Should I Invest Internationally?

Maybe. This concept, like most investing concepts, is a very individual thing and is not necessarily the right thing for everyone. The explanation given here is not in any way intended to encourage you to invest internationally, only to understand the idea so that you can properly consider it.

It seems obvious that investing internationally means buying stocks, mutual funds or bonds which are issued by companies not based in the United States, but do you know what those companies are or what they do? We can guess with some names, like China Mobile (CHL), for example, and we might be mostly right, although they may also do some things that would surprise us.

Then there are harder ones, like Diageo (DEO) from the United Kingdom. What do they do? They’ve built themselves up over the years to where they now own brands like Guiness, Moet, Johnnie Walker, Smirnoff, Captain Morgan and Tanquery, among others. They also own Louis Vuitton, the maker of really expensive things for women.

So, is that all you need Read More …

Technorati Tags: foreign investments, Invest international, investment strategy, What to Invest In

Why Shouldn’t I Just Buy An Index Fund?

Okay, on this one, I’ll start off by noting that, just like the idea of doing-it-yourself, it’s entirely possible that this could work, and in some specific time periods in the past it has worked. Of course, funds which follow the same index but are from different fund families behave a little differently, and within fund families there are funds which track dozens of different indexes. My English teacher would remind me that I should say “indices”, but I do what I do, and she does what she does.(That lesson did actually stick, I’m just having fun today.)

Let’s look at one of the most popular indexes, the S&P 500.

Lots of fund companies offer a version of this, which essentially is Read More …

Technorati Tags: how to invest, index funds, Invest Stock, learning index funds, What to Invest In

What’s A Dumb Financial Question?

Oh good, an easy question! ?

There isn’t one.
Say you came into my office and asked me a question, I explained the answer, and you nodded and went about your business, understanding a little bit of the answer but not really why or well enough even to remember a week later. Would I have done my job? Not really, or at least not yet.

That’s how a lot of information gets “shared” these days though. “Answers” are disseminated across the TV and the Web by people who know what they’re talking about and by people who don’t. Some of them are in official positions and so “should know” and others are not so official, like many bloggers, but could and do really know.

The opposite is also true,but what’s really important to you is, do YOU know? After all, it’s YOUR money.

Here’s my approach: Read More …

Technorati Tags: Financial Question, How to Invest Stock, What to Invest In

Why Shouldn’t I Use A Discount Brokerage?

This is a really great question, especially since many of the most popular investment books available today say exactly the opposite.

They tell you that you can do it yourself, and for a lot less money, and you know what? They’re right! But as you probably suspect, there’s a hidden catch that they’re not telling you about. The catch is you.

You see, most of us are really skilled at one or more things, but there’s thousands of things we could be skilled at. I could walk down the street and stop any one of you and find out maybe that you’re a top-notch web designer, or a first-rate auto mechanic, or that you run an Alaskan fishing expedition, or any number of other possibilities that I don’t do.

Could I learn Adobe’s Photoshop and InDesign? Sure. Would that make me a web designer? Nope. Could I go to a nearby technical college and learn how to be an auto mechanic? Yes, but that wouldn’t make me a good one. And in the interest of full disclosure, I do my fishing at the local Kroger. I could certainly save some fees on those tasks by doing them myself, and so mathematically the do-it-yourselfers are correct, but that’s not really the issue when it comes down to it.

So can you invest by yourself and save some fees? Read More …

Technorati Tags: discount brokerage, How to Invest Stock, Investing Stock, Learn To Invest, Stock Market Education, What to Invest In

What are Financial Ideas for Investing My Money in Health Care?

Here we go, back to the purpose you have (see the previous blog).

There are ways in which you can do what the title of this article asks, but that’s not getting deep enough into the topic yet.  Getting deep enough means having someone like me asking you exactly what you mean when you express that concern.

For example, maybe you mean getting the most for your health care dollar today, which given the current political debates seems fairly likely.

You could also be asking about getting the most for your health care dollar TOMORROW (or at or after your own retirement), which is a completely different question.

You might even be asking for a recommendation on the best health care companies to invest in, either at any time or in the immediate timeframe considering the uncertain outcome of the health care debate.

I can help you sort out and prioritize these questions, and once we know what the most current concern is, we can either solve it, or I can point you in the right direction to get it solved.

The client who can appreciate that is the best client for me or any other advisor to work with, because they realize that the advisor has their best interest in mind, not just his or her own.

So, don’t run out a get a new health plan or a new health care company as an investment, or even a health-related long-term plan without talking first with me.  I pledge to find the right thing for you, whether I can do it myself or not.  How’s that for a fair deal?

Want to know more?  Let’s talk, and create a plan that’s right for you and your family.

Technorati Tags: What to Invest In

Don’t Be Apprehensive About The Market!

“Oh, my gosh! Did you see what happened in the stock market today? It was down almost 120 points!”

Ever heard that before? If you haven’t, you will. The question is: should you listen? The answer is: only if you like being really depressed one day and really excited the next day, because that’s typically what happens? Sometimes we get really good days back-to-back and sometimes really bad days a few times in a row, but that’s still not stepping back far enough.

Let’s say you’re 40 years old, and you started putting money into the stock market 20 years ago. The S&P 500 was trading at approximately 340 points, compared to nearly 10,000 today. Or maybe you’re 50 and your start was 30 years ago. The S&P 500 then was trading for about 100 points. So between 1979 and 1989, the market tripled. Between 1989 and 2009, the market grew by 33 times!

Isn’t that a better concept to stick in your mind than what most of the media is alarming you with lately? Like a market down about 33% in the past two years?

The only reason – at all – to be concerned about the short term in the market is if you plan to retire in the next few years. If you’re younger than that or if you like your job, you should be taking advantage of the magic of compounding returns to get you in a position where you have choices! Having the choice to work or not work is a whole lot better than needing to work to make ends meet. That’s when you might have no choice but to be really aggressive, which can hurt a lot if things don’t go the way you hoped.

And don’t listen to people who say you can’t be too conservative, because you can be! Remember my article (below) about the Rule of 72. If you put all your money into CDs right now, your money will grow at a rate lower than inflation. I don’t know about you, but I’d like my money to double sooner than three to four (or more) decades!

Still confused about the right thing to do? Let’s talk, and create a plan that’s right for you and your family.

Email: John@financialideasblog.com

1.888.379.4352  Extension 1000

Technorati Tags: Financial Ideas, how to invest in stock, How to Invest Stock, Interest Only, play the stock market, recovering economy, Stock investing, Stock Market advice, stock trading, US finance, What to Invest In, what to invest in now, young investors

What’s The Difference Between A Stock And A Bond?

This poses an interesting question because it highlights how many people really have no idea about the different type of investment “vehicles”, as they are often called.

*You know what “equity” is, right?

Especially if you own a home, it’s the difference between what you owe and what you own.  If you have a $300,000 house and you owe $200,000, then you have $100,000 in equity, or ownership.

Stocks are much the same thing, except that what you own is (typically) a VERY small piece of a major company.  In most cases, you’ve already paid for it in full, and therefore you own it outright with no debt.  (It is possible to borrow ownership, but that’s a level 200 course).

This is why stocks are often called equities, and vice versa.  Think of yourself as a part owner, you can attend the annual meetings and vote on issues as requested by the board of directors – using what are known as “proxy statements”.

You will probably have a very limited impact on the direction of the company unless you own 5% or more of the outstanding stock, what most people buy stocks for is to Read More …

Technorati Tags: Bonds, Compound Interest Formula, how to invest in stock, How to Invest Stock, Rule of 72, Stock Market, stocks and bonds, What to Invest In

College Investing – Where Do I Start?

Lifetime Career Earnings:  H.S. Graduate Vs College Graduate

Finally, an easy question!  I wish I could say that the answer was just as easy to take, but it’s not, because college costs continue to go through the roof.
When I do a forecast for anyone saving for college, whether it’s for themselves later on or for their children or grandchildren, I forecast the college tuition inflation rate to be no less than 7%, which is twice the average inflation rate for the rest of the economy.

So, the biggest and hardest part to get through is going to be how much you might have to save and how early you might have to start.

In my neighborhood, there are dozens of young families Read More …

Technorati Tags: Financial Ideas, how to invest, Invest in college, Invest young, start investing, Stock Market Education, What to Invest In, young investors

The Investor ­- Advisor Relationship

OK, take a deep breath.  Done?  Great, now answer this question for me: what do you think of when you consider the idea of a financial advisor?
Do you think of someone who can take your order to do something for you in the stock, bond or mutual fund markets?  That’s part of it, but if that’s where your thinking stops, and it does for many people, then your best bet is to find a do-it-yourself discount broker and save a little bit of money.  (We’ll get to the real cost of that later).
Maybe you think of someone who can look at the big picture, put together a complete plan, put that in a box and tie a bow around it, and hand it to you for a flat fee usually somewhere in the $3,000 – $4,000 range.  Armed with that information, you go off and find a do-it-yourself discount broker and pay him or her for the transaction fees after paying for the plan.  When changes need to be made to the plan, which you might or might not be able to recognize on your own, you can always hire the planner again and pay them to tell you what changes to make.
If you don’t have that time or expertise, you can always work with someone who will charge you a full-service fee for access to the markets, as well as charging you an annual fee of perhaps 1.5% – 2.0% of the size of your accounts to do the planning. Pretty expensive, but at least they’re providing an integrated service, right?
Do I think any of those choices are a good idea?  No, I don’t.  Am I biased in my thinking?  Yes, I am!  The bad news there is that I’m biased for my own benefit, because I want your business.  The good news is that I’m also biased on your behalf, because I want you to have the best deal at the same time!
OK, you say, I’ve read this far, so what IS that best deal?
I recommend that you choose to work with someone like me, who charges you those full-service fees for access to the markets, and who also does end-to-end planning for your entire life and your entire family.  The difference?  I don’t charge for any of the research, the planning, the appointments, or answering questions when you have them, even if it’s not time for your next appointment.  If you really want to pay the annual fee, we can work that out, but I won’t charge you any commission, the fee will only be 1.35% and you’ll benefit even more by getting a refund on a portion of the money charged every year by the mutual fund companies to market their products for them.  (Most people don’t even know about those fees, and here I am telling you about them already!)
What does working with me look like?  Take a look at the chart showing how I approach the relationship we’ll have. It shows a lot of areas that, if not important to you yet, will be as time goes on.  Financial Planning and Investment Strategy are important from the very beginning of your plan, but only after we’ve built a relationship and we know who each other is and how each other thinks.
Investment Policy is the rules I have to follow that fit your goals and needs, and I’ll ask you a lot of questions to establish that.  Insurance is the protection that you, your family and your assets deserve. The best financial plan in the world is lacking badly if you’re not protected against losing it, and that’s true whether you’re younger with a spouse and children, or older and possibly facing the need for in-home care or even assisted living.  Trust me, you don’t want to pay for that directly when there are much cheaper alternatives.  Tax Planning is an important step to make sure that you’re not paying too much to the federal government that could instead be benefiting you.  Estate Planning and Charitable Giving are keys to passing things on to the next generation, or the one after that, and/or to your favorite charity, all without sticking them with the taxes.
The only thing I don’t do in the accompanying chart is Tax Preparation, because I’m not a licensed CPA, but I do know competent people who can do that for you if you’re local, and I’m happy to work with your tax professional via the phone if you live somewhere else.  I’m also not an attorney, so I can’t draw up your estate plan for you, but you and I can determine if one might be to your benefit, and I’ll work with your attorney as well to make sure your needs are being addressed.
You might be thinking at this point that, since you’re a pretty smart person (which I know because you’re reading a financial blog in the first place), that you can do all of this by yourself and save a bunch of money.  The real question is, what’s the cost of not knowing everything and getting something wrong, or just missing a key element of what you should be doing?

All of us, including me, need objective team members to help them get to where they want to be, because there’s just no way to be unemotional and completely objective about our own finances.  This way you also get to use “OPR”, otherwise known as “Other People’s Resources”, to help you get to where you want to be.

If you would like to have a conversation or just ask a question please email me at John@financialideasblog.com.

I look forward to hearing from you.

Technorati Tags: Financial Ideas, how to invest, Invest young, learning Stocks, real estate investing, What to Invest In

Why Did The Stock Market Drop After Last Week’s Unemployment Report?

The stock market dropped after last week’s unemployment report for one reason, and one reason only.  That reason is short-term investors.

We’re not talking about the proverbial day traders here, but ordinary people with ordinary fears and concerns who are not able to distance themselves emotionally far enough from their money to do serious investing.  We’re talking about most people.

We’re not just talking about unemployment reports.  We’re talking about any economic “news”, such as housing starts, manufacturing orders, foreclosures, mortgage rates, trade deficits, and a few dozen other factors which can be interpreted to mean different things by different people.  Primarily though, we’re comparing what actually happens with what “experts” forecast.  Even though we’ve seen a marked decrease in the number of new jobless claims, the unemployment numbers last week were a tiny bit higher than what was forecast.

This is not unlike the famous, or infamous, “guidance” which many companies offer as to how much money they will earn per share of their stock.  For example, Read More …

Technorati Tags: Financial Ideas, how to invest in stock, How to Invest Stock, Interest Only, play the stock market, recovering economy, Stock investing, Stock Market advice, stock trading, US finance, What to Invest In, what to invest in now, young investors