Investment | Invest Wise

Should You Manage Your Money Yourself?

Money management is a complicated business and can be an overwhelming hobby if you already have a full-time job or an otherwise active life. However, it is quite possible to manage your own investments if you have the time, inclination and knowledge to do so.

Do you understand the complexity of financial products and services out there? There are a myriad investment options that change as the market changes. Luckily, since you’re investing for just a single person – yourself – you already understand the risk factors of your client and can focus your efforts into the products that offer that amount of risk, but understanding what asset mixes would be the most beneficial given a certain financial goal is a must.

Are you aware of the impact that your investments may have on your taxes? Many investments change how your taxes are affected the year you put your money into an account, and some will affect your taxes the year that you decide to withdraw your investments. Knowing how taxes and investments interact together is integral if you plan on managing your own money, even if you plan on hiring a tax accountant so that you’re able to make better decisions on those investments and during those tax years.

If your investment is relatively small, it can become cost prohibitive to hire someone to manage your money. However, if you don’t have the time, inclination or knowledge to manage your money, there are advantages to hiring someone to do so. Full-time, professional management of your finances doesn’t mean you give up control – there are “non-discretionary” accounts where no action is taken until after your financial advisor has given you a recommendation and gotten your approval. The objective advice that can only be given by an outsider is also invaluable and can help you meet your financial goals faster.

Filed Under: General Finance Tagged With: Investment

Be Choosy, Nosy and Suspicious: How to Pick an Investment Advisor or Broker

When it comes to your money and your future, you have the rights to make sure you’re working with the best people possible and getting the best deal for your individual investment needs. However, many people balk and think it’s rude to ask too many questions of their investment advisor or broker. But being choosy, nosy and suspicious isn’t rude when it comes to how you invest – it’s being smart. Here are some guidelines on how to make sure you’re doing the research necessary to smartly choose an investment advisor or broker.

Once you’ve decided what your financial needs are (including what you’re saving for, how much you’d like to save and when you’d like to have access of your money), talk with several different investing agencies and be honest about your goals. If you have friends who have invested with the agencies you’re considering, be sure to get their opinion but try to find out what their overall financial goals are – if you’re trying to have $2 million for retirement in 30 years and they’re saving $20,000 for a child’s tuition in 10 years, their opinion of their investment advisor or broker may not be particularly relevant to your situation.

It’s OK to be nosy when you’re considering investing your future with an individual or firm. Knowing how the person working with you will be paid can help you decide if they’ll always be working in your best interest and with your financial objectives in mind.

Lastly, be suspicious. All investment has some type of risk and if your advisor or broker doesn’t talk about what your risk is, they’re not being completely honest with you. Always be wary of any deals that sound too good to be true. Also, avoid any investment advisors or brokers that have a high-pressure sales pitch. A good rule of thumb is that if someone is trying to sell you something immediately and doesn’t want you to think about it, it’s more likely to be a scam.

How Middle-class should spread their investments to minimize risk and maximize value

Whether one is poor, rich or middle class, saving and augmenting your money for the future is always a good idea. Responsible financial management of ones money leads to greater confidence and leverage to take intelligent risks. Prudent money managers have the ability to face an uncertain and unpredictable future, and in time of crises an alert and well thought financial portfolio can serve as a bell weather for a rainy day.

Since ancient times people have invested in land. Despite catastrophic population declines at various points in history due to wars, diseases, natural calamities and famines, population growth has more or less seen a predictable upward trend.

Investment in land therefore serves three purposes. An immediate shelter on ones head, perhaps even food security if part of land is tilled, and finally a well rooted hub for expanding and maintaining the family.

The second investment is in Gold and other precious metals such as silver, platinum, palladium as well as precious metals. Almost all major civilizations have emphasized and even deified the role and presence of gold from prehistoric times to modern contemporary fiat currency run global monetary system. The middle class and central banks everywhere except US, whether its India, China, Europe or Middle-east maintain and regularly audit large quantities of their gold.

Gold, Silver and precious stones, especially diamonds are therefore a great second line investment. These include Gold bullion, stakes in Gold mines as well as gold futures.

The third investment should be in modern money making methods such as Stocks, bonds and cash. The risk and uncertainty in stock and bond investment is greater and intrinsic, since the role of speculation is relatively exaggerated. Nevertheless, stock investment in commodity, technology, manufacturing, and energy sectors (sometimes classified under commodity sector itself) if distributed wisely can lead to a stable investment portfolio.

The aforementioned three categories in the order of priority make up the wisest money management portfolio.

Filed Under: Investments Tagged With: Investing, Investment, Money, Portfolio (finance), Precious metal

Why Should I Invest

Investing may be foreign to some, but it is worth considering. There are several benefits associated with investing that should not be overlooked. Knowing why you should invest is the first step in securing your financial future.

Money Doesn’t Multiply on It’s Own

If you stuff your money under a mattress, it will never have a chance to grow. Inflation is bound to happen and the money you put away will not be worth what it was when you first earned it. Investing gives you a chance to earn more money which will provide the extra money you need should inflation occur.

Preparation for the Future

College expenses and the amount of money needed to retire are at an all time high. Chances of you saving enough money to completely cover these future expenses are slim if you don’t put your money to work for you through investments. There will come a time when you won’t be capable of working any longer. Investing will allow you to take the money you did work for and multiply it so that you have the money later in life when you need it the most.

Free Money

Lets say you want to prepare for a roof replacement in 20 years. You estimate the cost will be $15,000. You can divide $15,000 by 20 and put away $750 each year. Now lets pretend that you chose to make investments with the money each year. Even at a small rate of return you can reach your goal five years sooner. This is essentially like getting free money since you won’t have to keep working as hard during the last five years to meet your goal.

In conclusion, there is no benefit in not investing, as your money will never grow. It will also be extremely hard to get ahead and provide for future needs, not to mention that fact that you will literally be throwing away free money.

Filed Under: Investments Tagged With: Interest rate, Investment, Money, Money management, Personal finance, Rate of return

Invest in US Treasury Bonds

There are many different methods you can utilize to increase your income. US Treasury bonds are one option to consider, especially if you want to start out investing small increments of cash. Once you get comfortable investing, you can increase these amounts.

Start Small

Many individuals think you need at least $1,000 to begin investing, but this is false. You can purchase US Treasury bonds for as little as $100 on the website TreasuryDirect.gov. If you aren’t comfortable purchasing the bonds online, you can always contact your local bank for assistance.

Earning Interest

Bonds earn interest much like a savings account, but the interest rates tend to be much higher than that of a savings account. When you purchase the bond, you will lock in the current interest rate for the entire term of the bond. Savings accounts have interest rates that fluctuate. Every six months, the interest is calculated and mailed directly to you. If you chose to purchase a five year bond, you will collect interest a total of ten times before the bond matures. Once the bond matures, you will receive back the total amount of money you invested. You can then start the process all over again.

Taxation on Interest

The interest you earn on the bonds you purchase is not taxable by your state. Unfortunately, you will need to pay taxes on the interest income you earned during the year when you file your Federal income taxes. Contact an accountant ahead of time to make sure you set aside money for the Federal taxes when you receive each of your interest payments.

In conclusion, purchasing US Treasury bonds is a great way to begin a journey in investing. You can choose how little or how much you want to invest, and then collect the interest payments twice a year.

Filed Under: Investments Tagged With: bond, Business, Income, Investment, United States Treasury security

Invest in Peer to Peer Lending

There are many ways to invest, but one little known method is to make loans to your peers. This sounds difficult, but it is actually quite simple if you know where to go and what to look for.

Where to Go:

Several legitimate websites exist that will hook you up with individuals who are in need of a loan. Prosper.com and GoBigNetwork.com are two of the larger peer to peer lending companies. Make sure you completely read the terms of service before you register. Registration is free.

How it Works:

Decide how much money you want to invest. You can invest as little as a couple hundred dollars, or as much as a few thousand. Search through the individuals who are asking for a loan that falls within your investment range. Read the requests to find one that you feel deserves a loan. Contact the individual making the request and ask them any questions that you need to make a final decision. Follow the websites instructions to set up the loan, interest rate, and re-payment schedule. If the individual requesting the loan agrees to your terms, you have a deal.

How Much Can You Make

You can set the interest rate, but if you make the rate too high, you may not have the terms accepted by the individual requesting the loan. The usual range reaches anywhere from 7% interest to 16% with 10% being the norm. This is much more than you would get with a savings or money market account.

In conclusion, you can use peer to peer loans as a great way to make a few investments that can earn you a nice return. There are always risks, so make sure you do your homework before you jump right in. Remember to never put all your eggs in one basket, or in this case, one peer to peer loan.

Filed Under: Investments Tagged With: Interest rate, Investment, Loan, Peer-to-peer

Invest in a Savings Account

Savings accounts typically have a low interest rate. That makes them less likely to earn you any significant amount of money. You can, however, take advantage of special programs associated with the savings accounts to earn a nice return on your money.

ING Direct

ING Direct has a referral program for their Orange Savings Account as well as a free cash reward for opening a new account. Sign up for an Orange savings account and get $25 free. Now here is the part where you can really earn. Tell your friends and family about the Orange Savings Account program and get $10 for each one of them that signs up. You won’t have any trouble getting sign ups either since each one of them will get $25 when they sign up. There is a limit, however, of 25 referrals. Still, that is a great investment. If you start off your account with $250, you could easily end up with an additional $275 two months later for a total of $525.

TD Ameritrade

Open a Save Yourself account with $100 at TD Ameritrade. Each month thereafter for a total of one year deposit another $100. At the one year mark, you will have a total of $1,200. TD Ameritrade will then reward you with a $100 bonus. That’s a 12% return on your investment in only a year’s time. That’s more than you would net with your average bond.

Other Savings Accounts

Many local banks offer a sign up bonus to attract new customers. Call around to find out which banks in your area have the best bonuses and open an account there. You can always close the account later on and invest your money again with another another company.

In conclusion, savings accounts can be a great way to invest small amounts of cash. A large and quick return is possible if you know which deals to align yourself with.

Filed Under: Investments Tagged With: Business, Investment, Money, Personal finance, Savings account

Investing Isn’t Just for Adults-Teenagers Can Do It To

: Image via Wikipedia

Teenagers can legally get a job once they turn 14 years of age. At this time, they can begin saving. Saving itself won’t be enough to reach large financial goals, such as paying for college or buying a house. Investing is the next logical step.

Money Market Account

Money market accounts work almost the same way that savings accounts do, but they yield a higher interest rate. Once your teen reaches $1,000 in his savings account, you will want to take him to the bank to have the money transferred to a money market account.

Mutual Funds

Once your teen has some money set aside in a money market account, you can introduce them to mutual funds. Mutual funds are not guaranteed like money market accounts, but they are less risky than the stock market. Mutual funds are a collection of investments that are funded by many investors. Set your teen up with a broker and create an account together. Allow your teen to make regular deposits in to the mutual fund based on your suggestions and the recommendations of the broker.

Stock Market

Playing the stock market is just as risky for a teen as an adult. If you allow your teen to get involved in the stock market, start out small. Take time to study the history of each company before choosing which shares to purchase. Your teen will not be able to participate in trading on his own, but you can do it for him. You may also want to get some professional council to fully understand the stock market before you continue.

In conclusion, it is best not to allow your teen to put all of his eggs in one basket. Monitor his investments as you teach him how to make wise choices. Then, when he is 18 he will be ready to venture out in to the financial world on his own.

Filed Under: Investments Tagged With: Business, Investing, Investment, Money market account, Money market fund, Mutual fund, Savings account, Stock market

How to Teach Your Child About Investing

A parent’s job is to train up her child so that when she leaves the home, she will be able to provide for herself. After your child has a basic understanding of how money works, how to save, and why having a plan for your money is important, you can teach her about investing.

Play Money

Use play money to have your child make an investment. Review the stocks and mutual funds in your newspaper and pick a company to invest in. Check whether the stocks and mutual funds rise or fall. Let your child see what will happen to their money in each instance. Kids learn best when they have a visual. Using the play money will demonstrate how investing works.

Printables

There are a ton of free printables on the web that you can utilize to teach your children about investing. There are printables on risk, mutual funds, bonds, and stocks. Cover one topic each week so that you don’t overwhelm your child. Once your child masters one concept, you can move on to the next one.

Online Tutorials

Allow your child to work through some free online tutorials that will do the teaching for you. Once the lessons are learned, your child can take quizzes or play games to make sure she has a full grasp on the topic. Some online tutorials also have virtual stock market game. Your child can review stocks and choose a few to invest in. Then your child can check back to see how her fake stocks are doing. She won’t lose any real money while she is learning how the stock market works.

When you and your child are ready, you can open a custodial investment account and begin investing for real. A child can’t invest on her own, but under your guidance she will get the necessary experience to begin investing when she turns 18.

Filed Under: Investments Tagged With: Business, Investing, Investment, Mutual fund, Stock, Stock market

Investing on the Internet Without Getting Scammed

The Internet is a great place to do business. With a few clicks of the mouse, your transaction is complete. Unfortunately, there are also a lot of scammers waiting to take advantage of unsuspecting investors. The best way to protect yourself is to know what to look out for.

Review Financial Statements

If you spot a company that sounds like a good fit, investigate it. Request the company’s financial statements. Legitimate companies will provide these documents without hesitation. You can also take note of the company’s financial standing and run for the hills if the company is in the red.

Check References

You wouldn’t rent out a house without checking references, so don’t go investing in an Internet company without checking references. Make sure you talk to both suppliers and customers. Verify that the company is in good standing with each group. If the supplier reports back that they never heard of the company, you know it’s a scam. At the same token, you don’t want to invest in a company that doesn’t treat its customers right.

BBB

Use the Better Business Bureau to check for complaints against the company you want to invest with. If any complaints were made, read the reports to find out if the issues were resolved satisfactorily. The BBB assigns a grade to each company it reviews. Don’t invest with any company that has a grade less than an A. Note: A return of no results either means that the company has no complaints against it, or that the company is brand new.

In conclusion, doing your homework will significantly reduce your chances of being scammed out of your invest. Unfortunately, there is no 100% guarantee. If you do, however, come across a scam, you should report it immediately to the Securities and Exchange Commission.

Filed Under: Investments Tagged With: Better Business Bureau, Business, Fraud, Investment