Money Archives

The 4 Investing Mistakes Beginners Should Avoid

Are you considering getting into investing? What are the most common investing mistakes beginner investors tend to make? In his book The Simple Path to Wealth, blogger and financial expert J. L. Collins warns new investors of four pitfalls they should know about before investing their hard-earned money. These include financial advisors, winning stocks, dollar-cost averaging, and common investment cons/scams. In this article, we’ll look at four pitfalls investors should beware of, starting with financial advisors.

Firm-Foundation Theory vs Castle-in-the-Air Theory

What is firm-foundation theory? How is it different from castle-in-the-air theory? How do they differ and which is the best stock valuation method? There are two primary stock valuation methods. Firm-foundation theory states that assets have an “intrinsic value” based on the value of current dividends and estimated potential in the future. The idea here is that the stock will always regress to the intrinsic value. The castle-in-the-air theory has a different approach, stating that a stock is worth what people are prepared to pay for it. Keep reading for an in-depth look at firm-foundation theory and castle-in-the-air theory.

Fundamental Analysis and Investing: Does It Work?

What does a fundamental analysis of investing options involve? Does this method of stock valuation work? Fundamental analysis is a method of stock valuation that uses in in-depth study to determine a stock’s value. Fundamental analysis of investing options takes into account a number of factors in addition to past price movement, including revenues, growth rate, and management skills. Find out more about fundamental analysis and investing below.

How to Live Off Investments (and Not Run Out of Money)

The Millionaire Next Door and Wealth Building

Do you plan to live off investments when you retire? How much money can you safely withdraw from your portfolio each year? According to financial expert J. L. Collins, withdrawing 3% or less a year is as close to a safe bet as you can get. Collins’s personal strategy, however, is to withdraw around 5%, but to reduce withdrawals to 4% if the market drops. He says it’s also important to be flexible—if you can reduce your expenses when necessary, find temporary work, or move to a cheaper area, you can add a layer of security regardless of the withdrawal

Calculate Bond Return With This Easy Method

What is the best way to calculate bond return? What simple method can help you do this? Determining returns on bonds held to maturity is an easier task than calculating returns for stocks. Use this simple method to calculate return on bonds, bearing in mind the potential effects of inflation. Find out how to calculate bond return below.

The Smart Beta Strategy For Investing: Does It Work?

What is the smart beta strategy? Will this approach help you make better investment decisions? The smart beta strategy is one of the most influential methods of portfolio construction. Building on previous investment theories, the relatively modern smart beta strategy promises to yield greater returns than the market without an increase in risk. Keep reading for more about the smart beta strategy.

When Should You Start Drawing Social Security?

What is the earliest age you can collect social security? What factors should you take into account when deciding when to receive your social security payouts? Choosing when to start drawing social security is an important decision. You can claim Social Security starting at age 62, but the sooner you start, the smaller your checks will be. The longer you hold off up to age 70, the larger they’ll be, but you’ll have fewer years to collect them. Here is what financial blogger J. L. Collins has to say on drawing your social security.

Behavioral Investing: Are You An Irrational Investor?

What is behavioral investing? What behavioral traits can cause problems for investors? Behavioral investing theories point out that people are generally not rational decision-makers. This is important for investing because a lot of people are actually irrational investors. Understanding (and avoiding) the common traits of an irrational investor will allow you to make better investment decisions. Keep reading for more about behavioral investing.

Safe Alternatives to Savings Accounts: 5 Strong Options

What are some safe alternatives to savings accounts? Which is the best choice you for? Keeping a robust cash reserve is essential for emergencies, but it can also be a losing proposition if your savings account interest rate is lower than the inflation rate. There are a number of safe alternatives to savings accounts that will allow your cash to keep pace with inflation. Keep reading for a list of safe alternatives to savings accounts.

The Best Investment Strategy: Expert Advice

What is the best investment strategy, according to economist Burton Malkiel? Why are index funds likely your best bet? In A Random Walk Down Wall Street, economist Burton Malkiel reveals his best investment strategy. If you only take one thing away from the book it should be this: Investors are better off putting their money in a passively managed index fund—a total market index fund, to be precise—than trading stocks themselves or investing in an actively managed mutual fund. Find out more about Burton Malkiel’s best investment strategy below.