Lately however as the stock market has been more volatile, many individual investors are foregoing their IRA contributions because they haven’t learned how to invest for long term growth in any but a bull market.  Many investors think that putting their retirement money in mutual funds is the only option they have to invest, and some individuals with retirement accounts aren’t even sure of the difference between the terms “IRA” and “mutual fund”. Hopefully we can clear up some of the confusion, and offer some ideas for finding good stocks to buy to keep your portfolio growing whether the market goes up or down.

Depending on the type of IRA you have, you may or may not have a good selection of investment choices.  This is also true of 401(K) account plans at most employers.  For example, many people open IRA accounts or retirement accounts with their bank, or an online bank, that restrict the choices available.  This means that there are likely several mutual funds, or particular mutual fund companies, that you can invest in, but you’re prevented from investing in ETFs, individual stocks, currencies, certain types of bonds, and so on.  These banks or employers do not want investors to come back complaining that they lost money in a particular stock, but as we’ve all seen, the potential for losses exists in all investment areas. 

As a result, poor information about investments, as well as the lack of education on the part of investors, are big reasons that people believe they don’t have to know anything about the markets, except to put their money into a so-called “good growth stock usual fund” and leave it there forever until they’re rich at retirement.  That scenario is now officially a pipe dream, and the best advice you can get is to move your money into a self directed brokerage account that gives you real choices and information.  You’ll need to take some time to learn to invest, and take that information into your planning process.  This is the only way you will be able to build a portfolio that can weather the coming economic turbulence.

When you switch to a self-directed IRA account, whether it’s a rollover 401k, or a new traditional IRA, you effectively open a brokerage account which you alone control. You are still subject to the withdrawal restrictions and penalties that apply to retirement accounts, but you can now invest in any investment vehicle which your broker offers.  This could include individual stocks, currencies, government and corporate bonds, options, mutual funds, ETFs, or any type of similar investment.  With this type of account, the choices for investment are much broader, and allow the investor to make decisions based on their personal financial plan, their own risk tolerance, and other goals that may or may not be fulfilled through the limited choices offered by employer-based plans or certain bank plans.

An important thing to remember is that with a self directed account, you can still invest in conservative investments like bonds and CDs or money market funds, or find good stocks to buy that match your investmnet goals, but you also have the ability to buy and sell holdings as you choose, or select new vehicles that fit your financial goals better. “Self directed” does not equate to “risky”.  It merely means you are now in control of your money and your financial future, which is the best way to make sure your money is working in ways that match your unique defined needs.

When you withdraw from a traditional IRA or a 401(K), you pay taxes and penalties, because the intent of those accounts is to hold the money for retirement. Your contributions have been tax free, and you will pay taxes when you retire.  Withdrawal after 59-1/2 are taxable, but are also penalty free.  But if you want to withdraw before that time, you will not only pay the taxes you avoided earlier, but a penalty to prevent you from doing so.  Now comes the Roth IRA.  We’ve set up a 401k rollover into a Roth IRA, or opened a new Roth account, to take advantage of the future tax benefits.  We contribute to Roth accounts with after tax dollars, and as a result, in retirement we can withdraw from our account tax free also. It’s for this reason, because the growth in the account is also tax free, that many financial advisors are now recommending that you invest in a Roth for retirement. But there is a down side. Because there are not taxes to be paid, withdrawals, at least of the money you initially deposited, are penalty and tax free.  And when people who don’t save have retirement funds they can pilfer from, they start withdrawing form their future.

The vast majority of Americans have little to no money saved for their retirement over and above what they hope to get from Social Security. this grasshopper vs. ant mentality was possible a few years back, when it seemed like prosperity had nowhere to go but up.  But today, there is a distinct possibility that we will not see growth – of home values, salaries, or anything that would normally put money in our pockets – for a long time.  Even for people who have a twenty year time horizon before they retire, if the current situation in the United States is anything like the deflation Japan suffered, the likelihood may be that there will be little to no growth in any stock or savings accounts for the next ten years. 

So, do you really want to deplete what you have now, while you can still earn and save and sell off possessions, and be more broker when you’re 75 years old?  With life expectancy increasing, do you really want to be working that waitress job at 69 years old because you took money out of retirement to buy a new $40,000 car when you were 55?  Is it harder to ask your child to pay for college today by working their way through, or to expect them to support you alongside their own family in twenty years?  We tend to think in short term time horizons, and today’s needs may be immediate, such as a health care emergency, or job loss.  But using retirement funds to support a lifestyle that was built on credit and can no longer be supported unless you use up retirement money is a foolish choice.  By taking money out of your Roth IRA withdrawal, or a 401(K) withdrawal, you are essentially hoping that your kids or the government will be able to support you because you will have nothing left.  One is unfair, the other just plain crazy.

Remember too that if things go horribly wrong, and you do have to file for bankruptcy, your retirement money cannot be touched by your creditors. That money stays put because it has a purpose to fulfill. If you use it all up and then declare bankruptcy anyway, you have truly robbed yourself.  It’s much better to tighten your belt as much as you have to right now, and leave that retirement money where it is – ten or twenty years down the road.

Lately, many investors are moving into cash or things like gold, that do better in bad markets.  Keeping cash on the sidelines, in addition to some stronger investments as part of your portfolio, may be a good idea.  If you are not an experienced investor, who knows how to make money in down or level markets, you could get royally screwed by keeping money in index mutual funds for example.  The old saw about keeping money forever in a “good growth mutual fund” is a lot of hoo hah in markets like this, because the fact is these types of mutual funds have barely performed over 5% in the past 10 year period.

With so much uncertainty, if you are depending on a job for your income, you  might consider paying off debt instead of putting money in an investment account where you may or may not get 4% returns.  You could also lose your shirt.  Small investors are not the ones who will do well in this type of environment.  Many Americans are just paying off debt and saving their money, to make up for not being able to get credit, not getting raises at work, or getting their wages cut or even getting laid off.  Investing in this type of market is not always the best way to go.

If you really have extra cash you can afford to lose, it might be a good idea to look at the types of things that do well in an economy where people are not spending on big items, but have to purchase certain things like fuel, heat, and food.  International investments may also be useful to look at, since many retailers now are seeing no growth in the U.S., but finding their growth is coming from sales in Asia.

It’s worth taking a look at the variety of investments out there that could do well in a continued downturn, however keeping cash handy and getting out of debt continue to be priorities before earning low returns in a volatile market.

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.

There are many options available for retirement accounts, both employer sponsored and through your own brokerage account. At your job, your employer has an option to offer a 401(K) retirement account, which lets you put pre-tax wages into a retirement investment account. Not all employers offer this, and if you can’t take advantage of a 401K, you can use a traditional IRA, or Individual Retirement Account.

Don’t get confused, as there is no such account as a 401k IRA – they are two separate types of accounts. However, depending on how much you earned, and your tax filing status, you may be able to invest in both a 401k and an IRA. Once you earn over a certain limit, you can no longer qualify for the IRA.

The amount you invest in an IRA is tax deductible off your federal income taxes. However, the maximum you can invest each year is much less than a 401K, so if you have a 401K option at work, that is probably the better of the two if you want to stash as much money as possible.

Both types of accounts have specific limits. For the tax year 2010, the maximum you can invest in a 401K is decided by your employer, as a percentage of your income, but not more than $16,500, or $22,500 if you are over 50 years of age. For a traditional IRA, the maximum investment is $5,000, or $6,000 if you are over 50 years old. This is also limited to the maximum amount you earned in 2010. (You can learn more about retirement account limits at the U.S. Internal Revenue Service website.)

You can see that there is a big difference in how much you can put away for your retirement. If you are able to put aside the maximum amount of your wages, you should discuss it with a tax advisor or your employer’s benefits manager, to see what your individual allowances are. Putting as much aside as you can may be a good idea. But remember, you will also need to know what the investments are that you’re investing in, not just how much money you can put aside.

Remember also that you can always invest as much money as you want in other accounts – they are just not tax-deferred or otherwise tax advantaged accounts. If you put money into a self-directed brokerage account, you will pay taxes on the capital gains earned in that account. But you also have options such as tax-free municipal bonds, where you can invest with lower tax impacts. The bottom line is, don’t think you are only limited to your 401K and IRA options for financial security in retirement. Work with a financial advisory to consider all of your options, once you’re reached your retirement account limits.

1 -  From Buy Stocks Online Now:  Learning how to buy and sell stocks takes time and research. There is a lot of good, informative information out there, and just as much that is out dated and inaccurate. Take the time to seek out books and websites that offer up to date and detailed information.

2 – The Biz Hunter offers this item:  Forex investment can be risky, but also very lucrative.  Critical skills are needed to profit in this highly competitive investment landscape, but these skills can be acquired through education, training and practice trading utilizing virtual (demo) accounts from the right broker. There is money on the table for those who can follow a system, control their emotions and practice good money management methods.

3 – This sounds interesting from Reveal Real Estate: Belize often flies under the radar as a property investment destination.  It’s known more for its diving.  But investors interested in Caribbean property should take notice.  Belize real estate is available at prices far below the more established parts of the Caribbean.  The areas that are attracting the most investor interest are Ambergris Caye, Placencia and Corozal.

4 – From Dallas Investment Property Guide:  A volatile stock market has sent individuals looking for more secure investments.  As the saying goes, “Buy land, since they’re not making anymore of it,” real estate is a time tested investment, especially income properties over time.  Dallas investment property is no exception, as Texas remains a stable economy.

7 - So You Want to Be a Real Estate Investor:   Have you been thinking about buying investment property for a long time?  Have you read all the books and watched all the infomercials, but just didn’t know where to start?  Here are some quick steps to get you started toward your investment property dreams.

The only way to really protect your finances is to invest yourself using a self-directed account. Whether you have a self directed individual account, a self directed rollover 401k account, a self directed custodial account, only you have your own best investing interests at heart. Many people who put money into mutual funds and other products – who are not truly “investors” as will be explained below – don’t want to hear that they have to learn how to invest. But the sobering fact is, even if you choose not to invest your own money in a self directed account, and prefer to give your money to someone else to invest it, you need to understand the markets and know how to invest so that you can make sure your broker is doing the right thing. You won’t know that if you don’t understand investing.

I’ve heard people say “I don’t want to know all the details of how to invest in stocks, so I hire a professional.” Well if you have less than a$250,000 to invest, real professsoinals, who operate on a fee only basis, are not going to want to work with you. There is no profit in it for them to have dozens of investors who only have $5,000, $10,000 or even $50,000 to invest. The reason is, they get fees that are high enough that it eats into your returns, and they can’t show you a decent return on your investment after you deduct the costs of using their services. And small investors are more likely not to want to pay fees in the hundreds of dollars to get advice anyway. So if you are rich, you can afford to hire a professional. The rich are not in the position of being concerned about saving what’s left of a very small nest egg.

So where then do you invest if you want to have a self directed account? The idea is, you invest then in vehicles you understand, and that you learn how to trade. In the beginning, this may mean just a money market fund, or a government bond fund, something conservative which is easy to grasp and where you can park your money relatively safely while you learn more. From there you can graduate to investing in index funds, but using ETFs instead of mutual funds, as they are cheaper to trade, have no minimum balance requirements (like the $3,000 minimums you’ll find as some fund companies) and they don’t have the same fees and taxes.

At some point, you may even learn to buy stocks, and there is nothing wrong with doing that, if you learn how to do the research, follow the market, and are ready willing and able to make trades that aren’t just based on emotions, but a solid financial plan. There are plenty of good sources of information about how to invest in stocks, from broker resources, to books, to entire publishing companies that put out nothing but investor information.

The point is you are going to take it slow, at your own pace, to learn about what works for you, and understand how your money is working for you. You are not then at the whim of some advisor and their desire to make money for themselves. You don’t have to be anxious about not knowing what is going to happen to your hard earned money, and what exactly it is invested in. You can relax, and plan your future around a financially stable plan, and know that you have the skill to take care of yourself financially.

Understanding options  is not that difficult. There are a huge variety of online tools available to help teach investors how to take advantage of this valuable investment vehicle. For example the options institute has an entire website devoted to nothing but educating investors on how to use options. The Options Industry Council(OIC) provides many top online educational tools including free webinars, recorded seminars, and virtual training platforms to help any investor try their hand at buying and *selling options* while taking zero risk with real money. In addition, you can find multiple books and magazines available for additional education. There are all kinds of books on the market on the subject getting started with options. Reading these, in conjunction with the virtual training tools available online, can help you get your feet wet and feel more confident in your ability to train options.

How do options work? The simple answer is that an option is simply giving you a right to buy or sell a stock but not the obligation to do so at a specific price that you select. Options are available for individual stocks and ETF’s on the market. There are also options available for commodities and futures trading. When you research options online, you select an individual stock for example for which you would like to see the option chain. An option chain lists all of the outstanding options for the next several expiration periods. When you purchase an option, you are purchasing the right to buy stock at a particular price point before an expiration date. So if you select a stock that you expect to go up in the next several months, you would buy a call option.

When you are buying or selling options based on stock you have in your portfolio that is called a “covered” option. When you don’t hold the stock itself in your portfolio, these are called “naked” options. Selling options based on stock you have in your portfolio lets you take care of market downturns where you may lose money on your stock price but earn money on your option purchase. Unlike covered options, buying or selling naked options is an outright gamble on whether the price of the underlying stock will go up or down.

Some of the best brokerages where you can trade options are the discount brokerages. Brokerage companies like Trade King, Options Express, or Interactive Brokers are brokerage houses that allow you to trade options for very low cost. With options, you normally pay a commission plus a price per contract. If you are buying and selling options frequently, these costs can add up so it makes sense to use a brokerage with low fees. In addition, many brokerages offer extensive training tools as well, because as an investor gets more educated about how to invest in options, they are more likely to purchase these investments for their portfolio. Look for features like how to materials including publications and webinars, forums where investors both beginner and expert alike that exchange information, and other trading blogs that can show you hands on information about actual trades being made in the field. Some brokerages even allow investors to publish their trades, so that you can follow along with some of the top traders who are training with the same firm.

*Getting started with options* is fairly simple. It might take some time to learn the ins and outs and go through some of the training materials, but afterward you will have a knowledge base that will help you profit and build your portfolio exponentially. Most brokerage accounts allow options trading for certain investors, and certain minimum balances may apply. Check with your broker, or investigate some of the other top brokerages for trading options. Here at Saving Cash Tips, we recommend Trade King, which is the brokerage we use ourselves. They offer an extensive variety of educational tools, forums and discussion groups, and research tools that are hard to find at other brokers. In addition the fees are rock bottom. Whether you decide to use options as a hedge mechanism or as a speculative vehicle to boost your returns, if you expect top returns you will definitely need to learn how to invest with options.

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.

You’ll find right away that interest rates paid on these savings accounts tend to be somewhat higher, since these banks are saving money by transacting business online. They pass the savings on to their customers. Granted, the savings account interest rates paid by these banks aren’t much higher than offline, but there are other advantages. Many offer CD products that are easy to buy, have low minimums as low as $100, and also pay higher interest rates than you might find at your local offline bank. For anyone looking to park their money safely for a longer term, these CDs are perfect.

Some online savings banks also have checking accounts you can open along with savings. Again, fees may be lower, and you will get access to ATM machines through a debit card, along with a listing online of where you can find a fee-free ATM in your area. If you have your own business, you can also open business accounts online for both savings and checking needs.

One other plus that needs to be mentioned is that these accounts can be set aside, out of the way of your normal banking, so that you are less likely to spend the money once you’ve saved it. Some accounts let you easily transfer into investment accounts electronically, or have other features that make it really easy to keep socking away the extra cash. You can set up your accounts so that you can direct electronic transfers of funds to and from either account. Some people have a regular transfer set up once a month, or you can have a portion of your paycheck direct deposit to you new online internet savings account.

Internet savings are no less secure than your local neighborhood bank. All accounts are password protected, and have extra security features to protect their depositors. Accessing your account on a public or shared computer includes security settings to avoid having information stored on that computer. For ease of use however, you can have different security settings at home for convenience.

These accounts are so easy to set up, you can also have savings accounts for your kids, and transfer money freely back and forth between your account and theirs. Why not set up accounts for allowances to be “direct deposited” to children, so that they save a portion of their weekly allowance? Some Internet savings banks include features for kids to play games and learn about saving and investing. It’s a great start to their financial future.

Getting an Internet savings account is a smart thing to do as part of an overall saving and investing plan. Anything that makes it easier to save will help you build your financial wealth.