Money & Investing - Banks.com

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One of the questions that many people have when it comes to look at how much return they are getting on their bonds has to do with the way the information is presented on the Savings Bond Wizard offered by the Treasury Department. One point of confusion has to do with the way I-bonds are presented, especially with regard to the term “yield.”

When the Wizard uses the term “yield”, it is referring to the average rate of return up to the present point. It is not actually referring to the current yield on an I-bond. It means the average rate of return up to the current point, over the life of the bond. When you see the “rate”, though, it means the current six-month period rate. I-bonds have two different rates, with a fixed rate for the life of a bond, and the inflation rate, which is adjusted in May and again in November of each year. So, if the current rate is higher than the yield, it is an indication that the rate is up in comparison to the average yield you have had over the life of your I-bond.

An I-bond is just one of the Treasury bonds available for investing. These are loans you make to the government, and the government pays you interest. I-bonds are protected from inflation. You can purchase them through Treasury Direct. It you use an electronic account, you only need a minimum of $25 to get started. Bonds offer relatively low returns, but they aren’t too bad. The current rate on I-bonds is 3.36% through the end of April — not too shabby for such an investment.  Better than a high yield savings account.

Bonds can make a good addition to an investment portfolio in need of a little shoring up for safety, but it is important to realize that you will get slow growth on bonds, and that if you want higher returns, you will need to balance things with other types of investments.

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.

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Ford, the only of the Big 3 American automakers to not need government bailout money (although the company did request a standby line of credit “just in case”), reported a profit of $1 billion for the third quarter. The news has provided a jolt of energy to a stock market that ended October on a rather dour note. Stocks are gaining, with the Dow up more than 100 points. It is far from certain that the stock market will be able to recoup all of its losses from last Friday, but it looks like the bulls are willing to give it a try. It may even be that the Dow makes another run at 10,000 this week.

However, some of the stock market’s success this week will depend on what happens with other news. Economic data will be heavy this week, so it will be necessary for the economy to show some fight and signs of recovery in order for the stock market to truly overcome. European stocks are higher as well, providing some help. And the stock market barely noticed the fact that CIT declared bankruptcy. The company claims that most of its debt holders are on board with the plan for reorganization, so the fifth-largest U.S. bankruptcy doesn’t appear to be causing a lot of consternation.

It will be interesting to see what happens going forward. Ford claims that it should be solidly profitable by 2011, and that things are looking up. Most of last quarter’s profits came with help from the Cash for Clunkers program, so it will be interesting to see whether Ford can remain sanguine moving forward.

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.

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It’s Halloween time, and in honor of Halloween, I thought I’d share 3 scary investment strategies:

1. Following that “hot tip”:  How often do we hear about a “hot tip” from someone that is just solid and will make you a great deal of money? However, just running after something that is “hot” is rather scary. By the time you get the tip, chances are that the things have cooled off. Indeed, in many cases, by the time you get in on the “hot” buy, it’s close to the top, and about to fall. Plus, who’s giving you this tip anyway?
2. Frequent trading: While there are lots of people who make money with day trading, I find the whole thing rather scary. I’m more of a boring buy and hold kind of girl. Frequent trading can have tax implications (short-term gains are charged at a higher rate than most long-term gains), and frequent trading can cut into your gains with transaction fees.
3. Market timing: Accurately predicting the market is impossible, so market timing is a tricky prospect. Waiting until just the right time buy can cost you, since you might miss a low. But what happens if you jump out just before something takes off? While there is no way to completely protect your portfolio, you can protect it to some degree by using a regular investment plan (such as dollar cost averaging to invest each month) and riding through the ups and downs. You may not get the same spectacular gains, but there’s a better chance that you’ll get steady gains over time.

What investment strategies do you find scary? Also, in honor of Halloween, I thought I’d share this video of Disney villains singing about money. Enjoy!

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.