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Archive for July, 2009

Four ways to diversify your stock portfolio

Friday, July 31st, 2009

If you are an investor in the stock market you most certainly should understand that diversification is extremely important to your long-term success. Let’s take a look at four different ways that an investor can stay invested in the stock market, but also be diversified.

4 Ways to Diversify Your Stock Portfolio

  1. Diversify by sector- The truth is different industries typically perform very differently in different market conditions. This allows you to diversify your stock portfolio by including different sectors, some that are more economically sensitive and some that are less economically sensitive.
  2. Diversify by market capitalization- This is an area where many investors fall short. It is certainly a good idea to try to diversify your portfolio by market capitalization. You can do this by making sure you have a fairly equal weighting of large cap stocks, mid cap stocks, and small cap stocks. There are times when small caps perform large caps and vice-versa, but it isn’t wise to stay concentrated in only one area.
  3. Diversify Internationally- In today’s modern economic world an investor needs to own some stocks in countries other than their own. Emerging markets are important to have a piece in, as are some of the more mature economies throughout the world. Though it is a global economy now, not all stock markets will respond in the same way at the same time.
  4. Mutual funds- Maybe this isn’t exactly the answer you were looking for, but the truth is mutual funds are a great way to diversify your investment portfolio. Mutual funds allow those with smaller amounts of money to be diversified quickly. Find a solid mutual fund that has stellar results and low expenses and put some of your money into it for the long run.

Use this four methods as guides when you are diversifying your portfolio. Whatever method you use, make sure in the end your portfolio is diversified and ready for whatever the market throws your way.

How to save money on education costs

Wednesday, July 29th, 2009

An education is a very important thing, but it can certainly get very expensive. There are several important ways you can make education costs more tolerable.

Ideas for saving money on education costs

  • Work to get grants or scholarships- Put in the hard work to try to get a scholarship, or find a grant you are eligible to receive. There are an increasing amount of grants and scholarships available as institutions realize how the lack of affordability is hurting many prospective students in the long run. Plenty of sites like FastWeb offer a nice place to start your search for what you may be eligible to receive.
  • Buy books online- You can save a whole lot of money by ordering your college textbooks online rather than paying full price at the university book store. Do your best to find out what books you will need as early as possible and then use a site like Campusbooks or Affordabook to search for the best prices available online. If you are willing to order used books you will save even more money. Buying books online can save 50% or more, so this is a must!
  • Cut down your commuting- This is one that some students already do to a certain degree, but it can be taken even further. If you are living off campus make sure you find an affordable place to stay as close to campus as possible. Even if you already live on campus don’t use a vehicle unless you are going out of town. Use public transit if it is available where you are, but even if it isn’t you can walk or use a bicycle most of the time. As gasoline prices rise, cutting down on the amount of travel is essential.

A solid education is never going to be cheap, but it is possible to do things such as find cheap textbooks or find grants available. If you are you will utilize these resources and make education as affordable as possible.

Insider selling at highest level in two years

Tuesday, July 28th, 2009

I came upon a very interesting piece earlier today from Mark Hulbert over at Marketwatch.com. He points out that the latest data from the Vickers Weekly Insider Report shows the highest level of insider selling relative to buying in almost two years. Last week the insider selling outpaced insider buying by a level of 4.16 to 1, an amazingly high number compared to most weeks. Since one week’s amount of data is so volatile most like to go by the eight week average, which stands at 2.69 to 1, the highest since November of 2007. Those of you who follow the market closely at all will remember that late 2007 is when the market reached its all-time high, only to enter a severe bear market not too long afterwards.

It’s difficult to say exactly what has caused the extreme bearishness among insiders in the last few weeks, but it certainly is something that should concern bulls in the stock market. While it is definitely true that insiders don’t always predict the market accurately or on time, levels that are this high are quite unusual. The bearish argument here will probably say that insiders are seeing through this current rally and understanding that things are not going well in the economy at all. On the other hand the bulls will likely say that insiders are lightening up because the market has done so well and there is little to be concerned about.

Insider selling is not necessarily a sign that you should clear out of the stock market altogether, but it is definitely something to think about when considering how much of your hard earned money you have invested in the market. Do these insiders know something about the state of the economy and what is to come? Only time will tell, but this data needs to make you at least consider lightening up on some of your stock positions for the time being.

Three unique ways to earn some money

Monday, July 27th, 2009

In today’s economy we need to be innovative and think about different ways that some money can be earned. Gone are the days where we can just sit back and hope that an opportunity falls into our laps. Now we must be able to go out there and find ways that we typically wouldn’t have thought of to earn some extra income and make ends meet.

Three Unique Ways to Earn Extra Money

  1. Rent out a room in your home- While this certainly takes some getting used to, if you have an extra room in your home that you rarely use this is something you can consider. When you realize that this alone could easily bring in an extra $500 or so a month it makes this option seem a little more attractive.
  2. Hold a joint garage sale with neighbors- Garage sales are definitely a solid way of making some money, but if you are able to join forces and make the garage sale a much bigger deal you can certainly get some extra traffic to your sale. Try to join forces with two or three others in your area and have a large garage sale or yard sale, where you are able to keep your things separate, but help each other get more potential buyers.
  3. Make Money from Advertisements on your car- Companies want to be able to get eyes on their products, and one place they can get that is on automobiles. If you are looking for a unique way to earn money use car wraps to earn money. Sites like PaidRide allow you to display advertisements on however much of the car you wish to display ads on and make either a small amount of money monthly for a small space, or a pretty sizable amount for a large car wrap.

Cash as a payment method can reduce credit problems

Friday, July 24th, 2009

Credit cards and debit cards are very easy to use and they can be great, but that ease of use can also get you in trouble over the long run. This is why I believe as a consumer you should take advantage of credit card reward programs when you can, but also carry cash and use that for most of your smaller purchases. Cash doesn’t have the potential to get you into a much deeper hole like credit or debit cards do.

Some people have gotten into a habit of only using their credit card and never carrying any cash. This is certainly convenient, and if you live in an area where theft is high it can also be wise, but in most instances using credit for all purchases is doing a little too much. Using that debit or credit card every time you go to a local fast food restaurant for lunch or catch a movie on a Friday or Saturday night can create bad habits.

The great thing about cash is you can’t what you don’t have. If you don’t have enough cash, you simply will have decide what you want to buy and what you won’t be able to purchase. While this might not be quite as convenient as using your favorite card to buy everything it is also much more safe for your personal budget.

The amount that you should use cash versus credit or debit cards really depends on your spending habits and how well you are able to keep things under control. You need to be completely honest with yourself and realize that if you like to use that plastic too much, it may be a good idea to go back to counting out those dollar bills. It’s alright to pay for things in cash sometimes, in fact it can be a great way to stay away from credit card problems.

Four ways to cut your investing expenses

Thursday, July 23rd, 2009

In today’s economy any wise investor will be looking at the best ways they can go about saving money while they are investing. Investing doesn’t have to cost you a fortune. After all, the goal of investing is to be saving up money and adding to that hard earned money over the long run. Fees and expenses are one of the biggest things in the way of you achieving your goal.

Four ways to cut your investing expenses

  1. Find a broker who charges less in commissions- There isn’t any reason you should be paying large amounts of money to a broker in commission fees. With plenty of options available for investors with small amounts of money or large amounts, you would be wise to check around and see what the trading fees are before opening an account with any brokerage.
  2. Trade less often- This should be rather obvious, but some people seem to forget the importance of this one.  Massive turnover inside your investment portfolio will quickly swamp you in fees. Try to adopt a strategy that utilizes trading less and making the most of every single transaction.
  3. Utilize tax efficient investing- While you should never make trades solely for tax reasons, you should consider them before making that final transaction. A good example would be if you had owned a stock that appreciated nicely for 11 months, you may want to consider waiting until the day after it has been one year to get taxed by long-term capital gains tax rates instead of short-term.
  4. Invest in index funds- Index mutual funds are a great way to save money from fees over the long haul. Index funds track the market and offer extremely low expense ratios and no loads. These funds are a perfect way to reduce turnover and get low fees.

Use these four ways as well as any others you can to reduce your investing expenses. Always remember that it is difficult to stay ahead of the game when investing if you are paying high fees or expenses.

The Recession and its Effect on Entry Level Jobs

Tuesday, July 21st, 2009

Entry level jobs have always been a little difficult to come by because so many corporations want to hire someone with experience. It’s always been a case of the old catch 22 for the job seeker; they need experience to find a job, but can’t find a job to get experience. In the recession today it has made finding a quality entry level job even more difficult. The recession has hurt recent college graduates quite drastically in their search for the start to a career, and just about anyone looking for an entry level job in most industries is in the same boat.

The recession has caused a lot of companies that previously offered nice entry level positions to turn to temporary workers or unpaid internships. The scarcity of quality entry level jobs makes it quite depressing for job seekers. Since there are so few entry level career positions available it has caused the amount of competition for these jobs to skyrocket to never before seen levels. The most prominent entry level jobs are now jobs that are commission based employment opportunities where the employee makes little or no salary and has to build up a clientele to make a living. This is definitely a tough way to go in the beginning unless you are a natural salesperson.

What are a couple of areas that you may be able to find entry level jobs even during the recession?  The health care industry still has quite a few entry level jobs available, especially as medical assistants. The health care industry is one that is virtually immune from the recession, so jobs there are much safer than other sectors. Another area that is hiring some entry level workers is the government. Government entry level jobs are down from previous levels because of budget shortfalls, but there are still quite a few decent positions available.

The bottom line is the recession has put quite a damper on the entry level job market, but if you are persistent and look in the right areas you may still be able to find a solid job.

Keep those credit card charge receipts

Monday, July 20th, 2009

In an era where identify theft has risen exponentially over the last few years, it is always a good idea to keep close track of your credit card charge receipts. The same is true with a debit card, since they are also the subject of identity theft of your banking account. Having the receipts available for you allows you to check and make sure you were charged the right amount when you receive the bill or statement, and could save you a whole lot of hassle in the long run.

Keeping track of your charges can be difficult or it can be easy, it really is up to you. If you choose to not keep every single receipt from the purchases you make it will be next to impossible to go back and find the proof of your purchase. On the other hand if you do keep every single receipt you will find it easy to keep a close eye on each month’s bill or statement. Probably the best method of keeping track of these receipts is to have a designated folder or envelope where your receipts go as soon as you get home. It is definitely advisable to keep them in the same place each time so there is no confusion as to where this important information is. By keeping this information when you receive the statement you are able to go down and check each and every purchase you made one by one. Mark off the purchase as you go and after you have paid the bill or verified your debit card statement you can throw away these receipts and start the process over for the next month.

While keeping track of every receipt can be a little bit time consuming it is more than worth your time, and in the long run it takes much less time than trying to track down a fraudulent purchase on your card if you haven’t kept close records of your purchases.

Top four ways to save money while shopping

Friday, July 17th, 2009

Let’s face it, shopping is a necessary for everyone whether you like it or not. We have to go shopping for the basic necessities such as food and water, and at some point we all have to venture out for things such as clothing and accessories. Whether you are a fan of shopping or not, you must realize that saving money while shopping is one of the most important ways to keep your budget under control.

Top Four Ways to Save Money Shopping

  1. Price comparison shopping- If you can’t compare prices between stores than you are most certainly going to end up paying more than you should. Price comparison shopping is an absolute must, and though it may take a little extra time, it is well worth it in the long run.
  2. Use those coupons- Coupons have gotten a bad rap from many people, as many seem to think they are a waste of time and not worth it. This is definitely not the case, in fact coupons can save you hundreds of dollars if you are wise about when and how you use them.
  3. Search through the weekly ads for great deals- Almost every store puts out a weekly circular with quite a few deals in them each week. Often the prices of these items are 25% off or even more, which can add a lot to your wallet over time. Searching through the ads and having shopping list ready is also very important so you reduce impluse buying.
  4. Buy in bulk when you can- This is certainly the case when it comes to grocery shopping, especially for things such as napkins, Kleenex, cleaner, soup, and other items that will last a long period of time. Obviously you’ll want to buy in bulk when they are on sale and then you won’t have to make a special trip to the store and pay full price later because you’ll have plenty bought up ahead of time.

One of the best places to save money in your personal budget is your shopping budget, but you have to be wise about it and use these four methods of saving.

5 ways to lower mutual fund fees

Thursday, July 16th, 2009

Mutual fund fees and expenses are part of life, but in order to have your returns be as high as possible you need to do everything you can to minimize those fees. Fees and expenses can quickly eat away at some very attractive gains. What are some of the best ways to minimize fees and expenses from mutual funds?

Five Ways to lower mutual fund fees and expenses

  1. Avoid loaded funds- This is the single most important thing you can do. Make sure you avoid loaded funds at all costs and simply go with the no load mutual funds. No load mutual funds are all over the place now, and they are just as successful at bringing in positive returns as loaded funds are, without the massive expenses.
  2. Consider index funds- Index funds have much lower expense ratios than most other mutual funds because they are passively managed. Index funds are a great choice for investors who don’t want to have to follow their investments constantly or those who simply want to achieve an average market return with low fees and expenses.
  3. Avoid high 12b-1 fees- These fees do nothing to help the investor, but rather they pad the pocket of the mutual fund  company. This fee is a marketing or distribution fee which charges investors so that the mutual fund company can promote their funds.
  4. Avoid high turnover funds- In general a fund that has a high portfolio turnover ratio will have higher fees because they are paying quite a bit more in commissions because of all the trades they are placing. Finding a solid mutual fund with a low turnover ratio is a good idea.
  5. Shop around for alternatives- This is clearly the most basic of the five ways to lower fees, but some investors don’t manage to do this. Simply look at mutual funds that have had similar performances and compare your overall fees before investing. If the mutual fund fees or expenses look too high, consider another option since there are so many available to you.

There are plenty of ways to lower your mutual fund expenses and fees, you simply need to be proactive.

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