Category: Investing101

10 Companies that might go bankrupt in 2013

In this Daily Finance Article the writer after many hours of research done on all of these companies has determined that all or most of them will be going under in the foreseeable future. Some of them are newcomers to the scene and some have been in business for decades but the sentiment and emotions are the same for all. What is it you ask? Nobody or at least very few people want to be their customers. That is by all means the only reason that a company is established. A company can have a year or two of operational cashflow reserves, but after that point then chapter 11 or 7 follows.

Daily Finance Bankruptcy List:

-AVON
-Metro PCS
-Oakland Raiders might become LA Raiders
-Salon Website
-Suzuki Motor Co.
-Pacific Sun Website
-RIM aka Blackberry
-Current TV Channel
-Talbots Retail Stores
-American Airlines
-JC Penny

All of these might go under and I would not invest in any of these right now. In addition to the list provided by daily finance I will make a prediction that in 3 years a few companies I will mention below will also go under. The list below is my guess by seeing a shift in consumer spending, agressive competition and just my own feelings based on the brands current marketing failures. All of the predictions above and below are based only in the U.S. consumer market space.

My Bankruptcy prediction of Companies:

-Best Buy
-Sprint
-Mitsubishi Motors
-Panasonic
-Nokia
-Sears
-A&P Supermarkets

Well their you have it, how do you feel both lists compare and do you support any of these companies, let us know. Also comment if you agree or disagree with both lists. In any event it is just to risky to buy any stocks or bonds from these companies in the future. If things turn around for them I will be the first to admit I was wrong but do not bet on me as my track record has been pretty good in predicitng companies from going under. Also Check out the bankruptcy rate in the U.S. from 2006 to 2008 how suprised are you now that you see the numbers of people applying. I think it is sad and unfortunate. So many problems arise from bankruptcy that you do not need the headache, unless it is a last resort and only option.

*Update the graph above states 4 thousand people daily filings.

Watch your Money!

Just For Fun

Imagine if you had a great income and could amass savings easily, and let’s make believe you already did this for many years. This project is to show you how easy it would be to live off of your assets. Assets are made specifically to provide you with more cash flow, more assets on top of the initial investment or a better net worth amount. I wanted to propose a make believe scenario for all of us here reading this blog. Let’s say you have saved 500 thousand dollars after the many-many years and you invested it in dividend paying stocks and bonds. The break down will be listed below for you to get the full effect of the numbers. I am showing you 9 real dividend stocks and a bond example with an average return of 5%. I divided the total amount by 50,000 for each investment as to stay diversified.  So what do the numbers show?
1.      You will get about 8,000 per Quarter from these investments.
2.      You will get about 33,000 every year as dividend and bond interest income. ( Minus any taxes of 15-25% ) 
3.      The cheaper the price the more shares you own and the greater your income per stock will be.
4.      The riskiest stocks usually have the highest dividends so be careful. 
5.      The more sectors you choose the better diversified you will be.
6.      500, 000 will net you about 25-28 thousand after taxes with a 6% shared dividend/bond rate. (Annually)
7.      500, 000 in two savings accounts earning 3% will net you 10-12 thousand after taxes. (safest option)
8.      Dividend investing always beats parking your money in a regular savings account.
9.      500K is a huge amount but with consistent investing and compounding interest it can be done.
10.   Coca Cola was removed because it was over the $50 dollar maximum limit. 
 

Stocks
Ticker
Price
Dollar Amount
Shares
Dividends
Per Quarter
QDR Cash Flow
Bond is Semi Annual
Bond Example
$50,000.00
5%
$2,500.00
$1,250.00
Coca Cola
KO
61
0
1.76
0.44
$0.000
Ent Prop.
EPR
35
$50,000.00
1428.571429
2.6
0.65
$928.571
Winstream
WIN
11.5
$50,000.00
4347.826087
1
0.25
$1,086.957
Con Edison
ED
50
$50,000.00
1000
2.4
0.6
$600.000
PSEG
PEG
28
$50,000.00
1785.714286
1.37
0.3425
$611.607
General Elect
GE
15.09
$50,000.00
3313.452618
0.6
0.15
$497.018
Verizon
VZ
35
$50,000.00
1428.571429
1.9
0.475
$678.571
SDRL
SDRL
31
$50,000.00
1612.903226
3
0.75
$1,209.677
ATT
T
25
$50,000.00
2000
1.68
0.42
$840.000
Plum Creek Timber
PCL
35.76
$50,000.00
1398.210291
1.68
0.42
$587.248
Total
$327.35
$450,000.00
$18,315.25
$7,039.650
$500,000.00
$8,289.650

        Given that this is a playful example to show moneywatch101 readers how important it is to save early and often. (It may take you 20-30 years to save this) Also to show the difference between dividend investing and regular savings accounts. Now it’s your choice where you want to save your dollars but the proof really is in the numbers. If I amassed this amount I would place my money in stocks like the ones mentioned here, but I would diversify to other sectors like healthcare and consumer staples. For this example Con Edison, PSEG, Plum Creek, and General Electric are on the safer side, while the rest are on the riskier side of investments.
If you don’t believe me – see this article from Seeking Alpha, they are known to give expert advice on financial matters. Dividend Article
Comment back on how you perceived the numbers and if you were shocked at how easy it is to get a good income with dividends. (33K a year is pretty good income for doing nothing.)
Watch your money grow and get a good income in the process.
Thanks,

Investing Strategies

Did you know the average person will need at least 750K-1.25M of assets to retire without any financial worries? When it comes to investing many people do not know how to diversify assets in order to take advantage of the most favorable route for their finances. The endless possibilities can be daunting but with research anybody can find the light at the end of the financial tunnel. If your company offers an excellent 401k/403b plan your first option should be there, but what if you wanted to diversify your options after you have contributed up to the match. Many online financial companies offer their services for a fraction of the cost a broker will end up costing clients. Companies like ShareBuilder, Schwab, TradeKing, and TD Ameritrade make investing fairly easy with very user friendly websites and low fees. For example TradeKing charges only $4.95 to trade stocks. Aside from the normal investing options of 401k’s, mutual funds, and Roth IRA’s, you can get a feel for a different aspect to investing that will eventually increase your cash flow and assets.
4 Non-Traditional Investing Options:
–Exchange Traded Funds (ETF’s): These are traded like stocks but are highly diversified like mutual funds with very low fees. ETF’s always follow a specific sector for example: Healthcare or Consumer Staples. 
–Municipal Bonds: These offer tax free advantages and are considered safer compared to corporate bonds. These pay a semi-annual coupon and return your initial principle investment at the end of the term (Most are 10 years or more). This website http://www.investinginbonds.com/ provides very detailed information on bonds and how to go about investing with bonds. Do a little research on the municipality’s debt structure before investing.
–Dividend paying Stocks: Given how paltry rates are in this economy, some dividend paying companies average about 3% or more and can give you an extra paycheck on a quarterly basis, unless you decide to reinvest the dividend with the purchase of more shares. Companies like Johnson & Johnson and General Electric have been around for over half a century. Utility companies offer many great dividend choices as well.
 
–Annuities: An investment product marketed to those nearing retirement, but are highly frowned upon by many financial gurus in the media as having high fees and having high risk associated with these products. But these products can give investors a set income for life after purchasing. Look only at highly reputable insurance companies for these risky products for example, MetLife/Prudential. Don’t forget to look at the fine print associated with these products and avoid products which have a 5 year deferral time to get the monthly income stream. 
Very important fact before buying dividend paying stocks is to research the P/E ratio, forecasted future earnings, and the Dividend Yield as these three details might give you a glimpse to how the company will perform in the future and how much you will actually make on a quarterly basis. The preferred Price to Earnings ratio financial experts in the field recommend is between 5% -20%, anything higher is considered overvalued price per share.

In concluding never forget to Watch your money!
Always remember that even though investments are protected by the Security Investor Protection Corporation (SIPC) there is always a certain degree of risk involved with any type of investment. So be well informed prior to making any decision. Calculation figures were provided by bankrate.com