Personal Investing Advice

What is a Better Investment, a House Or Stocks

Some financial planners will tell you that you can get a higher return on your money by investing it in the stock market rather than in a home. These financial planners will say the over a long period of time, the return on your money from the stocks will beat that of the return on your money from a home.

That may have been true back if you were in the market before the year 2000. It is definitely not true now. From 1982 on the stock market or the Dow Jones Industrial Average has grown so much that it went over the 10,000 mark. This is such a huge gain and is so much more than was thought to happen. The law of probability now comes into play. The stocks will fall back to where they should be. It was a great ride while it lasted. Nothing lasts forever.

The gains the Dow has seen were great to stock investors. There is a problem with all these previous huge gains. The economy of the United States grows at a much slower pace. You will end up with a wealth of paper. That is what it is, just paper. The real economy will catch up to the paper economy. So if you look at the cycle, stocks will grow slowly as the real economy and the paper stocks start to meet where they should be.

Now buy a home. Homes appreciate at a rate of about three to four percent. Much better than a slow growth stock market. So if you do the math a one hundred thousand home with a ten thousand dollar down payment with a low interest rate will increase by a factor of four or five. This results in a rate of return of around 24 percent.

you may say what about the expenses to keep up the home and actually live there. You have to live somewhere do you not? No matter where you live, there will be expenses. This is true whether you own a home or rent. There is still the electric bill, Heating oil or gas, food, etc. You have these expenses anyway. Therefore no need Read the rest of this entry »

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Predicting Market Moves Based on Yield Curve

Probably every investor’s biggest wish is to be able to predict the direction of the market. However, the market is so forward looking that profitability does not exactly like in predicting market returns but often in predicting the economy itself. Imagine, for example, being able to forecast economic recovery and recessionary periods before regular investor’s could. This could mean less loss (or even profitability) during market downturns by getting out or going short while others are still invested “long” and vice versa. In fact, with the S&P 500 returning 64.8% from March 9, 2009 until December 31, 2009 (or 19.7% for the entire year), knowing what the market forecasts for the economy certainly makes the task of investment management much less complicated.

One of the often overlooked tools when it comes to economic forecasting insofar as investing is concerned is the Yield Curve. Let’s take a look at what the yield curve signals about the market and tells us about the overall economic forecast:

Steep Curve

Normally, there is a three percentage point difference in yield between 3 month Treasury bills and 30 year Treasury Bonds. When that difference is more than three percentage points, the indicator from the market is that the economy is expected to enter an expansion phase. This is signal normally predicts an end to a recession and provides bond and stock market investors with cues that they will see strength in the near future.

Equity investors will study yield curves because they can have a better understanding about what the underlying companies will report in the next six to nine months. This allows them to enter some positions, close out others or ignore certain companies.

It should be noted that while three percent is the magic number, it is not an inflexible value. Studying the monthly trends of the yi Read the rest of this entry »

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Making a Killing by Selling Mineral Rights - 3 Powerful Tips Everyone Needs to Know

One of the most lucrative investments available, when done with the right knowledge, has got to be selling minerals rights. Everyone around the world is consuming more and more oil and gas on a daily basis. The more that is sold the more valuable your investment becomes. There are a few secrets to know about in order to get the best results. Finding the right company to work with when buying and selling can be crucial to your ability to successfully invest your money. These 3 powerful tips can give any investor an edge over other people when it comes to selling mineral rights.

The first thing to look at their track record. Be willing to research a company and ask questions about their performance. People will be honest about their experiences if you take the time to look around. This alone could save you tens of hours and thousands of dollars.

The second tip for selling mineral rights is to look at their overall support system. Do they offer consultations and offer advice for investing? Are they there to answer your questions and to genuinely help you make the best choices possible? The best companies handle as much of the work for you as possible by preparing all paperwork and county filings and free consultations. The more they are interested in helping you succeed the more likely you are to be successful.

The final tip for selling mineral rights is how convenient they are for you. Are they able to close within a set number of hours or allow you to liquidate and receive your check immediately? We are in a society where convenience and service are what lead in business. Customers want and need to be taken care of. After all, we have more important things to do with our time. We need a company that will allow us to manage our investments and not have to do all the legwork or sell our home to pay to have it done. Find a company th Read the rest of this entry »

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Investors Get Better Returns With Social Lending

If you’ve been disappointed by the low interest rates offered on CDs or checking accounts recently, you might want to look into social lending.

Social lending is a new investment opportunity that matches individual lenders with individual borrowers. Platforms like Lending Club and Prosper cut out the complexity and overhead of traditional banks to offer better returns to investors and lower rates to borrowers.

How good are the rates for investors? Well, I’m currently averaging a 13.77% annual return on my investments at Lending Club and the average return there is over 9% for all investments since 2007.

Your personal rate of return there can vary significantly based on the types of loans you choose.

Here’s how social lending works for investors. First, you open an account online and deposit funds (typically $1000 is the minimum). Then, you decide if you would like to select loans to invest in specifically, or if you would like the system to choose loans for you based on your risk tolerance and other criteria.

Generally, investors choose to invest small amounts across tens or hundreds of different loans. For example, if you invested $1,000, you might choose to invest just $25 in 40 different loans, to reduce the impact of the risk of default from any one loan.

Loans you can invest in will carry different interest rates, based on the borrowers credit worthiness. Interest rates at Lending Club vary from about 6% to 21%, and borrowers must have a credit score of 660 or better. Your overall annual rate of return will depend on the mix of loans you invest in and how many of those loans end in default.

How risky is social lending overall? Does it really fit in the same category as investing in a CD or checking account? Social lending does carry certain risks that are greater than investing in an FDIC-insured prod Read the rest of this entry »

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