Different Types of Investments: An Overview, Part I

There are three different main kinds of investments, stocks, bonds, and cash. Sounds simple, right?

Well, unfortunately, it can get very complicated from there. You see, each type of investment has numerous types of investments that fall under those three categories.

There is quite a bit to learn about each different investment type. The stock market can be a big scary place for those who know little or nothing about investing, and often the first time investor is disappointed, and perhaps even so badly burnt that they never have the confidence to try again.

In the same way that you have to practice in order to learn how to swim,  and swim well on your own, you can easily learn the basics of investing and then decide to dip your toe in to test the water. Jumping in without checking, diving, or doing a belly flop, is not recommended.

Fortunately, the amount you have to learn is usually in proportion to the type of investor that you are.

 

THREE TYPES OF INVESTOR, TWO LEVELS OF RISK

There are also three types of investors: conservative, moderate, and aggressive.

The different types of investments also cater to the two levels of risk tolerance: high risk and low risk.

 

CONSERVATIVE

Conservative investors often invest in cash. This means that they put their money in interest-bearing savings accounts, money market accounts, mutual funds, US Treasury bills (T-Bills), and Certificates of Deposit.

These are very safe investments that grow over varying periods of time, usually a longer period of time. These are also low-risk investments, and don’t require a great deal of time each week in follow-up and decision-making.

For example, if you go to the government website to buy T-Bills, you can set up your account in minutes, buy one for the sum you want, and the duration of time before it accrues its value.

So as an example, for a $1000 T-bill, you would pay $970, and in 4 weeks time, it would be worth  $1000. This is a simple but fool-proof strategy, and while the returns might not seem that high, in a volatile economy, it is an investment with no risk. Plus, this is just one example. There are t- bills and t-notes, and auctions online that might secure you that same $1000 T-bill for, say, $930 or even less.

 

MODERATE INVESTORS

Moderate investors often invest in cash and bonds, and may dabble in the stock market. Moderate investing may be low or moderate risk investment. Moderate investors often also invest in real estate, providing that it is low-risk real estate.

For example, in your 401k portfolio, you may see a US Property Fund account, with a 6 to 8% return.  Again, it may not be a huge return, but there is not much risk.

 

Continued in Part II.

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Obama vs. Wright: Obama’s hypocrisy makes him unelectable

 

After months of dodging the question of his association with the Reverend Jeremiah Wright, finally Obama disavowed him and disowned him yesterday.

Why?

Not because he disagrees with any of Wright’s inflammatory sermons.

No, it is because Wright made a comment about the fact that as a politician, Obama will do or say anything to be considered electable.

Obama claims that this is untrue, and that Wright does not know him after 20 years.

Quite the contrary, Mr. Obama. He knows you only TOO well.

After all, he married you to your wife, baptized your daughters, and as your pastor, has probably had some very private conversations with you about you and your life which few others would ever have been privy too.

And you did, after all, attend these inflammatory sermons yourself for how many years? Can I hear an Amen?t

The headline in the New York Daily News today says it all–BARACK STABBER

You have stabbed your friend and mentor in the back on a national, if not global scale and shown your true colors even to those who were once dazzled by you.

You are a hypocrite, and THAT is what makes you unelectable. You’ve managed, in a few short months in front of the media, to go from meteoric rise, to spectacular fall, all on your own.

It was your election to win or lose,  and you are losing, because you were arrogant enough to think you could weather the storm or controversy, and now hypocritical enough to try to dump the very person you described as a fatherly figure only a few short weeks ago.

There is no room for this level of dishonesty in Democratic Party when we need every vote we can muster to beat the Republicans and end the insanity of 8 years of mismanagement. There is no room for this level of open dishonesty before you ever even get anywhere near the White House.

And there is no room in the hearts of the American people for someone who has shown himself to be as UnAmerican as you are by association, despite all your trappings of flags behind you every time you make a speech these days, as if you are already president.

You have gone from media darling, to media sham,and slam, in only a few short weeks. You will go down in history as the most promising president that never was, and you have only yourself to blame for it at the end of the day.

 

Amen!

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A Budget: Your Ultimate Financial Management Tool, Part IV

(Continued from Part III.)

Now let’s look at your own personal finances in more detail.

 

SAVINGS, INVESTING, AND PAYING OFF DEBT

Savings should always come first before any spending or investing, except if you are carrying a fair amount of consumer debt or student loans. If you are, make it a point to pay if off first, as we have discussed above.

But do also make sure that there is no penalty actually involved in paying it off quickly. Seriously, they WILL do that. WHY? Because they make more money out of you paying interest, than in paying back the principal (the money owed.

Once you are in the clear on debt, then it makes sense to save.  If an APR is at 15%-29%, then the 4-5% savings you would get from the average online savings account would be meaningless.

Look at your savings options, and choose something with relatively easy access so you don’t run the risk of penalties if you have to withdraw it in an emergency (such as if you had it in a 1 year CD).

If you are thinking of investing it to get a higher return on your money, decide what you can afford to invest and thus risk.

Even a small amount saved will help you reach your short term and long term  financial goals.

 

BUDGETS: A LIVING DOCUMENT

Above all, keep in mind that your budget is a living entity, as the cost of living goes up or down, and your situation changes.  If you are living on your own, make sure you hold yourself accountable, by realizing that short-term sacrifices can lead to long term gains.

If you are in partnership, both of you will need to be happy with the final budget, and feel like it’s something you can stick to. Remember, you’re working together towards a brighter and better future, not playing the blame game.

Once you have your budget, you can look at your overall financial health, and work on the areas that need improvement. At least with your budget, you will have a workable map toward your destination, so while you may not always steer the straightest course, at least if you follow your budget, you won’t sail onto the rocks.

 

 

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A Budget: Your Ultimate Financial Management Tool, Part III

(Continued from Part II.)

Now let’s look at how to start organizing your family budget.

THE FAMILY BUDGET

If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what you are spending money on both collectively and together to run your household. If there is a lot of fat that needs to be trimmed, try to take it a step at a time. Remember, there is no blame involved, it is just looking at the cold hard facts.

Often just looking at them is to see a problem, and once you see it, you can start to work together to come up with a solution.

 

SHORT TERM AND LONG TERM FINANCIAL GOALS

The next step is to discuss  joint financial goals are in both the short and long term. Car, vacation, house, kids, college, retirement, these are pretty standard goals for most people. You may have other personal goals too, like going to grad school, having to pay off student loans, and so on.

Whatever the goals are, the first step is to identify them. That way you can plan your route to get to those goals.

Every journey begins with a single step, so the first step to attaining your goals is to make a realistic budget that you, or you and your partner,  can live with.

 

NO STARVATION RATIONS

A budget should never be a financial starvation diet. That won’t work for the long term any more than living on lettuce for three months to trim the fat would work. All you will do is get sick of it, and binge.

So, be honest, and realistic. The rate of inflation is about 5%, so make reasonable allocations for food, clothing, shelter, utilities and insurance and then add on 5% for a bit of wiggle room.

Set aside a reasonable amount for entertainment and the occasional treat. If you want a vacation, set aside a certain amount each month, but be clear it will have to come out of your budget, and not from a credit card or at the expense of other crucial items.

Continued in: A Budget: Your Ultimate Financial Management Tool, Part IV

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Reply to recent Op Ed piece on Bill Clinton

TO: Sonya Ross, AP

 

I read your op ed piece today with interest, and  while I think you believe you are being clever, you are actually being racist yourself, and unfairly judgmental.

The frustration we have all sensed and seen in Bill Clinton has nothing to do with race. As you point out, he did more for the African Americans of this country than any president before.

His frustration stems from his being a powerful personality, accustomed to power, and a husband taking a very very personal, perhaps too personal, interest in his wife’s campaign.

No one cares about Michele Obama’s unskillful remarks, or if they do, it is not getting one fraction of the media attention that his every move does.

His frustration stems from the fact that H Clinton was clearly the front-runner going in, with 30 years under her belt, and then a new candidate with barely two, basically appears to be running away with the whole election.

Except that if Obama were unstoppable, she would not have been able to stop him, as she has. He has not won a single large state, and is not so far in the delegate count than anyone can ever say this is a foregone conclusion.

Obama may have had some high profile endorsements early on, but he has not sewn this up yet, and according the rules he continues to flout, he would be short on delegates too.

On the other hand, if he were a true Democrat, he would want to see the Michigan and Florida delegates seated.  He has stopped that from happening at every turn.

Why not seat them? Because they broke the rules? Why not have another primary? Decide it once and for all, fairly?

This is the source of B. Clinton’s frustration-because the quicksand shifted, and now the rules are out the window and bogging down not only his wife’s campaign, but the whole effort to win the White House.

He wants to see he getting on with the business of helping this country, not running the gauntlet of her critics over and over again, let alone Obama, with his rude sexist digs at her at every turn.

(And ask yourself this:  you don’t want to betray your race, Ms. Ross, but you are prepared to set back the cause of equal rights for women how many decades as you try to yank the rug out from under Hillary Clinton?)

Obama has shown what he is made of since he first came to our attention. A meteoric rise is usually followed by an equally meteoric fall.

She has stayed the course with guts and resilience, putting herself through what NO presidential candidate has EVER had to put up with before, or ever will in the future.

And believe me, I am NO fan-she is as flawed as the rest of the political candidates this country seems to be so super at churning out. I was rooting for Edwards myself until he started to look so weak and other issues started to crop up which make him look less and less electable.

I am not voting for Obama because he is so inexperienced, and because, as YOUR most recent AP poll showed, those of  us who do actually know who he is now see him to be inexperienced, unethical, and dishonest.

B. Clinton’s admiration for H. Clinton’s determination, for the sacrifices she has made for years, her energy, her efforts. He does not want to just sit back and see it all count for nothing in the end. Yes, she can still be a Senator, but everything she has done for years has been leading up to her becoming the kind of commander in chief that he was.

So it  makes him impatient, true, but it does NOT make him racist.

And as we have seen, and your article indicates, racism works both ways, and when combined with sexism, is particularly ugly.

B Clinton is impatient, as we all are, for her to win fair and square, as she will, and deservedly so, and then beat the stuffing out of McCain and get to the White House.

Why deservedly so? Because all the other horses in the field were not able to keep up with her, or catch up with her, and her victory is going to be in the face of the most outright sexism any reasonably intelligent, prosperous country, should completely reject in the same way that it should reject racism, ageism, discrimination on the basis of sexual orientation, and so forth.

And because the alternative is 4 more years of Republican misrule, and more of the suffering the Bush administration has not only inflicted on the world with this war, but has resulted in the American people all now being plunged into the worst recession this country has seen in over 20 years.

Any true Democrat will want ALL the delegates to be seated, and any true PATRIOT will vote for the Democrat who wins, regardless of personal feeling, opinion, or any other hidden agenda, because the alternative of McCain is just too horrific to even contemplate.

The more everyone keeps producing devisive columns like yours, the less likely that is to happen.

We ALL have our opinions–you  using your position to inflame the race issue even further than you already claim it is, is completely irresponsible

And only makes all Obama supporters seem even more polarized and naive than they already do, especially after last week’s debate (or was it a debacle for Obama?)

It makes many people ask: are all Obama supporters all just strikingly fanatical-or racist and/or sexist themselves?

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A Budget: Your Ultimate Financial Management Tool, Part II

Continued from Part

PLANNING YOUR FINANCIAL FUTURE

 

BUDGET FIRST

The first thing you should do is work out your budget. That means looking at the reality of your situation here and now.

There are a number of free online tools and sample worksheets you can use, including at the America’s Debt Diet website. There are also templates in the Microsoft suite as well.

Then get out your most recent pay stub, and all your rent/mortgage, utility bills, and start filling in the blanks. Look at the receipts for all the things you’ve bought in the previous week. Work out in round figures how much you spend on items like gas, electric, cell phone, regular phone, food, clothes, and entertainment.

 

EASING YOUR CREDIT CRUNCH

Then look at your credit card statements, and the minimums you are paying each month. Is there anything left at the end of your calculations?

If yes, great.

If no, not so great. But take heart.

Now look again. Is there anything you can cut back on, any ‘luxuries’ you could do without, or do with less of? How much would you save each month.

Look at your credit card statements, at the balances, but also at the APRs, the annual percentage rates for the money you are basically borrowing for that new sweater or great pair of jeans you ‘just had to have’.

 

PAYING DOWN DEBT

If you took the money you saved from the luxuries, how soon could you pay down that debt?  If there is any left over, pay down the ones with the highest APR first, then the second, then the third, and so on.  You will improve your credit score very rapidly too if you don’t always pay at the last minute, but rather pay as soon as the bill comes.

In a lot of cases you can even pay quickly and easily online, free of charge.

 

SPREADING OUT YOUR BILLS

Once you have filled in your budget, make a calendar for yourself of when all the bills are due. It is easy to lose track of one and then end up with big problems on your hands.

Look at whether your pay cycle is weekly, bi-weekly, or monthly. Then you can space out the payments over X number of checks you are getting.

 

Continued in: A Budget: Your Ultimate Financial Management Tool, Part III.

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A Budget: Your Ultimate Financial Management Tool, Part I

 

A builder uses a set of house plans, or blueprints, whenever he builds a house or office building.

Rocket scientists would never begin construction on a new booster rocket without a detailed set of design specifications.

Yet most of us go blindly out into the world without an inkling about finances,  and without any plan at all as to how we’re going to achieve our  lifestyle goals in the short term and long term.

 

A BLUEPRINT FOR FINANCIAL SUCCESS

The most financially successful people have a blueprint or plan, called a  money plan is called a budget, to help keep them on track in both the short and long term when it comes to achieving their financial goals.

Without a plan, they would spend whatever they wanted, whenever, and basically end up living hand to mouth. Worse still, they might end up running up a great deal of debt, spending more than they earned, until they couldn’t even meet their credit card minimums any more.

 

THE CURRENT ECONOMIC CLIMATE: CREDIT CARDS ARE NOT YOUR FRIENDS

Credit has been easy to come by for the past few years, but in this current economic climate, a lot of credit card companies are pulling the plug on consumer credit. They might also be inflicting much heavier penalties on anyone who misses a payment, or increasing the interest rate, or, in some cases, even changing the payment date in the hope that you WILL make an error.

They are also making a great deal of money preying on people’s fears of credit card fraud, rather than taking the sensible steps of trying to cut back on credit card fraud in whatever way they can.

So credit cards are not your friend, and yes, it may be tough to get along without them, but your budget will be a lot better for it in the long run. Your budget is the one way to try to make sure you don’t end up on the rocks of a financial disaster. Or, if you think you’re already in danger of running aground, it can be the action plan that helps get you out of danger with persistent effort.

 

Continued in: A Budget: Your Ultimate Financial Management Tool Part II

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