You’re Wasting Money Investing in Stocks

You're Wasting Money Investing In Stocks

There is a right way and a wrong way to begin investing in stocks. But sometimes new investors have to learn the hard way. A coworker recently talked to me about investing in stocks for the first time. He was proud of himself for finally taking the plunge into the market to buy a few shares. And, then I asked him what he had bought. He said that he had bought a couple of shares of Ford Motor Company (Stock Symbol: F). He also bought a few shares of some other well-known blue chip stocks like General Electric, Dow Chemical, Walt Disney, Coca-Cola, Dr. Pepper Snapple Group, and others. These are some great companies and a few that I own … Read more

Getting Over The Inertia Of Not Investing In The Stock Market

Too Many People Are Not Investing In The Stock Market

Get over the inertia of investing in the stock marketToo 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.

Read more

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

Don't Fire and Forget your financesDo 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.

Read more

The Road Less Traveled to Financial Security

3590829216_bdd73ebfa8_zThere’s more than one way to skin a cat. At least that’s what people say, even though I can’t now think of why anyone would say or do that. But assuming that’s the case, that’s a saying that is true across many different realities and disciplines.

Nowhere is it more true than within investment and personal finance. While there are some investment methods that are sold as silver bullets, stuff that’ll work for anybody, not every method of investment is fun or right for every body.

That doesn’t mean that these people are out of luck. It just means that they’ll have to find a different way to accumulate wealth. Luckily, there are plenty of ways to do that.

People Who Want Money Fast

So many conservative investment principles hinge on the idea that money is for when we are very old. A lot of young people aren’t willing to accept that. We don’t even know if we will ever be Why can’t we enjoy life like that now? If this sounds like you, there are different ways to get rich quick.

Each of them has their own risks, but they are all ways that have worked for a lot of people. A) Forex trading investments are a kind of trading that can pay off big in just a few hours. Spread betting is the kind of investment you make that hinges on the value changes of two currency pairs. If you guess right you can win big. B) High Risk stocks. By investing in complex markets, like pharmaceuticals are right now, you stand the chance of picking a big winner overnight.

You’ve got to learn a lot about a specific industry, but if you know enough you can make better choices than other investors and stand to get huge returns fast.

People Who Want to Get Money Soonish

If you want wealth, but can wait a little while, you may be the kind of person who’s willing to really work for it. This kind of person will do well to go get further education which will increase their earning potential many times over.

The best fields for making money right now are the STEM disciplines. Science, Technology, Engineering, and Mathematics aren’t for everyone, but these are the fields with a lot of awesome careers right now. An investment in education is an investment in yourself. This is active investment, not the passive investment types that get people more only gradually.

Read more

Confessions of a Short Term Stock Trader with Swing Trading

Swing Trading

I have a confession to make. For the past six months, I have been buying and selling stocks at a rapid rate lately. It hasn’t been day trading, but I haven’t held a stock for more than a week before selling it. I’ve been swing trading. I have been swing trading with a small portion of my investment portfolio. I have been buying and selling stock and holding shares for only a few days in the hopes of short term price movements. And, I am really loving it I have to admit. Like when I started playing fantasy baseball and it renewed my love for the game, short term stock trading has renewed my love for trading. It’s not for … Read more

How To Invest Money Like A World Class Poker Player

How To Invest Money Like A World Class Poker PlayerI used to love to play Texas Holdem Poker. I still do, but I also have to know when something starts to become habit forming and possibly not healthy. Believe it or not, but there are a lot of things that investors can learn from poker players that will make you a better investor in the long run. You can learn how to invest money like a poker player.

There are a lot of similarities between the two. Here are ten attributes that I wanted to highlight how to invest money like a world class poker player. There are some great insights that can be drawn from the world of poker and applied directly to investing. Here are a few of my favorites.

How To Invest Money Like A World Class Poker Player

Know When To Hold’em

Like the classic Kenny Rogers song, The Gambler, you have to know when to hold them and know when to fold them. Of course, Kenny was talking about the cards that you have in your hand. But, the same can be said for stocks or even mutual funds. You have to know when to keep them and when to sell them.

Do you have a strategy? Did you buy a certain stock for a certain reason and you’re waiting for it to pan out? These are all things that you need to consider when investing just like a poker player thinks about when he or she sits down at the poker table to play.

Know When To Fold’em

There is no shame in calling it quits with a certain investment that did not pan out. It is often better to live to fight another day than to go down in complete flames with all of your money. Jim Cramer recommends in his book, Mad Money, to set a certain percentage (say 10%) of a loss as a trigger for you to automatically sell a position that you have in a company’s shares.

While Cramer’s book isn’t one of my top ten personal finance books that should be on your bookshelf, it is definitely well worth a read especially for people investing in individual stocks.

Play With The House’s Money

This is one of my favorite things to do when investing. I will often sell a position that I have had a lot of success with and get back my initial investment. Then, I will let my profits continue to run.

This is playing with the house’s money, the casino’s money or other people’s money…not your’s. This is also akin to using the interest that you earn from an investment to earn passive income and reinvest the proceeds into new investments. This is exactly what I do to earn a passive income with Lending Club. You can learn how to invest money.

Patience Is The Key

It takes patience to land on that incredible hand in poker. If a player is playing tight or only playing the best pair of cards, he or she could wait a while to strike. The same of course can be said for investing. You may have to stalk a company waiting for a pull back of its stock price to pounce on it. You may have to be patient to let your strategy play out.

Read more