Dec 21

Tips To Improve Your Relationship With Money

budget, save money, money mattersDealing with money is simply a part of life you have to get used to. By being fiscally responsible you can enjoy success regardless of how much money you make. Study and learn what it is going to take to becoming financially independent. In this article, you’ll find many tips to get you started.

Spend time analyzing your incoming and outgoing funds to settle on a budget. Figuring out how much money you make in a month is where you should start. All sources of income should be included. This includes money you make from a side job or a second job, property income, and any way that you generate some money. Avoid spending more than you make in a month.

Writing down your expenses is the next thing that you need to do. Log all of the expenditures made by your household during a month. This list should include every single dollar that you spend. Try to make the list as complete as possible. Restaurant visits and fast food dining should be included too! Don’t limit your car expenses to just your gas, but make sure and include the insurance cost and maintenance expenditures also. Try to find a monthly cost for infrequent costs. Every expenditure should be included such as how much you pay your babysitter up to and including rental storage fees. If you have an accurate list, you will be able to make a more accurate budget.

Once you have finished gathering and organizing the information, you can begin creating a more realistic budget. Try to eliminate all the expenses that you do not need. Can you save yourself a little money by replacing that cafe visit on your daily commute with home-brewed coffee? Look through the list carefully to find areas to cut.

If you feel that your water and heating bills are high, then you might consider repairing and replacing some appliances and so on. Installing new windows and doors will lower your heating bill. In addition, you may be eligible to receive a tax deduction on these updates. You might also consider getting a hot water tank that heats water as it is used, which reduces your bill even more. Hire a plumber to find and repair any leaky pipes to keep your water bill as low as possible. You should avoid using the dishwasher until you have stuffed as many dishes in it as you possibly can.

Appliances that are energy-smart can save you a ton of money in the long run. Any appliance that has an indicator light should be unplugged, if you aren’t using it. You can save money on your electric bill by doing this.

When you do not maintain your roof and insulation, it can cost you a lot of money. Spending a little money now will save you lots of cash down the road.

Using some of these simple ideas means you will be able to keep more money for yourself and balance your earnings with your monthly expenses. You can then start slowly to reinvest extra money into items that will further lower your expenses, such as fixing up your home or replacing appliances with more cost-effective ones. Getting some of these tips done will not only improve the living conditions for you and your family, it will also allow you to have more control over your budget. 

Dec 07

Do You Know the Different Types of Stock Markets?

In the United States there are several different stock markets. But if you are like most, the primary stock markets that you have heard of are the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX) and the NASDAQ.

Stock markets are realistically a place where investors and companies trade securities. It is a place where those involved gather to trade.

Since May 17, 1792 the New York Stock Exchange has been in existence. Located in New York City on Wall Street, it is the largest and most well-known stock exchange in the country. In order for companies to join the listings of the NYSE it has to pass some very strict requirements. Some of which are the company’s financial strength and the company’s ability to be an industry leader. The New York Stock Exchange is one market that companies work very hard to become associated with to include paying an annual membership fee.

When a company says that they are a member of the NYSE, what this really says is that their company has actually bought a “seat” on the trading floor of the NYSE. In simpler terms, it means that an actual employee is on the floor buying and selling stock for the company. A seat is not cheap. Companies have paid millions of dollars to be on the floor. Now seats are selling on a yearly basis in excess of $40,000.00 for floor trading.

The next major stock market to discuss is the American Stock Exchange (AMEX). The AMEX is actually the third largest stock exchange in the United States. In 2008, the American Stock Exchange was acquired by NYSE Euronext and soon became NYSE Amex Equities in 2009. The NYSE Amex Equities is quite similar to the NYSE when it comes to conducting trading on the trading floor. The floor of the NYSE Amex Equities is packed with the traders who are buying and selling securities. Since 1921 the American Stock Exchange/ NYSE Amex Equities has been located in New York. Although well-known as an exchange for stocks, the NYSE Amex Equities also exchanges options. Their market primarily consists of small-cap stocks, exchange traded funds as well as derivatives.

Next let’s discuss the National Association of Securities Dealers Automated Quotations (NASDAQ). The NASDAQ is actually the youngest of the three major stock markets as well as being the one investors are most familiar with. The association was first launched in 1971 and was the first exchange of its kind. Some consider the NASDAQ an over-the-counter stock market because it links buyers and sellers through a computer network. The NASDAQ lists almost every stock but they are very well-known for listing technology stocks and/or companies. You will actually find some of the major technology stocks available to include Microsoft and Intel.

Start-up companies wanting to list their stock in what is called an “initial public offering” typically list with the NASDAQ. Brokers and dealers will promote stocks by keeping an inventory in their accounts. Investors will then order and that is when the broker or dealer will buy or sell.

So, as you can see that when you are purchasing stocks, knowing where to locate that type of stock is very important as each stock market is different and their specialty is different.

Nov 28

What is Asset Allocation?

Allocating assets within your retirement account sounds more confusing than it really is. Asset allocation is more than just having stocks and bonds in your portfolio. Just think about your portfolio divided into a combination of various types of assets and classes that display what your investment goals are as well as what you can risk or are willing to risk.

Of importance is to have assets in your portfolio that do not move in the same direction at the same time. This is what is referred to as a balancing of your portfolio. Ultimately, if some assets take a down turn, others will be moving upward; thus, reducing the risk of loss to your portfolio.

Asset allocation is the most important decision you as an investor needs to make.

Simply put…where are you going to put your money? 

 

Asset Allocation for Investors.

There are different approaches an investor can take as a strategy to balance their portfolio. Some types of asset allocation models are strategic, constant, tactical, dynamic etc. Each has a different weighted approach to investing avenues but with research you can sure find one that works for your retirement account.

The asset allocation strategy that will work for you as the investor will depend on your personal investment strategies, age, type of investments held and more.

Some of the more common asset holdings for portfolios are traditional assets and alternative assets.

Traditional Assets are:

  • Stocks (dividend, value, sector specific type, small cap, large cap etc.)
  • Bonds (short-term, long-term, government etc.)
  • Cash (savings account, money market funds etc.)

Alternative Assets are:      

  • Commodities (precious metals, energy, agriculture etc.)
  • Real Estate (commercial or residential)
  • Insurance Products (settlements, annuity, life etc.)
  • Collectibles (coin collections, stamp collections, car collections etc.)

History has shown that investors who allocated some of their retirement fund in precious metals has given the account proper diversification, stability and the ability to properly maintain their risk that most retirement accounts need. Since gold and silver, as well as, other precious metals usually move in the opposite direction of the more regularly held types of investment choices. This is why gold IRA investing has become quite popular these days. In case of a stock market crash or a steep decline in stocks and bonds, backing your retirement fund with some type of gold or silver provides a safety net for your funds preventing a complete loss of your monies.

No matter how an investor is allocating their assets, there should always be some type of diversification. This will decrease the risk of losing quite a bit of money at once. Remember, the less diversified a portfolio is, the greater the volatility in the portfolio as once there is a fall off in one asset the greater the decrease in your portfolio.

Nov 17

Types of Investments

Generally, there are three various types of financial investments. These consist of stocks, bonds, as well as cash money. This sounds pretty basic, right? Well, unfortunately, it acquires quite much more complexity from here. You see, each sort of financial investment has many kinds of financial investments that drop under it.

There is a lot to learn about each of these investment types. The stock market can be a very scary place for those that know don’t know much about investing. But the good news is the amount of information regarding the investment will depend on the type of investor you are or want to become. As you may know there are three categories of investors: a conservative investor, a moderate investor and an aggressive investor. These types of investments will also the risk tolerance for the investor which are high and low risk.

Investors who are considered conservative with the monies will typically invest cash. This means that they invest their monies in savings accounts, mutual funds, money market accounts, U.S. Treasury bills and Certificates of Deposit accounts, or those that are interest bearing over an extended period of time. These types of accounts are considered more of the low risk types of investments.

A moderate investor will typically have cash in savings and bonds. They also may have a little money invested in the stock market. Their investment choices are typically low to moderate risk types of investments. They are more likely inclined to invest in real estate, as long as it is low risk.

Aggressive investors are just that…more aggressive. Majority of their investing is in the stock market which is of much greater risk. They typically lean towards investing in businesses as well as higher risk real estate deals. For instance, buying older properties wherein they need to spend a lot of money on renovations, which in turn puts their investment at a higher risk. Their expectation is that they will be able to rent the property at a much higher price than what it is renting for currently or sell the property at a much higher price than the value prior to renovations. Sometimes this works and sometimes this does not. This is where the term risk comes into play.

My advice to you is before you start investing study and learn everything you need to know about the different types of investments and what the benefit to you will be from those investments. Understand all of the risks involved with each investment. Also, check the history of the investment you are looking at as like they say, “history does repeat itself” when it comes to investing. In no time, you will have a portfolio that will make you proud.

Oct 21

Importance of Diversification

I know you’ve heard the saying, “Don’t put all your eggs in one basket!” If you are like me, you have heard this saying many times throughout your lifetime. And just like many other times in life, investing is another one of those times when this saying holds true. Diversification is the key to profitable investing. If you want to be a successful investor, you must create a portfolio that is diversified.

When you want to diversify your investment accounts you may want to invest in stocks, bonds, commodities, real estate, etc. Do you see what this means? Proper diversification is investing in diverse areas rather than just one.

History has shown that investors who properly diversified their portfolios consistently seen profitable returns rather than those who chose to put all of their eggs in one basket – so to speak. Not to mention that investing in several different areas also lessens your portfolio risk.

An example is that if you invested all of your money into one particular stock and that stock crashes, you have just lost all of your money. But if you properly “diversified” your investment account and invested in different areas, you will find that while one may crash the others have not and your investment account is fine.

There are many options for proper diversification of one’s account which include stocks, bonds, cash, commodities like gold or silver, and real estate. Don’t worry if you are not able to immediately invest in all of these. Starting with one and then slowly investing in the rest is fine. Just make sure you do spread your investing around.

On the other hand, if you are able to spread your initial investment amongst various types, you will have lowered your risk of losing money on your investments and increased profitability by not putting all your eggs in one basket.

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