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The Elections are Over. For Investors, Now What?
Tweet Share on Facebook November 10, 2010 CommentWe read all of the paraphernalia and voted smart, with our hearts and minds. But now what? Do we just sit and wait? I think not.
It's amazing how reading all of the newspapers after the election makes the election seem so inconsequential. One says that the Democrats will still push their message forward. Another says that the Republicans now can put an about face to some of the more liberal views. Others still say that neither party won and the next two years will be a period of wrestling for power to no avail resulting in gridlock.
So how does that affect everyday investors who still have to go to work to put food on the table, clothes on their backs, and money into retirement?
The answer: It doesn't.
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How to Get Started in Investing
Tweet Share on Facebook November 9, 2010 CommentPeople always say to me, "When I get $10,000 together I'm going to start investing." The problem is, in the time between $0 and $9,999 while the money is sitting in your checking account, you'll be tempted to buy another dress, go to a ballgame, or take a vacation. Any extra cash on hand can easily be spent in the blink of an eye.
That's why you have to start investing now. The longer you put it off, the more you're going to have to save later to accumulate enough money to retire. It's best to get in the habit of disciplined saving and investing at a young age, say in your twenties. But at any age, the sooner you can reach your goals, the better—and maybe you can even retire early. All of us would much rather retire by age 65 than work until 75.
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2 Ways to Create a Personal Pension Plan
Tweet Share on Facebook November 8, 2010 Comment (2)For the overwhelming majority of Americans, having secure retirement income in the future doesn't seem like a very sure thing. Consider the traditional "three-legged stool" that past generations had in place to support their retirement:
• First and foremost, a pension or some form of defined contribution plan from a company where you have worked. Sadly, these plans have all but disappeared. In their place are 401(k) plans where the responsibility is on the individual to contribute to his or her personal retirement.
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What Everyone Should Know About Financial Advisors
Tweet Share on Facebook November 5, 2010 CommentThere is no shortage of advice on the Internet that attempts to help individuals select a financial advisor, but a lot of it is centered on weeding out the crooks. This is great information, and certainly relevant given the buffoonery uncovered over the past two years.
However, there seems to be a shortage of useful advice on how to select the best advisor once the clowns have been culled from the list. The real key is to separate the pros from the salespeople. Here are some tips from a practitioner.
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ETF Basics: How to Invest in Commodities
Tweet Share on Facebook November 4, 2010 CommentCommodities are one asset class that has recently become acceptable to most financial advisers as part of a globally diversified portfolio. A large number of the most controversial exchange-traded funds invest in commodities. Most commodities ETFs do not perform as advertised. That's why it's important to know which ones to avoid.
A commodity is something for which there is demand, but which is supplied without any real difference across a given market. Commodities prices are determined as a function of their market as a whole. Generally, these are agricultural products, energy, gold and silver, and industrial metals.
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3 Fixed Income Investments You Need to Understand
Tweet Share on Facebook November 3, 2010 CommentThere are always questions about fixed income or bond investments. The reason: People need bonds in their portfolios to provide investment stability and to lower risk. The problem: Bonds are one of the least understood vehicles in the investing world. Here are three bond categories that have and should continue to provide stable returns for the next few months, if not years.
First, let's consider short-term bonds. A short-term bond is typically a bond or bond fund that matures in less than three years. Everyone needs fixed income in their portfolio, but in an interest rate environment that is about to significantly increase (as the stock market increases … hopefully) longer-term bonds will not be the place to invest. As interest rates increase, bond prices decrease; the longer the bond term, the greater the decrease in price. Therefore, shorter-term bonds can be less of a problem as interest rates increase.
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4 Reasons ETFs Aren't as Cool as You Think
Tweet Share on Facebook November 2, 2010 CommentWith the hype surrounding exchange-traded funds that track anything from gold to small-cap Chinese stocks, it's no wonder investors think they're the greatest invention since sliced bread. ETFs are similar to index funds that invest in the holdings of a certain index or a basket of stocks, bonds, and commodities. The difference is that ETFs can be bought and sold on an exchange during the trading day. After studying ETFs over the last several years, we have found that the flexibility, transparency, low costs, and tax efficiency touted as benefits of ETFs are either offset by other costs or do not have meaningful benefits for investors. Here are a few reasons to give ETFs a second thought before you buy them:
1. Investors may not get the best price when trading ETFs. Unlike mutual funds, investors can buy and sell ETFs during the day and get whatever the price is at the moment the trade is executed. On the other hand, mutual funds are priced according to their net asset value (NAV), which is determined after the markets close. (NAV is the value of all of the portfolio's holdings, less liabilities, per share outstanding.)
