Financial Planning
Plan For Retirement...You Will Thank Yourself Later
The Silver Lining in Silver Investments
Silver is like gold’s little brother. No one pays much attention to him. Gold is attractive, desirable, and much more expensive. The price of gold can be volatile, and it makes for an exciting investment. Aside from use in jewelry and a few electrical components, though, gold has minimal industrial use. In fact, gold’s only true value is that people like it. There’s already far more gold sitting in vaults than could ever be used. Silver has much more practical use. Over 40% of the demand for silver is for industrial applications. Silver is used in electrical applications because it’s the industrial metal with the lowest electrical resistance. Silver also has anti-bacterial properties and is used in the medical field. Silver can be a good investment, too. Silver has been used as a form of money and wealth storage for over 4,000 years. The price of silver is a function of supply and demand, as well as speculation. This is true for most commodities. Silver also serves as an excellent hedge against inflation. Consider these options for investing in silver: Silver bars. Silver bars can be purchased in several sizes. They are sold in troy ounces and the common weights are 1 ounce, 5 ounces, 10 ounces, 100 ounces, and 1000 ounces. The larger the bar, the lower the cost per ounce. Bars can be purchased online and at retail outlets. Silver doesn’t have as many storage limitations as gold. This form of investment also doesn’t yield any interest. In some European countries, silver bars can even be bought and sold at most large banks. Exchange traded funds (ETFs). This permits the investor to own shares in a trust that actually buys and holds silver. You can avoid worrying about storage or insurance. The largest silver ETF is iShares Silver Trust. Silver stocks. Stocks can be purchased in related activities. Mining stocks are one such example. While most investments related to silver rely entirely on the current price, silver stocks are more independent of prices. This is a relatively conservative investment. Keep in mind that silver mining companies also mine other metals found along with silver. These commonly include zinc, copper, and lead. Options and futures. If you have an interest in derivatives, you can use them with silver to obtain greater leverage. It isn’t necessary to worry about storage. The risk is high, but the potential payoff is high, too. Silver mutual funds. There are mutual funds that invest in silver, silver stocks, and other investments. Some specialize in multiple precious metals. These mutual funds can vary dramatically with regards to risk and volatility, depending on the types of investments. Silver medallions and coins. Coins are inexpensive in most cases and can be converted into cash quite easily. The cost per unit of weight is greater than that of silver bars. Medallions can range greatly in price and aren’t as easily converted to cash. If you’d like to invest in precious metals, silver is one of your most lucrative options. The price of gold is almost entirely dependent on the desire of investors to own it, whereas silver has actual industrial applications. When companies need more silver, the price tends to rise. Silver is much less expensive than gold, permitting small investors to make purchases of the actual...
read moreGuidelines for the Amateur Investor
Warren Buffett provides simple advice for the amateur stock picker. Most of us aren’t financial wizards and don’t even hold a job in a finance-related field. We’re teachers, managers, laborers, and engineers. Can the average person do a good job of picking stocks? That depends. Warren Buffet has 60 years of experience and invests full-time. Historically, Buffett has insisted that investing doesn’t require a high IQ, but it does take experience to recognize a great investment. He also has several advantages the average person doesn’t. However, his basic strategies are available to all. Buffett has suggested two different sets of instructions for non-professional investors. If you lack knowledge about the stock market and are short on time, check out these tips: Put 10% of your investment monies into short-term government bonds. This is money that can be accessed quickly and easily, but isn’t rotting away in a checking or savings account. Put the remainder in a low-cost index fund. While this isn’t the most exciting advice, it makes a lot of sense. Few managed funds are able to match the expense-adjusted results of an index fund over several years. Plus, the expenses and the folly of the fund manager are too much of a disadvantage. This is the exact advice Buffet has left for the trustee that will administer his wife’s trust. Assuming he loves his wife, it’s probably good advice for the rest of us.It doesn’t get much simpler than this. It also requires very little time and attention. If you prefer to pick your own stocks, follow this advice: Familiarize yourself with stock analysis. Buffett has frequently given this advice to business students. It consists of analyzing every single stock on the NYSE. When students point out that there are thousands, Buffett’s response is, “Start with the A’s.” Warren Buffett has stated that it’s easy to recognize good companies after you’ve researched a few thousand of them. Consider the margin of safety when you invest. Invest in companies that are available for a discount relative to the true value of the company. The greater the margin of safety, the greater the potential upside. The downside is also greatly reduced. Invest in businesses, rather than markets. Buffett doesn’t recommend investing just because a certain type of economy exists. At the end of the day, it’s the quality of the underlying company that’s most important. The economy rarely enters the picture. Keep it simple. According to Buffett, having anything beyond average intelligence is unnecessary when it comes to investing. Stick with businesses that are easy to understand. It’s easy to understand how a grocery store makes its money. Biotech companies are a little more complicated. Be careful where you get your information. Buffet once said, “Never ask your barber if you need a haircut.” Who benefits if you follow a broker’s advice? Be sure to consider the source. Unfortunately, the more mysterious the source, the more credibility we tend to project onto the source. You might doubt your friend, but you convince yourself that the odd man on the bus certainly knows what he’s talking about. Warren Buffet suggests an index fund for the armchair investor, but many enjoy investing and can do well on their own. It’s important to put in the necessary work to find solid investments....
read more6 Things You Need to Know If You Plan to Invest In Stocks
If you are serious about growing wealth in the stock market you got to be in it for long haul. Warren Buffett and other value investing proponents are quick to point out that you ought to be willing to stay the course for an extended period of time in order to get the benefit of value stock picks. Sometimes, this can even take over 10 years. It’s important to be able to separate the long-term investment companies from the short-term ones. To find a stock that you might be keeping for 10 or more years, it’s important to know the characteristics that these stocks possess. Fortunately, there are several qualities frequently shared by these long-term plays. Stocks for the long haul frequently share these characteristics: 1. A business that will still be thriving 10, 20, or even 30 years from today. Simple businesses that produce products or services that have stood the test of time are usually good long-term investments. A few examples of such products would include toothpaste, toilet paper, office supplies, banks, and insurance companies. • Many of these businesses may be seen as “boring.” But these products and services have been around for a while and will continue to be important. • High-tech firms frequently don’t meet this requirement, unless extremely well-established. Microsoft would be a good example. AOL is still around, but it’s hardly the company it was back in the late 90’s. 2. Solid financials. Companies with minimal debt and good cash flow are likely to survive even when the economy is faltering. These companies are typically unshakable and pay consistent dividends. Dividend payments come from earnings above and beyond what the company needs to thrive or expand. • Is the company valued fairly? How close is the competition within the same industry regarding pricing? This is the perfect place to use the Price to Earnings ratio (P/E ratio) in your analysis. 3. Consistent earnings. Are the earnings affected by the strength of the economy? By how much? When the earnings have slipped in the past, do you understand why? Have the earnings been rising over the last 10 years? Can you reasonably expect them to continue rising? • Value investors believe that price ultimately follows earnings. It only stands to reason that long-term earnings growth will lead to long-term stock price gains. 4. A good history. If you look at the popular stalwart companies today, you’ll see that most of them held a certain position far into the past. A company doesn’t suddenly have this characteristic. Many of these companies were around during your parents’ or grandparents’ childhoods. • How has the company performed in poor economies? If it performed poorly, is it still susceptible to the same economic conditions? 5. Good, consistent management. Executives at this type of company don’t have to do anything spectacular. They simply guide the ship gently and avoid doing anything foolish. The human factor is unpredictable, so solid management is important. • The best businesses may not require great management, but it’s good to have it...
read moreHow to Use Store Credit Cards
Many of us have and use store credit cards. We’re commonly enticed to complete store credit applications by promises of discounts and rebates. But are these store credit cards a smart decision? It isn’t easy to know. A little self-evaluation is likely to yield the best answer. Stores issue credit cards in hopes that you’ll shop in their stores more frequently. They’re also betting that you won’t pay your full balance each month. Companies that issue credit cards make a lot of money from interest payments and late fees. Be cautious and avoid falling into those common traps. Store credit cards can be useful, if they’re used correctly. The savings can be great, but the interest rates are high. The value of store credit cards is largely dependent on using them responsibly and intelligently. As with anything, there are advantages and disadvantages to using these cards: Credit. An additional line of credit can be useful. It’s another opportunity to build your credit history and boost your credit score. It’s important to use credit wisely. Another line of credit is also another opportunity to create additional debt and financial headaches. The greater your total credit limit, the greater the potential for financial disaster. Discounts. Holders of store credit cards frequently receive discount offers. It’s also common to receive coupons in the mail. The savings can accumulate over time and add up to a considerable amount. It’s important to take advantage of discounts and coupons offered through store credit cards rather than essentially giving them back by carrying a balance on your account. Rewards. Many store credit cards also have perks. These might be in the form of rewards points that can be redeemed in some fashion. Similar to traditional credit cards, free merchandise or gift cards are the norm. It’s also possible to receive other perks, like free gift wrapping. Interest charges. Of course, if you pay your balance in-full each month, the interest is irrelevant. Credit card companies know that most consumers will eventually carry a balance and return those discounts back in the form of interest payments. Store credit cards have some of the highest interest rates out there. Limited use. Using store credit cards is limiting because you can only use them in the store that issued the card. Store credit cards can potentially be a valuable financial tool because there are significant savings to be had. However, be responsible with these cards. Store cards typically have low credit limits and high interest rates. The limited acceptance can limit the overall utility. Consider how much money you’ll actually be saving over the course of a year. Additionally, judge your ability to pay your balance each month. The answer will tell you if a store card will enhance or challenge your financial situation. It’s these little decisions that can have a great impact on your financial well-being. A traditional credit card may be a better option. Even if you’re unable to receive the same discounts, you might be eligible for additional perks, such as airline miles or gift cards. More importantly, it’s possible for most consumers to find a credit card with a much lower interest rate and a higher credit limit. If you have weak credit, a store card can be easier to obtain than many traditional...
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