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Archive for August, 2010

Existing Home Sales Plunged

Tuesday, August 24th, 2010

Sales of previously owned homes fell 27.2% from June to a seasonally adjusted annual rate of 3.83 million, the National Association of Realtors said Tuesday, the lowest level since the industry group started its tally in 1999. (Source: Wall Street Journal) Job growth is going to be the key to economy recovery. Although the number of home sales went down, I don’t see any drastic reduction in home prices.

Everyone keeps talking about great bargains of $20,000 houses available in Detroit. If you are not living or working in Detroit area, what is the point of buying those houses anyway? Some may try them as investment properties. However, everyone needs affordable homes in the area where they have a job. If you are in the market for home in San Francisco bay area, you would know how difficult it is to find a decent single family house for less than $600,000. That’s not a bargain. It’s just not affordable at all for many of us.

I don’t see a dramatic fall in home prices anytime soon. The prices may stabilize in the next 12 weeks. I won’t be surprised if the prices move up a little bit next year. If you have a stable job and are able to find a decent home at a fair price, it’s a good time to buy the house especially given the low mortgage rates.

Related Link: Is it the right time to buy a house?

Crash coming to U.S. Stock Market?

Friday, August 13th, 2010

Is there a crash coming to Wall Street? Wall Street Journal thinks so.  When your stocks tanked to new low, you probably would think that stock prices are cheaper than justifiable prices. However, when you read stocks are priced 20-times cyclically-adjusted earnings, you are not going to like it! See the article here.

The article also cautions that too many people are too bullish. Really?! When Dow sinks every day, it doesn’t look like it.

Only thing I would agree with this article is that Job market is still in bad shape. Economy would turn around only when the job market gets the life. Things may get worse before they get better. But, a crash? I don’t think so.

Three Steps to Take Before Buying a Mutual Fund

Monday, August 2nd, 2010

A mutual fund is a great way to invest in the stock market without needing a large amount of cash to get started. A mutual fund also offers a terrific way to diversify your portfolio if you are an individual investor. Over the years mutual funds have multiplied and there are now thousands of mutual funds available for purchase. That isn’t necessarily a bad thing, but it does mean you need to do your homework before you purchase a fund.

Three Steps to Take Before Purchasing Mutual Fund Shares

  1. Determine Your Objective- If you don’t know what you are looking to do with your money, there is no way to research mutual funds properly. Consider your personal financial situation and what you need this mutual fund to accomplish before you even start researching where to put your money.
  2. Consider every single fee or expense that will be taken from your account-  There is a huge difference in the fee levels of mutual funds, and if you don’t find a fund with lower expenses you are really hurting yourself. Avoid funds with any kind of load, and make sure the annual expenses are less than the category averages. Remember, fees and expenses will quickly eat away from your earnings if you allow them to.
  3. Mutual Fund Performance- The upside to having so many different mutual funds to choose from is that you should always be able to find a solid mutual fund that has a great track record on performance. Many investors simply look at what the fund has done in the last few months or year, but I think it is much wiser to look at the three, five, and ten year averages for mutual fund performance.

Buying a mutual fund is a good idea for most investors, but before you jump in with both feet make sure you take these three steps. These steps will help ensure that the fund you purchase is the right fit for you.

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