Risk comes in many forms. The numerous types of insurance available help us mitigate some risk. Often folks take elaborate measures to avoid any kind of risk. But risk abounds. Life is a risk.
To avoid risk it may make sense to keep your money in cash, money markets, CD's or stable value funds. You watch as the stock market completes daily gyrations. After a huge downturn you express relief that your pile of cash is safe. But then you groan during an upturn, lamenting all the profits "you could have made"!
Running water, over time, wears away stone or carves a riverbed.
So too does inflation and taxes which wear away at your purchasing power when you keep your money "too safe". Little by little, year by year your pile of cash shows the same amount, or maybe a tiny gain. But below the surface, inflation has dramatically reduced the goods and services you are able to buy.
Over time, your cash will suffer the same fate as the stone - it will be worn away.
Bite the bullet. Put your money to work for you.
Yes, keep your emergency fund in cash or money markets.
Yes, keep the money you'll need for purchases in the near future (12-18 months) safe. Invest the rest. The stock market goes up and down. If you draw a trend line on a stock market chart you will see that the trend, over time, has been up.
Be $ Smart - Work hard. Save. Make your money work hard too.
Showing posts with label stock market. Show all posts
Showing posts with label stock market. Show all posts
Sunday, June 24, 2018
Monday, January 25, 2016
Riding the Roller Coaster
I have never been a fan of roller coasters; I consider them torture. Yet my older son can spend an entire day riding them - the higher, twistier, upside-down/inside-out, the better! But even he is not enjoying the volatile ride the markets have been taking these past few weeks and months.
Some folks view roller coasters as frightening.
Some find them exhilarating. How do you react to market volatility?
I will assume you have some money invested in the stock/bond/commodity markets. Maybe you have a 401k through work, an IRA or a 529 plan that holds a variety of funds.
Hold on tight, close your eyes, go for the ride!
1. DO NOT, repeat Do Not watch the TV constantly monitoring the daily market moves. We all know TV sensationalizes events.
2. Do Not check your accounts hourly, daily or weekly. This breeds dread, confusion and despair. Reviewing quarterly reports will suffice.
3. Take advantage of the opportunity to buy low if this is part of your investment strategy to increase certain positions. Yes, stocks may go a bit lower but they are way down from frothy highs. Remember "buy low, sell high".
4. Reassess your risk tolerance. Have you been anxious, upset and losing sleep these past few weeks? Perhaps you thought you could handle more risk. Or maybe you are closer to retirement or buying a house and feel the need to be more protective of your money. Give yourself some time before reallocating.
5. Hopefully you have an investment strategy, If so, stick with it. If not, now is not the time to implement one.
A good investment strategy will help you ride out the peaks and valleys of the market and provide guidance in achieving your financial goals.
In times like these it is helpful to remember, in order to generate the type of long-term returns that create wealth, you must accept a certain amount of risk. With that risk comes volatility. The key is not to take steps to avoid the risk altogether, but to manage the risk where possible.
Be $ Smart - Imagine the market as a living, breathing organism. It cannot inhale or exhale indefinitely. Have a plan to take advantage of market moves.
Some folks view roller coasters as frightening.
Some find them exhilarating. How do you react to market volatility?
I will assume you have some money invested in the stock/bond/commodity markets. Maybe you have a 401k through work, an IRA or a 529 plan that holds a variety of funds.
Hold on tight, close your eyes, go for the ride!
1. DO NOT, repeat Do Not watch the TV constantly monitoring the daily market moves. We all know TV sensationalizes events.
2. Do Not check your accounts hourly, daily or weekly. This breeds dread, confusion and despair. Reviewing quarterly reports will suffice.
3. Take advantage of the opportunity to buy low if this is part of your investment strategy to increase certain positions. Yes, stocks may go a bit lower but they are way down from frothy highs. Remember "buy low, sell high".
4. Reassess your risk tolerance. Have you been anxious, upset and losing sleep these past few weeks? Perhaps you thought you could handle more risk. Or maybe you are closer to retirement or buying a house and feel the need to be more protective of your money. Give yourself some time before reallocating.
5. Hopefully you have an investment strategy, If so, stick with it. If not, now is not the time to implement one.
A good investment strategy will help you ride out the peaks and valleys of the market and provide guidance in achieving your financial goals.
In times like these it is helpful to remember, in order to generate the type of long-term returns that create wealth, you must accept a certain amount of risk. With that risk comes volatility. The key is not to take steps to avoid the risk altogether, but to manage the risk where possible.
Be $ Smart - Imagine the market as a living, breathing organism. It cannot inhale or exhale indefinitely. Have a plan to take advantage of market moves.
Sunday, October 25, 2015
An Innovative Way to Buy Stock
A friend called to ask me if I would comment about the Wall Street Journal article on a new way to give stock as a gift. The concept totally surprised me as well as the fact that it has been available for some time!
A few years ago my 10 year old grandson told all his relatives he wanted stock for Christmas. That is not an unusual request knowing Calvin is obsessed with making money, always manages to have money and constantly chides his parents about the cost of things. So we all sent him cash with which his father opened an UGMA brokerage account and built a portfolio.
But NOW there is a simpler way.
Stockpile.com is a company that offers gift cards (like iTunes, Home Depot, Target, etc.) which enables you to buy a specific dollar amount of hundreds of stocks!
I am not endorsing this company as I have not made any purchases and cannot vouch for the process but I thought it important to make you aware of its existence. Here is what they offer:
- The ability to purchase the stock of hundreds of U.S. and international companies,
- Any amount of the gift - up to $1000. Whatever the amount will buy a certain number of full or fractional shares depending on the share price on the day the card is activated.
- Instant card delivery as they accept most credit cards.
- No cost to the recipient who may buy shares for the full amount of the gift but there is a gifting fee to the giver which pays the credit card fee and commission.
- A gift receipt which allows the receiver to choose a different company,
- A claiming notification to tell you when the gift stock has actually been claimed.
(Minors may own stock with a parent or someone over 18 in a Uniform Gift to Minors Account.)
A gift of stock makes a child curious especially if the stock is in a company he/she knows like Disney, McDonald's or KFC.
It takes the mystery and fear out of investing. It builds interest and confidence.
A gift card saves you from going through the pains of opening an UGMA brokerage account.
It might even make an interesting birthday or wedding gift for your friends!
Be $ Smart - start youngsters early in the stock market. It will pay a lifetime of dividends.
A few years ago my 10 year old grandson told all his relatives he wanted stock for Christmas. That is not an unusual request knowing Calvin is obsessed with making money, always manages to have money and constantly chides his parents about the cost of things. So we all sent him cash with which his father opened an UGMA brokerage account and built a portfolio.
But NOW there is a simpler way.
Stockpile.com is a company that offers gift cards (like iTunes, Home Depot, Target, etc.) which enables you to buy a specific dollar amount of hundreds of stocks!
I am not endorsing this company as I have not made any purchases and cannot vouch for the process but I thought it important to make you aware of its existence. Here is what they offer:
- The ability to purchase the stock of hundreds of U.S. and international companies,
- Any amount of the gift - up to $1000. Whatever the amount will buy a certain number of full or fractional shares depending on the share price on the day the card is activated.
- Instant card delivery as they accept most credit cards.
- No cost to the recipient who may buy shares for the full amount of the gift but there is a gifting fee to the giver which pays the credit card fee and commission.
- A gift receipt which allows the receiver to choose a different company,
- A claiming notification to tell you when the gift stock has actually been claimed.
(Minors may own stock with a parent or someone over 18 in a Uniform Gift to Minors Account.)
A gift of stock makes a child curious especially if the stock is in a company he/she knows like Disney, McDonald's or KFC.
It takes the mystery and fear out of investing. It builds interest and confidence.
A gift card saves you from going through the pains of opening an UGMA brokerage account.
It might even make an interesting birthday or wedding gift for your friends!
Be $ Smart - start youngsters early in the stock market. It will pay a lifetime of dividends.
Saturday, November 1, 2014
Stock Market Turbulence
The market's up, the market's down - what is all the buzz about?
In the past few weeks the stock market has been bouncing like a rubber ball on speed. But in recent days, it appears to have lost the bounce.
The DOW (Dow Jones Industrial Average) is comprised of 30 stocks. Usually very large multinational US companies.
The S & P 500 (Standard & Poors, a rating agency) holds the top 500 US companies.
These two indices are what folks usually refer to when they speak of the "stock market". There actually are over 5000 companies publicly listed - meaning that you and I and millions of other people may buy and own shares. (There are also thousands of companies privately held - e.g. Mars, the maker of Snickers, M&M's, Uncle Ben's, etc. is owned exclusively by the Mars family of McLean,VA. that are not included in either index.)
The value of a company stock will go up and down depending on many factors. If world or local events or an accident (like an oil spill) give cause to think the company is in trouble and cannot perform well and grow, the stock will bear a lower price. And the reverse is true - if everything good is happening - good sales, controlling costs, general public optimism - the stock price will rise.
Right now there are many factors, both home and abroad, affecting why the stock market has fallen (prices/values have dropped.) If you view the stock market as a living breathing organism inhaling and exhaling, you might realize the market has been inhaling for a very long time. The stock market has been rising with no substantial correction (drop) for a few years. The market cannot grow without substance. There has to be employment growth, a sound economy and solid political leadership to build and sustain a rising market. "The market hates uncertainty" is a quote I learned way back in the beginning of my career. It has proven to be true.
So how does this affect you? If I showed you a graph of the stock market from 1900 through 2014 you would easily see an upward trend, with occasional down blips. Seeing that visual might ease your concerns.
Be $ Smart - be aware the market goes up and down daily, and over the long-tern the trend has been up. It's the best way to make your money grow long term and to keep up with inflation.
The next $ Tip will take a look at how you feel/react to the ups and downs of the market - also known as Risk Tolerance.
In the past few weeks the stock market has been bouncing like a rubber ball on speed. But in recent days, it appears to have lost the bounce.
The DOW (Dow Jones Industrial Average) is comprised of 30 stocks. Usually very large multinational US companies.
The S & P 500 (Standard & Poors, a rating agency) holds the top 500 US companies.
These two indices are what folks usually refer to when they speak of the "stock market". There actually are over 5000 companies publicly listed - meaning that you and I and millions of other people may buy and own shares. (There are also thousands of companies privately held - e.g. Mars, the maker of Snickers, M&M's, Uncle Ben's, etc. is owned exclusively by the Mars family of McLean,VA. that are not included in either index.)
The value of a company stock will go up and down depending on many factors. If world or local events or an accident (like an oil spill) give cause to think the company is in trouble and cannot perform well and grow, the stock will bear a lower price. And the reverse is true - if everything good is happening - good sales, controlling costs, general public optimism - the stock price will rise.
Right now there are many factors, both home and abroad, affecting why the stock market has fallen (prices/values have dropped.) If you view the stock market as a living breathing organism inhaling and exhaling, you might realize the market has been inhaling for a very long time. The stock market has been rising with no substantial correction (drop) for a few years. The market cannot grow without substance. There has to be employment growth, a sound economy and solid political leadership to build and sustain a rising market. "The market hates uncertainty" is a quote I learned way back in the beginning of my career. It has proven to be true.
So how does this affect you? If I showed you a graph of the stock market from 1900 through 2014 you would easily see an upward trend, with occasional down blips. Seeing that visual might ease your concerns.
Be $ Smart - be aware the market goes up and down daily, and over the long-tern the trend has been up. It's the best way to make your money grow long term and to keep up with inflation.
The next $ Tip will take a look at how you feel/react to the ups and downs of the market - also known as Risk Tolerance.
Tuesday, November 29, 2011
Welcome to My Blog!
Hi! My name is Eileen Hawe . I’ve been working in financial services and personal finance for almost 30 years. It’s an industry that’s rife with conflict of interest. I witnessed it first hand and understand the need for basic, clear, unbiased information.
Have you ever had to make an important decision, looked for help or direction and didn’t know whom to trust? Or, while sitting across from a financial adviser heard that little voice in the back of your head wonder “what’s in it for him/her?”
I will answer your questions, even the “dumb” ones, clearly and simply. I will guide you through the rough times, get you back on your feet and help you realize that personal finance is not rocket science.
I love what I do. I have a skill which I am happy to share with you. It makes me feel good; we both benefit.
Follow my blog where I will post important financial facts on a regular basis.
For example: are you familiar with The Rule of 72?
Take the interest rate you are earning on an investment (a CD earning 2%).
Divide that number into 72 to show the number of years it will take to double your money. (72/2=36) Thirty-six years. An investment with a higher return of 6% would double your money in 12 years. (72/6=12) Twelve years. Higher returns may have higher risk.
Also, IRA Conversion: did you know that this year might be a good time to convert your regular IRA (individual retirement account) to a Roth IRA? Many portfolios have lost money in the second half of 2011 so the taxes due on the conversion may be less.
If these tips have helped you, contact me to schedule a meeting and I will guide you to financial security.
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