Investing Column

I am not an investing expert but that doesn’t stop me from writing about it! :) In these posts I’ll discuss investing principles, ideas, and comment on current events as they happen. The investments themselves could be in the stock market, real estate, or potential small businesses or franchises… basically anything that could help increase one’s cash flow.


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 Investing 
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Investing: Fundamental Analysis vs. Technical Analysis

Wall StreetIf you are interested in investing, you know that it’s important to find a way of evaluating your potential investments so that you are able to choose what is most likely to provide you with the best chance of a reasonable return.

But how can you determine which investments are likely to provide you with the highest potential performance? There are two main types of analysis that you can use as you evaluate investments: fundamental and technical.

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 Career, Investing, Retirement 
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5 Tips for Starting a Retirement Account When You Get Your First Job

RetirementYour first job is a major milestone. You can learn a lot from your first job, as well as start down the path toward financial freedom (if you manage your money right).

Unfortunately, too many us start first jobs and our thoughts go to how we’re going to spend our money. When I started my first job in high school — and even when I started my first job after college — I could think of little beyond how I was going to spend my money.

It didn’t really occur to me to save some of my money (even though my parents had tried to drill that lesson into my head), much less open a retirement account and start contributing. If you are starting your first job, it makes sense to pay attention to the future. Don’t forget to pay yourself first. Here are 5 tips for starting a retirement account with your first job:


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 Investing 
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Behavioral Finance: The Pseudo-Certainty Effect

Education InvestingWe all make mistakes when it comes to our finances. Few of us manage to create the perfect portfolio on the first try. Indeed, investing requires a little tweaking along the way. While it doesn’t have to be a complicated process, investing does have its difficulties — especially when you get in your own way.

In behavioral finance, one of the ways that investors can muck up their portfolios is with the help of the pseudo-certainty effect.

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 Investing 
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Treasury Department to Offer Floating-Rate Notes

Treasury DirectA few years ago, we bought some Series I Savings Bonds when the interest rates were higher than they are today. With Series I bonds, your interest rate is based on a fixed rate, which is set when you purchase the bond, and an inflation rate, which is set twice a year based on inflation announced by the Bureau of Labor and Statistics. Twice a year, the interest rate of the bond changes and the bond matures in 30 years. This, along with TIPS, are the only two bonds that adjust for any reason after they are issued. The Treasury is going to add to that list a new floating-rate note (FRN) that will be reset weekly and based on the 13-week U.S. Treasury bill auction rate. Experts expect to see these notes available later this year or early next year.

Do they make sense for you? It’s really hard to say with so few details but based on the interest rates we see for the 13-week U.S. Treasury bills, I suspect not. We’re talking ~0.05% – not exactly an appealing return, you can get more from a savings account or a 24 month CD. Ally Bank has a Raise Your Rate 2-Year CD at 1.04% APY. Capital One 360 has a less appealing 0.40% APY, but even that crushes the 0.05% you’d get in this FRN.

That said, here’s what we do know about the Floating Rate Notes:

  • They will have a 2 year maturity,
  • Minimum investment is $100,
  • The rate will be based on the 13-week U.S. Treasury bill auction and adjusts weekly (which is the frequency of the auctions).

Personally, I see this as something that might boost money market yields in a rising interest rate environment (those money market funds need to put that cash somewhere, they’re likely currently putting it in short term notes and rolling them over – this would simplify things) and that’s really the only impact the average person will see. You and I certainly won’t be buying these!

What do you think of the FRN?

 Investing 
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Should I Invest In a Bitcoin ETF?

BitcoinsThat’s the question the Vinklevoss twins want to know the answer to and their guess is “yes!” CNNMoney reported earlier last week that Cameron and Tyler Winklevoss, whose names you might recognize if you followed the saga of Facebook, filed a proposal with the SEC to offer an exchange-traded fund that would let investors trade in bitcoins. While we have no idea if regulars would approve such a thing, I think the idea is interesting to discuss.

I’ve been following bitcoin for a while, I’ve never done anything more than read about it. I watched its meteoric rise and fall (and smaller rise and fall) earlier this year because the idea of a de-centralized currency is fascinating. The appeal is simple – currency that cannot be manipulated by a central government and one that has zero regulation. The only difference between it and any other currency is acceptance.

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 Investing 
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How Much Could You Be Throwing Away in Investing Fees?

Nest egg savingsWhen it comes to retirement investing, there is no way to avoid the fees. You will have to pay something at some point. However, just because you can’t avoid fees entirely doesn’t mean that you have to pay high fees throughout your life.

One of the best things you can do for your financial future is to reduce fees associated with your retirement account. Why? Because you might be surprised at how much you are throwing away in unnecessary fees. We’re talking more than $100,000 in some cases. What could you do with that money instead?

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 Investing 
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Should You Invest in a Foreign Stock Market?

Education InvestingOne of the pieces of advice you are likely to receive about investing is that you need to make sure to diversify your portfolio.

However, diversification isn’t just about asset class and sector. Diversity also includes geography. For true diversification, you need to consider the where of your investments.

For some investors, it’s possible to do this by investing on a foreign stock exchange. A foreign market can provide you with access to different companies and opportunities.

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 Investing 
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How to Get Away with Insider Trading

Martha StewartInsider trading has been going on ever since the stock market existed. Everyone is looking for an edge and no one is willing to play fair. Martha Stewart did it and was treated to several months in one of our nation’s fine institutions. Raj Rajaratnam did it and was sentenced to 11 years in prison and penalties of over $150 million. Heck, someone you know has probably done it.

Some are brazen about it, others are a little more secretive. I first realized how prevalent it was when I read Trading with the Enemy, an anecdotal book written by Nicholas Maier as he worked at Jim Cramer’s hedge fund. The story that struck me most was how they’d get news stories before they hit print and used it to their advantage. It’s not necessarily insider knowledge about a company but getting it a few minutes before the rest of the world, even if it was a third party, is a big advantage.

So, as for insider trading, if you want to learn how to do it, this is what you need to do to get away with it.

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