Monthly Archives: June 2012

Start Investing Money June Carnival Roundup

We are happy to have our articles included in the following articles. A big Thank You to all who hosted these amazing carnivals in June.

Carnival of Financial Planning at Intelligent Speculator
Yakezie Carnival at 20s Finances
Carnival of MoneyPros at Financial Conflict Coach
Carnival of Retirement at Finance Product Reviews
Totally Money Carnival at Sterling Effort
Financial Carnival for Young Adults at Young Family Finance
Carnival of Retirement at Simple Finance Blog
Yakezie Carnival at Free Ticket to Japan
Wealth Artisan’s FinCarn at Wealth Artison
Totally Money Carnival at Financial Success for Young Adults
Fin. Carn. for Young Adults at 20s Finances
Carnival of MoneyPros at Finance Product Reviews
Carnival of Financial Planning at Cult of Money
Carnival of Retirement at Making Sense Of Cents
Canadian PF Happy Hour at Canadian Personal Finance
Carnival of Fin. Camaraderie at The University of Money
Carnival of MoneyPros at Broke Professionals
Yakezie Carnival at See Debt Run
Fin. Carn. for Young Adults at 20s Finances
Yakezie Carnival at One Cent At A Time
Carnival of MoneyPros at Simple Finance Blog
Carnival of Retirement at I Am 1 Percent
Festival of Frugality at Help Me To Save
Carnival of Financial Planning at The Skilled Investor

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Logical Tricks to Find More Money to Save and Invest

You can read and talk about investing all you like. But if you don’t have money to invest your talk will get you nowhere.

You may look at your income and expenses and think that you couldn’t find any money to invest at the present time. You need to get out of this mindset if you are going to push towards putting some successful investments in place for the future – whether it is for the short, medium or long term.

So with this in mind, here are some tricks for doing just that.

1: reduce your bills

Some bills are fixed. But others can be reduced. Shop around for a new mobile phone deal that suits your needs and costs less than the one you have now or switch to a hosted PBX system for your business to save even more money. Repeat the process with all the other bills that can be adjusted in a similar way.

2: earn more money

Can you find another part time job to earn a little extra? This depends on your circumstances and the jobs that are available that you can do, of course, but it is worth thinking about. You could also consider moving up in the industry you are already in. Look for another position that would allow you to earn more money.

3: sell off anything you no longer want or need

This is another good way of generating extra cash that can be funneled into investments of all kinds. It is said that we all have a few thousand dollars worth of items we don’t use or need. If you could find those items and sell them – maybe on eBay for example – you might be surprised how much cash you can generate as a result. Go through each room at a time if you feel overwhelmed doing your whole house and life in one go.

4: look for an investment that pays more interest than one you have at the moment

Even if it is a regular savings account, you’ll probably find a better deal somewhere else if you have held the account for a while. Always check regularly to see if you can find anything better with another bank or provider. You could be losing money on existing savings or investments without even realizing it.

Summary

As you can see it doesn’t matter what situation you are in, you can always find a way to generate and create extra cash to invest in some way. Make sure you go through all the above techniques. You may be able to use all of them to some extent. If you find, say, $20 from one technique and $40 from another one, you’ll have more cash all told than if you just used one technique.

It will take time to make the most of these techniques but the outcome should be more than worth it. This is especially true when you have investments to create for the future – you never know what you can achieve when you try.

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Why is it Important to Create Your Own Unique Investment Plan?

Here is a truth we are all aware of – everyone is different. So it should go without saying that our investment plans should be different too. The plans of a 22 year old full time person will be very different to those of a 50 year old individual. Similarly the plans laid down by a couple with two children will differ greatly from those thought up by a single person.

Unfortunately we all have a habit of comparing ourselves to others. This means that if you are trying to work out an individual investment plan and you happen to talk to someone else who already has one, you will consider theirs. You will automatically wonder if their plan would suit you as well. If it did it would provide you with a quick and simple way out of your situation.

Setting your own course

The important thing to remember is that no plan suits everyone. Even if this other person’s investment plan is working well for them, it could be disastrous for you. By all means check it out and see whether it could be good for you, but be prepared to discard it too.

The trick is to know what you expect from your investments and why you want to set them up in the first place. This brings us back to the idea of the 22 year old and the 50 year old mentioned above. The 22 year old will only just have started on their working life, whereas the 50 year old will be looking towards retirement not too far in the future. Their goals and ambitions will be very different indeed, and these will drive two very different types of investments.

What suits you?

Remember that it isn’t just a case of settling into an age group though. Don’t be fooled into thinking certain types of investments are good for people of a certain age. You need to drill down into your life and lifestyle to see which investments will work best for you. If you don’t have that knowledge you won’t be able to pick the right outcome.

This is the one main reason why everyone should take their time in choosing the most appropriate investments in each case. If you exhibit a kneejerk reaction to a particular investment you could live to regret taking part in it – or indeed rejecting it – for a long time to come.

So the key here is to strike out on your own. Take advice from others if need be, but take it as that – advice – and nothing more. You must ensure you make the right decision for you and you alone, and this could be very different from any decisions made by other people.

If you understand this and you can keep it in mind for the foreseeable future, you will always find it easier to pick the best investments for your life and family, no matter what your life turns out like.

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Got Credit Card Debt? Then Don’t Invest

As you’ll no doubt have noticed, the whole idea behind this website is to encourage and guide you in the process of investing money. But there are always caveats to this procedure. The main one is to note that debt should always be taken care of first. This is because most debt will have a higher rate of interest attached to it than you could ever hope to gain on an investment.

Should you clear all your debts before you start to invest money?

Not all of them, no. For instance a mortgage would not be included because most mortgages run over at least 25 years. You’d be waiting a long time to start any kind of investment at all if you were going to clear your mortgage first.

No, the kinds of debts we’re talking about here relate to credit card debt and store card debt. These will undoubtedly have much higher rates of interest than you would earn on your investments, so it makes sense to pay these off first.

Work out what debts you have

This is the most important step and also the first one you should take en route to clearing them. Write them all down and list the amounts you have in each case. For instance if you have three credit cards list all the balances and note down the rate of interest applicable to each one too.

The process of clearing them should work like this:

* Pay at least the minimum on each balance each month as requested
* Work out which credit card has the highest rate of interest
* Pay off as much of the most expensive credit card balance as you can each month
* Clear the most expensive balance first, then work on the others in turn

Note how much you spend on clearing those balances each month

The more you can put towards clearing your debts each month the better. But make a note of the cash you can devote towards this. This will help you figure out how much you can invest in other things in the future, once your debts are cleared.

The next step beyond your debts is to save enough for emergencies. Then you can get started investing properly in stocks, shares and other investment opportunities, depending on what you want to opt for.

It might seem counterintuitive to ditch any investment plans you might have in favor of going through the above steps. But the sooner you clear any debts like these that you have, the easier it will be to free up more cash to invest in the future. This will put you in a much better financial position, and you will be able to find out which investment options will be best for you as a result.

So take a fresh look at your finances now and see whether there are any debts you should be focusing on ahead of making those all important investments.

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A Brief History of Stock Exchanges

Stock exchanges have been around for hundreds of years. In fact, historians have traced the origin of the first stock exchange to France somewhere around the 12th century. Brokers traded stocks along the London Exchange, hence the term “stock exchange.”

The very earliest traders recorded seem to have traded things like government securities and debt notes. Throughout the 1500s, loose, disconnected markets were formed, and unofficial trading became more and more commonplace. Brokers met in an informal manner, making trades in coffee houses and other social arenas. In fact, the first official stock exchange didn’t even come about until 1602, when the Amsterdam Stock Exchange originated. It began when traders bought and sold shares of the Dutch East India Company, which were the first company stock shares to ever be sold.

The Stock Market Matures

The stock exchanges began to get their sea legs, and then by the beginning of the 1700s, there were already official stock exchanges in full swing in both England and France. They were so official, in fact, that bigger companies began to rely on them to raise money for investments by furnishing investors the opportunity to get a cut of the company’s potential profits. Since there was no real regulation to speak of in those days, scandals and backroom deals abound. Almost everyone had a chance to participate during that time, so there was no screening process to be eligible to trade.

The Stock Market in the United States

In the US, by the end of the WWII era, the country had entered a new phase in the history of investing. People were excited to trade, and the economy was flourishing. Investors were highly optimistic, and that optimism translated to a marked increase in people investing in the stock market.

Then, the markets took a turn for the worse. At the start of the day on October 24, 1929, there was a sudden and dramatic drop in stock prices. People far and wide were selling off their shares as quickly as they could. In fact, the stock ticker was so clogged with dropping prices that it fell behind at one point. This was the event that single-handedly ushered in the great depression and caused regulation to be implemented, which resulted in the modern stock trading we engage in today.

Now more than ever, stock markets are regulated. They exist all around the world, and we are quickly becoming a global economy, so the stock exchange as we know it today may evolve exponentially in as little as ten years from now. If you want to purchase shares now, you must do so through a licensed stock broker. Although the criteria to be listed in a stock exchange varies depending on the exchange in question, it is nevertheless an extremely regulated process for a company to be listed. Stock exchanges were face-to-face trading events in decades past, but the system is now moving toward becoming fully electronic and automated.

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Understanding the Different Stock Indexes

Stock indexes can be confusing at times. There are different types, but before we delve into that, it’s important to have a rudimentary understanding of what exactly stocks indexes are. Every day, millions of investors all over the world are buying and selling hundreds of thousands of stocks.

With so many stocks flying around, things get confusing mighty quickly. That’s why many different tracking companies – or “stock indexes” have popped up over the years. Their job is to track how certain segments of the stock market (or entire stock markets themselves) are doing in their day-to-day trading activities.

Different stock indexes keep tabs on different kinds of companies. Some stock indexes focus their tracking activities on solely large-cap companies, while others keep their sights on just the small-cap variety. Still others track the stock market as a whole. For instance, one very broad stock index in the United States is the Standard & Poor 500 (S&P 500). This index tracks the broadest range of businesses – in fact, it covers 500 of the largest companies in the US today.

Big Stock Indexes

Big stock indexes are the most common variety of stock trackers out there today. Arguably the most well-known of these types of stock indexes is the Dow Jones Industrial Average. This index tracks the ups and downs of thirty of the most highly influential businesses in the United States today. Some examples of these big players tracked by the Dow Jones include General Motors, General Electric, and Wal-Mart. The Dow Jones places precedence on the most expensive stocks out there, however, so a big stock index like this one is actually considered a “price-weighted index.”

This generally means that the index rises and falls depending on the fluctuations of these thirty companies as a whole. Some analysts think that this does not provide an accurate representation of the world’s economy; they don’t think that it paints a real picture of the rises and falls of every company out there.

Market Value-Weighted Stock Indexes

The previously-mentioned S&P 500 is different from a price-weighted index. It’s called a “market value-weighted index,” which means that the S&P 500 measures and tracks the combined value of stocks that all the companies in the index sell to investors. Basically, this means that stocks sold big the largest companies and with the largest market shares will have greater weight within the stock index.

It makes sense for larger companies to have more weight within a market-value weighted index, but this type of index does have its downfalls. For example, sometimes when a bubble develops that artificially inflates one segment of the economy, such as the bubble created by tech stocks in the 1990s, it can cause a ripple effect when it bursts that negatively impacts the rest of the stocks in the index and devalues the stock index as a whole.

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