Hope for your financial life and beyond

Give the Gift of Investing This Holiday Season

I’m happy to welcome today the Debt Free Guys. Enjoy their guest post on how the gift of investing may be the best present a child could receive this holiday season.

Christmas presents under the treeAmericans are expected to spend between 4 and 4.5 percent more this coming holiday season than in 2013 or $981 to $986 billion between November and January, excluding auto and gas sales. The lion’s share of that money is expected to be spent on technology, led by Apple’s iPhone 6 and 6+.

Already this month we’ve seen personal finance blogs with advice to manage expenses this holiday season. Expect to see lists of all sorts on financial blogs and websites, such as “25 Gifts Under $25”, “Gifts You Can Make” and “The Art of Re-Gifting”. We’ll kick off our 2014 holiday shopping advice to give the gift of investing this year.

There will be the exceptions, but most American children will have their fair share of gifts beautifully wrapped and lovingly placed under a Christmas tree or next to a menorah. They’ll excitedly un-wrap their gift, play with their new toy or wear the new piece of clothing, but eventually the gift will be forgotten. Some possibly forgotten before the day is over. Others will be forgotten by the end of the holiday season or a few months later. Even iPhones lose their luster after several months.

What won’t be forgotten is education. As we’ve discussed frequently at Debt Free Guys, we believe there is a gap in education in that kids don’t sufficiently learn enough about money management, saving and investing.

Educate the children in your life and give the holiday gift of life-long investing. There are three ways to do this.

Open a UTMA/UGMA Account

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Emotions and Investing Do Not Mix

Today I’m guest posting and commenting at the personal finance blog Frugal Rules. Click the link below to read about why emotions and investing don’t mix, including some boneheaded investing mistakes I’ve made through the years when my emotions got the best of me.

emotions and investingSome things fit perfectly together. Peanut butter and jelly. Batman and Robin. Yellow and blue. Separately they have value. When combined they create something extraordinary.

The same cannot be said for emotions and investing. Like oil and water, they simply don’t mix. There is no place for emotion in the investing world if you want to have success.

My Emotional History With Investing

I started investing in 1996, just after my wife and I were married. It was the height of the 1990s bull market run that saw computer, technology and Internet stocks in particular soar to record highs. A company could go public one day and be at $200 a share the next without ever making a single penny in profit. (That’s a slight exaggeration but accurately defines the lunacy of the time.)…

Click here to continue reading at Frugal Rules

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Do You Want to Beat the Market for 60 Cents Per Hour?

The following is a guest post from Graham Clark at Moneystepper.com

Pennies falling out of a tipped over jarWhy do we invest? Presumably, we all invest money to obtain the best returns we can to improve our financial future. Effectively, this means that we are investing to earn money.

We invest in the stock market because we think it “pays well”. Investing in the stock market (assuming we can earn the market returns of the S&P 500 since 1970) can earn us 15.79%. Alternatively, holding money in cash returns approximately 5%.

Investing in the stock market is therefore the equivalent of working at a legal firm instead of McDonalds – the wages are better.

Hourly wage of investing

Let’s say you have $10,000 invested in the Vanguard S&P 500 (with an annual TER of 0.1%). Therefore, your average annual return, after costs, is equal to $1,569. How much work did this take? To set up your Vanguard account and buy the fund, and then to completely forget about it for the year, probably takes about one hour.

So, you are earning an hourly basic wage of $1,569 per hour. Not bad. Well done you!

Now, I’m going to give you the opportunity to earn another 60 cents per hour. Would you like to do that?

You probably wouldn’t. Moreover, you would probably report me to the authorities for exploiting my employees!! But, millions of people are doing this when they are trying to beat the market.

Can you beat the market?

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How Are Various Investing Markets Related to Each Other?

The following is a guest post by Troy Bombardia.

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Commodities: An oil refinery at dusk

In the world of investing we have something that is known as correlation. The basic definition of correlation is simple: how do changes in variable X affect changes in variable Y (oh no, more math!)?

Correlation and relations exist in the financial markets. Changes in the price of certain markets (i.e. stocks) will have impacts on prices in other markets (i.e. bonds, currencies, commodities). In this post, I’m going to examine how various markets are related to each other (their correlation).

Why is it important to understand the relationships between various markets? Because if you know how one market is reacting and what relationship other markets have to this market, you can predict what the future price of other markets will be (which equals more profits!).

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Global Shares Plunge! OMG…The World’s Coming to An End!

ID-100178554It’s another typical early morning. With a busy day ahead, I’m getting a bit of writing done before the kids drag themselves out of bed and downstairs for breakfast. I’m clicking around the Internet and wiping the sleep from my eyes when I’m greeted with this headline from Yahoo Finance:

“Global Shares Plunge as U.S. Slowdown Adds to Emerging Markets Woes”

I quickly pulled up a stock chart and noticed the financial markets have been in a free fall since the start of January. As of this writing (the morning of 2/4/14), the Dow Jones Industrial Average has fallen over 1,200 points (about 7%) since Jan. 1st. Many are calling for another 3-5% drop from here. Yikes!

Well, faced with that news what could I do? I grabbed my shotgun, some bottled water and my case of Ritz Crackers ‘n Cheese and headed for the bunker I’ve built in the basement. It’s fully stocked for Armageddon. The wife and kids will have to fend for themselves.

Clearly the world is coming to an end.

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