Posted: March 31st, 2009 | Author: Joe | Filed under: 10 Investment Tips for Beginners, Investing, Tips | Tags: Investing, Stock Market, Tips | 1 Comment »
Investing can be viewed as buying shares of an appreciating asset, and holding for the long term time horizon. Buying shares of the Vanguard total stock index fund for retirement, is one example. Another example of investing is buying shares in a business when the share price is close to or less than the value of the underlying assets, but the business itself is sound.
Trading is buying an asset you plan to hold for a much shorter period of time, and may appreciate simply because of momentum or increased demand for the stock and not because the underlying business has increased in value. In general, investing is for the long term, while trading is riskier and sometimes thought of more like gambling.
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Posted: March 26th, 2009 | Author: Joe | Filed under: 10 Investment Tips for Beginners, Investing, Tips | Tags: Investing, Stock Market, Tips | 1 Comment »
A lot of people let tax rates and events dictate their investment decisions. This is unavoidable to some extent, but taxes are only part of the picture. I am not saying you should ignore tax policy. Just know what the tax policy is and how it affects your investments.
For example, buying tax exempt bonds when your tax rate is 10% doesn’t make much sense. Know when it’s OK to pay taxes. Similarly, holding an index fund with little capital gains generation in your tax deferred account doesn’t make much sense either.
This is different than beware of taxes. The point is that tax policy should be a part of your investment decision making, but you should not let fear of paying taxes paralyze you into not investing, not selling, or investing in the wrong things.
If you liked this, you may also like:
Jim Cramer’s 10 commandments of stock trading.
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Posted: March 24th, 2009 | Author: Joe | Filed under: 10 Investment Tips for Beginners, Investing, Tips | Tags: Investing, Stock Market, Tips | 3 Comments »
I don’t mean rules and regulations for investing, I mean your own rules! Have a plan and stick to it! An example of this would be to determine your asset allocation and only buy stocks that fit into your allocation when you need to increase the amount of stocks in relation to the amount of bonds in your portfolio. Conversely, sell your winners when you are over balanced in an asset class.
Another example might be to sell a stock if it hits your trigger price, regardless of what the reason might be. The point is that you can always rationalize your behavior, but when you are simply acting according to plan, then you are much less likely to act out of emotions like fear or greed. You might check out Cramer’s Stock Ranking Strategy to help you develop an entry and exit strategy.
If you liked this, you may also like:
Jim Cramer’s 10 commandments of stock trading.
25 Investment rules from Jim Cramer.
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Posted: March 19th, 2009 | Author: Joe | Filed under: Credit, Debt, Scam | Tags: Debt, debt settlement, getting out of debt, scams | 10 Comments »
It’s a common scenario. You find yourself over your head in debt and see an offer like the one pictured here, promising to get you out of debt, fast and easy! Most debt settlement companies are little more than a scam.
The plan is that you enroll in the settlement service for a fee. You then pay the settlement company a monthly fee, with the understanding that the company will in turn, negotiate either a smaller payment or smaller overall amount to be repaid.
Unfortunately, many debt settlement companies tell you to stop communicating with and sending payments to your creditors while you make payments to them. This is, in effect, diverting your debt payments from your creditors and sending them to the settlement company.
This simply causes you to rack up interest and pile on late fees, all the while the settlement company collects a monthly payment.
So, is debt settlement a good idea? For most people, no. In the worst case, debt settlement is a scam. In most cases, debt settlement is just not a good idea.
The reason is that you can do for yourself what the settlement company promises. Call your creditors and negotiate. This is especially effective in the current economic climate. Creditors are taking huge losses, and will make meaningful compromises to get at least some of what you owe back. Tell them you simply cannot pay back what you owe, or at least not at the current monthly payments. Negotiate for a lower payment, or overall outstanding debt amount.
However, some people are so far gone that debt settlement is the only way to go. If you are one of these people, be sure to find a nonprofit credit counselor through National Foundation for Credit Counseling. Their services might be free, but they should cost no more than $25 enrollment and $50 monthly fee.
You may also want to check out how I dug myself out of over $10,000 in debt in 7-steps.
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