Money & Investing - Banks.com

If you want to learn a little bit (and I mean a little bit) about investing, it might not be a bad idea to watch UN-BROKE: What You Need to Know About Money on ABC tonight. It’s a special, airing at 9 pm Eastern. Here is what the description of Un-Broke on ABC says about the special:

Hobson said: “Financial education is critically important, and UN-BROKE proves that it doesn’t have to be boring. The economic crisis was a harsh wake-up call that we can’t keep doing the same thing in the same way. To me, that meant taking a fresh look at my own approach to financial education. This will make people laugh while they learn.”

Celebrities are expected to make appearances so that they can teach us about money basics, from getting a home mortgage, to the basics of the stock market. The E*Trade Babies and The Jonas Brothers are primarily responsible for teaching the basics of stock market. I expect that information on retirement investment accounts will be included. And, hopefully, a little bit of perspective on the currency economic downcycle. But probably not. I have a feeling the main presentation is going to be all about money basics.

And, really, it’s pretty obvious that we do need some exposure to the money basics. The current state of affairs is due, in part, to a gross disregard for the fundamentals of money, investing and how it all works — from the boardroom execs and the Wall Street “experts” to the consumers with lack of financial literacy (or disregard for it).

Overall, I expect this to be a reasonably positive TV special event. And, if enough people watch it, perhaps it can generate more interest in sound money decisions and a future that is built on unsustainable growth and craaaaazy investments.

There are a lot of lists going around this month, it seems, in the blogosphere. So I thought I’d put one together as well. The Online Investing AI Blog has a list of 16 investing mistakes. These are things you want to avoid, but I decided that there are 5 investing mistakes that the long term investor should really try to avoid:

1. Trading too often. This is kind of an obvious one for the long-term investor. After all, the point of long term investing is to avoid trading too much. But it can still happen to even the best of us. If we get panicky, or if we think something better is coming, we might start trading too much. Then the fees and commissions start to add up. And losses can too.
2. Not sticking with your investing plan. One of the hardest things for the long term investor to do is to stick with the investing plan. He or she becomes worried that maybe this isn’t the right thing. Or short term setbacks cause doubt. If you have a good investing plan, stick with it. Over the long haul it is likely to pay off.
3. Choosing actively managed funds. Actively managed funds seem like a good idea at first, but they really aren’t. In fact, they are usually a bad idea. You have to pay fees when the manager decides to change the composition of the fund, and you have higher annual fees. You could even have load fees. Actively managed funds are usually a Bad Idea when it comes to long term investing. Instead, consider low cost index funds or ETFs.
4. Not understanding how investing works. Get educated about investing and money work. You don’t have to know the minutae of what is going on, but you should have a general idea of how investing works. And you should understand your investments. If you don’t understand how it works (*ahem* derivatives, credit default swaps), it’s probably a Bad Idea.
5. Refusing to take responsibility. Ultimately, as The Online Investing AI Blog points out, you are responsible for your future and your decisions. Take responsibility for your investing plan and your choices. This might mean getting good advice to help you make decisions, but you have to realize that they are still your decisions.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Image via Wikipedia

Automaking giant GM is preparing for bankruptcy. Yesterday, the company received word that its bond holders rejected a plan to swap the debt for company shares. Additionally, the United Auto Workers union decided to reduce its stake in GM. CNBC reports on what has been going down, and what the next steps are:

There was a small hope Tuesday that GM could avoid a bankruptcy filing when the United Auto Workers union disclosed that it would take a 20 percent stake in GM — down from the original plan of 39 percent. That seemingly freed 19 percent of the Detroit-based company’s shares to sweeten the pot for its recalcitrant bondholders. …

Because the bondholder deal did not go through, the equity freed by the UAW deal now apparently will go to the U.S. government, which may have to commit billions more for GM’s restructuring in court.

The government’s stake in the company originally was to be 50 percent, according to GM’s regulatory filings. But it now could be as high as 69 percent. The Canadian government also could get equity for up to $8 billion in aid for the automaker.

While the board is meeting in the hopes of finding some other solution, there is not a lot of hope. The capital raised from the bond holder agreement was one of the last hopes. However, many bond holders will not be getting that much with a bankruptcy agreement, either. Rival Chrysler filed for bankruptcy next month. A GM bankruptcy, if it happens, will be the fourth largest in U.S. history. GM shares are down, trading at around $1.20 per share.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.