Investing Archives - Page 4 of 4

Starting an Investment Club

Hey readers would you be open to starting an investment club with 15 people or would you be scared and run for the hills? Investments clubs have been around for a long time and it is primarily done to pool together assets to build the assets faster and in an intelligent manner. How can you say smarter because nobody actually wins in the game of the stock market? Well for starters if you are in an investment club, the members tend to have talks at least once a month to discuss the pros and cons of possible future investments the club will make. I think when people sit down and discuss finances in a responsible manner and make educated decisions then it all contributes to making better financial decisions.

Now to tackle the faster part of the process, if you have 15 people contributing 50 dollars a month for a year the sum total after 1 year is $9,000 of investable dollars being put to work for the club. Do this for 10 years with compound interest and the club will have upwards of 120 thousand dollars of compounding power every day. Little pennies turn into big quarters which turn into huge dollars. How long will it take you to save up 120K by yourself?

The one negative I see with this opportunity is at what point can members start to see the rewards of their invested dollars? If every member starts to take distributions from the club then the fund will not grow unless there is a plan in place to continue to contribute either new money or a portion of the distributions. For example if every member is owed 100 dollars a month for interest payments, maybe 15% can be held before releasing the money in order to grow the fund. Because if you equally distribute all the profits of the fund the fund will stay stagnate and will not increase to keep up with inflation plus the purchasing power of money. Getting everyone to agree on investing opportunities might be a difficult task as well. But the point of the investment club is to invest mutually to pool resources together in order to reap plenty of rewards at some point. After 10 years each member has equally invested about 6 thousand dollars towards the club. So I imagine people would want a good return on their money.

I see many positives with doing an investment club, but one that really sticks out is the availability of online tools (A Couple mentioned below). In addition to that you can also find bookkeeping software for investment clubs. These two tools will provide a ton of great information in order for the club to succeed. On one hand the club will get investment advice and analysis very easily, and on the other the club will handle the books for accounting purposes very easy. If things are automated then it makes life that much simpler for the group.

Typical Investment Club Structure:

President – Signing Authority for all Transactions / Investment Advice / Leads the Meetings

Vice President – Secondary Authority-Fill in for President / Finds Meeting Location

Treasurer – Maintains the Books / Signing Authority

Secretary – Communicates all Information to all Members

Tax Advisor – Handles the Tax implications for the Club

Financial Advisor – Monitors the Investment Markets to Find Deals

Resources:

http://en.wikipedia.org/wiki/Investment_club

http://www.fool.com/InvestmentClub/InvestmentClub05.htm

Join an Investing Club Association:

http://www.betterinvesting.org/public/default.htm ($ 84 Dollars Annually Fee)

Investing Advice Website:

http://www.dividend.com/ (169 Dollars Annually Fee)

This is the information you will need to start an Investment club.

Comment if you are a part of a club like this or if you will ever consider starting an investment club?

Rich Uncle EL

Investing When the Markets are High?

If you are investing when the markets are high you could be setting yourself up for major losses in the future. Many people think backwards when it comes to investing, they buy when stocks are going up instead they should be buying when stocks are crashing. Reason I say this is because the facts do not lie, when things are going good in the markets, people want to ride the roller coaster and get some easy profits. Billions and Millions of new investment money is thrown into the markets when things are going good, and when things are gloomy in the markets people run for the hills.

But if you think about it in its simplest form, would you buy milk for $7 dollars because you noticed the price going up? The answer is no because milk usually costs $3.49 a gallon so why would you pay double for the price for milk? Unless there is a shortage of milk nobody should ever consider paying more for it, and the same should go for stocks. Three years ago Verizon stock was listed for around $30 dollars a share and now it is steadily close to $52. I personally prefer to pay the $30 dollar per share price, what about you? Not only do you risk buying at the high point only to see capital most likely drop, your yield will be less if it is a dividend paying stock.

OK now that we got that out-of-the-way and you fully understand when people should be buying. What do you buy when the markets are high? The options are index funds, ETF’s, REIT’s, bond funds, and stocks that are trading in the lower range of the 52 week moving average. As of right now the picking might be slim, but the deals are out there. How can you find these investments? Look in Google Finance, Morningstar, or CNN Money. These sites offer a ton of financial information on where to place your money when things are bullish. But I am going to give you some examples of where I would put my money when the markets are high.

Investing When the Markets are High:

SDIV – ETF

GOV – REIT

GE – Stock

Pimco Bond Family – Bond Funds

These choices are either priced relatively low or not affected as much price wise by the recent bull run. For example GE back before the major recession was trading between $40-50 dollars a share. As of this posting the stock is currently trading at 21 dollars a share. The stock still has a long way to go to even come close to trading at those high levels. REIT’s are always a good buy because they pay such a high dividend yield, this particular investment is still trading in the 20 dollar range, compared to some of its competitors who are over $45 dollars a share. The Pimco bond funds have ticked up a bit in price since 2010, but not as crazy as the blue chip mutual funds, you can safely park your money in those bond funds and wait to see if the market corrects itself, (aka crashes) then at that point you will move back into equities.

Did you expect me to list Bit Coins, gold or maybe Greek debt above? I hope not, because those types of speculations are for the birds. When it’s all said and done you can always just save it in an online account and have the cash ready to strike when the next market crash hits.

Comment if you have a favorite stock, bond, ETF, REIT, or Mutual fund you invest in when the markets are high.

Rich Uncle EL

5 Steps to Prepare Your Finances for an Uncertain Future

This is a guest post.

Financial hardships can hit at any time. The best way to make sure you can weather the storm is to thoroughly prepare yourself for unexpected financial disasters ahead of time. These 5 steps will give you a solid financial foundation that can support you through an uncertain future.

Evaluate Your Budget

You must have an intimate understanding of your financial situation to prepare it for the future. If you have only a vague idea of what you spend on gas, groceries, bills, and entertainment each month, you may have a lot of work ahead of you. Comb through your budget until you can account for every penny you earn and spend. With the cold hard numbers in front of you, you may find many areas where you’ve overspent without knowing it.

Continue reading 5 Steps to Prepare Your Finances for an Uncertain Future

What Did You Purchase in 2012

Hello I did a what have you purchased post like this before about 1 year ago. Here it is to refresh your memory-Assets. I believe it is time for an update. Annual updates are easier for me to share with all of you as I am busy more often now a days. I will disclose what I have purchased and hopefully you guys can share what you bought as well. If you are shy then do it anonymously. For all of you not scared to share your success stories let me be the first one to congratulate you.

I will begin listing all the assets I have purchased and mostly all of them will go up every quarter as I have them on automatic reinvesting status. I will also list any other major purchases that add value to my life one way or another. I do not wish to share too much info, but I hope you can still get some value out of the post and then can track your own accounts.

What did I purchase in 2012:

1. 100 shares of a risky cheap Bank Stock-One Time (HCBK)
2. 100 Shares of a risky telecom Stock-Dollar Cost Averaging (WIN)
3. 100 Shares of various 401k Funds -Quarterly
4. 50 Shares of various Roth IRA Fund Shares-Quarterly
5. A new computer for my blog business and personal use.
6. A new mattress as back was hurting (Unfortunately New mattress has not helped)

It is really exciting to see the numbers increase from time to time, and I hopefully one day will be able to live off my investments. Did you know that if you owned 1000 shares of Altria Stock (MO) it would cost you about 34K dollars to buy all those shares. The dividend you would receive would be about, $ 450 dollars quarterly and $ 1800 dollars per year. Every quarter my dividends are greater as the number of shares grow. Compounding makes me a happy camper.

Imagine waking up to do what you please without being tied down to achieve other peoples dreams, and can contribute as much or as little towards your own dreams. The point in life is to become independent while accomplishing your passion. I feel we all can do this with the right investment strategy. See below for two great articles one about dividend stocks and the other about a retired blogger who is living his dream.

Article on the highest paying dividend champion stocks- Here

Look at numbers Retire by 40 is posting for his update on income and expenses.

What did you purchase in 2012?

Comment if you keep track of your finance accounts like this?

Rich Uncle EL

The stocks mentioned above are not listed or recommended by moneywatch101.com, do your own research before buying any stocks.

Portfolio Tracking by CNN Money

portfolio tracking by CNN Money

Would you give up all your investment / retirement account passwords to a website that is known for money and stock market news reporting? They track data from various sources; then report the findings eventually in random posts / articles. So how do you actually know if your portfolio tracking data will be safe? I think for me it is a real issue because I am always hesitant to trust another online entity tracking my accounts. It took me almost a year before I could allow myself to even sign up for Mint a few years back. Mint worked well and has a very respectable firewall and security features in place, but one issue I had all the time was several accounts did not link up correctly aka update when I would log on. The website left me with the wrong account info from time to time. I just got used to it, but maybe this service by CNN will not have the same bugs. (Fingers Crossed if I decide to sign up one day) Handling financial information might be a bit daunting, but Portfolio Tracking by CNN Money will help you keep up with your investments.

Details of the Portfolio Tracking by CNN Money:

– One View of all your Accounts: Sync and Track

– Real Time Quotes: Can help see buy and sell opportunities

– Your Portfolio Insights: Measure performance against Indexes.

Now CNN money wants to get all your passwords and help you keep track of all your investments, with some tools to help you become a better investor in addition to being your online portfolio manager. (They Say) How comfortable would you truthfully be, to allow them access to your precious retirement figures? What if they share your data with competing investment websites, who now continually pester your life with ads by email, hoping you will switch on over to their house of stocks. I appreciate the simplicity of this service, but I still feel some trepidation with releasing all that precious password info.

On another happier note, if they save your information by the last time you logged in, should that be considered another source of backing up people’s data. If an investment company happens to have a major computer meltdown and they were to lose all traces of your accounts, you can hopefully provide proof of the missing funds by asking CNN money to remember the last time you checked your accounts and the figures you held in those accounts. That is one of the positives I can see with this service, besides the stock analysis and stock market research data you can get from this service. It should be noted of course that the CNN service is just a portfolio tracking service (as well as offering stock analysis and research data), if you’re looking to actually trade stocks independently then you will need a stock trading platform such as this one offered by AVA Trade.

Many of you have already signed up with CNN money to track your stock and mutual fund accounts in 1 place, but if you have not, what other features might get you to sign up for a similar portfolio management service?

What additional concerns might you have that you can share?

Leave info about how Portfolio Tracking by CNN Money might benefit you?

Rich Uncle EL

Pic credited to: CNN

The Doom and Gloom behind News Media

Everyday does not go without the doom and gloom behind news media centralized on our nations financial conditions. I cannot tell you how many times I heard the term fiscal cliff in a span of 4 months and still counting, I am running out of fingers and toes. I ask myself why does all this doom and gloom crappy news sell or for that matter why do people want to hear it? I even got a random email from a coworker who could care less about his finances or being responsible with money, asking me what I thought of the fiscal cliff. I gave my explanation to him that it’s all hoopla based primarily on the elections. But that still doesn’t even begin to answer the question; why is there so much doom and gloom coming from all the media outlets and why do people care to hear it.

Continue reading The Doom and Gloom behind News Media

Master Limited Partnership

Do you want to learn about an investing idea that you probably have never heard of? Well you have found the perfect place to get your knowledge up. They are called Master Limited Partnership companies. I like to refer to them as the connectors of natural resources to the people who use the resources. Why you ask? Because they own the pipelines and the technology to effectively extract gas, coal or oil from the ground and transport them to refineries.

Continue reading Master Limited Partnership

Asset Allocation

Why is asset allocation important? Basically you are dedicated to a specific breakdown of financial sectors that you may or may not have knowledge what the breakdown should be. The possibilities are endless when it comes to the asset breakdown for your retirement accounts. Finding the right asset allocation is crucial to how your investing performs.

But it all comes down:

What you want to invest in
How much Risk you wish to take
Why your age may favor a specific breakdown
How comfortable you are with making adjustments

For years many investment gurus preached that the younger you are the higher your percentage of funds should be in U.S. Stock sector but now I think that is not the right way to invest. The volatility now a days is getting way to out of control for even the professionals to grasp.

What can you do to put yourself in the best possible path for your funds? Understand the importance of doing asset allocations based on you’re percentages and fund prices. (If you are into spreadsheets and tracking prices you will benefit from the ups and downs of the market)

When I say for you to make these allocations, I am referring to your 401K or similar plan which may include IRA plans as well. The reason I say this is because these types for accounts usually do not charge you fees for making moves / shifts between funds. Now let’s discuss the % breakdowns by age range.

Asset Allocation by Age:

20-30s: 70% U.S. Total Stock Fund, 15% International Fund, 15% Bond Fund
40-50s: 50% U.S. Total Stock Fund, 30% Bond Fund, 20% International Fund
60-70s: 40%U.S. Total Stock Fund, 40% Bond Fund, 20% International Fund

Clearly as you get older you want to start to move the risk away in retirement accounts by reducing your % in the U.S. equity markets and moving it to bonds, income producing assets, and cash. This will assure you will be better protected if there is a dramatic market collapse like in 2008. These diversification tactics coupled with the lower costing index funds like Vanguard funds you will have a greater chance of hitting your retirement magic number sooner than later.

Then you can be preoccupied with what to wear to the beach because you have just reached the financially free stage of your life. Now the fun begins.

Asset allocation definition as per Investopedia

Rich Uncle EL