen before you can pounce on the opportunity.
Recession.

For more articles you can visit my blog at http://www.syafiqshaidi.wordpress.com Article Source: http://EzineArticles.com/?expert=Syafiq_Shaidi

TIPS - Treasury Inflation Protected Securities Fundamentals

By Greg Phelps Treasury Inflation Protected Securities (known as TIPS), are inflation indexed bonds issued by the US Government. But what do they really offer you as an investor and how exactly do they work???
First of all, there's a lot of investor angst regarding future inflationary expectations. After all - it's a normal concern with the government deficit exploding to unfathomable proportions on a minute by minute basis (not to mention interest rates overall are at historically low levels, and when rates revert to the statistical mean inflation is a likely counterpart to that occurrence).
TIPS can be purchased direct from the US government through the treasury, a bank, broker or dealer - or most preferably through a low cost index fund such as DFA Inflation Protected Securities (DIPSX). Individual TIPS are purchased according to an auction process, where you can either accept whatever yield is determined at the auction or set a minimum yield you're willing to accept. In the auction method, if your requested yield target isn't met - your purchase request will not be executed.
TIPS come in 5, 10, and 30 year maturities and are bought in increments of $100. The return of principal AND ongoing interest payments depend on the TIPS principal value adjustment for the consumer price index (the CPI which is the most commonly used measure of inflation). The coupon payment however, is a constant and stays the same for the life of the security. This is where TIPS get a little tricky - while the coupon payment remains the same, the TIP itself fluctuates meaning the actual yield you receive will vary.
With the underlying TIPS unit value fluctuating based on the CPI, each coupon payment interest rate fluctuates (fixed dollar payment divided by a fluctuating par value equals a floating interest rate). So while the principal value fluctuates, the interest rate is fixed. This is how the holder is protected from inflationary pressures. If inflation increases, the underlying TIPS par value increases along with it.
As with the majority of US Government debt obligations, TIPS pay their coupon semi-annually. The index for measuring the inflation rate is the non-seasonally adjusted U.S. City Average All Items Consumer Price Index for All Urban Consumers (CPI-U), published monthly by the Bureau of Labor Statistics (BLS).
In what situations would TIPS be a viable option for your investment portfolio? Take for example an expectation of inflationary pressures over the next five years. If you were to invest in a portfolio of TIPS, as inflation occurs the principal value of the TIPS rises to compensate you for the inflationary pressure. Your coupon payment remains the same, but your TIPS principal investment is worth more.
Now let's look at the opposite of inflation - deflationary pressures. Should deflation occur, your principal value would drop. TIPS do have a backstop for deflation however. The TIPS maturity value payment is the greater of $100 per TIPS unit, or the adjusted current value at that time.
Treasury auctions vary by security type and date, and it's challenging to find relevant samples for different types of issue. However here's some real life examples of TIPS and regular 5 year treasury notes for comparison.
In a recent TIPS auction on April 26th, 2010, 5 year TIPS were priced at 99.767648 (or $99.77 per $100 par value TIPS security) with a rate of.50%. On the same day, the 5 year treasury note yield was sitting right at 2.6%. In this case, the regular 5 year treasury note is yielding roughly 5 times as much as the 5 year TIPS. Seems like a lot to give up for some inflation protection doesn't it? The wide disparity in yield is primarily due to investor expectations of inflationary pressure (investors are willing to accept a lower interest rate for the inflation protection).
There is an upside however. Let's look at a similar 5 year TIPS security issued last year on 4/15/2009. It was issued at $100.11 for each $100 TIPS and a rate of 1.25%. At the same time the normal 5 year treasury note yield was at 1.71% - not nearly the spread of the first noted TIPS example. That same treasury note issue today (June 5th, 2010) is indexed at 1.02858 or each TIPS is worth $102.86.
A 5 year treasury note issued on April 30, 2009 (as close as possible to the last TIPS example) priced at 99.691687 ($996.91 per $1,000 maturity par value) and yielded 1.875%. Today through TD Ameritrade where I custody client assets, that same 5 year note is priced at 101.188 ($1,011.88 per $1,000 maturity par value).
The roughly one year old 5 year treasury note has earned a return of the coupon payment (two payments at $9.375 each plus some accrued interest which we're discounting for this example), plus an increase in principal of $14.97 which equates to a 3.37% return. For comparison, the closest issued TIPS issue from April 15, 2009 has garnered a return of two coupon payments (I'm using 10 TIPS to bring this example to parity with the $1,000 par value treasury note) of $6.25, and experienced an increase in value of $27.48 for a comparative return of 3.99%. In this example the TIPS outperforms the treasury note by a reasonable margin.
Granted, these examples aren't perfect, but they're close for illustrative purposes on TIPS calculations and values compared to treasury note calculations and values.
There are downsides to TIPS however - one being taxes. Should the principal value rise with inflation in a given year you're taxed on the growth (which is NOT distributed, it's only on paper) as if it were income. This creates somewhat of a phantom income tax - you don't actually receive the money, but you're taxed as if you did! The upside of this is you establish a new basis in the security and won't be taxed on it again, and in fact if deflation occurs may have a loss to put on your tax return. Of course, don't take my word for it - please consult your tax advisor.
In addition to the tax issue, there's also political risk associated with the US Government (the rules can change - after all the rules change all the time!) in addition to the fact that the government calculates the CPI (who's to say they've got their calculations right, and are they manipulated for other political or economic reasons?).
While TIPS are great for some investors, they're not right for everyone, and certainly not right for an entire (or even a majority of) portfolio. However, should inflation pick up from these historically low levels over the next five years, the TIPS should comparatively do just fine compared to the regular 5 year treasury notes.
With all of the TIPS calculations noted above, still one of the best ways to hedge inflation is with a diversified portfolio of passive investment assets such as Dimensional Fund Advisors (DFA Funds), and other exchange traded funds (ETF's). At Red Rock Wealth Management, our portfolios provide a substantial amount of NON-dollar denominated assets (a great way to hedge against a weak dollar). Client portfolios consist of over 13,000 equity (stock) securities across 41 countries. In addition, many US based companies hold non-dollar assets as well, and the Red Rock Wealth Management portfolio philosophy also holds other tangible assets the government can't "print" - such as gold, oil, and timber.
The point is, through proper investment management your risk associated with inflation can be mitigated substantially through Treasury Inflation Protected Securities AND broad diversification.
Consider adding TIPS to your portfolio for a component of inflation protection, just make sure you fully understand all of the positive AND negative aspects of TIPS!

Greg Phelps is an Financial Advisor & Retirement Planner, and a Fee-Only CERTIFIED FINANCIAL PLANNER (TM) in Las Vegas and Henderson, Nevada. With over 15 years of financial industry experience, Greg is an accomplished financial advisor, author, and speaker. Through his financial consultant positions with two of the largest investment banking firms on Wall Street - Morgan Stanley and Goldman Sachs, as well as serving as the Regional Manager of Wealth Management and National Manager of Fiduciary Advisory Services at the 5th largest accounting firm in the country - RSM McGladrey, he's consistently and ambitiously improved his skill and knowledge in the financial planning field. In addition to creating a Free Mortgage Rate Quotes utility for use by financial advisors with their clients, he strives to deliver exceptional financial planning advice and guidance in all areas relevant to his clients, with a specialty focus in retirement financial planning. Article Source: http://EzineArticles.com/?expert=Greg_Phelps

3 Reasons Why You Need to Avoid Bonds

By Christopher Fitch There are several points in time where people should find bonds extremely attractive. Unfortunately, midway through 2010 is not one of those times, although one would believe by the outflows of cash from equity based mutual funds into fixed income based mutual funds that this is untrue. Here are three reasons why investors should avoid bonds at this point in time unless, of course, they are willing to hold the actual bond until maturity.
1. Rates. With interest rates at the lowest they have ever been, the only obvious direction they can head is up. In fact, there has been an evident trend over the past several decades that rates were on their way down -- the past decade has shown the clearest signs of a dropping rate trend. Over the past four to five years, that trend has slowed and leveled off. If an investor were to look at bond rates the way one would look at stocks, the trend line suggests quite clearly that rates are about to reverse their trend.
2. Yield Curve. The yield curve is an indicator that is created by bonds themselves. It plots the difference between three month bond yields all the way up to the thirty year bond yields (and everything in between). The current bond yield is telling us that we are about to enter a period of economic expansion. This is in line with what economists have been saying for over a year. The only thing standing in the way of an economic expansion is that technicality known as time. Once the economy starts to expand, rates are guaranteed to increase, resulting in lower market values for bonds.
3. Bond bubble. With so many people shifting money into bonds, many market observers have called this asset class the next "bubble." They draw similarities between tech stocks in the late 90's and early 2000's, to oil in the year 2000, real estate in the year 2006 and so on. Following the popular asset classes will always yield negative results and with so many strong indications to suggest that this asset class is one to avoid, investors would be wise to tread this area extremely carefully in the coming years.
While bonds and the fixed income asset class are a necessary evil in terms of building a properly diversified portfolio, investors need to exercise extreme caution when investing in these areas. These are just three of the strongest arguments for why this asset class should be avoided or, at the very least, exposure should be strictly limited.

--> Consider Growth Funds as an alternative to bond funds. Visit the Mutual Fund Site for more information. With more than 17 years of financial services experience, Chris is currently the owner of the Mutual Fund Site.org. As well, he manages Gym Exercise Machines.com, a website that provides conversational Elliptical Trainer Reviews. Article Source: http://EzineArticles.com/?expert=Christopher_Fitch

Fantasia barrino sex tape and suicide attempt.

Fantasia made video that leaked to the whole world, we are not sure if she intended to make the video nor do we know if she even knew that the video existed. Now that the video has surfaced, we think this will affect her financial status.  The video that involved fantasia is a sex video that showed her having sex with her boyfriend that is still married to another woman; according to law she might have played part in her boyfriend’s crashing relationship with his wife, with this being the case she is liable for any law suit that may arise.  Fantasia is an American idol finalist, she is known for her kind heart and her innocent behavior. If such allegation was to occur at all, majority of the world will argue that this is rear that it will come from fantasia simple because of the image she has portrayed to the public as a role model, a Nobel and well behaved person who lover her family dearly. Since the video leaked, we can rule out the fact that it may be a rumor because she has tried to commit suicide by overdosing one prescription medication. Do you smell guilt? Well we do, and we wish her the best in all her doings, especially financially, because this will affect her earning.