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Does Age Have a Bearing on Investing?

June 17, 2013 Tushar Mathur No comments

This is an interesting question, and yet it may not be one that has ever occurred to you before. However when you look at it more closely, you’ll come to the conclusion that the investment goals of a 57 year old person will be very different from the goals set by an 18 year old. Indeed you could say the teenager may not have any goals at all because they’ve got plenty of time to think about stuff like that. Conversely the person who is nearing retirement has to think about their investment goals now, and whether it is too late to set up any new ones.

So yes, age certainly does have a bearing on how you invest, why you invest and what you hope to get out of it. It also stands to reason that you should review your investment goals from time to time. You might start out at the age of 20 with a firm investment goal in your mind. But if you let that goal stand and you reach the age of 30 before you review it, you may find it no longer serves your needs as it did originally.

This means it is well worth thinking about whether you should get different investments at different times of your life. In reality an investment that is ideal at the age of 18 isn’t as likely to suit someone aged 57. However there are conditions to that assumption. For example, if the investment was a short term deal it may be suitable for both age groups. However if it is a long term investment, perhaps over ten years or more, it may not be ideal for the person who is nearing retirement.

This is why it makes sense to think of your age and circumstances whenever you consider starting a new investment. It also makes sense to bear these factors in mind when you are thinking about changing an existing investment or bringing it to a close. Life changes and sends us curve balls from time to time, and what may have worked once may not work anymore once you get to a certain age.

Of course, every investment must be carefully considered before you jump into it with both feet. However some investments will make more sense to people of certain age groups than they will to others. For instance, someone aged 18 is in the perfect position to set up a pension for their retirement, even though this is several decades into the future. Someone aged 57 won’t consider this type of investment because they may only have a few short years until they retire. As you can see, age has a bearing here, and this isn’t the only situation it is relevant to.

So the next time you consider changing an investment plan or starting a new one, make sure you are able to bring your age into the equation. It may make your decision easier to make.

Could You Invest More Cash if You Were Self Employed?

June 03, 2013 Tushar Mathur No comments

It’s an interesting question isn’t it? Plenty of Americans are employed with businesses of all sizes, but in recent years there have been an increasing number of self employed people carving out their own businesses as well. This is partly due to the economic crisis, as more and more people have been made redundant. Armed with a redundancy package (if they’re lucky) and no prospect of an employed position in sight, many people are looking to create their own opportunities instead.

The picture of self employment is often painted as a challenging one. You’ve no guarantee where the next job is coming from and you might end up with a very uncertain cash flow. However, many self employed people are doing well, and when you compare this to the uncertainty of being employed, you can see there may not be such a big gulf between the two after all.

All of which brings us to the question posed in the title: could you invest more cash if you were self employed as opposed to employed? Would it really be possible to do this?

Every situation is different

No two people are ever the same, whether they are self employed or not. An employed person on a low wage might save more than a self employed person on a high income, simply because they have better savings habits. But let’s consider a level playing field here for a moment in terms of income and the working situation you might be in.

Let’s suppose there are two people each earning $40,000 a year. One is employed and the other is self employed. By the nature of self employment, this person is able to earn money from a number of sources (clients). The employed person relies on their company to pay them their wage. If the employer lets them go, they’re out of a job and have no more cash coming in.

In contrast, if the self employed person loses a client, they still have other clients to fall back on. Their income might dip, but they can go out and look for other clients to make up the shortfall. Indeed, they can also look for new clients to earn still more money.

Which is best?

This is where the difference becomes clear and you see why there is a greater chance of saving more if you are self employed. Clearly the real difference comes when discipline and good savings habits come into the fray. However, there is more potential here to earn more money as a self employed person. Since you are in control, you can create all manner of schemes and ideas to bring in more money and more benefits to you and your business.

Of course not everyone is cut out for self employment. Whatever position you are in and however promising your future looks, make sure you set good financial habits in motion now. They will help you achieve the level of savings you want to have in the future.

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What Should You Do if You Simply Cannot Save for the Future?

May 27, 2013 Tushar Mathur No comments

The focus of this blog is to start investing money: sinking it into one or more investments so you have a nest egg to fall back on in the future.

However, all this relies on the fact you have at least some surplus cash to play with. What do you do if this isn’t the case yet you still want to invest for the future – or at least save something in case you need some cash in an emergency?

Paring things down to the basics

This is step one, if you will. We all have a lifestyle we are used to. Sometimes we may need to strip this back so we can free up more cash for one reason or another. You can do this here if you haven’t already done so. Many of us could strip back our outgoings to the absolute basics if we needed to – and in some instances it is possible to strip things back a little further. You only need to read some of the inspiring blogs and articles that focus on providing tips and hints on eating on a dollar a day and other subjects to see how true this is.

Have you pared things back to the basics yet or do you still have more work to do? Re-evaluate your life in every area and see whether you can free up some cash so you are able to set some savings aside, even if you cannot invest anything else.

Things change

Many people go through periods in their lives when saving money is not an option. If, even after going through the stage above, you find you can’t free up any spare cash, don’t worry. It doesn’t mean you can’t still read and learn about saving for the future. You may just come across a way of doing it that would work for you. Indeed, you may discover a new method for making a little extra cash to help you along the way.

The moral of this story is to make sure you are always open to the idea of saving money. Even if you can only save a dollar or two every now and then, it instills in you a mindset that will help you through the hardest financial times. It will also lead you towards a brighter financial future, and this alone can be a positive experience when you are trying to save money for some reason.

The only way you will never save money for the future is if you decide it cannot be done. Even if this is true at present, it’s not a good idea to succumb to this mindset – it may just follow you around for longer than you’d like. As you can see, if you take the right stance you might just change your fortunes for the better. If you can do that, you could start saving money for the future sooner than you might at first think was possible.

Should You Invest in Your Own Online Business?

May 06, 2013 Tushar Mathur No comments

The internet has changed our lives in an incredible number of ways. Perhaps most notably, it has given many people the opportunity to set up businesses from home. New business opportunities have been created that many people can have a go at.

However, does this mean you should invest in a business of your own on the internet?

If you are thinking of doing just this, with the hope of generating a new line of income in the process, here are some points you should be aware of.

1: you can start with very little money

This is good to know if you are on a tight budget. There are enough free services online to make it possible for people to get started making a small amount of money without investing anything up front.

There are also other opportunities for you to make money while investing just a small amount upfront. For example, you can easily set up your own website by purchasing a domain name and hosting for just a few dollars a year. Most people could afford this and create a blog that recommended products from free to join affiliate programs. This alone has the potential to generate anything from a few to a significant number of dollars per year.

2: you can build a business in your spare time

This is one of the main points that attract people to earning money online. Regardless of what job(s) you do now, you can find spare time in which to build a business of your own. Plenty of other people have done so before you – could you be next?

3: there are plenty of scams out there – make sure you’re not a victim of one of them

Never part with any cash to get a job opportunity; you’re often better off setting off on your own path. By all means research different opportunities and find reviews of what other people think. But make sure you don’t fall for any smooth selling.

4: it really is possible to build your own business

Who knows, you might even earn more from doing so than you’d ever earn working for someone else. You do need to work for it though – don’t assume it will come easily or without making any mistakes.

Since there are several opportunities you can go for online, you might also want to consider which one will suit you best. The worst mistake you can make is to do something simply because someone else is doing it and achieving success with it. It doesn’t automatically mean you’ll be successful too. The trick is to find your passion – that’s what will earn you the money you need to succeed.

In the end, there are ways to invest in your own business on the internet. But you need to be diligent and do your research to find the best opportunity around for you today. Make sure you make the most of your opportunities and seize the moment to make your business work.

Three Months In: How Are Your Financial Goals Shaping Up for 2013?

March 18, 2013 Tushar Mathur No comments

It may still seem as if the festive season only finished yesterday, but in fact we are nearly a quarter of the way through the ‘New Year’. This provides the perfect opportunity to assess the financial goals you made at the beginning of January, to see how they are progressing.

It means you have a chance to look back over the last three months to see what you have achieved during that time. Have you done what you wanted to do? Have you achieved some short term goals yet? Perhaps you have already ticked off some of your goals and set new ones. Perhaps you are well on the way to accomplishing some of your longer term goals. Perhaps you have yet to begin making any real progress at all, despite setting goals at the start of the year.

Look back and create a progress report

Don’t just look back on the last three months and think about them randomly. Make some notes. What worked? What didn’t work? Which goals are well on the way to being achieved? Which ones are you struggling to get close to?

It’s worth thinking about what you can realistically achieve at this point. It may be you have a savings target set for the end of the year, and you are not yet 25% of the way there. However this doesn’t mean you cannot still hit your target. You should still focus on redoubling your efforts to get there; you never know if an unexpected source of cash could come up, or you might get a promotion. Having a goal often makes unusual things happen – things you may never expect. A progress report is simply a good way of looking at where you are.

Look ahead and revise your goals if necessary

There are lots of reasons why you may need or want to revise your financial goals for 2013 at this stage. For example you may have achieved something you wanted to do. Perhaps one short term goal was to save $500 over those first three months to put towards some home improvements. Now you can invest in those improvements, tick the goal off your list and make a new one to replace it.

Another reason may be that your initial goal just isn’t working. Perhaps you have tried approaching it in a variety of ways and nothing has worked. In this situation you may have to revise your goal or scrap it altogether. There are normally ways to achieve any goal you set for yourself, but it could be that you don’t yet have the knowledge or the finances to achieve the goal you originally set.

Once you have reviewed your goals, think about doing the same again at the end of June. This is the halfway point of the year, and it provides an ideal time to review your progress at that point as well. It also means you can review the results of any adjustments you make at this stage. So you see this is the best way to ensure you hit all your goals.

Should You Look Into Unusual Investments?

March 11, 2013 Tushar Mathur No comments

When you think about investments you probably think of stocks, shares, mutual funds and various other investments of a similar ilk. However you have more options than this, including some rather unusual investment opportunities you may wish to consider.

So let’s focus on some of these now, so you can see whether your interest is piqued by them.

Wine

For many people wine is something to be drunk and enjoyed on an evening spent with friends and family. For others, certain choice wines are to be invested in with an eye to the future.

There are certainly plenty of wines that appreciate in value over the years. Of course you have to know your stuff – it’s not enough to buy a few bottles from the local store and put them away for a few years to capitalize on your investment. However if you are willing to focus on learning more about wine – and in particular which wines to look out for and invest in – this could be worth sinking some money into.

Art

The more you know and understand about art, the easier it will be to stand a chance of investing successfully in this medium. This is perhaps one of the more challenging but unusual ways to invest some cash.

However there are some simple rules you can bear in mind. Don’t aim to buy expensive artwork from famous artists. Instead, look for ones who have not yet been discovered. If it turns out you have an eye for the best artists who achieve fame in the future, your investments could appreciate by a significant amount. In addition, make sure you recognize the importance of quality and store your artwork properly so it does not become damaged.

Memorabilia

This is another example of a tangible investment you can think about. Memorabilia can relate to investments in lots of different areas. For example you could invest in sports memorabilia, or opt to sink some money into toys from years gone by. You may even find you already own a few things of this ilk that have a value beyond what you originally bought them for.

This often begins as a hobby for many people; indeed there is arguably a lot more enjoyment to be had from investing in memorabilia than there is from investing in stocks and shares.

What could you invest in?

These three suggestions are just the tip of the iceberg when it comes to unusual investments. They should perhaps act as an additional way of investing your money as opposed to being an alternative to stocks, shares and whatever else you invest in. However it is wise to make sure you don’t just view these possibilities as quirks. You need to be sure you apply the same diligent research as you would to any other investment before sinking your money into it.

This is all part of not having all your eggs in one basket. As you can see, it is worth having a few more unusual baskets in your collection too.

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Penny Stocks Could Cost You a Pretty Penny

February 28, 2013 Tushar Mathur No comments

Okay so the title is designed to catch your eye. But if you are thinking about investing in penny stocks it is worth realizing you could lose a lot of money in doing so.

This is not meant as a scare story, merely as a way of reminding you that investing in penny shares doesn’t make them any less volatile or safe than regular shares. Indeed, they are generally even more volatile, which is the reason why they are available so cheaply anyway.

Think about the value of a company before you invest

Let’s say Company A has shares valued at one cent each. Company B has shares valued at $6.78 each. Clearly there is a lot more value in the shares of Company B than those of Company A. This is because penny shares are made available by those companies who show promise for the future. They are created largely to generate funds to put back into the company so it can expand and develop.

Of course we all know lots of companies and businesses fail in their early days. So your task is to invest in penny shares released by companies that have the biggest potential for a great future. Lots of people wish they’d invested in IBM or Microsoft when their shares first came out. They’d be worth a lot of money by now. And when you think about the idea behind penny shares it is easy to see how such an investment can seem extremely tempting.

The reality behind penny stocks and shares

Let’s take a look at the reality of the situation now. The truth is penny shares are affordable for many people looking at getting into the stock market. But they are the riskiest shares of all. You may be able to afford more shares from Company A than you ever could from Company B, but that doesn’t mean it is a wise investment.

The bottom line here is to consider how much you can afford to invest – and also to lose. There is a bigger chance of penny shares nosediving in value and becoming worthless than there is of shares in any other company doing the same thing. There are exceptions of course, which is why you should never invest in any types of stocks or shares unless you know what you are doing and what to expect.

Many people say you should only invest money you wouldn’t miss when it comes to penny shares. There is a lot of truth in this. You should never really invest in it to gain a particular amount of money in return. It is far more speculative than other shares, which is why they are not for everybody.

This doesn’t mean you should avoid them at all costs of course. It just means you should be aware of the pros and cons and of what you are investing in. The more you understand about penny shares, the better your chances are of getting it right.

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Tips for Choosing High Yield Mutual Funds

December 24, 2012 Tushar Mathur No comments

If you are considering investing some cash in mutual funds, it makes sense that you’d want to invest in the best ones you can find. So called high yield funds are the best ones to look for, since they provide you with the opportunity to enjoy the highest possible yield you can.

So with that in mind, here are some tips on choosing the best high yield mutual funds on the market today.

Do your homework

It should go without saying, but it is surprising how many people are so eager to invest in these funds they’ll slap their money down on anything that looks good. They do this without researching it properly first, so it makes sense to ensure you don’t fall into this group.

Start looking online to see how many mutual funds are out there that fall into this type. Of course you shouldn’t just trust everything you read. Everyone is keen to stress the positives without focusing too much on the negatives. This means it’s your job to do both.

There are plenty of well known and reliable websites that are long established online that can be relied upon to give out good information. If you search for the phrase ‘high yield mutual funds’ you will find lots of these sites popping up on the first page of Google. Use these results to help you find the companies you need to look at more closely.

Choose a fund that fits in with your investment plans

It goes without saying that most mutual funds will perform better over the long term as opposed to the shorter term. But there can be a difference between investing for five years and fifteen years. Think about the goal you have in mind and how long you want to save for, and consider which funds most closely match your ideal.

You may find some perform better over the period of time you want to save for, in which case you should add these to your shortlist. Now it is time to delve into each individual fund more closely. Find out everything you can about each one – get the literature and speak to those managing the funds if you can.

You should also bear in mind that while looking at the most successful mutual funds for this year will help in some ways, it doesn’t necessarily mean those same funds will perform just as well next year. Be sure to look back over a longer period, say five years or more, to get a more accurate pattern.

As you can see, it is wise to focus on the details of all the high yield mutual funds you have come across that you are thinking about sinking money into. Choose the one that appeals to you the most. While you cannot get rid of the risks inherent in investing in this type of fund, you can vastly reduce them and hopefully get the highest yields in the process.

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Low Minimum Mutual Funds to Consider Investing In

December 03, 2012 Tushar Mathur No comments

Are you looking to invest in some mutual funds for the future? Many people are, and yet the toughest problem of all is finding ones that are affordable. Even a cursory look will reveal plenty of mutual funds that require $1,000 and up to invest in.

If you need a much lower minimum fund to consider, perhaps these will be of use to you. Remember though that it is a good idea to look into all these funds in more detail before considering whether you should invest in them or not. Remember too that it’s not just a question of whether you are able to afford to invest in a particular fund – it’s a question of whether the fund is set out as you would like it to be.

American Funds American Mutual Fund Class A

This is a mutual fund with a very affordable $250 as the minimum investment you need to get through the door. It has performed well over the past year and is a large cap investment fund, so it might be worth a closer look if you want a super low investment amount to work with.

American Funds AMCAP Fund Class A

Here we have another fund that only requires a $250 minimum to get in. In common with the above fund it has done well during the last year, so it could be a good one to consider. This is a growth fund, whereas the one mentioned above is a value fund.

FAM Value Inv (Fenimore Asset Management)

Do you want the maximum number of $500 options to consider? Here is another one to add to your list. It is a blended fund and has risen by more than 12% in the past year.

American Funds EuroPacific Class A

If you feel that even $500 is a little too much to stretch to at the moment, you will be pleased to know you can invest in mutual funds for even less than this. How about trying $250 for example? In this case the fund has performed exceptionally well once again over the space of the last year, giving you more to think about if you want to keep your initial investment as low as possible.

American Funds New World Class A

One final suggestion for you here – and it also requires a minimum of just $250 to get started. As the name would suggest it points to a selection of new markets to invest in, and has performed well over the past year. Remember though that the long term is the idea for this fund, rather than a quick investment for quick profits.

So there you have it – a few suggestions worth exploring in more detail if you only want to sink a few hundred dollars into your first mutual fund. The more you learn and the more you know, the easier it will be to figure out which mutual fund will be the best one for you.

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Expenses Involved with Mutual Funds

November 12, 2012 Tushar Mathur No comments

If you are considering getting involved with mutual funds you should be aware there will be expenses involved as well. Indeed if you aren’t careful you can end up with a mutual fund that doesn’t perform anywhere near as well as you thought it would – and it can all be down to excess expenses.

So let’s take a closer look at the expenses you should look out for.

Yearly fees on mutual funds

Each year you are part of a particular mutual fund you will pay a fee to stay in it. This fee can vary between separate funds so when you are looking for a suitable investment to make in the beginning, ensure you look at these fees and choose a high performing fund that keeps the yearly fees at a respectable low.

Loads for buying or selling the shares you hold in a fund

When you are searching for mutual funds to invest in, you will probably notice some of them are referred to as no load funds. In this sense a load refers to a charge levied on the fund, or more properly to shares held within a fund. A load is basically a transaction charge and it is well worth looking out for.

Since some mutual funds exist without these charges, it makes sense to ensure you choose a mutual fund that doesn’t add them on. It can save you a lot of money in both the short and the long term. The no load funds come directly from the fund company itself, whereas those offered with a load attached will generally be offered through a broker.

Look at the expense ratio

While some fees are applied directly to a mutual fund, such as those indicated above, others are not as easy to spot. Perhaps the best example of this is the expense ratio that is applied to every mutual fund around today.

The expense ratio will be expressed as a percentage. It is the amount of money that is deducted from the mutual fund’s earnings on an annual basis to make sure all operating expenses are paid for. There will be quite genuine operating expenses involved, such as the salaries of those who run the fund and administrative expenses as well. But of course the expense ratio can be much higher with some companies than it is with others, so watch out for this and compare one to another so you know what to expect.

Looking out for the items above should ensure you have a better chance of finding a good quality fund that pays out a healthy amount to its investors each year, without taking back huge amounts for itself.

It should also ensure you can narrow down the possibilities more quickly, so you can find a more suitable mutual fund for your requirements. Expenses can certainly climb considerably if you pick the wrong fund. However, pick the right one and you will benefit for a long time to come.

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How to Find Top Performing Mutual Funds

November 05, 2012 Tushar Mathur No comments

If you want to invest in mutual funds, it makes sense that you’d want to invest in the ones that bring in the best performance. But how do you find them?

Fortunately you don’t have to resort to closing your eyes and sticking a pin in a list you have in front of you. There are ways you can make the job easier. Here are some suggestions.

Check out the fund manager

This is the most important aspect of all. If you only pick one thing to do, make it this. It is better to choose a good fund manager with a company you’ve never heard of than to choose a fund manager with no track record who works with a company that is a household name. In short, go with the fund manager and not the company.

Find the benchmark for the funds you are interested in

You need a benchmark in order to gauge how well – or badly – a particular fund is doing. The benchmark can vary depending on the specific funds you are looking at. For instance, if you want to invest in a stock mutual fund you would look closely at the S&P 500 Index.

Look for consistent returns

This is a good way to find funds that perform well over a longer period of time. This points to funds that can be relied upon to do well even when times are not as good as they might be. Of course you will have periods when any fund will do better or worse than it may do at other times. But you want to pick something that is more consistent than its counterparts. You want to avoid the funds that have a tendency to dip further than others do, in order to make the most of your investments.

Look for no load funds

This is another important aspect to consider. A ‘load’ is basically another word for a charge made for entering into a mutual fund. Hence where there is no load, there is no fee. This is good news for you because it means you will pay less over the long term. This automatically means you get a better performing mutual fund, simply because you will pay less than you would otherwise. Just imagine the difference when compared to a fund that requires you to pay fees and charges every year.

As you can see there are a number of ways to help you find top performing mutual funds. While the fund manager is the most important element of all, adding in the other elements certainly helps to narrow down the possibilities. This will leave you with only the best mutual funds to consider.

One final point – don’t assume you will find the top performing funds in a matter of minutes. This process can take some time to go through if you want to do it properly. Spending a little more time now will mean better profits later on.

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A Comparison Between Lending Club and Prosper: Peer to Peer Lending

October 15, 2012 Tushar Mathur No comments

If you’ve been reading our blog in recent weeks you’ll know we’ve covered peer to peer lending and two services in particular: Lending Club and Prosper. This week we’re going to focus in on comparing the two, to enable you to get a better understanding of how they fare against each other.

What amount of loans has been met so far?

At the time of writing, Lending Club had filled $960,287,975 in loans since it had first got underway. Prosper has managed under half of this at $411,000,000. Prosper opened its doors in 2006, while Lending Club began life a year later.

Are the loans rated to provide different rates of interest at each club?

Yes – you’ll notice different grades of returns at each service, going from A upwards. This enables you to gauge what degree of risk you are happy with and to balance your investments in each case too, so you can spread the risk.

What is the maximum amount you can borrow if you are looking for a loan?

Prosper will lend a maximum of $25,000, with a minimum of $2,000 in place. Lending Club will lend up to $35,000 and there is no obvious minimum given.

Are you guaranteed acceptance for your loan?

No – Prosper indicates it will accept creditworthy borrowers, whereas Lending Club specifies that it approves less than 10% of the people who make a loan application.

How do you invest? Is the process similar for each one?

Yes – you invest in notes. Each note with each company is represents a $25 investment. You can choose how many notes you want to invest, although a larger amount is more likely to give you a good rate of interest, because you can spread your risk across more than just a handful of investments.

Do you get a good degree of control over your investments?

Yes you do, because in each case you can decide whether you want safer A graded investments or riskier higher graded investments. Most people balance out the risk and thus improve their chances of getting better returns while spreading the risk.

How do you decide which peer to peer lending organization to go to?

There is no simple answer to this. One person might prefer Lending Club while another might be happy with Prosper. The best course of action is to go through all the options and to read the information on each website. Compare what each organization is giving you (either as a borrower or an investor) and see which one seems best for your needs.

One thing is clear though: both Prosper and Lending Club have established themselves as leading players in the peer to peer lending market. If you like the idea of this new model of investing and borrowing, it might prove worthwhile to look into it further. Plenty of people have already had experience of peer to peer lending from one side or another: you could be next.