Personal Finance and Money Management 41 - How to Choose Between Rrif and Anuity for Your Rrsp
Remember that the government only represents about 30% of our retirement income, the company retirement pension plan offers another 30 % and many of us do not have one. It is up to individuals to invest wisely short and long term in order to make up for the short fall if he or she would like to live comfortably after retirement without giving up some retirement plans. Now you reach the year of RRSP conversion year, you are facing the choice to choose either to convert your registered retirement saving plan to RRIF or annuity. In this article, we will discuss How to choose between RRIF and annuity for your RRSP.
I. Choose RRIF, if
a) You want to have control your investment and manage your RRIF to ensure that your income from it can be last as long as you live.
b) beside RRIF, you have other non registered assets.
c) You want to have some money left for estate preservation.
d) Your interest of your RRSP assets are for future growth.
e) Together with non registered assets, your income every month is far exceed your expenses.
II. Choose annuity, if
a) You requires income every month to meet your basic expenses.
b) you are worry about that you may out live your capital.
c) You don`t want to manage your own assets.
d) You are healthy and you believe that you will be live for a long time.
e) The only source of income is your RRSP.
f) You do not have a lot of saving.
g) You may require assistance from the government for supplement income.
I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page:
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/
http://personalfinance41.blogspot.com/
I. Choose RRIF, if
a) You want to have control your investment and manage your RRIF to ensure that your income from it can be last as long as you live.
b) beside RRIF, you have other non registered assets.
c) You want to have some money left for estate preservation.
d) Your interest of your RRSP assets are for future growth.
e) Together with non registered assets, your income every month is far exceed your expenses.
II. Choose annuity, if
a) You requires income every month to meet your basic expenses.
b) you are worry about that you may out live your capital.
c) You don`t want to manage your own assets.
d) You are healthy and you believe that you will be live for a long time.
e) The only source of income is your RRSP.
f) You do not have a lot of saving.
g) You may require assistance from the government for supplement income.
I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page:
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/
http://personalfinance41.blogspot.com/
How to Build a Healthy Relationship?
BoomerYearbook.com - December, 2008 - “Happily ever after” is a term which exists only in fairy tales. In real life every relationship has its share of bumps and problems. In fact having occasional arguments is even considered healthy. But if mutual bickering and fights become an everyday phenomenon, then you know your relationship is headed for trouble.
A lot of song writers and poets have aptly said “love just ain’t enough!” Mutual love may be the most important building block of a relationship, but love alone can’t sustain the relationship. You might love your partner or spouse to death but may still find your relationship battling stormy weather. The reason could be that your relationship has one or more of the following elements missing: trust, open communication, respect, honesty and/or complete commitment. However, if you have the will and desire to make your relationship work, these problems can be sorted out.
How to make your relationship work?
Acknowledge that you have a problem
Blame- game is the common factor in almost all troubled relationships. People tend to get so blinded with anger that they lose their objectivity. Ego of course adds fuel to the fire. Sadly, this raging fire of anger and ego burns down the most vital building block of a relationship- love. It is therefore important that both the partners acknowledge the fact that they have a problem and refrain from finger pointing.
Communicate
Often we don’t share our feelings with our partner/spouse for the fear of hurting them and some times we may avoid speaking our mind in order to avoid an argument. Continuation of this kind of behavior has the potential to destroy a relationship. Not sharing your feelings will lead to simmering resentment within you and the other person will continue with their life without even realizing that their behavior is hurting you. The result can be an explosion of bottled up emotions, leaving your partner bewildered and deeply hurt. Open channels of communication are therefore vital for the health of any relationship and remember communication need not always be in an argumentative tone or a high pitched voice. It’s important to keep your ego aside and communicate your feelings in a loving manner, in order to save yourself and your loved one from pointless hurt.
Relationship counseling
When you are angry or deeply hurt, you may blow small problems out of proportion. Just as love sometimes clouds our objectivity, hurt and anger have a similar effect too. You may be tempted to ask a friend or a close relative to interfere or “make the other person see the sense of your argument”, but remember this approach can easily backfire as friends and relatives may not be objective and biased towards you. It’s therefore advisable to seek relationship counseling if both you and your partner are open to the idea. You may feel hesitant about confiding in a stranger, but remember a counselor is not just a stranger but a trained therapist. Just like you go to a doctor to treat an illness, you can visit a relationship counselor to treat your ailing relationship.
Clinical Hypnosis
If either of you have a problem with insecurity, jealousy or commitment phobia, the reason could be your past. Clinical hypnosis could help you in this case. Sometimes some past events or happenings may get so firmly embedded in your subconscious that you might end up taking a lot of actions because of those past memories, without even realizing it. Through clinical hypnosis a trained therapist will be able to delve into your subconscious and help you release the memories which are hampering your relationship and re-program your mind.
Positive affirmations
When a relationship is in trouble we tend to indulge in lot of negative self-talk about ourselves and our relationship. Not only does such behavior push the relationship further into the abyss of loneliness it also affects our confidence and desire to make the relationship work. Repeated negative self-talk ends up strengthening our belief that our relationship is beyond repair. However, if instead of telling yourself how miserable you are and how imperfect your relationship is, if you could focus on making your relationship work, not only will you feel more motivated to bring your love life back on track but you’ll also feel more confident about being able to do it. You can either make up your own affirmations or practice the following in front of a mirror everyday:
“I love and appreciate myself the way I am”
“I deserve to love and be loved”
“I am surrounded by love at all times”
“The universe supplies me with endless love”
“All is well in my world”
Visualization techniques
Have you ever noticed that when you visualize something negative your body and mind start reacting as if you are already facing that situation? For example if you visualize you and your partner/spouse parting ways, you might feel a lump in your throat and your heart may start sinking. If you continue with your negative visualizations your body and mind start unconsciously pushing you in the direction of what you visualize the most. Similarly if you visualize yourself in a fulfilling relationship with your spouse/partner, your body and mind will start preparing you to live those happy images and will push you to push to fruition the visions of a healthy relationship.
These tips and techniques will be able to help you build a healthy relationship only if you and your partner are open to the idea of changing for the better, to make your relationship work.
Want to learn more? Have a comment or situation you’d like to start? Continue your self-help coaching journey at Boomer Yearbook. Please Visit: http://www.boomeryearbook.com/forum/forumdisplay.php?f=6
www.boomeryearbook.com is a social networking site connecting the Baby Boomer generation. Share your thoughts, rediscover old friends, or expand your mind with brain games provided by clinical psychologist Dr. Karen Turner. Join today to discover the many ways we are helping Boomers connect for fun and profit.
A lot of song writers and poets have aptly said “love just ain’t enough!” Mutual love may be the most important building block of a relationship, but love alone can’t sustain the relationship. You might love your partner or spouse to death but may still find your relationship battling stormy weather. The reason could be that your relationship has one or more of the following elements missing: trust, open communication, respect, honesty and/or complete commitment. However, if you have the will and desire to make your relationship work, these problems can be sorted out.
How to make your relationship work?
Acknowledge that you have a problem
Blame- game is the common factor in almost all troubled relationships. People tend to get so blinded with anger that they lose their objectivity. Ego of course adds fuel to the fire. Sadly, this raging fire of anger and ego burns down the most vital building block of a relationship- love. It is therefore important that both the partners acknowledge the fact that they have a problem and refrain from finger pointing.
Communicate
Often we don’t share our feelings with our partner/spouse for the fear of hurting them and some times we may avoid speaking our mind in order to avoid an argument. Continuation of this kind of behavior has the potential to destroy a relationship. Not sharing your feelings will lead to simmering resentment within you and the other person will continue with their life without even realizing that their behavior is hurting you. The result can be an explosion of bottled up emotions, leaving your partner bewildered and deeply hurt. Open channels of communication are therefore vital for the health of any relationship and remember communication need not always be in an argumentative tone or a high pitched voice. It’s important to keep your ego aside and communicate your feelings in a loving manner, in order to save yourself and your loved one from pointless hurt.
Relationship counseling
When you are angry or deeply hurt, you may blow small problems out of proportion. Just as love sometimes clouds our objectivity, hurt and anger have a similar effect too. You may be tempted to ask a friend or a close relative to interfere or “make the other person see the sense of your argument”, but remember this approach can easily backfire as friends and relatives may not be objective and biased towards you. It’s therefore advisable to seek relationship counseling if both you and your partner are open to the idea. You may feel hesitant about confiding in a stranger, but remember a counselor is not just a stranger but a trained therapist. Just like you go to a doctor to treat an illness, you can visit a relationship counselor to treat your ailing relationship.
Clinical Hypnosis
If either of you have a problem with insecurity, jealousy or commitment phobia, the reason could be your past. Clinical hypnosis could help you in this case. Sometimes some past events or happenings may get so firmly embedded in your subconscious that you might end up taking a lot of actions because of those past memories, without even realizing it. Through clinical hypnosis a trained therapist will be able to delve into your subconscious and help you release the memories which are hampering your relationship and re-program your mind.
Positive affirmations
When a relationship is in trouble we tend to indulge in lot of negative self-talk about ourselves and our relationship. Not only does such behavior push the relationship further into the abyss of loneliness it also affects our confidence and desire to make the relationship work. Repeated negative self-talk ends up strengthening our belief that our relationship is beyond repair. However, if instead of telling yourself how miserable you are and how imperfect your relationship is, if you could focus on making your relationship work, not only will you feel more motivated to bring your love life back on track but you’ll also feel more confident about being able to do it. You can either make up your own affirmations or practice the following in front of a mirror everyday:
“I love and appreciate myself the way I am”
“I deserve to love and be loved”
“I am surrounded by love at all times”
“The universe supplies me with endless love”
“All is well in my world”
Visualization techniques
Have you ever noticed that when you visualize something negative your body and mind start reacting as if you are already facing that situation? For example if you visualize you and your partner/spouse parting ways, you might feel a lump in your throat and your heart may start sinking. If you continue with your negative visualizations your body and mind start unconsciously pushing you in the direction of what you visualize the most. Similarly if you visualize yourself in a fulfilling relationship with your spouse/partner, your body and mind will start preparing you to live those happy images and will push you to push to fruition the visions of a healthy relationship.
These tips and techniques will be able to help you build a healthy relationship only if you and your partner are open to the idea of changing for the better, to make your relationship work.
Want to learn more? Have a comment or situation you’d like to start? Continue your self-help coaching journey at Boomer Yearbook. Please Visit: http://www.boomeryearbook.com/forum/forumdisplay.php?f=6
www.boomeryearbook.com is a social networking site connecting the Baby Boomer generation. Share your thoughts, rediscover old friends, or expand your mind with brain games provided by clinical psychologist Dr. Karen Turner. Join today to discover the many ways we are helping Boomers connect for fun and profit.
Giving Her Turn - Getting Your Girl To Put More Value In Your Relationship
Ever notice how you put more value on something you worked hard for over something else that just fell on your lap? A common example of this is when you see someone spend lottery winnings on a fancy house, but thinking twice about investing life savings.
When something comes with a great deal of effort, that object increases its worth to that person who went through a great deal to get it. The same can be said about relationships. Someone who was won over with little effort can be let go just as easily. But when one is made to invest time and resources, it is harder to let them simply slip away.
Guys, believe it or not, it is okay, if not healthy, to let your lady work at your relationship and making things slightly more challenging for her to get you. After all, women have been playing “hard to get” for the longest time. It’s only right that they be returned the favor.
You may agree, but then you may not know exactly how. So read on for some helpful ideas on letting your mate work on increasing the value of your relationship.
- Retain some enigma.
Perhaps in their eagerness to impress the ladies, guys nowadays tend to share information about themselves short of a resume. That leaves very little for a woman to build her curiosity on.
Women are creatures of curiosity. They are wired to hunt for information on something that they are interested in. Just looking at how they consume gossip magazines will show you that.
Let this work to your advantage by revealing just enough information about yourself to get them interested while giving them hints on how to find out more. For example, let her know that you two have a common friend, but only give hints as to who it is. If she is in the least interested, chances are she’ll be asking everyone she knows if they know you. As a result, you’ll probably be constantly on her mind - which is a very, very good thing.
- Challenge her views.
If you don’t agree with some things your lady believes to be the only truth, let her know your opinions as otherwise. You will find that she will engage you with a lot more enthusiasm, if only to win you over to her side.
The advantage to this is that if you get “won over” by the arguments she made for her case, she’d feel a greater sense of attachment to you. Just be careful in doing so as your challenge can very easily be perceived as picking a fight, which may turn out badly for the both of you.
- Acquire a new skill together.
Whether it is a craft or a sport, encourage your girl to take up something she’s never had before with you. As she agrees, subtly push her to perform better than you are. If you are a very competitive type of guy, this may be quite difficult for you.
But if you keep your competitiveness in check, and allow her to excel over you with this new skill, you help build her confidence while at the same time making you the focus of her efforts.
- Let her imagination work.
When you and your lady have reached the point where you are physically intimate, you access another aspect of your relationship where you can allow you lady to work on.
When it comes to sex, even if she has already encouraged you to talk about it the first time, do what you can to avoid the topic - at least long enough for her to ask the second time. At this point, indulge her with some ideas you have in mind but leave out the details.
Allowing her imagination to fill in the blanks has already got you set up in her mind about the possibilities of an incredible night with you. Remember, a woman’s most erogenous zone is her brain. Work this part of her and it’ll take all of her self-control not to jump you the next time you meet.
These ideas all work to get your woman to invest more time and effort on you, reinforcing the connection you two have made. But be sure to affirm these efforts and let her know that you notice the work she is putting in. Nothing makes her feel better than to know her man thinks she is not only a great partner, but someone who can stand well enough on her own.
When something comes with a great deal of effort, that object increases its worth to that person who went through a great deal to get it. The same can be said about relationships. Someone who was won over with little effort can be let go just as easily. But when one is made to invest time and resources, it is harder to let them simply slip away.
Guys, believe it or not, it is okay, if not healthy, to let your lady work at your relationship and making things slightly more challenging for her to get you. After all, women have been playing “hard to get” for the longest time. It’s only right that they be returned the favor.
You may agree, but then you may not know exactly how. So read on for some helpful ideas on letting your mate work on increasing the value of your relationship.
- Retain some enigma.
Perhaps in their eagerness to impress the ladies, guys nowadays tend to share information about themselves short of a resume. That leaves very little for a woman to build her curiosity on.
Women are creatures of curiosity. They are wired to hunt for information on something that they are interested in. Just looking at how they consume gossip magazines will show you that.
Let this work to your advantage by revealing just enough information about yourself to get them interested while giving them hints on how to find out more. For example, let her know that you two have a common friend, but only give hints as to who it is. If she is in the least interested, chances are she’ll be asking everyone she knows if they know you. As a result, you’ll probably be constantly on her mind - which is a very, very good thing.
- Challenge her views.
If you don’t agree with some things your lady believes to be the only truth, let her know your opinions as otherwise. You will find that she will engage you with a lot more enthusiasm, if only to win you over to her side.
The advantage to this is that if you get “won over” by the arguments she made for her case, she’d feel a greater sense of attachment to you. Just be careful in doing so as your challenge can very easily be perceived as picking a fight, which may turn out badly for the both of you.
- Acquire a new skill together.
Whether it is a craft or a sport, encourage your girl to take up something she’s never had before with you. As she agrees, subtly push her to perform better than you are. If you are a very competitive type of guy, this may be quite difficult for you.
But if you keep your competitiveness in check, and allow her to excel over you with this new skill, you help build her confidence while at the same time making you the focus of her efforts.
- Let her imagination work.
When you and your lady have reached the point where you are physically intimate, you access another aspect of your relationship where you can allow you lady to work on.
When it comes to sex, even if she has already encouraged you to talk about it the first time, do what you can to avoid the topic - at least long enough for her to ask the second time. At this point, indulge her with some ideas you have in mind but leave out the details.
Allowing her imagination to fill in the blanks has already got you set up in her mind about the possibilities of an incredible night with you. Remember, a woman’s most erogenous zone is her brain. Work this part of her and it’ll take all of her self-control not to jump you the next time you meet.
These ideas all work to get your woman to invest more time and effort on you, reinforcing the connection you two have made. But be sure to affirm these efforts and let her know that you notice the work she is putting in. Nothing makes her feel better than to know her man thinks she is not only a great partner, but someone who can stand well enough on her own.
How to Build a Healthy Relationship?
“Happily ever after” is a term which exists only in fairy tales. In real life every relationship has its share of bumps and problems. In fact having occasional arguments is even considered healthy. But if mutual bickering and fights become an everyday phenomenon, then you know your relationship is headed for trouble.
A lot of song writers and poets have aptly said “love just ain’t enough!” Mutual love may be the most important building block of a relationship, but love alone can’t sustain the relationship. You might love your partner or spouse to death but may still find your relationship battling stormy weather. The reason could be that your relationship has one or more of the following elements missing: trust, open communication, respect, honesty and/or complete commitment. However, if you have the will and desire to make your relationship work, these problems can be sorted out.
How to make your relationship work?
Acknowledge that you have a problem
Blame- game is the common factor in almost all troubled relationships. People tend to get so blinded with anger that they lose their objectivity. Ego of course adds fuel to the fire. Sadly, this raging fire of anger and ego burns down the most vital building block of a relationship- love. It is therefore important that both the partners acknowledge the fact that they have a problem and refrain from finger pointing.
Communicate
Often we don’t share our feelings with our partner/spouse for the fear of hurting them and some times we may avoid speaking our mind in order to avoid an argument. Continuation of this kind of behavior has the potential to destroy a relationship. Not sharing your feelings will lead to simmering resentment within you and the other person will continue with their life without even realizing that their behavior is hurting you. The result can be an explosion of bottled up emotions, leaving your partner bewildered and deeply hurt. Open channels of communication are therefore vital for the health of any relationship and remember communication need not always be in an argumentative tone or a high pitched voice. It’s important to keep your ego aside and communicate your feelings in a loving manner, in order to save yourself and your loved one from pointless hurt.
Relationship counseling
When you are angry or deeply hurt, you may blow small problems out of proportion. Just as love sometimes clouds our objectivity, hurt and anger have a similar effect too. You may be tempted to ask a friend or a close relative to interfere or “make the other person see the sense of your argument”, but remember this approach can easily backfire as friends and relatives may not be objective and biased towards you. It’s therefore advisable to seek relationship counseling if both you and your partner are open to the idea. You may feel hesitant about confiding in a stranger, but remember a counselor is not just a stranger but a trained therapist. Just like you go to a doctor to treat an illness, you can visit a relationship counselor to treat your ailing relationship.
Clinical Hypnosis
If either of you have a problem with insecurity, jealousy or commitment phobia, the reason could be your past. Clinical hypnosis could help you in this case. Sometimes some past events or happenings may get so firmly embedded in your subconscious that you might end up taking a lot of actions because of those past memories, without even realizing it. Through clinical hypnosis a trained therapist will be able to delve into your subconscious and help you release the memories which are hampering your relationship and re-program your mind.
Positive affirmations
When a relationship is in trouble we tend to indulge in lot of negative self-talk about ourselves and our relationship. Not only does such behavior push the relationship further into the abyss of loneliness it also affects our confidence and desire to make the relationship work. Repeated negative self-talk ends up strengthening our belief that our relationship is beyond repair. However, if instead of telling yourself how miserable you are and how imperfect your relationship is, if you could focus on making your relationship work, not only will you feel more motivated to bring your love life back on track but you’ll also feel more confident about being able to do it. You can either make up your own affirmations or practice the following in front of a mirror everyday:
“I love and appreciate myself the way I am”
“I deserve to love and be loved”
“I am surrounded by love at all times”
“The universe supplies me with endless love”
“All is well in my world”
Visualization techniques
Have you ever noticed that when you visualize something negative your body and mind start reacting as if you are already facing that situation? For example if you visualize you and your partner/spouse parting ways, you might feel a lump in your throat and your heart may start sinking. If you continue with your negative visualizations your body and mind start unconsciously pushing you in the direction of what you visualize the most. Similarly if you visualize yourself in a fulfilling relationship with your spouse/partner, your body and mind will start preparing you to live those happy images and will push you to push to fruition the visions of a healthy relationship.
These tips and techniques will be able to help you build a healthy relationship only if you and your partner are open to the idea of changing for the better, to make your relationship work.
Want more tips on how to build a healthy relationship? Have a comment or question you’d like to share? Come join others at Boomer Yearbook for simple and effective coaching tips and strategies.
www.boomeryearbook.com is a social networking site connecting the Baby Boomer generation. Share your thoughts, rediscover old friends, or expand your mind with brain games provided by clinical psychologist Dr. Karen Turner. Join today to discover the many ways we are helping Boomers connect for fun and profit.
For www.boomeryearbook.com
A lot of song writers and poets have aptly said “love just ain’t enough!” Mutual love may be the most important building block of a relationship, but love alone can’t sustain the relationship. You might love your partner or spouse to death but may still find your relationship battling stormy weather. The reason could be that your relationship has one or more of the following elements missing: trust, open communication, respect, honesty and/or complete commitment. However, if you have the will and desire to make your relationship work, these problems can be sorted out.
How to make your relationship work?
Acknowledge that you have a problem
Blame- game is the common factor in almost all troubled relationships. People tend to get so blinded with anger that they lose their objectivity. Ego of course adds fuel to the fire. Sadly, this raging fire of anger and ego burns down the most vital building block of a relationship- love. It is therefore important that both the partners acknowledge the fact that they have a problem and refrain from finger pointing.
Communicate
Often we don’t share our feelings with our partner/spouse for the fear of hurting them and some times we may avoid speaking our mind in order to avoid an argument. Continuation of this kind of behavior has the potential to destroy a relationship. Not sharing your feelings will lead to simmering resentment within you and the other person will continue with their life without even realizing that their behavior is hurting you. The result can be an explosion of bottled up emotions, leaving your partner bewildered and deeply hurt. Open channels of communication are therefore vital for the health of any relationship and remember communication need not always be in an argumentative tone or a high pitched voice. It’s important to keep your ego aside and communicate your feelings in a loving manner, in order to save yourself and your loved one from pointless hurt.
Relationship counseling
When you are angry or deeply hurt, you may blow small problems out of proportion. Just as love sometimes clouds our objectivity, hurt and anger have a similar effect too. You may be tempted to ask a friend or a close relative to interfere or “make the other person see the sense of your argument”, but remember this approach can easily backfire as friends and relatives may not be objective and biased towards you. It’s therefore advisable to seek relationship counseling if both you and your partner are open to the idea. You may feel hesitant about confiding in a stranger, but remember a counselor is not just a stranger but a trained therapist. Just like you go to a doctor to treat an illness, you can visit a relationship counselor to treat your ailing relationship.
Clinical Hypnosis
If either of you have a problem with insecurity, jealousy or commitment phobia, the reason could be your past. Clinical hypnosis could help you in this case. Sometimes some past events or happenings may get so firmly embedded in your subconscious that you might end up taking a lot of actions because of those past memories, without even realizing it. Through clinical hypnosis a trained therapist will be able to delve into your subconscious and help you release the memories which are hampering your relationship and re-program your mind.
Positive affirmations
When a relationship is in trouble we tend to indulge in lot of negative self-talk about ourselves and our relationship. Not only does such behavior push the relationship further into the abyss of loneliness it also affects our confidence and desire to make the relationship work. Repeated negative self-talk ends up strengthening our belief that our relationship is beyond repair. However, if instead of telling yourself how miserable you are and how imperfect your relationship is, if you could focus on making your relationship work, not only will you feel more motivated to bring your love life back on track but you’ll also feel more confident about being able to do it. You can either make up your own affirmations or practice the following in front of a mirror everyday:
“I love and appreciate myself the way I am”
“I deserve to love and be loved”
“I am surrounded by love at all times”
“The universe supplies me with endless love”
“All is well in my world”
Visualization techniques
Have you ever noticed that when you visualize something negative your body and mind start reacting as if you are already facing that situation? For example if you visualize you and your partner/spouse parting ways, you might feel a lump in your throat and your heart may start sinking. If you continue with your negative visualizations your body and mind start unconsciously pushing you in the direction of what you visualize the most. Similarly if you visualize yourself in a fulfilling relationship with your spouse/partner, your body and mind will start preparing you to live those happy images and will push you to push to fruition the visions of a healthy relationship.
These tips and techniques will be able to help you build a healthy relationship only if you and your partner are open to the idea of changing for the better, to make your relationship work.
Want more tips on how to build a healthy relationship? Have a comment or question you’d like to share? Come join others at Boomer Yearbook for simple and effective coaching tips and strategies.
www.boomeryearbook.com is a social networking site connecting the Baby Boomer generation. Share your thoughts, rediscover old friends, or expand your mind with brain games provided by clinical psychologist Dr. Karen Turner. Join today to discover the many ways we are helping Boomers connect for fun and profit.
For www.boomeryearbook.com
Offshore Investment Companies: Based Out Of Tax Havens
These countries are often less regulated than the host country and are hence preferred by offshore investors. Offshore investment gives greater freedom to the investor and has the potential for much greater return on investments. Since there is a wide portfolio of investments on offer offshore investment companies play a vital role in conducting these affairs.
Offshore investments can be made in the form of hedge funds, offshore investment funds, overseas mutual funds, offshore investment bonds, offshore unit trusts, offshore property funds etc.
An offshore investment offers a high level of privacy and is sometimes is looked at suspiciously as offering a channel for investing illegally acquired wealth. However offshore investments shield legitimate, affluent individuals from the financial pressures and constraints faced by them in their home country.
In fact offshore investments managed by offshore investment companies are completely legal and are regulated by the jurisdictions of those countries where investments are made.
Investors who live away from their home country, those who want to maintain their financial privacy and those who want to protect their assets legally usually opt for offshore investments.
Other reasons for offshore investments are benefits from a reduction in taxes, opportunity to remain discrete in financial affairs (due to family arrangements), and to expand investments beyond the investor’s current jurisdiction, to achieve a better return on investment.
Offshore investment companies with their years of investment experience gained by working in offshore jurisdictions help both corporate and individual investors to protect their assets through market savvy investments, thereby enabling investors to attain maximum return on their overseas investments.
Offshore investments shields investments from capital gain taxation and augments assets through a confidential and secure investment that is not governed by the rules and regulations of the home country.
It is very essential to choose the right offshore investment service provider to ensure that good advice is being obtained and more crucially an excellent ROI is achieved. Offshore investment companies work closely with their clients so as to get a detailed understanding about their investment and financial objectives, which enables them to give the best possible offshore advice.
Offshore investment companies prepare well constructed balanced portfolio of investments for their investors so as to ensure success. They update the investment portfolio because financial markets adjust according to world economies and are prone to internal and currency fluctuations. They make assessments on investments after every six months along with a full financial analysis once every 12 months. This is essential to maintain the growth of the investment portfolio.
Investing offshore can be a very attractive option to an investor who wants to explore and invest in markets outside the home country by acquiring overseas private investments. The common perception that offshore investments can be very risky does not hold any truth. In fact offshore financial centers rely heavily on offshore capital and as such are very concerned about maintaining their reputations.
Offshore investments can be made in the form of hedge funds, offshore investment funds, overseas mutual funds, offshore investment bonds, offshore unit trusts, offshore property funds etc.
An offshore investment offers a high level of privacy and is sometimes is looked at suspiciously as offering a channel for investing illegally acquired wealth. However offshore investments shield legitimate, affluent individuals from the financial pressures and constraints faced by them in their home country.
In fact offshore investments managed by offshore investment companies are completely legal and are regulated by the jurisdictions of those countries where investments are made.
Investors who live away from their home country, those who want to maintain their financial privacy and those who want to protect their assets legally usually opt for offshore investments.
Other reasons for offshore investments are benefits from a reduction in taxes, opportunity to remain discrete in financial affairs (due to family arrangements), and to expand investments beyond the investor’s current jurisdiction, to achieve a better return on investment.
Offshore investment companies with their years of investment experience gained by working in offshore jurisdictions help both corporate and individual investors to protect their assets through market savvy investments, thereby enabling investors to attain maximum return on their overseas investments.
Offshore investments shields investments from capital gain taxation and augments assets through a confidential and secure investment that is not governed by the rules and regulations of the home country.
It is very essential to choose the right offshore investment service provider to ensure that good advice is being obtained and more crucially an excellent ROI is achieved. Offshore investment companies work closely with their clients so as to get a detailed understanding about their investment and financial objectives, which enables them to give the best possible offshore advice.
Offshore investment companies prepare well constructed balanced portfolio of investments for their investors so as to ensure success. They update the investment portfolio because financial markets adjust according to world economies and are prone to internal and currency fluctuations. They make assessments on investments after every six months along with a full financial analysis once every 12 months. This is essential to maintain the growth of the investment portfolio.
Investing offshore can be a very attractive option to an investor who wants to explore and invest in markets outside the home country by acquiring overseas private investments. The common perception that offshore investments can be very risky does not hold any truth. In fact offshore financial centers rely heavily on offshore capital and as such are very concerned about maintaining their reputations.
Unlocking your Self Improvement Power
When we look at a certain object, a painting for example – we won’t be able to appreciate what’s in it, what is painted and what else goes with it if the painting is just an inch away from our face. But if we try to take it a little further, we’ll have a clearer vision of the whole artwork.
We reach a point in our life when we are ready for change and a whole bunch of information that will help us unlock our self-improvement power. Until then, something can be staring us right under our nose but we don’t see it. The only time we think of unlocking our self-improvement power is when everything got worst.
Take the frog principle for example.
Try placing Frog A in a pot of boiling water. What happens? He twerps! He jumps off! Why? Because he is not able to tolerate sudden change in his environment – the water’s temperature. Then try Frog B: place him in a lukewarm water, then turn the gas stove on. Wait until the water reaches a certain boiling point. Frog B then thinks “Ooh… it’s a bit warm in here”.
People are like Frog B in general. Today, Anna thinks Carl hates her. Tomorrow, Patrick walks up to her and told her he hates her. Anna stays the same and doesn’t mind her what her friends says. The next day, she learned that Kim and John also abhors her. Anna doesn’t realize at once the importance and the need for self-improvement until the entire community hates her.
We learn our lessons when we experience pain. We finally see the warning signs and signals when things get rough and tough. When do we realize that we need to change diets? When none of our jeans and shirts would fit us. When do we stop eating candies and chocolates? When all of our teeth has fallen off. When do we realize that we need to stop smoking? When our lungs have gone bad. When do we pray and ask for help? When we realize that we’re gonna die tomorrow.
The only time most of us ever learn about unlocking our self-improvement power is when the whole world is crashing and falling apart. We think and feel this way because it is not easy to change. But change becomes more painful when we ignore it.
Change will happen, like it or hate it. At one point or another, we are all going to experience different turning points in our life – and we are all going to eventually unlock our self-improvement power not because the world says so, not because our friends are nagging us, but because we realized its for our own good.
Happy people don’t just accept change, they embrace it. Now, you don’t have to feel a tremendous heat before realizing the need for self-improvement. Unlocking your self-improvement power means unlocking yourself up in the cage of thought that “its just the way I am”. It is such a poor excuse for people who fear and resist change. Most of us program our minds like computers.
Jen repeatedly tells everyone that she doesn’t have the guts to be around groups of people. She heard her mom, her dad, her sister, her teacher tell the same things about her to other people. Over the years, that is what Jen believes. She believes its her story. And what happens? Every time a great crowd would troop over their house, in school, and in the community – she tends to step back, shy away and lock herself up in a room. Jen didn’t only believed in her story, she lived it.
Jen has to realize that she is not what she is in her story. Instead of having her story post around her face for everyone to remember, she has to have the spirit and show people “I am an important person and I should be treated accordingly!”
Self-improvement may not be everybody’s favorite word, but if we look at things in a different point of view, we might have greater chances of enjoying the whole process instead of counting the days until we are fully improved. Three sessions in a week at the gym would result to a healthier life, reading books instead of looking at porns will shape up a more profound knowledge, going out with friends and peers will help you take a step back from work and unwind. And just when you are enjoying the whole process of unlocking your self-improvement power, you’ll realize that you’re beginning to take things light and become happy.
We reach a point in our life when we are ready for change and a whole bunch of information that will help us unlock our self-improvement power. Until then, something can be staring us right under our nose but we don’t see it. The only time we think of unlocking our self-improvement power is when everything got worst.
Take the frog principle for example.
Try placing Frog A in a pot of boiling water. What happens? He twerps! He jumps off! Why? Because he is not able to tolerate sudden change in his environment – the water’s temperature. Then try Frog B: place him in a lukewarm water, then turn the gas stove on. Wait until the water reaches a certain boiling point. Frog B then thinks “Ooh… it’s a bit warm in here”.
People are like Frog B in general. Today, Anna thinks Carl hates her. Tomorrow, Patrick walks up to her and told her he hates her. Anna stays the same and doesn’t mind her what her friends says. The next day, she learned that Kim and John also abhors her. Anna doesn’t realize at once the importance and the need for self-improvement until the entire community hates her.
We learn our lessons when we experience pain. We finally see the warning signs and signals when things get rough and tough. When do we realize that we need to change diets? When none of our jeans and shirts would fit us. When do we stop eating candies and chocolates? When all of our teeth has fallen off. When do we realize that we need to stop smoking? When our lungs have gone bad. When do we pray and ask for help? When we realize that we’re gonna die tomorrow.
The only time most of us ever learn about unlocking our self-improvement power is when the whole world is crashing and falling apart. We think and feel this way because it is not easy to change. But change becomes more painful when we ignore it.
Change will happen, like it or hate it. At one point or another, we are all going to experience different turning points in our life – and we are all going to eventually unlock our self-improvement power not because the world says so, not because our friends are nagging us, but because we realized its for our own good.
Happy people don’t just accept change, they embrace it. Now, you don’t have to feel a tremendous heat before realizing the need for self-improvement. Unlocking your self-improvement power means unlocking yourself up in the cage of thought that “its just the way I am”. It is such a poor excuse for people who fear and resist change. Most of us program our minds like computers.
Jen repeatedly tells everyone that she doesn’t have the guts to be around groups of people. She heard her mom, her dad, her sister, her teacher tell the same things about her to other people. Over the years, that is what Jen believes. She believes its her story. And what happens? Every time a great crowd would troop over their house, in school, and in the community – she tends to step back, shy away and lock herself up in a room. Jen didn’t only believed in her story, she lived it.
Jen has to realize that she is not what she is in her story. Instead of having her story post around her face for everyone to remember, she has to have the spirit and show people “I am an important person and I should be treated accordingly!”
Self-improvement may not be everybody’s favorite word, but if we look at things in a different point of view, we might have greater chances of enjoying the whole process instead of counting the days until we are fully improved. Three sessions in a week at the gym would result to a healthier life, reading books instead of looking at porns will shape up a more profound knowledge, going out with friends and peers will help you take a step back from work and unwind. And just when you are enjoying the whole process of unlocking your self-improvement power, you’ll realize that you’re beginning to take things light and become happy.
In Risky Markets, Following The Secrets Of The Ultra-rich, Not The Rich, Will Help Your Investment Decisions
Recently, there was an article on CNNMoney that spoke about the “secrets” of the elite rich in the United States. In turn, several articles were written about this article, including one that stated that the richest of Americans “built their wealth with diversification, wealth preservation and strategic growth.” That is a ridiculous statement in itself because two of those strategies, diversification and preservation don’t help build wealth. Perhaps the richest of Americans use these two strategies to maintain an even keel AFTER they have accumulated great wealth, but certainly they didn’t use them during the accumulation phase. According to this article, a survey of Northern Trust uncovered that the “richest Americans do not heavily rely on high-risk investment vehicles like hedge funds to make money, but are moderate risk takers who put more than half of their asset allocation into U.S. stocks and cash.”
Again, just as former hedge fund manager and multi-millionaire Jim Cramer said that he used certain financial journalists, including ones employed by the Wall Street Journal, as pawns to spread misinformation far and wide to benefit himself, again this is an example of investment institutions using the media as pawns to spread their myths to keep the masses of retail investors ignorant. The CNNMoney article made it appear that the richest of Americans built their wealth by being conservative and slowly growing their money over time. That’s an oxymoron right there. To state that the rich became rich by slowly growing their money over time. Well, if they are slowly growing their money and becoming even richer, then this implies that they were rich to begin with. So how did they accumulate wealth? Surely not by “slowly growing” their money.
Sure, some of the “richest Americans do not heavily rely on high-risk investments” because they ARE ALREADY EXTREMELY RICH. The majority of ultra-rich do NOT build their fortunes by speculating on high-risk investments as is commonly believed. Often they build fortunes utilizing volatile assets and investments but that does NOT mean they were engaging in risky behavior. Many times, investing in a hedge fund can be much riskier than investing in some of the assets that your investment firm will tell you is “risky”. But investment firms will gladly place a portion of your money in hedge funds because the fees they earn from hedge funds are so high even as they advise you not to put your money in a much less risky investment with much greater earning potential. And THIS IS THE SECRET that investment firms never tell you.
Volatile assets that often can be used to build great wealth are NOT RISKY if they are purchased at entry points that are extremely favorable and provide a low-risk point of entry. 99% of investors don’t understand what high-risk investments truly are because they have been misinformed by their advisors and their firms for the past half of a century. Purchasing volatile assets at low risk-high reward entry points greatly mitigates and neutralizes the great majority of risk of volatile assets. If you don’t understand this concept then you need to.
Many millionaires that are wealthy but that could be extremely wealthy fail to build enormous wealth because investment and financial institutions mislead them about certain investment opportunities and describe them as complex and risky and are able to convince their clients of this belief because they never properly explain risk-reward scenarios to their clients. However, those investors that are extremely wealthy are the rare breed that understand this concept. If investors had a choice between allocating $1,000,000 in a historically volatile Investment A that has a 78% chance of returning a 250% gain versus an Investment B that has a 95% chance of earning 9%, most investors would choose Investment A.
However, because Investment A may exhibit 50% more volatility than Investment B, the great majority of advisors would steer their client away from the former investment into the latter one. In fact, this is exactly what even “prestigious” firms that cater to ultra high net-worth clients do because they allow misinformed, uneducated investors dictate the rules of engagement to them, and they would much rather appease such powerful, important people with slow,minimal gains rather than empower and enlighten them and boost their returns like never before. They would choose to steer them away because they present the investment opportunities incorrectly, merely telling their client that while they could earn 350% from Investment A there was also a very realistic probability that they could lose $300,000, and that shooting for the slow but steady $90,000 a year is much better for them.
If you are thinking to yourself, “That makes absolutely no sense?” Why would firms not earn 20% a year for their clients if they could instead of 8% a year? The answer is because the overwhelming majority of investment firms, no matter how prestigious their brand, are merely highly glorified sales machines. They fail to convince clients to invest in phenomenal investment opportunities that sometimes arise like Investment A because in order for Investment A to be a moderate risk, very high reward investment, it must be entered at a low risk entry point so that the probability of being down $300,000 at any give time would be reduced from perhaps 50% to 20%.
And that even if their timing is not optimal, then a firm must educate the client that as long as they don’t panic when they are down, the odds are still extremely high that they will earn a 250% or better gain. However, the greatest factor that determines why firms will not seek this strategy is time. Engaging in much better strategies such as these for their clients would take massive amounts of time in client education and enough time in research that the amount of assets gathered would take a serious hit.
So because it is not in a firm’s interest to engage in activities that maximize portfolio returns (unless it is their own institutional portfolio), instead, we have Chief Investment Officers at top investment firms making statements like, “”Generally they [the richest of Americans] want to see prudently managed growth without a lot of surprises, which is why we emphasize diversification.” Again, this is a sales & marketing campaign statement, not an aboveboard statement about how to make money for clients.
If clients are uncomfortable with strategies that would actually built great wealth for them instead of producing mediocre or subpar returns, their discomfort only originates from the fact that the largest investment firms have been deceiving their clients, just as Jim Cramer had deceived the thundering sheep herd for years, about the realities of building wealth. This discomfort originates solely from the fact that he or she has been kept in the dark for so long. Thus, we have a misinformation-driven cauldron of investors making bad investment decisions that exists today. In 2007, you’ll still find Chief Investment Officers of very well known firms making ridiculous statement that investors need to invest at least 50% of their stock portfolio in U.S. stocks if they wish to grow their portfolios exponentially.
How are they going to grow their portfolios exponentially with more than half of their stocks in a stock market (the U.S.) that has NEVER been the best performing market in the past 25 years (even among developed stock markets)? How will they grow their portfolios exponentially by buying stocks in market that trades in what is quite possibly the worst currency on earth among developed markets (the U.S. dollar)? Yes I know that when the U.S. dollar shows a brief spike in strength as is likely to happen soon (I’m writing this article in April, 2007), that many people will question what I am saying, but this is only again because they are victims to the mass deception mind-games of the investment industry. I suppose if planning to earn better than subpar returns in your stock portfolio is engaging in risky behavior as Chief Investment Officers of various firms claim, then yes, I whole-heartedly endorse engaging in risky behavior.
And because so many people, yes, even those considered quite wealthy, fall victim to the preaching of investment industry demagogues, there is a second mistake that many rich investors will soon make.
Another survey of wealthy U.S. investors uncovered that a large percentage of investors with investment assets of over a million do not employ any type of investment advisor but plan to do so soon giving the increasingly gloomy nature of the U.S. stock markets. To that, this is what I have to say. Making money in difficult markets is ten times more difficult than making money in bull markets. If investors believe that it will be increasingly more difficult to make money in U.S. stock markets, but yet top investment firms in the U.S. continue to preach that more than half of your portfolio should be in U.S. stocks (mostly to cover their respective firm’s inadequate coverage of emerging markets), how is the hiring one of these men possibly going to improve these investors’ future performance outlook?
But there is an EXTREMELY important distinction to be made here. What I’ve written above applies to the behavior and mindset of some of the richest people in America, but not THE very richest people in America. The very richest people in America, those you might categorize as the world’s ultra-rich, possess a very different mindset and behavior set than those that are just rich. The ultra-rich have positioned their portfolios extremely differently from how the rich people discussed above have positioned their portfolios. The reason why articles regarding their behavior and investment decisions are virtually non-existent is because they don’t grant interviews and they don’t want people to know what they are doing. But I’ve investigated what they are doing, and trust me, it is nothing remotely similar to the behavior of wealthy investors described by Northern Trust and other investment firms.
If you would like to find out why the ultra-rich always manage their own money or able to find the 1 in a million consultant truly capable of providing them the returns they desire, consult our resource of “101 Reasons Why Managing Your Own Money is the Only Way to Build Wealth.” Even if the ultra-wealthy have someone managing their money for them, the only way they were capable of finding this 1 in a million financial consultant was due to the fact that if they had to, they could manage their own money successfully as well. Only be first fully understanding the most successful investment strategies themselves could they identify an advisor capable of employing such strategies. However, a great majority of ultra-wealthy continue to handle and make their own investment decisions.
Again, just as former hedge fund manager and multi-millionaire Jim Cramer said that he used certain financial journalists, including ones employed by the Wall Street Journal, as pawns to spread misinformation far and wide to benefit himself, again this is an example of investment institutions using the media as pawns to spread their myths to keep the masses of retail investors ignorant. The CNNMoney article made it appear that the richest of Americans built their wealth by being conservative and slowly growing their money over time. That’s an oxymoron right there. To state that the rich became rich by slowly growing their money over time. Well, if they are slowly growing their money and becoming even richer, then this implies that they were rich to begin with. So how did they accumulate wealth? Surely not by “slowly growing” their money.
Sure, some of the “richest Americans do not heavily rely on high-risk investments” because they ARE ALREADY EXTREMELY RICH. The majority of ultra-rich do NOT build their fortunes by speculating on high-risk investments as is commonly believed. Often they build fortunes utilizing volatile assets and investments but that does NOT mean they were engaging in risky behavior. Many times, investing in a hedge fund can be much riskier than investing in some of the assets that your investment firm will tell you is “risky”. But investment firms will gladly place a portion of your money in hedge funds because the fees they earn from hedge funds are so high even as they advise you not to put your money in a much less risky investment with much greater earning potential. And THIS IS THE SECRET that investment firms never tell you.
Volatile assets that often can be used to build great wealth are NOT RISKY if they are purchased at entry points that are extremely favorable and provide a low-risk point of entry. 99% of investors don’t understand what high-risk investments truly are because they have been misinformed by their advisors and their firms for the past half of a century. Purchasing volatile assets at low risk-high reward entry points greatly mitigates and neutralizes the great majority of risk of volatile assets. If you don’t understand this concept then you need to.
Many millionaires that are wealthy but that could be extremely wealthy fail to build enormous wealth because investment and financial institutions mislead them about certain investment opportunities and describe them as complex and risky and are able to convince their clients of this belief because they never properly explain risk-reward scenarios to their clients. However, those investors that are extremely wealthy are the rare breed that understand this concept. If investors had a choice between allocating $1,000,000 in a historically volatile Investment A that has a 78% chance of returning a 250% gain versus an Investment B that has a 95% chance of earning 9%, most investors would choose Investment A.
However, because Investment A may exhibit 50% more volatility than Investment B, the great majority of advisors would steer their client away from the former investment into the latter one. In fact, this is exactly what even “prestigious” firms that cater to ultra high net-worth clients do because they allow misinformed, uneducated investors dictate the rules of engagement to them, and they would much rather appease such powerful, important people with slow,minimal gains rather than empower and enlighten them and boost their returns like never before. They would choose to steer them away because they present the investment opportunities incorrectly, merely telling their client that while they could earn 350% from Investment A there was also a very realistic probability that they could lose $300,000, and that shooting for the slow but steady $90,000 a year is much better for them.
If you are thinking to yourself, “That makes absolutely no sense?” Why would firms not earn 20% a year for their clients if they could instead of 8% a year? The answer is because the overwhelming majority of investment firms, no matter how prestigious their brand, are merely highly glorified sales machines. They fail to convince clients to invest in phenomenal investment opportunities that sometimes arise like Investment A because in order for Investment A to be a moderate risk, very high reward investment, it must be entered at a low risk entry point so that the probability of being down $300,000 at any give time would be reduced from perhaps 50% to 20%.
And that even if their timing is not optimal, then a firm must educate the client that as long as they don’t panic when they are down, the odds are still extremely high that they will earn a 250% or better gain. However, the greatest factor that determines why firms will not seek this strategy is time. Engaging in much better strategies such as these for their clients would take massive amounts of time in client education and enough time in research that the amount of assets gathered would take a serious hit.
So because it is not in a firm’s interest to engage in activities that maximize portfolio returns (unless it is their own institutional portfolio), instead, we have Chief Investment Officers at top investment firms making statements like, “”Generally they [the richest of Americans] want to see prudently managed growth without a lot of surprises, which is why we emphasize diversification.” Again, this is a sales & marketing campaign statement, not an aboveboard statement about how to make money for clients.
If clients are uncomfortable with strategies that would actually built great wealth for them instead of producing mediocre or subpar returns, their discomfort only originates from the fact that the largest investment firms have been deceiving their clients, just as Jim Cramer had deceived the thundering sheep herd for years, about the realities of building wealth. This discomfort originates solely from the fact that he or she has been kept in the dark for so long. Thus, we have a misinformation-driven cauldron of investors making bad investment decisions that exists today. In 2007, you’ll still find Chief Investment Officers of very well known firms making ridiculous statement that investors need to invest at least 50% of their stock portfolio in U.S. stocks if they wish to grow their portfolios exponentially.
How are they going to grow their portfolios exponentially with more than half of their stocks in a stock market (the U.S.) that has NEVER been the best performing market in the past 25 years (even among developed stock markets)? How will they grow their portfolios exponentially by buying stocks in market that trades in what is quite possibly the worst currency on earth among developed markets (the U.S. dollar)? Yes I know that when the U.S. dollar shows a brief spike in strength as is likely to happen soon (I’m writing this article in April, 2007), that many people will question what I am saying, but this is only again because they are victims to the mass deception mind-games of the investment industry. I suppose if planning to earn better than subpar returns in your stock portfolio is engaging in risky behavior as Chief Investment Officers of various firms claim, then yes, I whole-heartedly endorse engaging in risky behavior.
And because so many people, yes, even those considered quite wealthy, fall victim to the preaching of investment industry demagogues, there is a second mistake that many rich investors will soon make.
Another survey of wealthy U.S. investors uncovered that a large percentage of investors with investment assets of over a million do not employ any type of investment advisor but plan to do so soon giving the increasingly gloomy nature of the U.S. stock markets. To that, this is what I have to say. Making money in difficult markets is ten times more difficult than making money in bull markets. If investors believe that it will be increasingly more difficult to make money in U.S. stock markets, but yet top investment firms in the U.S. continue to preach that more than half of your portfolio should be in U.S. stocks (mostly to cover their respective firm’s inadequate coverage of emerging markets), how is the hiring one of these men possibly going to improve these investors’ future performance outlook?
But there is an EXTREMELY important distinction to be made here. What I’ve written above applies to the behavior and mindset of some of the richest people in America, but not THE very richest people in America. The very richest people in America, those you might categorize as the world’s ultra-rich, possess a very different mindset and behavior set than those that are just rich. The ultra-rich have positioned their portfolios extremely differently from how the rich people discussed above have positioned their portfolios. The reason why articles regarding their behavior and investment decisions are virtually non-existent is because they don’t grant interviews and they don’t want people to know what they are doing. But I’ve investigated what they are doing, and trust me, it is nothing remotely similar to the behavior of wealthy investors described by Northern Trust and other investment firms.
If you would like to find out why the ultra-rich always manage their own money or able to find the 1 in a million consultant truly capable of providing them the returns they desire, consult our resource of “101 Reasons Why Managing Your Own Money is the Only Way to Build Wealth.” Even if the ultra-wealthy have someone managing their money for them, the only way they were capable of finding this 1 in a million financial consultant was due to the fact that if they had to, they could manage their own money successfully as well. Only be first fully understanding the most successful investment strategies themselves could they identify an advisor capable of employing such strategies. However, a great majority of ultra-wealthy continue to handle and make their own investment decisions.
Self-improvement & Success: Hand in Hand
Everything that happens to us happens in purpose. And sometimes, one thing leads to another. Instead of locking yourself up in your cage of fears and crying over past heartaches, embarrassment and failures, treat them as your teachers and they will become your tools in both self-improvement and success.
Remember watching Patch Adams? It’s one great film that will help you improve yourself. Hunter “patch” Adams is a medical student who failed to make it through the board exams. After months of suffering in melancholy, depression and suicidal attempts – he decided to seek for medical attention and voluntarily admitted himself in a psychiatric ward. His months of stay in the hospital led him to meeting different kinds of people.
Sick people in that matter. He met a catatonic, a mentally retarded, a schizophrenic and so on. Patch found ways of treating his own ailment and finally realized he has to get back on track. He woke up one morning realizing that after all the failure and pains he has gone through, he still want to become a doctor. He carries with himself a positive attitude that brought him self-improvement and success. He didn’t only improved himself, but also the life of the people around him and the quality of life. Did he succeed? Needless to say, he became the best damn doctor his country has ever known.
So, when does self-improvement become synonymous with success? Where do we start? Take these tips:
• Stop thinking and feeling as if you’re a failure, because you’re not. How can others accept you if YOU can’t accept YOU?
• When you see hunks and models on TV, think more on self-improvement, not self pitying. Self-acceptance is not just about having nice slender legs, or great abs. Concentrate on inner beauty.
• When people feel so down and low about themselves, help them move up. Don’t go down with them. They’ll pull you down further and both of you will end up feeling inferior.
• The world is a large room for lessons, not mistakes. Don’t feel stupid and doomed forever just because you failed on a science quiz. There’s always a next time. Make rooms for self-improvement.
• Take things one at a time. You don’t expect black sheep’s to be goody-two-shoes in just a snap of a finger. Self-improvement is a one day at a time process.
• Self-improvement results to inner stability, personality development and SUCCESS. It comes from self-confidence, self appreciation and self-esteem.
• Set meaningful and achievable goals. Self-improvement doesn’t turn you to be the exact replica of Cameron Diaz or Ralph Fiennes. It hopes and aims to result to an improved and better YOU.
• Little things mean BIG to other people. Sometimes, we don’t realize that the little things that we do like a pat on the back, saying “hi” or “hello”, greeting someone “good day” or telling Mr. Smith something like “hey, I love your tie!” are simple things that mean so much to other people. When we’re being appreciative about beautiful things around us and other people, we also become beautiful to them.
• When you’re willing to accept change and go through the process of self-improvement, it doesn’t mean that everyone else is. The world is a place where people of different values and attitude hang out. Sometimes, even if you think you and your best friend always like to do the same thing together at the same time, she would most likely decline an invitation for self-improvement.
We should always remember that there’s no such thing as ‘over night success’. Its always a wonderful feeling to hold on to the things that you already have now, realizing that those are just one of the things you once wished for. A very nice quote says that, “When the student is ready, the teacher will appear.” We are all here to learn our lessons. Our parents, school teachers, friends, colleagues, officemates, neighbors… they are our teachers. When we open our doors for self-improvement, we increase our chances to head to the road of success.
Remember watching Patch Adams? It’s one great film that will help you improve yourself. Hunter “patch” Adams is a medical student who failed to make it through the board exams. After months of suffering in melancholy, depression and suicidal attempts – he decided to seek for medical attention and voluntarily admitted himself in a psychiatric ward. His months of stay in the hospital led him to meeting different kinds of people.
Sick people in that matter. He met a catatonic, a mentally retarded, a schizophrenic and so on. Patch found ways of treating his own ailment and finally realized he has to get back on track. He woke up one morning realizing that after all the failure and pains he has gone through, he still want to become a doctor. He carries with himself a positive attitude that brought him self-improvement and success. He didn’t only improved himself, but also the life of the people around him and the quality of life. Did he succeed? Needless to say, he became the best damn doctor his country has ever known.
So, when does self-improvement become synonymous with success? Where do we start? Take these tips:
• Stop thinking and feeling as if you’re a failure, because you’re not. How can others accept you if YOU can’t accept YOU?
• When you see hunks and models on TV, think more on self-improvement, not self pitying. Self-acceptance is not just about having nice slender legs, or great abs. Concentrate on inner beauty.
• When people feel so down and low about themselves, help them move up. Don’t go down with them. They’ll pull you down further and both of you will end up feeling inferior.
• The world is a large room for lessons, not mistakes. Don’t feel stupid and doomed forever just because you failed on a science quiz. There’s always a next time. Make rooms for self-improvement.
• Take things one at a time. You don’t expect black sheep’s to be goody-two-shoes in just a snap of a finger. Self-improvement is a one day at a time process.
• Self-improvement results to inner stability, personality development and SUCCESS. It comes from self-confidence, self appreciation and self-esteem.
• Set meaningful and achievable goals. Self-improvement doesn’t turn you to be the exact replica of Cameron Diaz or Ralph Fiennes. It hopes and aims to result to an improved and better YOU.
• Little things mean BIG to other people. Sometimes, we don’t realize that the little things that we do like a pat on the back, saying “hi” or “hello”, greeting someone “good day” or telling Mr. Smith something like “hey, I love your tie!” are simple things that mean so much to other people. When we’re being appreciative about beautiful things around us and other people, we also become beautiful to them.
• When you’re willing to accept change and go through the process of self-improvement, it doesn’t mean that everyone else is. The world is a place where people of different values and attitude hang out. Sometimes, even if you think you and your best friend always like to do the same thing together at the same time, she would most likely decline an invitation for self-improvement.
We should always remember that there’s no such thing as ‘over night success’. Its always a wonderful feeling to hold on to the things that you already have now, realizing that those are just one of the things you once wished for. A very nice quote says that, “When the student is ready, the teacher will appear.” We are all here to learn our lessons. Our parents, school teachers, friends, colleagues, officemates, neighbors… they are our teachers. When we open our doors for self-improvement, we increase our chances to head to the road of success.
Stock Market Investing Guide > Day Trading Like a Pro - Mastering Your Trades
By.- http://www.StressFreeTraders.com
It’s no secret that online trading can be a very lucrative, yet highly competitive field, and the truth is that the stock market doesn’t care if you are an experienced or a beginner trader.
The rules and the opportunities are the same for everyone, so either you are going to make money when you pick a stock and make a trade or you are simply going to lose it in favor of the more seasoned ones.
As a stock trader your homework is all about studying and testing different market strategies that can help you take advantage of stocks while at the same time protect your gains.
Just always keep in mind that a good strategy is simple and practical. Complicated stock systems will always make you slow in your decision making process or confuse you from the start.
A trader must always read as much as he can. There is simply no other way to prepare one self for this difficult yet incredibly rewarding activity, but to read and put into practice as much ideas as you can, at least by paper trading first.
The are a lot of books on the subject that pretend to help you, however many of them where written 6 or 8 years ago and that kind of makes them obsolete in this constantly changing field.
Fortunately there are some practical stock trading sites on the web where you can access proven trading strategies that are easy to implement. One of those sites is http://www.StressFreeTraders.com
They focus on stock trading methodologies that can help you identify and take advantage of certain stocks with momentum, while limiting your risk.
Visit them today and improve your stock trading potential in 2009.
It’s no secret that online trading can be a very lucrative, yet highly competitive field, and the truth is that the stock market doesn’t care if you are an experienced or a beginner trader.
The rules and the opportunities are the same for everyone, so either you are going to make money when you pick a stock and make a trade or you are simply going to lose it in favor of the more seasoned ones.
As a stock trader your homework is all about studying and testing different market strategies that can help you take advantage of stocks while at the same time protect your gains.
Just always keep in mind that a good strategy is simple and practical. Complicated stock systems will always make you slow in your decision making process or confuse you from the start.
A trader must always read as much as he can. There is simply no other way to prepare one self for this difficult yet incredibly rewarding activity, but to read and put into practice as much ideas as you can, at least by paper trading first.
The are a lot of books on the subject that pretend to help you, however many of them where written 6 or 8 years ago and that kind of makes them obsolete in this constantly changing field.
Fortunately there are some practical stock trading sites on the web where you can access proven trading strategies that are easy to implement. One of those sites is http://www.StressFreeTraders.com
They focus on stock trading methodologies that can help you identify and take advantage of certain stocks with momentum, while limiting your risk.
Visit them today and improve your stock trading potential in 2009.
Investment Corner Part 2
Different Types of Investments:
As we said last time, owning a stock is like owning part of a company. As the company rises or falls in value, so does the price of it’s stock. A key distinction is that the value of the stock is not only driven by the fundamental value of the company, but by other factors as well. These factors may include overall stock market trends, domestic versus foreign trade issues, business sector climate, etc. Owning a bond, is like owning part of a loan to a company or institution, like the State of Texas. Bonds typically pay a fixed amount of dividend as the loan is repaid. The bond’s value is determined by the interest rate on the underlying loan, and the current interest rates and trends in the marketplace. For example, who would not want own a 10% bond right now, when the money markets or bank passbook savings accounts are paying 3%? Should the institution or company fail or default on the loan, you could lose all or most of your bond’s value. Large companies or institutions usually issue bonds; so the risk is greatly reduced over owning a company’s stock share.
A stock mutual fund, is a group of stocks owned by a fund company to achieve certain investment objectives. Likewise a bond mutual fund is a group of bonds held to achieve a certain investment objective. Mutual funds, in both stock and bond types exist in many styles and forms. Fundamentally they are a savvy collection of stocks or bonds assembled and professionally managed for a specific or combination of investment aims. These typically diversify your investments so that no one particular company can sink your entire investment. The converse is that no one single stock can shoot your mutual fund up to a huge return.
Typically each mutual fund focuses upon growth, income, value, large, small or mid-capitalization companies, or a combination of these objectives. There are thousands of different funds and dozens of fund families to choose from. There are also companies that rate mutual funds, like Morningstar (www.morningstar.com ). Some mutual funds use a management team to select and prune stocks in the portfolio, some use certain methods, and some follow the leadership of a single fund manager. You should check these out before investing in a particular fund.
An oft-overlooked mutual fund consideration is the management fee or what are referred to as 12b-1 fees. Most fees are in the range of 1 to 2%. Be wary of any fund outside that range. The United States Securities and Exchange Commission can help unravel some of these issues for you. A good starting point is their investor section on mutual fund performance, specifically www.sec.gov/investor/pubs/mperform.htm . They also have a fund cost calculator to help take into account the fund management fees. Some funds are no-load mutual funds because they do not pay a sales person any commissions for selling fund shares. These are typically lower in cost, and if you own them for a long time, they can make a difference in the net return on your mutual fund investment. Conversely, there are loaded funds, which charge a commission when you invest in their fund. These vary widely in amounts, so ask for exact details before investing. Some require you to pay the sales commissions; others add that to the fund expenses. Either way it’s a cost to you. The Vanguard Funds (www.vanguard.com ) are often mentioned as a leader in creating no-load, low cost mutual funds. You will find compelling arguments at their website for owning no-load funds. You should check carefully on overall fund performance including fees when evaluating fund choices.
Measuring Risk:
Most mutual fund and stock tables and resources will list something called the beta or volatility of the items listed. Beta is a measure of the risk of the security listed associated with variation of the security when compared to the overall stock market. If beta is 1, then the stock or mutual fund varies about the same as the general market index. If less than 1, then the security is less volatile than the general index of comparison, with higher than 1 meaning more risk.
Measuring Risk-adjusted Returns:
There is also parameter called alpha, which is the market-adjusted return of the security. If alpha is positive, then the security earned a higher return than the relative market index of comparison. If alpha is negative, then the security earned less than the market did.
Minimizing Overall Risk:
Risks in the future may be reduced in the present only through preparation, planning and actions!
We discussed preparation and planning for the future in the last Investment Corner, which is a key risk-reduction strategy.
Risk reduction for investing is typically achieved through:
• Diversification,
• Portfolio Allocation,
• Pre-determined buying and selling prices, and
• Adherence to personal investing rules.
Now let’s look at the first part of risk reduction strategy for investing.
Diversification:
Diversification is spreading out your investments across several areas to reduce risk and capture growth in multiple places. Diversification is typically done at several levels. At the uppermost level, we typically diversify investments across different investment vehicles, such as cash, stocks, bonds and real estate. By doing this, we reduce several important risks. Inflation can reduce the value of cash on hand over time, which is why smart folks do not keep their life savings in cash hidden in a mattress! On the other hand, inflation can drive down the value of fixed dividend investments like bonds as well. Real estate may rise or decline with inflation, depending upon the health of both the local and the greater economies. Fixed hard assets like precious metals funds (gold) will usually rise on inflation or fears of inflation. Other risks include stock market declines, individual company bankruptcies, and so on…. By not “placing all the eggs in one basket” we lower our exposure to risks through diversification. During broad stock market declines, many folks move assets from stocks to cash or bonds. And of course the opposite during bull market runs.
Another diversification notion is that of slicing up your investment by specific growth sectors. Within a specific type of investment vehicle, say Mutual Funds, we diversify across the available growth and income sectors. Typically this is large, medium and small companies, as well as high dividend or high growth type stocks. You also could look into diversifying into domestic or international companies such as Asia-Pacific.
At the lower levels of investment diversification are multiple choices within a specific growth target. Most advisors strongly recommend diversification within a stock or bond market holding. If you feel for example that the Internet’s growth will continue or expand soon, buying stock in several companies who offer Internet products would help lower risk of any one company not doing too well. Diversification across several stocks is usually done in simple form through equal partitioning. If for example you had $10,000 to invest, how would you do it? You could place 20% of your total investment amount in each of 5 different Internet stocks as in Table I:
Table I –Stock Investment Diversification
Stock Name Current Price 90 Day High 90 Day Low Amount Invested ~ Shares
Company A $25 $28 $20 $2000 80
Company B $40 $40 $20 $2000 50
Company C $60 $60 $20 $2000 33
Company D $300 $300 $198 $2000 7
Company E $8 $9 $3 $2000 250
By looking at the trading ranges across the 90-day history, you can estimate the risks or volatility of each stock. Do the stocks have the same risks? Do they all have the same growth potential?
One approach would be to allocate risks equally, as opposed to allocating investment equally. You would be to use the information in the range of stock trading prices to assess risk and re-allocate your investments as this diversification calculator shows below in table II:
Table II – Risk Diversification Calculator
Risk Diversification Calculator
Investment Amount $10,000
Stocks 5
Stock_1 Stock_2 Stock_3 Stock_4 Stock_5
90-day Max $28 $40 $60 $300 $9
90-day Min $20 $20 $20 $198 $3
Cur. Price $25 $40 $60 $300 $8
Trade Rnge 32% 50% 67% 41% 100%
Eq. Amt $2,000 $2,000 $2,000 $2,000 $2,000
$$ at Risk $640 $1,000 $1,333 $819 $2,000
Risk Ratio 1 1.5625 2.083 1.28 3.125
Risk-Red. $2,000 $1,280 $960 $1,562 $640
Adj. Inv.$3,104 $1,987 $1,490 $2,425 $993
If you do not want to do the research and monitoring required for several individual stocks or bonds, choosing a mutual fund may be the wisest choice, with a smaller but usually acceptable return on your investment. The key question you need to answer is not “Should I diversify?”, but rather “How will I diversify my investments?”
About YOU
The primary things you should know about yourself before selecting among the different types of investments are:
I. How much of my time is available to monitor/manage my investments?
II. How often do I want to change my investment choices?
III. Do I want help and advice from investment professionals?
These are important questions you need to answer for yourself. All investment requires some time commitments to monitor and manage. When stock markets or life situations begin to change, you may need to change your investment choices. If your experience level does not warrant it, getting professional help may increase both your results and comfort level.
I. Time to manage your investments: Your time is worth money! At least if you can put it to good use in managing your investments… but do not become obsessive with it. Investments take time to grow. Every investment portfolio must be watched and pruned from time to time. You wouldn’t want to look back after 5 years and find that right after your investment choices were made, that the business climate changed and those choices had become poor performers.
Two typical uses of your time applied to investment managing:
• Weekly, monthly or quarterly checking for:
o Stock movements
o Business climate changes,
o Company news
• Annual or quarterly allocation changes
o Re-planning or shifting your plans
o Pruning and re-diversification
o Reallocation of investment amounts
Weekly or Monthly Check-ups
If you buy individual stocks and bonds, these will need monitoring more often than if you had purchased mutual funds. However, stock and bond funds need attention too, just less often.
Some questions you should answer for yourself are:
• Can I afford time each week to check investments (Friday night or Saturday morning)? This is important for individual stocks and bonds.
•Am I disciplined enough to check my investments periodically? This is critically important, as the business environments are constantly changing.
• Can I put this on a monthly calendar and stick with it? Monthly checkups are important no matter what your investments may be…
• If I get an automatic e-mail sent will I read it? Many investment houses will do this for all accounts above a certain size limit. You can pool your investments under one roof, usually with savings in cost plus perks for research, quotes, e-mails, etc. Both Fidelity and Schwab are good examples of these services once you reach certain size limits.
Quarterly or Annual Check-ups
If you are only into mutual funds as investment vehicles, then you need check them only quarterly or annually. After all you are giving up some small amount of income to pay for professionally managed investments, right? You may want to keep up with monthly or weekly news on the investment fund management team, however, as management team shakeups there could cost you. The key thing is disciplined reviews and setting a schedule that you can stick to. Ignorance in this case can be dangerous, so do it together with your spouse or a family member that you trust. As you get good at it, the time required to do these should drop from several hours to perhaps an hour to review all your investments. If you have been keeping tabs on things, it can be shorter still.
“Even if you’re on the right track you will get run over if you just sit there!” - Will Rogers.
II. Changing your investment choices:
The challenge when deciding to change investments is often the emotional content. “We had a return of say 7%, when the broader markets got only 5%”. How did the overall group for your investment vehicle do? Morningstar provides good index comparisons, as do other groups. If your choices did not perform above the class average for 1 or 2 quarters in a row, it’s probably a good idea to consider other alternatives. That may require all the same diligence of researching an investment as you did originally. If you are seriously concerned and need to act quickly, you can always sell and put the proceeds into cash or a money market for a short time while you do the research.
III. Getting help from professionals:
I have often found the larger funds and investment houses to be a plethora of information via the Internet. They have how-to guides, acronym explanations, and in general some great advice. If however, these seem to complex for you, or you would prefer to seek out a single person with whom to deal, then find a Certified Financial Planner. The best ones should be able to provide references, a track record, and a good deal of services all at your doorstep. These services do not come free and can be in the thousands of dollars to set up your initial plans. Be certain to check 3 to 5 references and interview several planners before deciding. Determine what you pay exactly and what you get exactly after your selection is made. Be certain that they are certified, a place to begin is: http://www.cfp.net/ .
Summary
We’ve covered a lot of ground in this topic of stock and bonds versus mutual funds. Primarily remember that individual stocks require more monitoring, but can yield higher returns. The same applies somewhat to individual bonds. Newer investors to these may want to start with mutual funds, Money magazine has an annual issue every February that is very helpful and is usually available at public libraries. Finally remember to lower your risks by diversification, no matter what investments you make. Ask yourself the questions we reviewed about your time commitments and discipline for monitoring as part of the investing process. And of course, read-up on the Internet and some of the books listed below.
Next time – Portfolio Allocation, Pre-determined trigger points, and Personal investing rules …
Self-Study:
Some great resources to continue your journey are located on the web.
Try visiting these sites:
•http://www.greatcompaniesgreatcharts.com/archives/001864.html
•http://www.rightline.net/home/gate_rm.html
•http://www.investorguide.com/stockfaq.html
•http://www.pascoresearch.com/int_alpha.asp
•http://www.stockbook.com/Evaluator/
Or read these well known authors and books:
• William J. O’Neil: How to Make Money in Stocks
• John Boik: Lessons from the Greatest Stock Traders of All Time
• John C. Bogle: Common Sense on Mutual Funds : New Imperatives for the Intelligent Investor
Additional info from this author may be found at http://www.sbtionline.com
As we said last time, owning a stock is like owning part of a company. As the company rises or falls in value, so does the price of it’s stock. A key distinction is that the value of the stock is not only driven by the fundamental value of the company, but by other factors as well. These factors may include overall stock market trends, domestic versus foreign trade issues, business sector climate, etc. Owning a bond, is like owning part of a loan to a company or institution, like the State of Texas. Bonds typically pay a fixed amount of dividend as the loan is repaid. The bond’s value is determined by the interest rate on the underlying loan, and the current interest rates and trends in the marketplace. For example, who would not want own a 10% bond right now, when the money markets or bank passbook savings accounts are paying 3%? Should the institution or company fail or default on the loan, you could lose all or most of your bond’s value. Large companies or institutions usually issue bonds; so the risk is greatly reduced over owning a company’s stock share.
A stock mutual fund, is a group of stocks owned by a fund company to achieve certain investment objectives. Likewise a bond mutual fund is a group of bonds held to achieve a certain investment objective. Mutual funds, in both stock and bond types exist in many styles and forms. Fundamentally they are a savvy collection of stocks or bonds assembled and professionally managed for a specific or combination of investment aims. These typically diversify your investments so that no one particular company can sink your entire investment. The converse is that no one single stock can shoot your mutual fund up to a huge return.
Typically each mutual fund focuses upon growth, income, value, large, small or mid-capitalization companies, or a combination of these objectives. There are thousands of different funds and dozens of fund families to choose from. There are also companies that rate mutual funds, like Morningstar (www.morningstar.com ). Some mutual funds use a management team to select and prune stocks in the portfolio, some use certain methods, and some follow the leadership of a single fund manager. You should check these out before investing in a particular fund.
An oft-overlooked mutual fund consideration is the management fee or what are referred to as 12b-1 fees. Most fees are in the range of 1 to 2%. Be wary of any fund outside that range. The United States Securities and Exchange Commission can help unravel some of these issues for you. A good starting point is their investor section on mutual fund performance, specifically www.sec.gov/investor/pubs/mperform.htm . They also have a fund cost calculator to help take into account the fund management fees. Some funds are no-load mutual funds because they do not pay a sales person any commissions for selling fund shares. These are typically lower in cost, and if you own them for a long time, they can make a difference in the net return on your mutual fund investment. Conversely, there are loaded funds, which charge a commission when you invest in their fund. These vary widely in amounts, so ask for exact details before investing. Some require you to pay the sales commissions; others add that to the fund expenses. Either way it’s a cost to you. The Vanguard Funds (www.vanguard.com ) are often mentioned as a leader in creating no-load, low cost mutual funds. You will find compelling arguments at their website for owning no-load funds. You should check carefully on overall fund performance including fees when evaluating fund choices.
Measuring Risk:
Most mutual fund and stock tables and resources will list something called the beta or volatility of the items listed. Beta is a measure of the risk of the security listed associated with variation of the security when compared to the overall stock market. If beta is 1, then the stock or mutual fund varies about the same as the general market index. If less than 1, then the security is less volatile than the general index of comparison, with higher than 1 meaning more risk.
Measuring Risk-adjusted Returns:
There is also parameter called alpha, which is the market-adjusted return of the security. If alpha is positive, then the security earned a higher return than the relative market index of comparison. If alpha is negative, then the security earned less than the market did.
Minimizing Overall Risk:
Risks in the future may be reduced in the present only through preparation, planning and actions!
We discussed preparation and planning for the future in the last Investment Corner, which is a key risk-reduction strategy.
Risk reduction for investing is typically achieved through:
• Diversification,
• Portfolio Allocation,
• Pre-determined buying and selling prices, and
• Adherence to personal investing rules.
Now let’s look at the first part of risk reduction strategy for investing.
Diversification:
Diversification is spreading out your investments across several areas to reduce risk and capture growth in multiple places. Diversification is typically done at several levels. At the uppermost level, we typically diversify investments across different investment vehicles, such as cash, stocks, bonds and real estate. By doing this, we reduce several important risks. Inflation can reduce the value of cash on hand over time, which is why smart folks do not keep their life savings in cash hidden in a mattress! On the other hand, inflation can drive down the value of fixed dividend investments like bonds as well. Real estate may rise or decline with inflation, depending upon the health of both the local and the greater economies. Fixed hard assets like precious metals funds (gold) will usually rise on inflation or fears of inflation. Other risks include stock market declines, individual company bankruptcies, and so on…. By not “placing all the eggs in one basket” we lower our exposure to risks through diversification. During broad stock market declines, many folks move assets from stocks to cash or bonds. And of course the opposite during bull market runs.
Another diversification notion is that of slicing up your investment by specific growth sectors. Within a specific type of investment vehicle, say Mutual Funds, we diversify across the available growth and income sectors. Typically this is large, medium and small companies, as well as high dividend or high growth type stocks. You also could look into diversifying into domestic or international companies such as Asia-Pacific.
At the lower levels of investment diversification are multiple choices within a specific growth target. Most advisors strongly recommend diversification within a stock or bond market holding. If you feel for example that the Internet’s growth will continue or expand soon, buying stock in several companies who offer Internet products would help lower risk of any one company not doing too well. Diversification across several stocks is usually done in simple form through equal partitioning. If for example you had $10,000 to invest, how would you do it? You could place 20% of your total investment amount in each of 5 different Internet stocks as in Table I:
Table I –Stock Investment Diversification
Stock Name Current Price 90 Day High 90 Day Low Amount Invested ~ Shares
Company A $25 $28 $20 $2000 80
Company B $40 $40 $20 $2000 50
Company C $60 $60 $20 $2000 33
Company D $300 $300 $198 $2000 7
Company E $8 $9 $3 $2000 250
By looking at the trading ranges across the 90-day history, you can estimate the risks or volatility of each stock. Do the stocks have the same risks? Do they all have the same growth potential?
One approach would be to allocate risks equally, as opposed to allocating investment equally. You would be to use the information in the range of stock trading prices to assess risk and re-allocate your investments as this diversification calculator shows below in table II:
Table II – Risk Diversification Calculator
Risk Diversification Calculator
Investment Amount $10,000
Stocks 5
Stock_1 Stock_2 Stock_3 Stock_4 Stock_5
90-day Max $28 $40 $60 $300 $9
90-day Min $20 $20 $20 $198 $3
Cur. Price $25 $40 $60 $300 $8
Trade Rnge 32% 50% 67% 41% 100%
Eq. Amt $2,000 $2,000 $2,000 $2,000 $2,000
$$ at Risk $640 $1,000 $1,333 $819 $2,000
Risk Ratio 1 1.5625 2.083 1.28 3.125
Risk-Red. $2,000 $1,280 $960 $1,562 $640
Adj. Inv.$3,104 $1,987 $1,490 $2,425 $993
If you do not want to do the research and monitoring required for several individual stocks or bonds, choosing a mutual fund may be the wisest choice, with a smaller but usually acceptable return on your investment. The key question you need to answer is not “Should I diversify?”, but rather “How will I diversify my investments?”
About YOU
The primary things you should know about yourself before selecting among the different types of investments are:
I. How much of my time is available to monitor/manage my investments?
II. How often do I want to change my investment choices?
III. Do I want help and advice from investment professionals?
These are important questions you need to answer for yourself. All investment requires some time commitments to monitor and manage. When stock markets or life situations begin to change, you may need to change your investment choices. If your experience level does not warrant it, getting professional help may increase both your results and comfort level.
I. Time to manage your investments: Your time is worth money! At least if you can put it to good use in managing your investments… but do not become obsessive with it. Investments take time to grow. Every investment portfolio must be watched and pruned from time to time. You wouldn’t want to look back after 5 years and find that right after your investment choices were made, that the business climate changed and those choices had become poor performers.
Two typical uses of your time applied to investment managing:
• Weekly, monthly or quarterly checking for:
o Stock movements
o Business climate changes,
o Company news
• Annual or quarterly allocation changes
o Re-planning or shifting your plans
o Pruning and re-diversification
o Reallocation of investment amounts
Weekly or Monthly Check-ups
If you buy individual stocks and bonds, these will need monitoring more often than if you had purchased mutual funds. However, stock and bond funds need attention too, just less often.
Some questions you should answer for yourself are:
• Can I afford time each week to check investments (Friday night or Saturday morning)? This is important for individual stocks and bonds.
•Am I disciplined enough to check my investments periodically? This is critically important, as the business environments are constantly changing.
• Can I put this on a monthly calendar and stick with it? Monthly checkups are important no matter what your investments may be…
• If I get an automatic e-mail sent will I read it? Many investment houses will do this for all accounts above a certain size limit. You can pool your investments under one roof, usually with savings in cost plus perks for research, quotes, e-mails, etc. Both Fidelity and Schwab are good examples of these services once you reach certain size limits.
Quarterly or Annual Check-ups
If you are only into mutual funds as investment vehicles, then you need check them only quarterly or annually. After all you are giving up some small amount of income to pay for professionally managed investments, right? You may want to keep up with monthly or weekly news on the investment fund management team, however, as management team shakeups there could cost you. The key thing is disciplined reviews and setting a schedule that you can stick to. Ignorance in this case can be dangerous, so do it together with your spouse or a family member that you trust. As you get good at it, the time required to do these should drop from several hours to perhaps an hour to review all your investments. If you have been keeping tabs on things, it can be shorter still.
“Even if you’re on the right track you will get run over if you just sit there!” - Will Rogers.
II. Changing your investment choices:
The challenge when deciding to change investments is often the emotional content. “We had a return of say 7%, when the broader markets got only 5%”. How did the overall group for your investment vehicle do? Morningstar provides good index comparisons, as do other groups. If your choices did not perform above the class average for 1 or 2 quarters in a row, it’s probably a good idea to consider other alternatives. That may require all the same diligence of researching an investment as you did originally. If you are seriously concerned and need to act quickly, you can always sell and put the proceeds into cash or a money market for a short time while you do the research.
III. Getting help from professionals:
I have often found the larger funds and investment houses to be a plethora of information via the Internet. They have how-to guides, acronym explanations, and in general some great advice. If however, these seem to complex for you, or you would prefer to seek out a single person with whom to deal, then find a Certified Financial Planner. The best ones should be able to provide references, a track record, and a good deal of services all at your doorstep. These services do not come free and can be in the thousands of dollars to set up your initial plans. Be certain to check 3 to 5 references and interview several planners before deciding. Determine what you pay exactly and what you get exactly after your selection is made. Be certain that they are certified, a place to begin is: http://www.cfp.net/ .
Summary
We’ve covered a lot of ground in this topic of stock and bonds versus mutual funds. Primarily remember that individual stocks require more monitoring, but can yield higher returns. The same applies somewhat to individual bonds. Newer investors to these may want to start with mutual funds, Money magazine has an annual issue every February that is very helpful and is usually available at public libraries. Finally remember to lower your risks by diversification, no matter what investments you make. Ask yourself the questions we reviewed about your time commitments and discipline for monitoring as part of the investing process. And of course, read-up on the Internet and some of the books listed below.
Next time – Portfolio Allocation, Pre-determined trigger points, and Personal investing rules …
Self-Study:
Some great resources to continue your journey are located on the web.
Try visiting these sites:
•http://www.greatcompaniesgreatcharts.com/archives/001864.html
•http://www.rightline.net/home/gate_rm.html
•http://www.investorguide.com/stockfaq.html
•http://www.pascoresearch.com/int_alpha.asp
•http://www.stockbook.com/Evaluator/
Or read these well known authors and books:
• William J. O’Neil: How to Make Money in Stocks
• John Boik: Lessons from the Greatest Stock Traders of All Time
• John C. Bogle: Common Sense on Mutual Funds : New Imperatives for the Intelligent Investor
Additional info from this author may be found at http://www.sbtionline.com