Money Questions and Answers

Fitness As An Investment Tool

by Jeremy

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Professional investors have pretty stringent definitions of what is and isn’t an investment. Depending on who you talk to, an investment may only be a narrow band of financial allocations, to which sophisticated improvements may be applied.

Such investors tend to deride lots of other forms of investment as mere speculation. But this is a very narrow way of thinking about investment, one which will leave most people out.

More broadly considered, investing is a simple allocation of a finite resource to a (hopefully) profitable end. Regular people make investments of time every day. They invest in products and appliances. They invest their attention in entertainment and conversation. These applications don’t often result in direct profit, but they’re investments just the same, ones which can be adjusted to start seeing more beneficial ends across the board.

Getting Over The Inertia Of Not Investing In The Stock Market

by Hank Coleman

Too Many People Are Not Investing In The Stock Market

Too many people are not investing. It’s especially true for millennials.

The inertia of inactivity keeps us from investing. People gave sworn off the stick market since the 2008 recession. Millennials are scared to invest.

But, that’s just an excuse. You shouldn’t be scared. We all know that we should invest for retirement, pay off our debts, and save for our financial goals. Our inaction was an issue before the stock market and housing markets tanked it 2008.

Over 90% of millennials say that they distrust the stock market and that their lack of investing knowledge make them less confident about investing according to a Capital One Investing survey.

State Street Bank also found that millennials are also holding a significant amount of their investment portfolios, over 40%, in cash. This is an alarming trend considering that we have seen historically low interest rates on savings accounts and money markets for over a decade. Young Americans are seeing their purchasing power erode by holding cash that they aren’t putting to work in their favor.

But, that’s not half of the story. When it comes down to it, we’re lazy. Not investing for our future is the path of least resistance. It’s easier to do nothing than to venture out from shore. We’re using the market correction and its turbulence simply as a scapegoat to ease our minds and sugarcoat our inactivity.

But, how do we get over that initial inertia of not investing in the stock market? It’s not easy. But, how do you get started? Here are a few ways that can help you get off the sideline and start investing again – or investing in the stock market for the first time.

Don’t Fight An Automatic Enrollment

Many employers now offer automatic enrollment for their new employees in their 401k retirement plan. You should take advantage of that benefit. Invest in your company’s 401k.

More and more employers are using an “opt out” 401k automatic enrollment. Meaning that employees must opt out of the program instead of signing up when investing in the stock market or other investments.

From your very first day of employment, your company invests a small percentage of your salary in an ultra-safe investment option such as money market funds or government treasuries.

But, it is on you, the employee, to change your investment choices from the automatic enrollment selection. A money market fund will not do much for you. In fact, it won’t even keep up with inflation.

You have to change what type of investment that you want. So, this is a great option. You’re half way there – your company already got you investing in the stock market. But, now you have to choose a better investment – maybe an index fund that mirrors the S&P 500 index.

Don’t ‘Fire and Forget’ Your Finances and Investments

by Hank Coleman

Don't Fire and Forget your finances Do you fire and forget your finances and investments like an unguided, general-purpose dumb bomb falling from an Air Force bomber? Or, do you constantly watch your investment and track them like a TOW missile? The answer is often to find that ground road between the two, the compromise.

Far too many of investors often choose the path of least resistance. After we finally overcome the initial roadblocks and start investing for retirement and other financial goals, many of us get set in our ways. We let our investments run their course without following up with them or even checking on the periodically.

You must find a balance in investing. Where do we draw the line in being too involved versus having a hands off approach? We have to find that middle ground.

Deep down, we all know that we should have some checks and balances with our investments. Here are a few times when you should look back in on your investments.

Look at Your Asset Allocation

Are your investments unbalanced with more bonds or more stock than you planned? With the recent fluctuations in the stock market over the past few weeks, many investors find their asset allocation, their asset class percentages, misaligned from their plan.

You should look at rebalancing your portfolio at least once a year. The mix between stocks, bonds, cash equivalents, and other investments that you have cannot simply be set on autopilot and forgotten about. You need to relook it every so often.

A couple of good tactics and techniques that many employ are the simply rebalance your investment portfolio after the New Year. I know other investors who like to look at their investment mix around their birthday. It’s an easy date to remember for most of us, although many may not like the reminder of getting older.

Whatever tool you use or date you set, put it on your calendar. Have you had a great year with your stocks? Are you underweight in bonds for your target? Find time to rebalance your portfolio once a year.

Dollar Cost Averaging Is a Great Tool

Most of us have heard that we should pay ourselves first and place investing for retirement and our other financial goals high in our budgeting priorities. And, dollar cost averaging is a great tool to accomplish that goal.

With dollar cost averaging, you invest a set amount of money each month in an investment regardless of that investment’s share price. In some months, you will pay a higher amount for few shares with rising share price. But, other months, you’ll be able to purchase more shares with the same amount thanks to lower share prices.

Over the course of a long time horizon, your costs will start to average out to a middle range, hence the name, dollar cost averaging. Typically, your total costs will be lower on a per share basis than had you simply just tried to time the markets.

John Hancock Investments: Raising the Ceiling on Your Investment Potential

by Jeremy

Professional investors never go it alone. Even Warren Buffett has a trusted cadre of colleagues and quasi-apprentices. Each is meant to offer a JhonHancock different level of expertise in a different field. Because the world of investment is far too broad, deep, and varied for a single person to wrap his or her hair around, the professional investor has to employ a network of experts and money managers to take advantage of investment opportunities, anticipate difficulties, and always maintain the edge that made the investor successful in the first place.

But no investor can do this without the ability to manage a team of managers. And not just any investor can handle this level of scope. It’s a rare talent, and one that’s not seen very often in a single person. This is where John Hancock offers a rarified level of management prowess to professional investors around the world.

FX Risk In Focus With An Infographic

by Jeremy

Dealing with volatile foreign currencies is something many business that work internationally or maintain overseas offices. While there is a certain amount of risk inherent in dealing with foreign currencies, there are also ways for smart treasury departments to mitigate this FX risk. Here is what you need to know about FX risk. Several different types of fluctuations affect FX risk. According to professionals, the most volatile areas are revenues, the cost of purchasing goods overseas, and, more frequently, a combination of the two. Fortunately, there are steps you can take to mitigate your risk. Some common methods for managing risks related to foreign currencies include FX exposure netting and hedge accounting. If you are entering the world of international … Read more

Understanding Investing With Margin

by Jeremy

The demand for robust returns in the capital markets environment has created an environment where investors require capital to enhance their returns. This demand has generated a sophisticated process in which investors can borrow capital that is used to invest in stocks and futures to enhance their returns. Investing with margin is a way that investors can find a great rate of return.

Most brokers offer investing with margin as a product which allows investors to borrow capital using the securities they hold within their account as collateral. Margin provides leverage, which can enhance and detract from returns.

What Is Investing With Margin

Margin is collateral that the holder of a financial instrument has to deposit to cover some or all of the credit risk of their counter party. Investing with margin is most often associated with a broker or an exchange. The collateral that can be used to post margin can be in the form of cash or securities, and it is deposited in a margin account.

The initial margin is a guarantee and offsets losses should they occurs. Margin is calculated by using the historical volatility of a financial security and calculating the potential losses that could occur on a given day. The margin system is a mechanism that insures there is sufficient cash to cover losses and protects a broker from risks of losses.