Archive for Investing Your Money
May 17, 2008 at 11:13 pm · Filed under Investing Your Money
Points to ponder as you consider what can be done to maximize your 401k returns:
1.Are You Maximizing Your 401k Returns?
2.Is Your Plan Working Efficiently?
3.Do you need to Maximize Retirement Income?
4.Do you want Simple but Powerful Strategy to Increase Your Retirement Wealth?
For most people their 401k investment strategy is to “set it-and-forget
it”.
This mindset has long been in existence and has been perpetuated
by 401k administrators and human resource departments alike. Don’t make the mistake of thinking these people know what is possible, or that they will tell you if they do, to maximize 401k returns.
Unfortunately, accepting the given type of strategy at your company will most often result in less than optimal returns. Yet so many people believe that if there were more to be gained, their employers would have a system set up to capitalize on that fact. They don’t!
If you were able to implement a strategy to squeeze a little more out of your 401k plan, say 8% more every year, this would result in four times the amount of money you would have at retirement because of the power of compounding interest!
Think about that for a minute: 4 times what you might expect when you retire just by learning how to raise your return by 8%.
Is this possible? Not only that, but people in the know are doing it by the thousands right now.
A very simple but powerful 401k strategy that works with any 401k plan involves two things.
1. Awareness
2. Use of an index fund (where available)
By awareness, I mean tracking the value of your 401k holdings on a weekly basis if possible. With this level of awareness you can easily spot a portfolio decline. If it approaches a predetermined amount (5% to no more than 10% suggested) you should switch into a money market. Or if you are well informed and have the ability into an index fund that is designed to profit from a decline (a Bear Fund).
The biggest advantage you will gain is NOT letting your account value sink to such dismal levels that a 40%, 50% or greater gain is required just to get back to even.
This alone could significantly increase the size of your 401 over time.
Is this the only strategy that can safely increase your return rate on your 401k?
Not at all. You just need to know what most people won’t tell you. I have written a book on the subject called “Scientific Wealth Strategies.” You can find it at http://wealthscientist.com
There are also a lot of resources available on the net to help you understand what you can do with your 401k to maximize default returns no matter how your 401k is set up by your administrator now.
A site in our publishing network helps you find this information. It can be found here: http://www.401kinfo4u.com
The worst thing you could do is let your 401k lay almost dormant with the minimum returns you are getting now. Calculate what it will be worth at retirement now as opposed to what you’d have waiting for you when you retire with 8% more in returns.
That should get you interested in seeking out the education needed to realize a whole different kind of retirement nest egg!
C.C. Collins is a Financial Planning Advisor and Author of “Scientific Wealth Strategies” at http://www.wealthscientist.com Find more information at http://www.401kinfo4u.com
May 16, 2008 at 8:27 am · Filed under Business Performance, Finance Web, Investing Your Money
The past week had the potential to be explosive. Central bank meetings in the UK and Europe had traders licking their lips with anticipation for the possible outcomes of the meetings and the potential volatility they could bring.
Sadly for volatility lovers, the week came and went with little significant turbulence. The FTSE ended the week up almost 150 points. The Dow Jones Industrial Average was not so lucky, losing more than 250 points; most of it on Friday afternoon, when the world largest insurance company AIG announced it will be seeking more then 12 billion dollars in new capital. The new week brings with it a slew of data from UK and Europe; the common theme being inflation.
From Consumer Price Index to Producers Price Index, traders will be looking for a number that’s on the higher side of expectations, as oil prices are at an all time high and largely to blame for the inflation run. As it was mentioned last week in the EU bank speech that accompanied the rate decision, the main reason why the decision was taken not to lower interest rates, was the great concern that doing so would cause inflation to spiral out of control. On the US side, the data will focus more on retail sales and the health of the manufacturing industry. Last week, Wal-Mart and a few other big box retailers announced that their ’same store’ sales were higher, possibly indicating that consumers are shopping more. If this is the case then perhaps this could be the stimulus that the US president was talking about, or maybe it could be explained by consumers hitting the shops to spend their tax refunds.
For Information on Asset Management contact Nigel Walter
May 4, 2008 at 9:35 am · Filed under Investing Your Money
5 dos and don’ts in short selling.
1. Do use stops. Period.
2. Do monitor “hot” industries and sectors. Identify fake players, poor competitors, minor companies with too-ambitious goals, fundamentally weak stocks, technical laggards and “pumped” prices. They will eventually give short sellers the opportunity to make a profit.
3. Don’t short stocks with high short ratios or high proportion of short shares vs.float. Chances are you will get “squeezed”.
4. Don’t short growth companies and those with good ideas, aggressive research/marketing and solid balance sheets. Remember that good companies will prevail in the long term and good news might be around the corner.
5. Don’t short companies that pay dividends. Consistent dividends create steady prices (a boring situation for traders, unless you play options), counter panic, attract buy-and-hold investors rather than traders, and create resistance to moderately bad news, sector weakness and cyclical variations.
Note: If you’re not familiar with short-selling, you may want to take this opportunity to familiarize yourself with it. If the past has shown us anything, it’s that stocks go down a whole lot faster than they go up. Thus the profits for short-sellers can come surprisingly quick. Many people even in this “enlightened” era, do not realize that you can make a lot of money if the market is falling. Well the fact is that you can, and there are 2 good ways to do it. One is to “sell short” and the other is to buy options called “puts”.
For a FREE report on HOW TO TRADE FAST, enter your email address at:
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April 22, 2008 at 4:24 pm · Filed under Investing Your Money
How many of you remember the immortal words of P. T. Barnum? Of Yogi Berra? On Wall Street, the incubation period for new product scams may be measured in years instead of minutes, but the end result is always a lopsided, greed-driven, gold rush toward financial disaster. The dot.com melt down spawned the index mutual funds, and their dismal failure gave life to “enhanced” index funds, a wide variety of speculative hedge funds, and finally, a rapidly growing number of Index ETFs. Deja Vu all over again, with the popular ishare variety of ETF leading the lemmings to the cliffs. How far will we allow Wall Street to move us away from the basic building blocks of investing? What ever happened to stocks and bonds? The Investment Gods are not happy.
A market or sector index is a statistical measuring device that tracks the movement of price changes in a portfolio of securities that are selected to represent a portion of the overall market. Index ETF creators: a) select a sampling of the market that they expect to be representative of the whole, b) purchase the securities, and then c) issue the ishares, SPDRS, CUBEs, etc. that you can trade on the normal exchanges just like ordinary stocks. Unlike ordinary index funds, ETF shares are not handled directly by the fund, and as a result, they can move either up or down from the value of the securities in the fund, which, in turn, may or may not mirror the movements of the index they were selected to track. Confused? There’s more… these things are designed for manipulation!
Unlike managed Closed-End Funds (CEFs), ETF shares can be created or redeemed by market specialists, and Institutional Investors can redeem 50,000 share lots (in kind) if there is a gap between the net-asset-value and the market price of the fund. These activities create demand in order to minimize the gap between the fund net-asset-value and the fund price. Clearly, these arbitrage activities provide profit-making opportunities to the fund sponsors that are not available to the shareholders. Perhaps that is why the fund expenses are so low… and why there are now hundreds of the things to choose from.
Two other ishare/ETF idiosyncrasies need to be appreciated: a) performance return statistics for index funds typically do not include fund expenses… it should be fairly obvious that an index fund will always under-perform its market, and b) some index funds, ishares in particular, publish P/E numbers that only include the profitable companies in the portfolio. How do you feel about that?
So, in addition to the normal risks associated with investing in general, we add: speculating in narrowly focused sectors, guessing on the prospects of unproven small cap companies, experimenting with securities in single countries, rolling the dice on commodities, and hoping for the eventual success of new technologies. We then call this hodge-podge of speculations a diversified, passively managed, inexpensive approach to 21st Century Asset Management! How this differs from how the dot.com mess started is a mystery to me. Once upon a time, there were high yield junk bond funds that the financial community insisted were appropriate investments because of their excellent diversification. Does diversified junk become un-junk? Isn’t “Passive Management” as much of an oxymoron as “Variable Annuity”? What ever happened to the KISS Principle?
But let’s not dwell upon the three or more levels of speculation that are the very foundation of all index funds. Let’s move on to the two basic ideas that led to the development of plain vanilla Mutual Funds in the first place: diversification and professional management. Mutual Funds were a monumental breakthrough that changed the Investment World. Hands on investing (without the self-centered assistance of the banks and insurance companies) became possible for absolutely everyone. Self directed retirement programs and cheap to administer employee benefit programs became doable. The investment markets, once the domain of an elite group of wealthy entrepreneurs, became the savings accounts of choice for the employed masses. But only because the Funds were relatively safe with their guarantees of diversification and professional management! ETFs are just not the answer to the problems we’ve experienced lately with traditional Mutual Funds. (Those problems are a function of Fund Manager Compensation, conflicts of interest within Fund Sponsor Organizations, the delivery and pricing system for the funds, and believe it or don’t, the self directed retirement programs themselves.)
Here’s a thumbnail sketch of how well the major Passively Managed Indices have done since the turn of the century: For those six years, the DJIA growth rate averaged Zero % per year, the S & P 500 averaged Minus 2% per year, and the NASDAQ Composite averaged Minus 8% per year! How many positive sectors, technologies, commodities, or capitalization categories could there have been? Go ahead, add in 1999 just to make yourself feel better and you’ll come up with +2% per year for the DJIA, Zero % annually for the S & P, and a stellar -1.5% per year for the NASDAQ. Now subtract the fees… hmmmm. Again, how would those ishares have fared? Hey, when you buy cheap and easy, it’s usually worth it. Now if you want performance, I suggest you try management. Any management is better than no management, so long as you are receptive to the strategies or disciplines employed by the manager. If you can’t understand or accept the strategy, don’t hire the manager. During the past six years, there have been more advancing issues than declining ones on the NYSE, more stocks achieving new highs than new lows. Why did you lose money?
Sure, you might find some smiles in an ishare or two, particularly if you have the courage to take your profits, and there may be times when it makes good business sense to use these products as a hedge against a specific risk. But please, stop kidding yourself every time Wall Street comes up with a new short cut to investment success. Don’t underestimate the value of experienced management, even if you have to pay a little extra for it. Actually, there is no reason why you (and I mean every one of you) can’t learn either to run your own investment portfolio, or to instruct someone how you want it done. Every guess, every estimate, every hedge, and every shortcut increases risk, because none of the crystal balls used by those creative product hucksters works very well over the long haul. Products and gimmicks are never the answer. ETFs, a combination of the two, don’t even address the question properly. What’s in your portfolio?
Steve Selengut
http://www.sancoservices.com
http://www.valuestockbuylistprogram.com
Professional Portfolio Management since 1979
Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”, and “A Millionaire’s Secret Investment Strategy”
April 20, 2008 at 7:23 pm · Filed under Investing Your Money
There is a current movie entitled “Eternal Sunshine of the Spotless Mind”. It is about a man who has had a painful love affair and will do anything to rid his mind of those pain thoughts of a former love. He sees an advertisement that offers just such a service. It seems his former lover has the exact thoughts and she goes through the same treatment. Guess what? They meet again, do not recognize each other, and fall in love again.
Does any of this sound familiar?
May I gently remind you of what happened to your stock portfolio in 2000 to 2003? Please. Don’t shoot the messenger. You fell in love with the stocks or mutual funds in your 401K and became wildly emotional about all the money your were making and how you thought about buying one of those islands in the Bahamas for early retirement. Then came the road crunching detour and you are left with a broken down portfolio by the side of the road.
Along came a shiny red tow truck and a mechanic who said he could fix everything. Slowly you began to forget the previous gut-wrenching journey and your car is now running (not as well as it used to) and seems to be getting better as this mechanic from Maul Street is working on it.
Hey, I think I’m in love again.
If you cannot remember what happened in the past you will repeat those same errors in the future. Every great statesman has been a student of history. Every great investor has studied the history of the stock market to try to determine what the future will bring. Cycles continue to repeat and repeat because people forget the past. Those who are smart enough do not fall into the repetitive trap and instead take advantage of it.
One of the most predictable is the long cycle of the stock market. It usually runs about 16 to 18 years. There is the up cycle which is invariably followed by a down cycle of equal length. Within each long cycle are several short cycles of 6 month to 2 years with a resumption of the downward move until the cycle is completed.
Do you realize we just completed an 18 year up cycle in 2000? Now the market is completing a one year advance within that cycle and may be getting ready to head down again. How is your spotless mind doing? Have you forgotten your lesson from 2000? Are you willing to make that same mistake again?
If you choose to forget you are doomed to repeat your losses. This time use your whole mind to learn from a past mistake so you will not see your money disappear - again.
Al Thomas’ book, “If It Doesn’t Go Up, Don’t Buy
It!” has helped thousands of people make money
and keep their profits with his simple 2-step
method. Read the first chapter at
http://www.mutualfundmagic.com
and discover why he’s the man that Wall Street
does not want you to know.
Copyright 2005
al@mutualfundstrategy.com; 1-888-345-7870
April 5, 2008 at 9:47 pm · Filed under Investing Your Money
Saving money for retirement can be easy or difficult
depending on your current salary. If you are like 75
percent of the American population, earning just enough
money in your current job to meet your monthly bills, then
it’s time to do some serious thinking on how you are going
to live when you retire.
Social Security isn’t going to meet all your monthly
payments. That is, if Social Security, or some revised form
of it, still exists when your day of retirement arrives.
Here are some tips on how to save today for your future. No
matter how little, or how much, you earn today.
Estimate how much you must save to give you the income you
know is necessary for you to retire in comfort.
Experts suggest that you will need an income equaling about
75 percent of your current take home pay. Be sure to
estimate a rise in inflation which has historically been
about 5.3 percent per year.
Figure out how much of your current salary will need have to
save each year to achieve your retirement goal by counting
backward from the year you plan to retire to see how many
years you have before retirement. Include the possibility
of being on a fixed income for as long as 20 or 30 years.
Depending on how many years you have until retirement a U.S.
Treasury bond that guarantees six percent interest might be
considered, while stocks might have the potential for a
much higher return, but has a much higher risk of loss.
A financial planner, stockbroker, or an accountant, can
offer guidance, expertise and access to knowledge about
almost any type of investment or retirement planning
concerns.
Spread your money out over a variety of investments. Some
will prosper while others may fail.
Set up an automatic draft from your bank account from your
paycheck so that a portion of your income goes directly into
your retirement funds.
Pay off major debts, such as home mortgages, college loans
and other significant cash-flow drains, as quickly as you
can.
For more information visit: http://www.apluswriting.net/finance/retire.htm
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Author: Marilyn Pokorney
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Also loves crafts, gardening, and reading.
Website: http://www.apluswriting.net
