Money & Investing - Banks.com

There are always a lot of investing ideas, tips and advice floating around out there. Today I thought I’d take a look at some of what’s going on in the investing world, from forex trading to real estate trends to commodities.

Forex trading

One of the investing products that has been growing in popularity lately is the forex exchange traded fund. ETFs can be traded on the stock exchange, and forex ETFs allow you to diversify into currencies without actually getting involved in forex trading.

Now, addressing the lack of forex ETFs for emerging market currencies, there are some new currency funds for countries like India and Brazil. And interesting thought.

Real estate investing

In the hardest-hit markets, it may be a great time to buy. As home prices move lower, investors are swooping in. This means that in some real estate markets, signs of life are starting to appear. If you are looking to make a real estate investment, and you can secure the funding, it may be a good time to go for it. Just make sure that you carefully consider the area you are looking into. You want to buy in real estate markets that, though hard hit, are more likely to recover.

Commodities investing

Oil prices are heading down right now, but how long will they stay down? Worries over how emerging markets will be able to keep up with prices have oil prices steadying. But will they fall further? Or will they make a turnaround and head back up? If you think they’ll be heading back up, maybe now might be a good time to buy — you know, while they are retreating.

For an interesting look at oil prices and how they are related to gold prices, check out this post on Power Wealth.

Finally, if you are looking for a list of good online discount brokers that can help you get started in investing, Blueprint for Financial Prosperity has a great review of some of the best.

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. 

One of the most important things to remember in investing is that research is required. A bit of education goes a long way investing. It is vital that you understand how investing works, and that you do some research into the kinds of investments that you make, whether they are Treasury bonds, stocks, currencies or funds.

This doesn’t mean that you obsessively follow stock prices or bond futures each day. But what it does mean is that you need to have due diligence in figuring out which companies are fundamentally sound, or choosing mutual funds with low (or better yet, no) fees.

Be educated about the risks

You should also understand the risks of investing. While the point of investing is to make money, the risk inherent in investing means that there is a chance that you could lose money. Sinking a great deal of money into a venture that a friend insists is the “next big thing” is risky. On the other hand, investing in index funds or Treasury bonds is a little safer. But you should know: The bigger the risk, the bigger the returns (if the whole thing pans out, of course). You should under stand which investments are riskier, and which are likely to give steadier returns — although things in the market could change at anytime.

Know yourself before investing

Many people forget to educate themselves about one important factor before they begin investing — themselves. It is vital that you know your risk tolerance and other aspects of yourself before you begin investing. You should know what you have available for investing, as well as what you can afford to lose. You should also understand your own temperment before you begin. Can you handle the stress of riskier investments? Or will you be more comfortable with “safer” investments that come with more modest gains?

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.

Tags: investing education, stock investing blog, investments, risk tolerance,
risks investing, treasury bonds, understanding markets

Today I thought I’d answer a reader question that has a lot to do with what is happening in the financial markets right now:

I hear that diversity is important. What kinds of things can I do to increase diversity in my investment portfolio?

You are quite right. Diversity is an important part of managing investment portfolio risk. And times like this, during an economic slowdown, and times of market volatility, diversity in your investment portfolio becomes even more important.

Diversify types of investments

One of the first ways to diversify your portfolio is to look at different types of investments. Do you have mostly individual stocks? Consider adding mutual fund and index funds to the mix. These often have diversity built in (especially index funds), and that can help you more easily diversify your investment portfolio. Additionally, some stock funds (like the Sierra Club fund) offer some diversity while helping you enjoy the current trend toward ethical investing.

Also consider cash investments. These aren’t particularly sexy right now, what with the Fed lowering interest rates left and right, but they can help you build a measure of safety into your investment portfolio. CDs, bonds and other cash investments (I like high-yield online savings accounts as well) can add a solid element to your investment portfolio.

Diversify according to sector

Many people just randomly buy mutual funds and believe that they are diversifying. The fact of the matter is that some funds actually have a lot of the same sector, so they aren’t all that diverse. Look at the companies in the fund or investment trust. You can get REITs or something like the Wilderhill Clean Energy ETF, but it is important that you balance out that heaviness in one sector with some diverse investments in a variety of other sectors.

Branch out to foreign companies

Many people forget that they can add diversity to an investment portfolio by becoming diverse in overseas investments. Consider investing in companies that limit exposure to the US dollar. This can help you even when domestic companies struggle. I think the Motley Fool offers some great advice on this front:

After all, you do everything in dollars. You earn dollars, you spend dollars. Doesn’t it make sense to invest in euros, or reais, or pounds? Why not find companies such Brazilian energy firm Petrobras (NYSE: PBR), Global Gains recommendation and Asian gaming company GigaMedia (Nasdaq: GIGM), or European consumer products giant Unilever (NYSE: UL) — all of which have much lower exposure to the greenback?

Also, don’t forget to diversify with some investments that are a little riskier (for bigger returns), while still keeping some safer investments and investments with intermediate risk.

With proper diversity in your investment portfolio, you can weather market volatility much better.

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.

Tags: investing blog, diversity investment portfolio, ethical investing, manage investment risk,
economic slowdown, investing news, investing blog reader question