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How to Invest 1,000 Dollars at Age 18

A while back, I had a conversation with a former student of mine who is looking to invest in the stock market. He was in college and had some money sitting around that he didn’t need for school. He wanted to know how to invest 1,000 dollars and whether it was realistic or not at this time of his life.

how to invest 1,000 dollarsHis situation was similar to what many 18-year-olds face. They’ve worked full-time summer jobs since they were 16 and maybe even part-time ones during the school year. Their college expenses are taken care of either through scholarships or the bank of mom and dad. The money they have earned is just sitting in their savings account drawing little to no interest. Does it make sense for them to do something else with it, like beginning to invest?

The answer is “YES…it absolutely makes sense” but with a very big “BUT…”.

Before I get to the “BUT…” though, lets look at some assumptions about 18-year-olds that are going to impact how they invest and where they put their money.

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Is Gold a Good Investment for an Average Person?

There are many people who believe that investing in gold bars could be the best decision you would ever make. But, equally as many people have faced indecision between investing in gold bullion or stocks and bonds as a way of securing their future. Which is the best option to capitalize on?

The truth is you can capitalize on both of them. Both have upside potential.

So, is gold investing a venture the average person should entertain? For those who answer “Yes”, here are the four main reasons they site.

Why to Invest in Gold

1. The Unpredictability of the Dollar

Although the dollar is believed to be one of the world’s strongest currencies, it becomes hard to figure out when its value is likely to drop. An excellent example of such times was from 1998 and 2008 when gold prices hit $18,000 per ounce.

During this period, the dollar was relatively weak due to the trade deficit and increased money supply into the economy. Individuals who had stored their worth in currencies moved to the security of gold to redeem their portfolios. As a result, the value of gold nearly tripled. Investors who had a gold ira rollover made a large profit out of it.

This is why an average person looking for a long term investment strategy shouldn’t overlook the benefits of storing their savings in gold. You never know when fluctuation of the current currency would strike. Luckily, when such a time comes and you had saved your wealth wisely, you might end up opting for an early retirement because you have gained so much.

2. Supply Constraints

As a general rule of the demand and supply chain, when the demand for commodities goes up, the likelihood of their supply goes down. As a result, this leads to an increase in how much you would have to part with to get the same item. The less their is of an item, the more it is going to cost.

The same principle applies in the gold market. Between the year 2000 and 2007, annual new gold production fell from 2,573 to 2,444 metric tons, according to bullion vaults of the global central banks.

During times like this, those with precious stones are reluctant to sell them. For those who are willing, they end up asking for lots of money. As a result of the decline in the availability of gold, if you had made a move and bought your fair share of the metal, you would be making handsome profits from their sale.

3. Portfolio Diversification

You can never tell when one form of the securities would be outdone by the other. It may sound more lucrative to invest in bonds and stocks. But as an average person, it would come in handy if you diversified your portfolio with some precious metals.

Related Content: The Ultimate Beginner’s Guide to Investing Money the Right Way

4. Geopolitical Uncertainty

Trust in global trade unions keep on experiencing crises. This was most recently seen in the recent case of the European Union, where some countries wanted to walk out of the coalition. Similarly, when nations are against each other, the geopolitical tensions rise. This makes the currency in those particular countries deflate.

Business can become hard to conduct, resulting in global economic burden. The value of the currencies goes down and investors start hoarding cash. At those times, many see the safest place to invest is with precious metals.

Eventually, gold becomes hard to buy due to the shooting up of its demand. For individuals to have their investment in gold, it’s a great time to take profits.

Conclusion

Gold is one of the ways for an average person to diversify their portfolio. With the economic shifts becoming hard to predict, you never know when your money will lose some of its value. Similarly, precious metals are the right way of investing with less risk compared to stocks, which sometimes end up not yielding the much-anticipated returns. Ultimately, gold has been known to be a hedge against inflation, making it an investment strategy you might want to consider.

Questions for Discussion: Have you ever invested in gold? What was your experience like? Do you think their is more risk in investing in gold, stocks or bonds? 

What is the Dow and Why is it Important?

The words Dow or Dow Jones may not be completely unfamiliar terms. You may know what they refer to, but you may not know exactly how it works. So, this article will help set the record straight and give you the basics about the Dow Jones Industrial Average.

What is the Dow Jones? For starters, it would be correct to say that it is the most quoted financial instrument in the world. That is why it sounds familiar. No doubt, you have heard financial market reports about this on the news every day.

The Dow Jones Industrial Average is a stock index. It was created in 1896 by two financial reporters, Charles Dow and Edward Jones. They were looking for a way to give the public a snapshot of how stocks generally preformed in any given day. To do so, they took the 12 largest companies at the time, added up their prices and divided by 12. That gave the average market price of that basket of companies.

Today, the Dow consists of 30 companies. The Dow Jones today represents the most significant areas of the U.S. economy, namely, financials, technology, utilities, industrials, and transportation. It includes companies like Apple, Caterpillar, Coca-Cola, Exxon Mobil, General Electric, Goldman Sachs, Home Depot, Microsoft, Nike, Proctor and Gamble and Walmart.

Because the Dow consists of only 30 companies, it may lead you into thinking that it does not carry much value. That is not the case. As you noticed, these companies are the heavyweights – the most influential companies in the U.S. As the Dow average goes, so usually goes the rest of the market.

Are there Limitations to the Dow Jones?

Just like most market indexes, Dow Jones has several limitations.

The first issue is that it does contain only 30 stocks. Today there are over 3,000 publicly traded companies which you could invest in. So the Dow may not give an accurate portrayal of what is going on in the rest of the stock market.

Secondly, the Dow’s calculation does tend to favor the more expensive stocks. The index is weighted based on price. So the more expensive a stock is, the more an up or down movement in that stock influences the overall index. The less expensive stocks will not have as much influence on the average.

What are the Benefits of the Dow?

1. The Dow serves as a historical marker

In order to predict or forecast the future of the markets, historical trends need to be observed. Analysts study the past stock market trends to help them reach conclusions about what the future may hold for stocks. This is where Dow Jones comes in.

By virtue of its long history, it offers a valuable information for the comparison of today’s markets and those throughout history.

2. The Dow helps investors make decisions

In the early days of stock trading, there was little information about stocks that was available to the general public. You invested in stocks with the phrase caveat emptor (“let the buyer beware”) in the back of your mind. You were at great risk due to lack of company transparency and information.

This is not so today. There are new rules set forth by the Securities and Exchange Commission (SEC) that guard investors from being defrauded by companies. Additionally, news about the Dow and the rest of the markets is widely available through media outlets. It is not difficult for an investor to find the information they need. Knowing the price movement of stocks (for which the Dow is the standard), will help investors know when to invest.

Related Content: The Ultimate Beginners Guide to Investing Money the Right Way

3. The Dow provides a broad view of the economy

As aforementioned, Dow Jones is an umbrella of U.S. most capitalized and influential companies. Because the 30 Dow stocks are spread over different industries, they help create a comprehensive view of the U.S. economy. As those companies perform well, they will contribute positively to economic growth within the U.S. And as the economy goes, so goes the stock market.

If the economy is doing well, the stocks in the Dow will rise. If the economy is doing poorly, the Dow will at best be stagnant but most likely decline.

The Dow Jones continues to be one of the most resilient indices in the world. It has stood the test of time and continues to be the standard for financial markets around the world.

Make a Comment: Do you monitor the Dow on a daily basis? On what do you base your investing decisions?   

What to Invest in When You are Scared to Invest

There are times when the stock market causes real fear for investors. It’s scary to see the markets and your portfolio value go down day after day. This is especially true for those closer to retirement. At times like that, it’s hard to know what to invest in or whether one should be investing at all.

what to invest in

You can’t discount the power of fear. Even the most seasoned investors get it from time to time. However, those who have been investing for a long time know something that perhaps a beginning investor doesn’t know – fear is not necessarily an excuse to stop investing.

But fear could be something that prompts you to reevaluate what to invest in. Market downturns are a great time to look again at your portfolio and analyze your strategy. Every time I’ve done that, it has actually served to calm me down. It reminds me that I am following sound investing practices that will serve me well in the long run.

There is good news if you are scared of the markets and don’t know what to invest in. There are a couple simple strategies to follow that can help you sleep easier at night. Here are several to consider that will help you put your fears to rest.

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5 Tips for Getting Started with Individual Stock Trading

Despite what you might think or have heard, not all investing is created equal. There is a big difference in investing in the stock market and investing by trading individual stocks. Both are classified as investing. But in reality individual stock trading is quite different from traditional investing.

The biggest difference relates to time frames. Individual stock trading is more focused on short-term movements in the market. Trades are done frequently based on the up and down movement of the individual stock. Stock traders try to gauge the momentum of the market and use things like technical analysis to give them an advantage in trading.

Traditional investing has a more long-term focus, spanning years and even decades. Instead of focusing on individual stocks, long-term investors traditionally rely on mutual funds as their investing vehicle of choice. Mutual funds provide more stability and spread your investing dollars around over many different stocks. In that way, they create instance diversity for your money.

There are times in the markets history when stocks have been red hot. In fact, in the last couple of years, the indexes have been climbing higher and higher, setting new records along the way. At times like this, individual stock trading becomes enticing. And with new options to invest in, like the few bitcoin stocks that are moving higher, people can be drawn into this time of investing.

It’s important to remember though that there are things to consider before trading in individual stocks. Even when things are going great, you must always be aware of the risks. Otherwise, you might get yourself into a lot of trouble. Keep these tips in mind if you are interested in individual stock trading.

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The Ultimate Beginner’s Guide to Investing Money the Right Way

Success in our personal financial life is something we all desire. What that financial success looks like is different for each situation. However, there is one undeniable truth that applies to all of us when thinking about how to achieve our financial dreams and goals – investing money will help you get there.

investing moneyThere are several challenges though when it comes to investing money. For one, people scare themselves out of investing money for fear of losing it. They see the ups and downs of the stock market and don’t want to be involved with that volatility.

Others may not know how to invest or where to start. I remember learning about investing money in my early twenties and feeling extremely overwhelmed.

Still others may feel they lack the time to really make investing work for them. They either started to late in life to make a difference or just don’t have time in their daily schedule to learn about it.

And finally, perhaps the biggest challenge of all – some just don’t have the money to invest.

If you fall into any of those categories or are a beginner just looking to learn about investing money, this article is for you. From my own experience, I had many questions of my own when I first started. So I’ll be answering some of the most basic ones I had like:

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Are CDs a Good Investment for the Average Joe?

I don’t think I’ve ever met a person who wouldn’t say “Yes” to the question, “Would you like to make/have more money?” Aside from our job, the best way to get more money is by investing what you have in various financial products like savings accounts, the stock market, real estate or business ventures. Some would even use CDs as a valid investment. But are CDs a good investment for the average person?

Let’s find out.

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Should You Invest in the Stock Market During a Trump Administration?

Last week the stock market was setting all-time highs as the Dow Jones Industrial Average crossed 20,000 for the first time. Since the close of trading on Nov. 4th, the market has raced ahead by over 2,200 points to where it stands today. Of course it remains to be seen whether this market can sustain the momentum or not under the leadership of our new President, Donald Trump.

stock marketJust typing that last sentence seems surreal, for people in both parties. We hardly could have imagined this two years ago. Whatever your political views, you have to give him credit for doing what no one thought possible. It’s something we haven’t seen in the history of our government.

President Trump is still an unknown quantity. By his own words, he is new to the political scene. We do not fully know how he will proceed with matters of national policy or foreign affairs because he doesn’t have a long track record for us to parse through. But we do know one thing about him. President Trump is a businessman through and through. He has done well for his family and the thousands of people he has employed.

Will this expertise be good for businesses across the country though? And will it translate into upward momentum in the stock market? Should you invest in the market during the Trump presidency, be it four or eight years? Let’s try to find out.

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This Smith and Wesson Stock Chart Reveals Our Biggest Fear

Smith and Wesson stock is reaching heights never seen before in the history of the company. The stock price closed at $29.07 on Friday, just 30 cents shy of it’s all time high. However, that alone doesn’t tell the whole story.

Smith and Wesson stock has been tracing higher for the last five years. As you can see from the stock chart below, on Sept. 26, 2011, it traded at $2.52. If you would have bought then, you’d be looking at a 1,053 percent increase. Not bad for a five-year investment.

smith and wesson stock

Chart courtesy of Morningstar.com

The bulk of the rise in the stock price has occurred since January of 2015. Since that time Smith and Wesson stock has risen from around $10 per share to what we see today. Again, not a bad return for a year and a half investment.

So what’s driving the stock price? Well, in the most basic of investment world terms, it’s company sales. Just a few weeks ago the company announced fourth quarter sales of $221.1 million. That figure was an increase of 22.2% over the fourth quarter of last year.

So the company is growing by selling more of its product. Those sales are leading to increased profits and a healthier company balance sheet. Investors are taking notice and more are purchasing the stock for their portfolios (hence the rise in Smith and Wesson stock price).

“But what’s driving sales?” you might be asking. Well, in case you don’t know Smith and Wesson manufactures and sells firearm products and accessories. That’s right…it’s a gun company.

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CFD Trading Online for Beginners

If you’ve been investing for awhile and are looking at some alternative ways to put your money to work, you might want to consider CFD trading. It has become a popular way of trading on equity derivatives in the last few years. There are a number of benefits related to this form of investing.

If you are a beginner, you need to know some useful information on the derivatives product CFDs. Here we will see what it stands for, give an example and show some rules to follow when trading.

Contract for Differences (CFD)

CFD stands for contract for difference. It is an equity derivative trade and is an agreement between the trader and the broker. The agreement is made to exchange any differences in value of an underlying asset between the time when the contract is opened and when the contract is closed without ever owning the underlying asset.

CFDs complement traditional investing methods such as trading in individual stocks. Although requiring some study before proceeding, CFD trading is easy to understand and trades well in the different types of underlying markets.

CFDs are similar to the futures and options branch of trading. The closest cousin of trading CFD online is spread betting.

Example of CFD Trading

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The Easy and Hard Parts to Becoming a Millionaire by Age 65

Would you feel financially secure if you became a millionaire? I’d say most people would. A million dollar net worth provides the cushion you’d need to weather almost any financial storm. Becoming a millionaire should set your financial worries at ease.

becoming a millionaireThat doesn’t mean you can live recklessly and spend money on whatever you want. Do that and you might find yourself broke before you know it.

Nor does it necessarily mean you can stop working. A millionaire at 75 can sit back and enjoy the fruit of their labor. A millionaire at 35 still has many more years of life expenses in front of them.

Becoming a millionaire is both easy and hard. That may seem contradictory. How can something be both easy and hard? As you can see from the following graphs, the contradictory nature of that statement can best be viewed through three variables:

time, income and choices.

Becoming a Millionaire by Age 65 in Visuals

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