Tag Archives: investing

Which Portfolio Mix, Is Best For You?

Guest Article By Richard Brody 

When, it comes to investing, and/ or, personal financial planning, there is no such thing, as, one – size – fits – all! Depending on one’s age, needs, goals, priorities, risk tolerance, purposes, etc, the most appropriate strategy, may be determined, on a case – by – case, basis! Your total assets, liquid assets, income (from a variety of sources), job security, reserves, and personal, comfort zone/ level, are significant factors, to determine, the best path forward, for you, in terms of creating a personal, investment portfolio. With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, which, mix, might make the most sense, for your specific combination, and set of conditions, and factors.

1. Risk tolerance: One of the first things to consider, is, your personal, risk tolerance. That means, in simple – terms, how might you balance, investing, and being able, to sleep, at night! Many people confuse terms, especially, when it comes to, mixing – up, the difference, between, growth, and income. How often have you heard, someone, declare, the growth – investments, they held, didn’t offer enough income, and/ or, income – focused investments don’t provide growth/ rising prices, etc? One must consider, how much risk, they are ready, willing, and/ or, able, to tolerate, and accept!

2. Goals/ objectives: Identify, clearly, your individual goals, and objectives, when considering your portfolio mix. Some goals, include: saving for a child’s education; creating a source, to purchase a future house; developing a retirement fund; etc. It makes sense, usually, to carefully, choose, the right mix of investments, for each objective. Achieving goals, generally, is easier/ simpler, when done, over a longer – period of time, so one might take advantage of the concept of Dollar Cost Averaging. This approach, often, minimizes overall – market risk, because, when purchases are made, at a specific point, every month, market fluctuation becomes far – less, relevant and significant!

3. Needs: We are individuals, and have our own needs! Avoid, trying to, Keep Up With The Joneses, because, what might make sense, for them, may not, for you, and what you need! Do you need, growth, present income, future income, or some combination, etc?

4. Small, versus, Large – Cap, equity: We often hear the terms, small – cap, versus, large – cap. This refers to the amount of capitalization, of the individual company, investment, or mutual fund. The value, and monetary stability, and strength of any company, may be a factor, in the safety, etc.

5. Bonds and Preferred Stock: Corporate bonds are debt, which companies use, to raise monies/ capital. Some are unsecured ones, but, generally, we consider, secured bonds (debentures), which are backed, by the finances of that company. Therefore, while, many consider, bonds, safe, that depends on, the quality of the specific company. Preferred stocks are generally, favored forms of equity, and pay a regular dividend. Most people, who invest in these two types of investments, seek consistent income. At this point – in – time, because of record – low, interest rates, existing bond prices, are high, because they were issued, when rates were higher, and the price of the bond, is adjusted, because, it determines the total yield.

The more you know, and understand, the better, you will determine the portfolio mix, which might, best serve your individual needs, goals, and priorities. Become a smarter investor!

Richard has owned businesses, been a COO, CEO, Director of Development, consultant, professionally run events, consulted to thousands, conducted personal development seminars, and was involved in financial planning, for 4 decades. Rich has written three books and thousands of articles. His company, PLAN2LEAD, LLC has an informative website http://plan2lead.net and Plan2lead can also be followed on Facebook http://facebook.com/Plan2lead

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Selecting A Brokerage Account

Once a person has decided that they want to start investing in the stock market, have stabilized their finances, created a workable financial budget, and established their investment strategy it’s time to select an investment platform/brokerage through which you want to buy and sell your stocks. This would be the most efficient and economically manner in which to do this.
There are quite a few brokerages to choose from. I’m only going to tough upon a few in this post. Most brokerage companies are now commission-free for normal traditional investing activity. There are exceptions so make sure that you check out their fee schedules to find out what transactions carry a fee with them and how much.

M1 Finance : You get high yield checking, low rate borrowing for margin trading, automation, and optimization. They do support fractional shares and you can tap into a flexible portfolio line of credit at a low base rate, and use those funds for anything: major purchases, emergency funds, or portfolio leverage. Plus, you can pay back on your schedule. There are 2 downsides to this platform: they require a minimum investment of $100 and they charge a yearly fee of $125.

Public : Another commission-free investing platform that also will give you a free stock when you open and account and fund it. Also supports the purchase/ownership of fractional shares. They have Built-in safeguards for risky stocks, they explain terms when you see them, but they don’t allow day-trading or sell you margin loans to invest with, and they don’t sell you exotic, complex investment instruments.

Robinhood : Another of the non-traditional investing brokerages that offered a free stock when you open an account and funded it. This is the one where I got my start in investing. Also allows for purchasing/ownership of fractional shares, unlimited commission-free trades in stocks, ETFs, and options with Robinhood Financial, as well as buy and sell cryptocurrencies with Robinhood Crypto. Does not offers free IRA accounts or short selling.

Webull  : Webull supports full extended hours trading, which includes full pre-market and after hours sessions. One problem with Webull is it doesn’t currently support dividend reinvestment, but they may in the future. I would take this is mean that fractional shares are not supported. Offers free IRA accounts and commission free short selling in margin accounts.

TD Ameritrade : One of the main brokerage companies that has recently been bought up by Charles Schwab. After starting out on Robinhood I moved all of my positions over to here. You can manage your own portfolio or, for a fee, have your investments managed for you. They do have a DRIP (Dividend ReInvestment Program) and allow fractional shares through it but you cannot buy fractional shares outright.

There are other brokerage accounts out there so be sure to do your research before you make your final selection. If you decide to switch later on most brokerages will allow you to transfer you account to another brokerage but there will be a transfer fee associated with it. The fee with depend on the brokerage company you are transferring your account FROM.
Many of the brokerage houses, even the smaller ones, provide tools to help you manage your investments. Depending on how much detail information you want will determine which platform you’ll want to use, from least detailed like Robinhood to most detailed like TD Ameritrade.

7 Ways on How to Invest For Your Retirement

Guest Article By Kivale Joshua

Investment Plan for Your Retirement

There so many investment plans available out there. The following points will guide you to choose the most appropriate one for you with lesser risks and commitments to manage. The points are based on the fact that, after a while they are going to be appreciating business ventures for your retirement.

1. Annuity

Annuity is a plan whereby an insurance company in exchange for purchase price enters into a contract to pay an agreed amount of money every year while the annuitant is still alive.
Annuitant- is the person on whose life the contract depends.
Annuity- is the amount of money paid to the annuitant.

The benefits of an annuity especially when used in connection with retirement provision is that it would ensure that the retiree has an income for a convenient number of years. The best type of annuity is deferred annuity because it gives you life time benefits.

2. Bonds

A bond is a loan to either a government or a corporation, whereby the borrower agrees to pay a fixed sum of interest usually semi-annually, until your investment in full. Treasury bonds are secure, medium to long-term investments that typically offer you instant payment every six months throughout the bond maturity. Treasury bonds have a fixed rate meaning that the interest rate determined at auction is locked in for the entire life of the bond. This makes treasury bonds predictable, long term source of income.

3. Exchange Traded Funds (ETFs)

Exchange traded fund is an investment fund traded on stock exchanges just like stocks. An ETF holds assets such as stocks, oil future, foreign currency, commodities or bonds and generally operates with an arbitrage mechanism to keep its trading close to its net asset value, although deviations can occasionally occur. These assets are divided into shares where shareholders do not directly own or have direct claim to the investments in the fund.
ETF shareholders are entitled to a proportion of the profits such as earned interest or dividends paid.

4. Stocks

In Kenya the main stock market is Nairobi Stock Exchange (NSE). A stock market is a place where public limited companies and other financial institutions, come to buy and sell bonds and other derivatives. NSE acts as a third-party broker and allows investors to buy and sell shares independently through share dealing platforms. You can directly and indirectly invest in stocks. Direct investment means that you buy shares from a company and become a shareholder while indirect means you invest in more than one company therefore spreading the risk. Indirect investment is done through an open-ended fund and the money is secure so that even the company defaults the money is still safe.

5. Mutual Funds

Mutual funds are some of the most overlooked yet probably the easiest way to invest much more than both stocks and bonds. A mutual fund is a pool of money, often from similar minded investors. You can sell your shares when and if you want. All shareholders of the fund benefit from the fund and share in any losses. There are five categories of mutual funds where you can choose the one which best suits you.

6. Real Estate

Real estate is a retirement investment plan you should never overlook. Landon said ‘look for what’s going to give you the most bang for your back’. Real estate as a front is a very lucrative opening. However, one must research the market and know the current and emerging trends in the sector. The location of the real estate matters a lot and should be well selected. Some of the major locations can be near universities, developing towns or big company sites. In any investment capital becomes the main organ to jump start the investment. Research on different financial organizations and try to compare their payment and funding terms. You can still opt to become a Real Estate Trader. A real estate trader is one who buys property with the intention of holding them for a short period and sell to make a profit.

7. Pension Plan

Pension plan is a retirement plan that requires an employer to make contributions into a pool of funds aside for a worker’s future benefit. The pool of funds is invested on the employee’s behalf, and the earnings on the investment given to the worker upon retirement. In Kenya even self-employed workers can still contribute to the social security fund to help them when time comes.

Retirement is a process where every living worker must come to terms to. Retirement is just like any other investment but a more crucial one since when you retire you productivity goes low due to health and age. You can start now and by the time you retire have significant benefits that can help you live a befitting like after retirement. Take a step today and plan to invest for your retirement now and be a happy retired worker living a good life and building the economy even at old age.

KIVALE JOSHUA
https://www.upwork.com/o/profiles/users/_~017745077c7c727711/
visit my profile on the above link to contact me for more well researched content writing.

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Importance Of Stock Price To A Dividend Investor

How important is the stock price to a dividend investor. Speaking only for myself, stock price is a little less important than the dividend payout and the number of shares owned. As long as the stock price remains within the 52 week price range, all is well for me. If it set a new low, I will definitely take another look at the company to determine if I want to remain invested with it. To me the share price is an opportunity for me to buy additional shares so that I can get more dividends.

You find a lot of stock investor stressed out because of the activity with the stock market, specifically when the market has a downturn or pullback in the prices. That’s because that is all they are banking on, the overall value of the total stock. I don’t sweat it when my stocks take a decrease in price. I look at it as an opportunity to purchase more stocks at a price less than what I originally paid. Don’t get me wrong, I still think that stock price is important but not the #1 factor. It’s in the Top 5. You could end up with a stock like Just Energy Group ($JE) that had a 1 day drop in price of 95% back in Sept-Oct.

That’s too much of a risk for me. I can’t eliminate all risk but I tend to prefer mitigating it as much as a I can.

Managing The Retirement Income Portfolio: The Plan

Guest Article By Steve Selengut 

The reason people assume the risks of investing in the first place is the prospect of achieving a higher “realized” rate of return than is attainable in a risk free environment… i.e., an FDIC insured bank account featuring compound interest.

Risk comes in various forms, but the average income investor’s primary concerns are “financial” and, when investing for income without the proper mindset, “market” risk.

  • Financial risk involves the ability of corporations, government entities, and even individuals, to honor their financial commitments.
  • Market risk refers to the absolute certainty that all marketable securities will experience fluctuation in market value… sometimes more so than others, but this “reality” needs to be planned for and dealt with, never feared.
  • Question: Is it the demand for individual stocks that push up funds and ETF prices, or vice versa?

We can minimize financial risk by selecting only high quality (investment grade) securities, by diversifying properly, and by understanding that market value change is actually “income harmless”. By having a plan of action for dealing with “market risk”, we can actually turn it into investment opportunity.

  • What do banks do to get the amount of interest they guarantee to depositors? They invest in securities that pay a fixed rate of income regardless of changes in market value.

You don’t have to be a professional investment manager to manage your investment portfolio professionally. But, you do need to have a long term plan and know something about asset allocation… an often misused and misunderstood portfolio planning/organization tool.

  • For example, annual portfolio “rebalancing” is a symptom of dysfunctional asset allocation. Asset allocation needs to control every investment decision throughout the year, every year, regardless of changes in market value.

It is important to recognize, as well, that you do not need hi tech computer programs, economic scenario simulators, inflation estimators, or stock market projections to get yourself lined up properly with your retirement income target.

What you do need is common sense, reasonable expectations, patience, discipline, soft hands, and an oversized driver. The “KISS principle” should be the foundation of your investment plan; compound earnings the epoxy that keeps the structure safe and secure over the developmental period.

  • Over the past ten years, such risk free saving has been unable to compete with riskier mediums because of artificially low interest rates, forcing traditional “savers” into the mutual fund and ETF market place.
  • (Funds and ETFs have become the “new” stock market, a place where individual equity prices have become invisible, questions about company fundamentals meet with blank stares, and media talking heads tell us that individuals are no longer in the stock market).

Additionally, an emphasis on “working capital” (as opposed to market value) will help you through all four basic portfolio management processes. (Business majors, remember PLOC?) Finally, a chance to use something you learned in college!

Planning for Retirement

The retirement income portfolio (nearly all investment portfolios become retirement portfolios eventually) is the financial hero that appears on the scene just in time to fill the income gap between what you need for retirement and the guaranteed payments you will receive from Uncle and/or past employers.

How potent the force of the super hero, however, does not depend on the size of the market value number; from a retirement perspective, it’s the income produced inside the costume that shields us from financial villains. Which of these heroes do you want fueling your wallet?

  • A million dollar VTINX portfolio that produces about $19,200 in annual spending money.
  • A million dollar, well diversified, income CEF portfolio that generates more than $70,000 annually… even with the same equity allocation as the Vanguard fund (just under 30%).
  • A million dollar portfolio of GOOG, NFLX, and FB that produces no spending money at all.

I’ve heard said that a 4% draw from a retirement income portfolio is about normal, but what if that’s not enough to fill your “income gap” and/or more than the amount produced by the portfolio. If both of these “what ifs” prove true… well, it’s not a pretty picture.

And it becomes uglier rather quickly when you look inside your actual 401k, IRA, TIAA CREF, ROTH, etc. portfolio and realize that it is not producing even close to 4% in actual spendable income. Total return, yes. Realized spendable income, ‘fraid not.

  • Sure your portfolio has been “growing” in market value over the past ten years, but it is likely that no effort has been made to increase the annual income it produces. The financial markets live on market value analytics, and so long as the market goes up every year, we’re told that everything is fine.
  • So what if your “income gap” is more than 4% of your portfolio; what if your portfolio is producing less than 2% like the Vanguard Retirement Income Fund; or what if the market stops growing by more than 4% per year… while you are still depleting capital at a 5%, 6% or even a 7% clip???

The less popular (available only in individual portfolios) Closed End Income Fund approach has been around for decades, and has all of the “what ifs” covered. They, in combination with Investment Grade Value Stocks (IGVS), have the unique ability to take advantage of market value fluctuations in either direction, increasing portfolio income production with every monthly reinvestment procedure.

  • Monthly reinvestment must never become a DRIP (dividend reinvestment plan) approach, please. Monthly income must be pooled for selective reinvestment where the most “bang for the buck” can be achieved. The objective is to reduce cost basis per share and increase position yield… with one click of the mouse.

A retirement income program that is focused only on market value growth is doomed from the getgo, even in IGVS. All portfolio plans need an income focused asset allocation of at least 30%, oftentimes more, but never less. All individual security purchase decision-making needs to support the operative “growth purpose vs. income purpose” asset allocation plan.

  • The “Working Capital Model” is a 40+ years tested auto pilot asset allocation system that pretty much guarantees annual income growth when used properly with a minimum 40% income purpose allocation.

The following bullet points apply to the asset allocation plan running individual taxable and tax deferred portfolios… not 401k plans because they typically can’t produce adequate income. Such plans should be allocated to maximum possible safety within six years of retirement, and rolled over to a personally directed IRA as soon as physically possible.

  • The “income purpose” asset allocation begins at 30% of working capital, regardless of portfolio size, investor age, or amount of liquid assets available for investment.
  • Start up portfolios (under $30,000) should have no equity component, and no more than 50% until six figures are reached. From $100k (until age 45), as little as 30% to income is acceptable, but not particularly income productive.
  • At age 45, or $250k, move to 40% income purpose; 50% at age 50; 60% at age 55, and 70% income purpose securities from age 65 or retirement, whichever comes first.
  • The income purpose side of the portfolio should be kept as fully invested as possible, and all asset allocation determinations must be based on working capital (i.e., portfolio cost basis); cash is considered part of the equity, or “growth purpose” allocation
  • Equity investments are limited to seven year experienced equity CEFs and/or “investment grade value stocks” (as defined in the “Brainwashing” book ).

Even if you are young, you need to stop smoking heavily and to develop a growing stream of income. If you keep the income growing, the market value growth (that you are expected to worship) will take care of itself. Remember, higher market value may increase hat size, but it doesn’t pay the bills.

So this is the plan. Determine your retirement income needs; start your investment program with an income focus; add equities as you age and your portfolio becomes more significant; when retirement looms, or portfolio size becomes serious, make your income purpose allocation serious as well.

Don’t worry about inflation, the markets, or the economy… your asset allocation will keep you moving in the right direction while it focuses on growing your income every year.

  • This is the key point of the whole “retirement income readiness” scenario. Every dollar added to the portfolio (or earned by the portfolio) is reallocated according to “working capital” asset allocation. When the income allocation is above 40%, you will see the income rising magically every quarter… regardless of what’s going on in the financial markets.
  • Note that all IGVS pay dividends that are also divvied up according to the asset allocation.

If you are within ten years of retirement age, a growing income stream is precisely what you want to see. Applying the same approach to your IRAs (including the 401k rollover), will produce enough income to pay the RMD (required mandatory distribution) and put you in a position to say, without reservation:

Neither a stock market correction nor rising interest rates will have a negative impact on my retirement income; in fact, I’ll be able to grow my income even better in either environment.

My articles always describe aspects of an investment process I have been using since the 1970’s, as described in my book, The Brainwashing of the American Investor. All the disciplines, concepts, and processes described therein work together to produce (in my experience) a safer, more income productive, investment experience. No implementation should be undertaken without a complete understanding of all aspects of the program.

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How to Make a Lot With a Small Investment

Guest Article By Pritesh Jarodiya  

Saving becomes a necessity once people get close to the retirement age. At that stage in life, saving is not just an option, but it is a key to having a stress free retirement. However, having plenty of savings do not guarantee a stress-free older age upon retirement. With countless responsibilities, upon retirement with no source of a steady income, you could end up diminishing all your savings. With a big chance of mismanagement of the savings, it is essential for financial advisors to suggest that people and, in specific, retirees must consider investing their money in exchange for fruitful returns.

Making a Smart Investment Decision
Making smart investment decisions is fruitful for any age and anyone. It is the best and the most reliable way to get a steady income. Before taking a major decision to invest, consult experts for advice and consider the following steps for safe investments.

Know your Risks
Always do your homework before choosing a company for investment. Although it is always a good idea to ask an expert investor for tips and advice, do your own research too. Do not pick a company that has unreliable information about their returns. The lack of necessary knowledge could cost you all your savings. Always ask how the investment will work, study the terms and conditions when making an investment decision.

Have a Portfolio Investment
A good idea for investment is to invest in small but safe investments. The safest way to do this is to invest in a portfolio. Instead of putting all your money in one investment, create a portfolio of mutual funds, stocks or shares, and other financial investments. This way if one fails the other investments in your portfolio could reap positive returns.

Choose Investments with Immediate Annuities
Annuities are reliable for those who need guaranteed payouts. Once you decide on investing in annuity funds, it automatically qualifies you to get an income exchange for a major series of payments over a specific time. With so many annuities, each one has a unique feature that could be expensive. Before making any investment decision or investing in an annuity, consider talking to an expert.

Strategic Positioning of the Investment
Strategic positioning of the investment depends on the attractiveness of the entire sector of a specific industry. It is essential that the company you choose for investment have a strong market share. A strong company with a major market share will prove as an effective investment.

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‘Buy in October and Stay’

Seasonal pattern getting bullish for stock market 

John Nacion

Investors could benefit from a strong seasonal tailwind if they buy stocks this month and stay invested, according to Bank of America technical strategist Stephen Suttmeier. In a note to clients, Suttmeier pointed out that the best three and six-month periods for the S&P 500 begin in November, making October a prime opportunity for investors to increase their equity exposure. "Investors and financial media love to commiserate over 'Sell in May and go away' but often forget about 'Buy in October and stay,'" Suttmeier said.

	

What’s the Story With Snowflake?

So, yesterday was the first day for the IPO for Snowflake Inc. ($SNOW). I always wanted to try to get in on the ground floor for companies that go public. I figure that they start out small and as they prove their ability to perform and generate revenue their stock price tends to go up. When I heard about Snowflake Inc going public I started following in hope of being able to get in on the ground floor.

The first time I heard about the tentative stock price was when they were talking about it being around $23/share. Seems reasonable. I could afford that. That wasn’t an overly large amount of money and I could come up with a few dollars to buy some shares to try my hand at investing in a company just starting out trading shares. I couldn’t screw up too badly at $23/share.

But the day before the IPO and the day of the share price was scheduled to open at $120/share! What happened? Then when the market opened and I checked how it was doing I found that the stock price had climbed to over $230/share. What?!?!? What did I miss? I can’t understand how the price could have jumped that high. What was the new price based on? Were that many people buying the stock? I read all of the reports and articles about the company but I wasn’t able to determine which factor was the key to driving the price.

So, how does it work? The share prices are based on the company fundamentals up to a certain point and then it becomes like a religious thing and faith takes over? Or is it one of those deals where the big players get in on it early, wait for the share price to peak and then when it starts dropping in price start selling off their shares to insure profits? Is it all big money investors or are there any small investors? If so, are they able to keep up with the trade activity in order to not lose everything?

I’m still new at this investing game so I try to learn whateveer I can so I can better understand the way things work.