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How to put your long term investments on autopilot

In the US, pensions are rare for most workers, and those who do want to save for retirement are encouraged to use employee funded plans such as 401Ks. The problem that most investors have is that most of them are not professional investors. In fact, most are not even casual investors, and often do one of either two things, make no decisions at all, or leave the decisions to some kine of financial expert.

Doing nothing is not a good option, and leaving decisions completely to others is a better idea if the financial advisor is charging a minimal amount for their services. One company that takes the latter approach is Wealthfront (www.weathfront.com), which is an automated investment service that manages a diversified, low-cost portfolio of index funds.

Wealthfront makes it easy for investors who are willing to do a minimum of work to track their investments by creating personalized online investment account that is accessible anytime and anywhere from your desktop, tablet, phone, or other mobile device. The company supports the following types of accounts:

– Individual, joint, trust, & LLC taxable accounts
– Traditional, Roth, & SEP retirement accounts (IRAs)
– 401(k) rollover accounts
– 501(c) accounts for non-profit institutions

What are the Wealthfront investment options?
Wealthfront uses exchange traded funds (ETFs) that track indexes for the 11 major asset classes. These kinds of broad, market based investments historically have been more consistent than individual stocks. Their analytical process can also provide investors with reasons why a particular ETF was chosen.

How much does Wealthfront cost?
Wealthfront requires a minimum of $5,000, and charges no fees for the first $10,000. After that, the charge is 0.25% per year. There are no additional fees for their service, and no trading commissions. For A $100,000 investment, the annual costs would be $225 (0.25% of $90,000).

While investing with Wealtfront is not like putting your investments completely on autopilot, it can take most of the work out of your investing decisions. Interested investors should visit Wealthfront.com and evaluate their service for themselves.

Things To Consider When Performing A Title Search

There are numerous things to consider when performing a title search. The value of the property is necessary to know before making a purchase. The previous history of ownership is also important for individuals who do not want to make a bad investment. Making a decision about the number of owners can also help a person to decide whether or not the investment is going to be worthwhile in the long run. The history of the property can also indicate the likelihood of being able to do business in a location as the property is intended for professional purposes. For more information a person has before purchasing property the user will be for them to make the best investments with their real estate investment money.

Property Value
If a person is interested in doing a investigation into a piece of property, understanding the value of the property is important before quitting and an initial offer. If a person is going to perform a title search in vic, they will need to be working with a company that is reputable and can give me information which is up to date and legitimate. The research methods used by a company to determine the value of property is also an important part of the consideration in terms of which company to utilize the services of when having the search completed. The relevance of the information is also essential for evaluation purposes. If the information is updated on a regular basis it will be seen as credible and can be utilized to make financial decisions. The ability to make financial decisions which are going to be the emphasis for long-term investments is important for the majority of individuals who are not knowledgeable about the real estate market.

Ownership History
Understanding the ownership history as a free is also essential to making intelligent decisions regarding real estate. If there are a lot of people making the investment and the property only to turn it over quickly people should consider the possibility that there’s something wrong with the land itself. Having a surveyor or other professional individual investigate the problems with the property prior to making an investment is essential for individuals were looking to do business on the property. This will also enable people to make the best decisions as it relates to understanding the zoning laws and regulations regarding a certain area. The more knowledge people have about the specifics expected from them when making an investment in a certain area me easier it will be for them to make decisions regarding it for long-term planning necessary when purchasing property.

Five fundamental tips for long term investors

If are the kind of person who wants to take an active part in your investing and not let some other person do it for you, then you have to be prepared to do a few basic things to make it more likely that you are happy with your investment choices and with their performance.

Investing is a very personal choice because it is not without financial risk, but as any honest financial expert will tell you, with investing, you’ll likely gain more than you’ll lose if you make the effort to learn about your investments and make sound decisions. But at the same time, there are no guarantees, and you need to be prepared for losses and gains. You also need to be patient. Don’t expect to see a return on investments for several months, and it could take a year or more for you to see a significant return from any investments. The following five investing tips should help you get started in the world of investing, but if you have questions or specific concerns or just want some reassurance, you should definitely get in touch with a local financial advisor or an investment firm.

  1. Be prepared to spend money for stocks and other paper assets: Stocks, mutual funds, and other paper investments is one financial area where you really will have to spend money in order to make money. But it’s easy to see why this is the case: you need money to purchase these kinds of assets. Once purchased, so long as they perform well enough, your stocks will earn your money. And on that note, be prepared for even the best performing of stocks to lose on occasion. It happens to even the most conservative and frugal of investors, so don’t beat yourself up too badly if you end up investing in a stock (or even a couple of stocks) that winds up under-performing.
  2. Be patient
    Rome wasn’t built in a day, and neither is a company. Even already-running companies will need some time to take the capital they receive and convert it into a successful company. On average, it can take a company who’s selling stock six or more months to begin showing even a moderate return on the capital they received.
  3. Build a portfolio of paper assets: It’s understandable that you’d like to play it safe by going for low-risk stocks or other low-risk paper assets, but if you want to have a great portfolio that won’t let you down, mix things up a bit. Try to have about 60 percent of your shares in low-risk companies, 25 percent in moderate-risk stocks, and the remaining 15 percent in high-risk stocks. Low-risk and moderate-risk stocks will keep you balanced, while the loss from a small percentage of high-risk stocks will not hit hard – but on the other hand, gains from those high-risk stocks could certainly have a nice impact.
  4. Look beyond paper assets: While stocks, bonds, mutual funds, and other paper assets are by far the most common investment vehicles for the average person, the investing universe is a lot bigger than just paper. Starting your own business, however small, may be a great way for you to get an economic benefit from your personal skills and connections. Like paper assets, businesses both large and small have risks, so it may be best to start small so that your mistakes don’t hurt you that much.
  5. Keep learning: Once you are committed to investing, you should also be committed to learning about investing. Between the Internet and your local library, you have access to more information about investing and investments than you can possibly learn in ten lifetimes. However, you are not investing in every option under the sun, so you can easily focus your learning to those areas where you are either investing in now or plan to invest in the future. The day you think you don’t need to learn is the day that you should hire someone else to do your thinking for you.

Managing debt by expanding your assets

Previous articles have discussed various aspects of debt management, including changing one’s approach to debt. Those changes can included reducing the total amount of debt, reducing the number of debts, looking at different financing options, and understanding the difference between a positive debt that leads to long term positive financial results, and negative debt that only produces expensed and creates no benefits.

One of the golden rules of debt is related to the last distinction of a positive or a negative debt. A positive debt incudes debt that is finances an asset that produces income that exceeds the costs of debt service and the other costs associated with that asset. An investment in an apartment building that produces a positive cash flow each month is an example of a positive debt.

Another kind of positive debt would include an educational loan that allows someone to find employment that produces a higher income, even after taking the educational debt payment into account. These very same debts could become a negative debt if the investment has a negative cash flow or if the educational loan doesn’t lead to a job or a pay raise.

While managing or reducing debt can be a primary financial goal, sustainable financial stability is much more likely to happen when you have assets working for you. Your assets can range from cash in a savings account or other low-risk paper asset, or a business or real estate investment that provides a positive cash flow every month.

If you don’t have any assets at all, it is probably smartest to start with a low risk asset like a savings account or precious metals. If you are going to use some kind of paper asset, it may be best to put it into an account that is not easily accessed to keep you from being tempted to spend it quickly.

Precious metals may fit into this kind of strategy, since you can’t just take a silver bar or a gold coin 1 oz gold american eagle to the store and use it like a common currency. You have to first take it to a coin dealer and exchange it for regular money before you can spend it. Gold and silver have an additional advantage as it can be used as a hedge against currency fluctuations and inflation.

Even if your debts are far larger than your assets, having even a tiny amount of assets to your name could do wonders to make you feel better about your financial situation and your prospects for the future.

Making Money Decisions

Do you every wonder about your ability to make good decisions about money? Do you think you need to know something special to be better than average? Before you got that seminar, buy that book, or sign up for that MBA program, you should take some time to look at how you make money decisions. Success in investing, or choosing the best mortgage, or picking a sensible credit card all starts with using your mind to figure out your options and to make decisions.

The Making Money Decisions posts will take you through a few basics of decision making and take some of the stress out of making decisions about your money.

The ability to make good decisions is as skill that can be improved through practice and the use of the proper techniques. None of these techniques are based on any sophisticated mathematical or psychological concepts. If anything, the basic techniques of decision making are about figuring out what information you need for a decision, making a clear decision, and checking up on the results afterward. It is about finding the proper balance between intuition and analysis and recognizing that you can develop all the decision making skills that you need to become a better investor.

Next Lesson: Taking the time to think about your money problem

Money Market: For People that Always Looking for Something More

It is common that people always look on ways for their money to grow more in speed and value.

While expecting their money to grow in speed and value, people always consider and weigh between risk and yield. Naturally, higher risk yields higher result. On the contrary, lower risk yield lower result.

The battle of risk and yield always present in one’s mind, and often attributed to one’s personality traits – for example, in outdoor activity, do you like bungee jumping or strolling in the park? Your answer will be one of the indicators of your risk tolerance toward investing your money.

How much do people want more?

As people always look for something more, the quantity of ‘more’ in people’s mind is widely different, depending on the personality traits, investment outlook and personal finance budgeting and planning.

There are investment instruments that allow you to choose the investment type that best suited to your situation.

Investment in stocks, mutual funds, money market, certificate of deposits, etc. along with the macroeconomic trends will determine how much you will get out of your investment.

Money market

I would like to focus on one of the most common investment option, but not many people aware the benefit of – money market.

According to Wikipedia – In finance, the money market is the global financial market for short-term borrowing and lending. It provides short-term liquid funding for the global financial system.

Normally, investing in money market by opening a money market account yield more return than the conservative saving account.

According to M&T Bank eMoney Market website, the Annual Percentage Yield (APY) of money market is 3.25 per cent, compared to the 2.25 of national savings average.

Just like other forms of investing, you can open an online money market account, such as M&T Bank eMoney Market Account.

Money market might have the right compromise between risk and yield for some person. I personally recommend money market account (and do not recommend savings account) as part of diversification in your personal finance budgeting and planning to achieve your financial goal.

Investing: Can you take the pain?

On a day at the stock market like today we almost all feel the pain. As I write this the Dow Jones Industrial Average (the Dow) is down 130 points for the day and off 450 points in the last 4 trading days. So when the value of your mutual fund or stocks are moving strongly to the down side what are you tempted to do? Sell to stop the hemorraging or buy more because of the value. Some psychological studies can tell us which way we probably lean.

Studies done in the 1970’s have shown we feel twice pain or distress for the financial loss than we feel happiness for a gain. Let us see if I can engender some pain and gain in you. Imagine you have a mutual fund account with a value of $100,000. You get your quarterly statement and the account value has fallen to $90,000, how do you feel? A little (maybe more than a little) pain there, heh? Now you open the statement and see a $10,000 gain to $110,000. Feels pretty good, but definitely not a strong as losing that $10 grand! Leave it to psychologists to figure a way to measure phychological pain and pleasure, but the double the pain makes sense to me.

So how does this affect us as investors? From the question in the first paragraph, I think when our investments start falling in value, we are strongly tempted to sell to just stop the pain. It gives us a good idea why so many investors are so good at buying high and selling low. I know personally when a stock I have invested in goes down I start to mistrust my judgement and search the news for clues I might have missed that this was a bad investment. Doing this research will, hopefully, help me hang on to good investments when the overall market does not think much of them.

One last point we need to remember so we do not let the pain of less lead us to the poor house. A recent article submitted to Seeking Alpha did a pain vs. gain calculation. First, the average return of small cap stocks over the last 60 years is 16.3% per year and the average return for large cap stocks is 12.76%. The author used monthly returns to record a positive point for each percentage of positive months and 2 negative points for each percent negative return in negative months. The more volatile small cap stocks racked up a score of minus 788 (-788) points even as an investment would have grown to 13 times the original investment (using rule of 72). The steader large cap still gave us minus 482 (-482) pain points in spite of a 10 fold gain.

Bottom line: If you want to be a stock market investor, you must figure out a way to handle the negative emotions of negative returns. Markets go up and down, but the research shows it is much harder for us to live with the down part.

Investment perspective redux

“We’re putting all our spare cash into the stock market right now,” my coworker M said to me not long ago. “I figure that it’s cheap to buy right now, and prices are bound to go up.”

“We had twelve thousand dollars in the stock market,” my friend J said to me not long ago. “Then when everything came down it was ten. Now it’s back up to eleven. But we’re sure not doing anything with stocks until it gets back up to twelve at least. We can’t afford it.”

There are differences between M and J, of course–one is that M is in a household with two good incomes and J is in a household with (temporarily) one fair one–but they also have different perspectives on investing. Following up on Tim’s post, different people can look at the same world situation–a depressed stock market in which prices which had been rising have fallen and are slowly climbing again–and have radically different reactions.

As Tim said, the price you pay or how you feel about an investment doesn’t affect its outcome–but it does affect yours. Buying stocks cheaply now may well be a good move; but even if J had the money, she probably wouldn’t do it because she’s risk-averse and has just suffered a loss, which increases her risk aversion. M, on the other hand, is relatively risk-loving. If both of them were given the same opportunity–for example, the chance to buy stock in a company being touted as the next Google–chances are that they would react differently, even if they have the same information about the market and the absolute risk, based on their investment styles and their previous experiences.

It’s worth considering whether your previous experiences are coloring your thinking when it comes to investing. Maybe you lost money recently in your portfolio. (Chances are you did; most people have.) That doesn’t mean you’re going to lose money if you make another investment. It doesn’t mean you’ll make it, either, of course. It all depends on the market and world events; but not, as Tim said, on your action or your personal history.

Your investment decisions can have global effects

If you could choose only one, would you choose to (a) save a thousand people in a foreign country from dying in an earthquake, (b) save a hundred people in your home town (but that you don’t know) from dying in a plane crash, or (c) save your best friend from dying in a car accident?

Most people will answer (c), and will choose (b) over (a). (Up the ante by changing “your best friend” to “your child” and all but the most Vulcan-like among us will answer c.) You could call it egoism–the view that humans always act based on rational self-interest–or emotionally-motivated behavior or just plain selfishness; but given the choice, people almost always choose to do what benefits them, even at the detriment of other people, especially if those other people are distant strangers.

This is healthy human behavior; we value what we have and what we know, and we act to protect what we value. Rationally, however, if we assume that human life in general is valuable, we know that (a) is the most logical choice. Most of us don’t worry too much about this, since saving one’s best friend from death is pretty big, and after all, it’s just a hypothetical dilemma.

Now let’s talk about the food crisis. Chances are you’ve heard that food prices are rising and seen it for yourself. There are a number of factors causing the higher prices: increased demand, low reserves, the weak dollar, the high price of oil…and speculators. This Washington Times article describes how investors are putting money into futures markets for corn, wheat, and rice (among other things), which actually drives prices higher.

Speculators have always played a prominent role in commodities markets, but in the past year, they have literally overwhelmed them, causing a dramatic increase in trading volume, volatility and prices and disrupting many of the normal relationships between producers and end-users.

…As with the credit bubble before it, the explosion in commodities prices has its origins in a global savings glut and massive trade imbalances…The difference this time, however, is that even before it bursts, this bubble is causing economic discomfort for households and businesses around the world, and misery for hundreds of millions of hungry people who suddenly cannot afford a bowl of rice or scrap of meat.

Generally speaking, your financial decisions affect you, your family, and maybe a corporation’s profit margin or a stock broker’s bonus. But this is a new twist in financial decision making, where deciding to make some money could mean making a family just like yours–even if it’s on the other side of the world–go hungry.

If you could choose only one, would you choose to (a) feed a hundred starving people in India, (b) feed ten hungry people in your home town, or (c) make a little extra money off the stock market?

Choosing to invest in the stock market, even in the commodities market, won’t directly bring you to that choice, of course. But it’s true that thanks to our truly global economy, your financial decisions can now truly affect people in foreign countries. What would you choose?