Wednesday, November 23, 2005

Debt

Many people say that the power of debt is a good thing. Under certain circumstances I will agree that debt can be a good thing and that it can help people out in a time of need.

Debt is not a toy; and it should be used with extreme caution. The interest that people pay to creditors is incredible. The interest rates on the majority of cards are higher than the highest return the stock market has experienced.

With investments you invest in hopes of receiving a nice return, with a credit card you pay the creditor an interest rate most investors would die for.

With real estate investments one needs to really know what the market is like in his/her area. What is the average time it takes to flip the house. What is the average time it takes to find a renter. What is the going rate for rentals. If you have done your due diligence and still feel right about buying a house, buy a house that you can manage. Do not take a loan out for a house that is too much for you to handle if your were to loose your job.

Think first, dissect it, and then put it back together; and if it holds together as if it were still new then go ahead and do it.

Thursday, November 10, 2005

Saving Made Easy

Have your bank take out 10 percent of each paycheck and have it deposited into a savings account. After a while you will be surprised at how big your account will have grown to.

Remember that the account is not to be touched. Try to forget about it, if you can do this your net worth will grow!

A good bank to look into is ING.

Wednesday, November 02, 2005

Cash Flow

Cash Flow the game is an eye opener for those who have no financial knowledge. I have had many people that were not for investing or saving, but after playing Cash Flow they had a desire to learn more and to invest their money.

I do recommend the game as a learning tool along with his first book Rich-Dad-Poor-Dad, for those who are wanting to learn or need an eye opener. The rest of his books I do not feel are worth the investment. There are plenty of better written books than those that he has produced.

"When you thirst, you learn."

Tuesday, November 01, 2005

Sound Investment Advice

Best Investment Strategy:

In "The Intelligent Investor" Benjamin Graham states that you should never have more or less than 75-25% of your investments in stocks or bonds. It does not matter how old you are in-regards to how you weigh your investments. You should invest according to how comfortable you are with your risk allocation.

He also suggests that you reevaluate your portfolio twice a year to keep the percentage allocated to each category the same. E.g. Your portfolio consists of 64% stocks and 36% bonds, if your portfolio goes to 65% stocks and 35% bonds, sell the percent in your stocks to balance your portfolio. January 1 and July 4 are two great dates to evaluate your portfolio.

Also, instead of buying separate bonds from a company, invest in a mutual fund. You can also invest in ETFs (equity traded funds; for more information regarding ETFs go to http://www.sec.gov/answers/etf.htm).

Remember that investing should be a long term goal. If you are day trading you are gambling with your hard earned money!