Money & Investing - Banks.com

One of the fears I hear regularly is that with stock market volatility — and other upheavals in the investing world — that investing is “too risky” or “not smart” right now.

It is true that some types of investing may not be the best idea right now, especially for beginners. But investing is still a smart choice. It is important to use investments to allow the law of compounding interest to work in your favor. You just have to be careful about what you invest in.

Stocks

If you choose carefully, picking fundamentally sound value stocks, you can actually find some great bargains right now. Buying more while the market is mostly down on most days can mean great gains down the road. Index funds are another way to get into stock investing without exposing yourself to excessive risk (although that risk will always be there). Mutual funds can also offer stock investing diversity with lower risk than individual equities (but watch out for the associated fees).

Bonds

These are considered “safe” investments — when they are government bonds. Federal bonds regularly grow, albeit at a rather stodgy rate. However, they can make good investments in terms of safety, and they generally do better as the economy falters. For better returns (but greater risk) corporate bonds and municipal bonds can be invested in.

Currencies, Commodities and Futures

Currencies are rather risky. When you get involved with FX trading, you should have a high risk tolerance. It is possible to make quite a lot of money on the currency market, but it requires some practice and the ability to take chances with your cash.

Commodities and futures are also quite risky. These require knowledge of markets and savvy decision making. Any number of factors can affect how commodities and futures move, and it is important to know what you are doing and to have a high risk tolerance when you engage in commodities and futures trading.

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.

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futures trading, investments, FX trading

Diversity is important in your investment portfolio, and funds can provide that kind of diversity. Whether they are index funds, mutual funds, bond funds or currency funds, it is possible to use funds to your advantage when you make them part of your investment portfolio. However, it is important to realize that there are costs associated with funds, and that you need to do your research before adding them to your investment portfolio.

What to look for in an investment fund

One of the most important things to look at when choosing an investment fund is cost. Morningstar points this out about costs and investment funds:

Don’t settle for high-cost, poorly run funds simply because they fell into your portfolio. Take the time to research and buy funds that will work for the long haul. Three months from now you won’t see a difference, but you will in 10 and 20 years when the power of compounding has grown your portfolio.

Look for funds that have low fees and that have fewer fews. Just because you pay a lot does not mean you are getting quality. Make sure that you understand the fee structure and the costs associated with each fund you add to your investment portfolio. Funds are notorious for having additional fees that can be rather high.

Another good point is looking at how the fund is run. Evaluate how the fund is run, who runs it and the success it has had over the long haul. You want to add only funds that are well run to your investment portfolio. And if you get into managed funds, you need to make sure that whoever is managing the fund does a good job.

You can find great financial information to make better decisions for your investment portfolio by visiting Wilson Financial Report.

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.

Tags: investment fund, investing tip, investing blog, investment portfolio,
bond funds, mutual funds, index funds

Money Magazine has looked things over and decided that there are only 7 investments you’ll ever need. The investments chosen allow you to simplify your investment portfolio with solid funds that have a reasonable rate of return. And, with the market in turmoil, now is the time to get started (if you haven’t already).

Use a little dollar cost averaging to get a regular investment regime going. The returns aren’t as high, but for most people — especially in terms of retirement savings — it’s the consistency that matters. Here is what Money suggests:

1. Fidelity Spartan 500 Index. This is a blue-chip US stock fund that offers a good buy, according to Money.
2. Vanguard Total International Stock Index. Here’s something that allows you to diversify into foreign markets. And the fund beats almost all of its peers in terms of performance.
3. T. Rowe Price New Horizons. This is a fund that invests in small companies that have potential for growth. This is one of the very few managed funds that Money recommends.
4. Vanguard Value Index. A solid fund that looks to get good value for your investing dollar. Emphasis is on dividends instead of growth.
5. Vanguard Total Bond Market Index. Bonds are fairly solid and considered “safer” than other investments. This could be a good way to build a solid foundation in your investment portfolio.
6. Vanguard Inflation-Protected Securities Fund. This one really piqued my interest. It is meant not to offer amazing returns, but rather to serve as a hedge against inflation. The five-year return is low for an investment (6.6%), but it does more than beat inflation.
7. Fidelity Cash Reserves. This is a money market account that allows you some liquidity in your portfolio. Right now the yield is low, but the idea is to have money that is fairly easy to get at — without selling stocks and possibly having to pay taxes on the money. Plus, in terms of retirement savings,a money fund allows you to put some of your income from other investments safely away.

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.

Tags: investment portfolio, money magazine, investing blog, bond fund,
retirement savings, investments, dollar cost averaging