Archive for October, 2008
How to invest in the right types of stocks
Posted October 30, 2008 by Bernz
Stocks and stock markets can be really confusing! This article will clear up a few misconceptions and help you understand how stocks and markets work and how to invest in the stock market.
By Dustin M.
Quite simply, stocks or shares are small parts of a publicly traded companies. Companies sell these parts to raise capital for future investment in buildings, employees, and other resources. There are two types of stocks or shares called, common and preferred.
Common stock
Common stock/shares is the most common kind as you can imagine. This is the kind of stock traded on the stock market every day. It is the kind of stock that is bought for mutual funds and 401K plans.
Preferred Stock
Preferred stock/shares are high level, very expensive stocks. Sold only to hand-picked investors by companies with stocks that run into the thousands of dollars. Usually founders of the company and their friends end up with these privileged shares. Also, private banks also tend to hold these shares as well. These are not often traded on the open market because people who own these shares tend to sit on the board of the company or have other controlling interest.
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Tags: stock markets, stocks
Posted in Investing Basics | No Comments »
Mutual Fund Education
Posted October 29, 2008 by Bernz
By Tom
Mutual Funds are ran by mutual fund managers that group money together and invest in stocks or bonds as a group. Mutual funds are the best way to quickly and easily diversify your portfolio. Fund managers carefully choose stocks or bonds to maintain a 4-5 percent return on the entire portfolio of stocks that is in the fund. A single stock may return that or may not. Investing in several stocks evens out the return and reduces the ups and downs that an individual stock may take. Also bond interest rates fluctuate and having many bonds together being bought and sold and maturing at different dates makes investing in the volatile bond market much easier because someone else is making sure that your money is getting reinvested and that the best bonds are being chosen. Investing mutual funds makes that whole confusing process a lot easier. Fund managers have the time and are paid to do the research necessary to find stocks and bonds that are appropriate to their fund.
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Tags: mutual fund, mutual fund manager, mutual funds
Posted in Mutual Funds | 2 Comments »
Bonds 101
Posted October 28, 2008 by Bernz
Everyone always talks about stocks and bonds, bonds and stock but are bonds really and how do they work? This little article is here to talk about the largest kind of bonds you can invest in.
Keep in mind that for the individual investor who is working with capital of less than 1,000,000 dollars the best way to invest in bonds is to buy into a bond mutual fund. The only exception is that if your municipality is doing a bond issue for a project and you want to invest in something specifically then that can be fun and help you rise up the social strata of the city but overall even though bonds are traded frequently over the open market mutual funds are the easiest way to get involved in the bond market.
Bonds also have what are called maturity dates. The maturity date is when the entity that has issued the bond buys the bond back from you for face value plus interest or they will pay you part interest over the life of the bond and the rest at the end or they will pay you all the interest over the life of the bond. In any of these cases bonds are generally not volatile. They are issued usually by government entities.
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Tags: bonds, mortgage bonds, savings bonds
Posted in Investing Strategies | No Comments »
Regular vs. Roth
Posted October 27, 2008 by Bernz
The vehicle we now call the Roth IRA was born on January 1, 1998 as a result of the Taxpayer Relief Act of 1997. The Roth IRA provides no deduction for contributions, but instead provides a benefit that isn’t available for traditional retirement accounts: if you meet certain requirements, all earnings are tax free when you or your beneficiary withdraw them. Other benefits include avoiding the early distribution penalty on certain withdrawals, and eliminating the need to take minimum distributions after age 70½. Remember that in either cashing cashing an IRA is very expensive and should only be done for very extreme circumstances.
Plus and minus
The nice part is that you get a tax free retirement vehicle with the downside of not being able to deduct the money you give to your Roth IRA. Which is more important depends on the individual like your income level and how soon you will need the money. Usually a Roth IRA is better in most people’s cases especially when the income level in is beneath 160,000. Also you will not have to take money from it until age 70 ½.
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Tags: IRA, roth ira, traditional ira
Posted in IRA | 2 Comments »
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