Archive for the 'Investing' Category
For the longest time I thought hedge funds were just lawn service departments, of course with years comes knowledge, hedge funds are privately managed investment funds. The manager gets paid based on performance, also hedge managers pool many different peoples money together to hedge the group from risk. However like any investment there is always risks, there is a negative association that hedge funds are secretive and dangerous because of that. Because hedge funds do not make very many purchases and when they do they spend a lot of money they need to be secretive as to not tip their hand (and supposed hot investment) so I do not buy the risk. In my opinion Hedge funds are a good investment if you want to invest long term, and don’t want to spend a lot of time yourself planning and managing your investments.
Much like Hedge funds Mutual funds are a professionally managed group of many different investments that pool money from many different people. These funds like hedge funds can invest in pretty much anything, stocks, bonds, money markets and other securities. This type of investment is good for people that want to spend a little bit of more time managing their portfolio and is an alternative to hedge funds. What kind of investment fund is your favorite?
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 Real Estate’s really real, but also risky! The logical way to remove some of this risk is to invest in real estate long term, however there are “daytraders” here too, house flipping is very lucrative. The only problem is that markets change all the time, and just because you put in $30,000 doesn’t mean that you are going to get that money back. There are a ton of television shows that focus on people flipping homes, and many of them end the same way, the flipper being happy just to be done and to wipe their hands of the project. I even remember one show were they guy had five or six multi million dollar homes that he was flipping. Think of all of those budgets and bookkeeping!
You don’t have to be a flipper to make money in the real estate business, a friend of mines family mad the majority of their money buying a few acres in the almost center of a developing town, fifteen years later they sold it for millions to a developer and now it has apartment housing on it. Not a bad passive investment. Next week, dust off your clippers we are going tackle those hedges!
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Thirdly let those CD’s Spin! CD’s (and not that those shiny music machine discs) or Certificates of Deposits are glorified savings accounts. Generally purchased through a bank they offer higher percent of return on investment. The downside to them is that you are unable to pull your money out early in many cases (and the cases that you can often result in heavy penalties).
One great system for managing your CD’s is to set them up so they each mature a month after the next, therefore if you end up needed the capital back there is a CD maturing soon. and of course if you don’t need the money you still just roll it over for another year of very secure money making.
I like to keep this CD system because it is a good use of emergency money. Technically I know that a CD is a form of saving, but since I plan on not using them and instead save them for the future they are kind of like very secure investments. I know that if I ever really need them, I can get it within a few weeks if I need it, for instance, say I need $900 next week, well I put it on my credit card temporarily, CD matures in 3 weeks, so 2 weeks from now I have $1k coming in to pay off CC, no charges, no interest paid to the evil credit cards (I always pay it off every month but more on that later).
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* The Power of a Savings Account
* Investing – Bonds(2nd of 5 part special)
* Investing – Stock (1st of 5 part Special)
 2nd part of a 5 part investment special! This week is bonds… A bond is simple a debt security in which the issuer of the bond borrows money and is obligated to pay the holder back at a later date (of course plus interest). This type of investment is very secure and safe and because of that it lower return on investment. There are many different types of bonds, junk, government, fixed, floating, the list goes on forever. I personally think that bonds are a great investment strategy especially in times of speculation and turbulent stock market. By investing in bonds you again diversify your finances, further protecting your precious eggs.
Although bond’s are really just glorified I.O.U’s they are not 100% fail proof, sometimes you do not get your money back, sometimes you do not get the return on them that you expected and planned. IF you need even more security in your investment then perhaps CD’s are what you are looking for.
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 Eggs, they are yummy, they are good for you but when they are all in one basket it could be spelling out instant death! As history will show us what is hot today is not necessarily going to be hot tomorrow, because of this investing 100% into the hottest thing today could be very very bad to your personal finances very quickly. diversifying your portfolio is the solution.
The stock market is a wonderful and interesting place, thousands and thousands of stocks are listed and changing in price every second. Always be aware of what you are investing in, do research on what the company is, what their plans are, what their stock has been doing, how their sector is doing, what is their market share in their sector…ect, It seams very foolish to invest in a company that you know nothing about. Because of this I will only buy two or three stocks a year.
Some people preform in a task that I look down on “day trading” these people gamble in a fast past low informed market where they may only own a stock for a few minutes to cash out the positive change of 1/8 a dollar. To me it just seams like stocks should be used more long term and you should be more informed with what you are going to do with your money. Next week we cover Bonds!
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