Entries Tagged 'What To Invest In Right Now' ↓

With a continuing volatile market, there are many average investors who want to find good stocks to invest in.  the days of choosing an index fund and letting it ride are gone.  Instead, investors need to be more active and aware of how the markets are performing, and balance and rebalance their portfolios with that in mind.  for anyone who has a broker that says keep just socking away money in your S&P 500 index mutual fund, you do yourself a favor and run, not walk, to the nearest self directed brokerage where you can start to repair the damage caused by formulaic investing advice.

Most average investors are still not made whole since the declines suffered in the market in 2008.  Indexes are sitting at 20% or so below their highs.  While it’s true that much of the losses were recovered, to continue this type of plan in the face of a continued slowing economy is not prudent.  Instead, investors who want to find some good stocks will need to think outside the box.  A financial strategy should not just include mutual funds (if it includes mutual funds at all) but should look at individual stocks, exchange traded funds (ETFs) and other vehicles, such as bonds. 

One of the ways to find good stocks to invest in is to look at the cash flow of a given company.  Relying on debt to run a company, especially in the act of declining or sluggish revenues, is not a way for a company to survive the next decade. Not only is getting credit harder to come by for many companies, the costs will likely go up in the future, and not being able to repay loans out of sales is a recipe for disaster, as we have all recently seen. 

Another good way to find stocks is to consider what our society will need in the future. Energy with be all important, as sources of energy are either being depleted or will be phased out due to environmental concerns.  Similarly, water resources are being depleted worldwide, and this will affect agriculture as well. Green energy business is being built as fast as possible in China, as well as Europe, so eventually the U.S. will get in the game too, but worldwide this sector is a likely place for growth. 

Consider also giving ETFs a try, if you haven’t already. With ETFs, you can invest in domestic and foreign indexes and currencies, commodities and bonds, just to name a few, however instead of minimum  balances and high fees, these trade like shares of stock. You can buy one or more shares, and trade at the market, not at the end of the day like mutual funds.  Smaller investors can invest in energy, precious metals, and foreign stocks using ETFs, which are usually available only to larger investors.  You can hold ETFs in a traditional IRA if you have a self directed IRA, or in a custodial account, or individual brokerage account.  Even advisors like Suze Orman now recommend that individuals take matters into their own hands and invest with ETFs, as opposed to blindly investing money in index mutual funds where you don’t have much choice.  Unfortunately, for most people who have 401K investments at their place of work, options like these may not yet be available, and mutual funds are probably still the bulk of investments offered by employers who are advised by the big mutual fund companies. But if you leave your company for any reason, you can do a 401K rollover into a self directed account, and start to take advantage of these different investments.

Be aware however that if you are looking to find good stocks or ETFs or other investments for your portfolio, you will have to take the time to learn more about investing, specifically, investing in each of these types of vehicles.  Don’t move into an investment until you know what your financial plan is, how this investment fits your strategy, what your entry and exit points are, when whether or how  you plan to hedge the investment.  Blindly gambling on FOREX or options is only a way to lose your money faster.  You can learn quite a bit from a top self directed brokerage, many now have detailed educational materials, virtual trading, screens and discussion groups.  Take advantage of these, trade with virtual cash first, and get familiar with how each vehicle fits your financial goals before putting real money behind it.

We all hear about how important it is to invest, and this includes individuals and families who don’t have a lot of extra cash on hand, but understand the importance of why you should “pay yourself first” by putting money aside. It’s important to know that even if you only have $25 to invest, or as little as $5, you can begin to secure your financial future by saving, investing, and laying the foundation for future wealth.

When investment banks throw around numbers in the millions, billions and trillions, it can make a small investor feel like there’s no point to putting aside just a little extra money each paycheck. It seems futile when the money you want to invest can barely buy one share of stock, with the commissions being extra! With a small amount like $5 or $10 to invest, it’s hard to see how that will add up to any real money in the near future. Yet even if you can’t buy stocks, that’s really not the right way to look at the matter. Instead, it’s the simple act of making sure that at least some money from each paycheck gets put aside for yourself, instead of given to a retailer trying to separate you from your earnings. When you begin the habit of putting something into your savings or investment account each month, no matter how little it is you will begin to see the balance grow.

It’s true that the interest rates today are truly pitiful, under 1%, which does not give anyone an incentive to set money aside in a savings account. But instead consider that the purpose of saving is to begin to make the habit of saving important in your life.

When the interest rates on savings accounts are virtually non-existent, so low they aren’t worth even mentioning, it can send the small investor looking for other ideas, other ways to make even that small amount of money work for them. And believe it or not, there are plenty of other options for investing with small amounts of money. But for now, keep that savings account open, or start one like and online savings account, where you can stash money any time you have it. Later as your balance builds, you will move it into other investment vehicles that will earn you more. At least until interest rates go higher, use a savings account as a place to make it easy to save up extra cash.

The first rule of thumb is that you should strive to save ten percent of your income as savings. Start a rainy day fund, an emergency fund, or whatever you want to call it, but saving like this would be used mainly to make sure you are able to pay for an emergency when it comes along, like a car repair, hospital bill or job loss. Ten percent might sound like a lot, and even be beyond what you can afford. But think of it as a goal, and save whatever you can. Putting $10 aside twice a month when you get paid is just fine.

So where do you invest $5 or $10, or other small amounts? The first place to start, is that savings account and an emergency fund. Work toward having a balance of $500 or $1000 in that account before you do anything else. Along with your savings form your paycheck, you can also have a garage sale or pick up a second part time job to fund that balance. Try selling items on eBay or Craigslist to get fast cash.

Once you have some emergency cash set aside, the best thing you can do is pay down high interest rate credit card balances. It just does not make sense to pay 18% to 29% interest on a credit card balance every month, as you try to find out where to earn 2-3% on a savings account! Your money is not working for you that way. By paying off your high-interest card, that’s like earning 18% on your “investment” right there! There is absolutely nowhere else you can go to invest $25 and earn an interest rate of 18-29%! That is just a fact. So any small amount you save up, add it to your high interest rate loans. Simply make the payment for five or ten dollars more than the minimum. Ideally, you will want to make the largest payment you can afford, to pay off balances more quickly.

If you don’t have much in the way of expensive credit card debt, then you have some interesting investing options. First, you can always invest in good old United States savings bonds. You can buy EE bonds, which most people are familiar with, which you buy for half the face value, it pays a fixed rate of interest, and the bond matures in twenty years, reaching the full face value. You can also buy these at face value online, with TreasuryDirect.gov. This is convenient because you can open an account and have money transferred from your savings account right to your Treasury investing account. There is also the newer I-bond, which pays a variable interest rate based on the rate of inflation. It’s a little different in that you pay the face value, a minimum of $25, and the interest will to accrue until you cash it in, there is no maturity date after which no additional interest accrues. There is a penalty however for cashing in either of these types of bonds during the first five years you own them.

Beyond savings bonds, what other options do you have? You can buy certificates of deposit (CDs) which give you a slightly higher rate of interest above that of a savings account – but not by much. today, many online savings accounts also offer purchase of CDs, for example ING Direct. You can buy a CD with as little as $100. This means you can’t really get at the money to spend it, which might be a good idea for some folks! While the interest rates aren’t great right now, at least you will have a way to earn and save until you decide on other vehicles for investment.

For another idea, you actually can buy stocks through some accounts with small amounts. Today there are accounts that let you invest in stocks with very little money. Sharebuilder is a service run by ING Bank that allows you to purchase stocks, with a $4 commission. The beauty of this however is that you can buy what’s known as “fractional” shares. That means you can buy a portion of a share, where most brokers would required you to buy at least one share. For example, if shares of Apple stock are $250, but you only have $25 to invest, you can purchase just $25 worth from Sharebuilder. Your purchases are scheduled throughout the month according to their buying schedule, so you can’t buy immediately, but you have the opportunity to participate in buying stocks, ETFs and mutual funds through this account. While we wouldn’t recommend that you pay $4 commission for a $25 investment – a 20% fee – at least you have the option to do so. You can also deposit your money into your Sharebuilder account, and wait until you build up a certain balance before buying. you can invest each paycheck as well. Along with regular investment accounts, they also offer IRA retirement accounts, custodial accounts for minors, and even 401(K) account for business owners. It’s a great way to invest your money.

With all of the above ideas, you now have no excuse not to get started saving money, even if you only have $5 to invest. There are many places where you can invest with small amounts. Now you know where to invest $5, where to invest $25, or even where to invest $500 or more. Get started and pay yourself first today.

A big question in this crazy market it, “What should I invest in right now?” – especially if you are looking for investments that will protect your principal and also possibly make money.

The days of just parking your cash in an index mutual fund and waiting for 20 years are long gone.  It might be helpful to talk a little bit about setting up some self directed accounts, including a self directed IRA, what that means and why you shouldn’t be afraid to buy individual stocks, as well as options and other types of investments.

When you invest in a mutual fund, you are giving all the control and authority to the fund manager to pick and choose stocks, to buy and sell as they see fit. (If you’re investing in a 401(K), you are giving all the control to your plan administrator – you can’t pick and choose among ALL mutual funds, only among those they decide are good for you.) You have to trust that fund manager to make choices you agree with. You have to trust that they understand what’s going on in the market.

However as so many experts are fond of noting, the large majority of fund managers failed to beat the stock indices, like the S&P 500 Index. So, lots of people started parking their money into what they thought were best index funds. For a while there, the funds did follow the stock markets, and did as well as the indices did, which wasn’t bad – until the markets crashed, and kept crashing. And so did all the index funds.

How can an average investor ever again feel confident or secure enough to get back into the markets? If you still think it should be as easy as just sending in your check, then you are better off putting your money in a cash savings account or under the mattress. To avoid losing, you need to learn something about investing.

Here’s just one solution. First, you need to learn to invest money. No matter how expert you are, or how many years you’ve been in the market, there is always something more to learn. But abandon the idea that you can just send your check to the mutual fund every paycheck. That’s over. You need to learn more about the funds, about stocks, and about what options are out there if the markets turn down again. One good choice today is to learn about using Exchange Traded Funds (ETFs) instead of mutual funds – they trade like stocks, don’t have the same management fees and minimums to get invested, and you can buy a broad range of index funds, currencies, commodities and other investments that would otherwise be tough to get into for a new investor.

Next, you need to open an account where you can make all the decisions. If you currently have a retirement account through your employer, you should seriously consider opening up a self directed IRA as well. the reason is, many Americans can take advantage of an IRA when they don’t have access to other retirement options, or take an additional tax credit. For small business owners, there are self directed IRA plans such as a SEP-IRA that you can also open.

There are plenty of discount brokers out there. There is also a ton of websites where you can learn more about stock investing that you ever wanted to. This site recommends TradeKing as the best - fees are low, and they have awesome forums, educational materials, trading platforms and they have the Trader Network allowing you to follow top traders, ask questions and much more.

When you open a self directed account, you can open a regular brokerage account, or retirement accounts (IRA) or custodial accounts (UTMA, UGMA, Coverdell) for your kids’ investing. You can also open small business owner retirement accounts like SEP-IRA. Here is where you can take control of your retirement investments, and not delegate it to someone without knowing more. You can put a little money here to work with, until you learn more and step by step take back control of your investing.

All self directed means is that you decide and make the trade yourself, usually online, without having a broker or financial advisor do it for you. Using a discount broker with a lot of educational materials is key, and also to take small steps. You can buy safe investments in your self-directed account, like CDs or bonds, but you can also buy mutual funds, or exchange traded funds (ETFs) instead of mutual funds if you choose. You can also, as you learn more and bcome more comfortable with risk, branch out into options trading to help hedge your investment risk.

There is a lot involved in learning to invest money, and do well in the markets. With a self directed account, and taking the time to learn what should you invest in right now, you can learn what you need to know to profit from the incredible opportunities that will be coming up in the future.