Check out our FREE investing starter kit, it covers all the basics and has 5 stocks to get you started, go to https://www.Fool.com/Start
Buying gold as an investment — good or bad?
There is a huge portion of financial media that fixates on gold. The most common argument you’ll see is that gold is a hedge for economic collapse – gold is seen as a safe place to store money because it’s been used as a form of currency for thousands of years.
That history, plus gold’s global appeal and limited supply sells a lot of people on the value of gold as an investment. But is it actually a good idea?
As an investor, you’re looking to buy something that will be worth more in the future than it is today. To measure that, a lot of people will look at the “intrinsic value” – or the inherent worth of a company, property, or asset.
Most of this analysis will look at the money the potential investment over time might generate
In the case of a company, you’d look at the expected profits the business would generate over time. As a shareholder, you’re a part owner of the business and so your stock entitles you to a sliver of those earnings. For a business that is growing over time, earnings should go up, and the value of your piece of ownership should follow.
What’s tricky about gold is that as an asset, it doesn’t actually generate cash. The piece of gold you own today will be the same piece of gold 5 years from now, no more and no less.
If you buy a house, you can decide to rent it out, and over time the rental payments you receive could provide a steady flow of cash. Alternatively, you can live in the house and instead of paying rent month after month, you would be making mortgage payments and building equity over time in an asset that is capable of creating cash flows.
On its own, gold can’t generate cash, which makes it harder to value.
The value of gold is really tied to its scarcity – that gives it value in the jewelry market and it makes it useful as a store of value and means of exchange.
Some of you probably heard that and thought “what the heck does that mean?”
Globally, gold is recognized as a precious metal, and that worldwide recognition means it readily can be exchanged across borders and cultures, which is part of the reason why major institutions like central banks maintain gold reserves.
It’s also why some investors want in on gold.
They view it as a hedge against economic instability and inflation. Paper dollars, like the US dollar are “fiat currency” — meaning they have value because we say they have value — sound familiar?
So, if events unfold that lead people to question the value of a fiat currency, OR the government takes actions that change the value of a currency — like printing waaaaay more bills and giving them out to people — the currency can lose value. If a currency loses value, the relative value of gold, as expressed in that currency, will shoot up, allowing investors in gold to profit.
Some people keep money in gold because it is less tied to any one government and isn’t as impacted by inflation or an economic collapse in any one country.
But it’s merit as an investment really depends on the timeline you’re looking at.
From September 2008 to August of 2011, the price of gold went up over 100% while stocks in the US eeked out 1% gains on a total return basis.
There’s money to be made investing in gold, but it comes down to being right about gold at the right time — because gold tends to surge in value when major financial systems are struggling.
Since September of 2011, stocks have returned over 180% on a total return basis while the price of gold has fallen nearly 30% AND the returns of the S&P 500 trounce those of gold on a 1,3,5, and 10 year basis.
And for people with a very long time horizon, since 1990, The S&P 500 has posted 1,400% gains on a total return basis. Over the same nearly 30 year period, gold has returned 220%.
If you are worried about an economic downturn, it may make sense to have a small portion of your portfolio in gold, but it certainly shouldn’t be your main investing strategy, and for many time periods, you’d be better off being all in stocks.
Subscribe to The Motley Fool’s YouTube Channel:
Join our Facebook community:
Follow The Motley Fool on Twitter: Tweets by themotleyfool
Is It A Good Idea To Invest In Stocks That Don’t Provide Dividends?
After sowing a seed how quickly do you get the fruit? You water the seed, protect it, give it time to bloom. Exactly! Its wealth grows with years and investments behave similarly.
If you ask an experienced stock market observer will always advise you to think of investing with a long term perspective, atleast when it comes to equities. Patience is the name of the game! And who knows the rules better than our expert?
Tune in every week as Vivek Law talks to Certified Financial Planner, Suresh Sadagopan answering your financial queries on BSE presents Plan Your Paisa.
Click The Below Link To SUBSCRIBE:
Investing made simple: The Motley Fool’s essential guide to investing is now available to the public, free of cost, at http://bit.ly/1atRpHZ. This resource is truly all you need to get started today. To claim your free copy, simply click the link above — no credit card required!
Visit us on the web at http://www.fool.com, home to the world’s greatest investing community.
Subscribe to The Motley Fool’s YouTube Channel:
Or, follow our Google+ page:
Inside The Motley Fool: Check out our Culture Blog!
Join our Facebook community:
Follow The Motley Fool on Twitter: Tweets by themotleyfool Video Rating: / 5
Billionaire entrepreneur and „Shark Tank“ co-host Mark Cuban stopped by the office to talk about a number of topics. In this video he tells us why investing in a 401(k) is both easy and wise.
Mark Cuban is the creator of Cyber Dust, a private messaging app. His user name is +blogmaverick.
Follow BI Video on Twitter: http://bit.ly/1oS68Zs
Follow BI Video On Facebook: http://on.fb.me/1bkB8qg
Read more: http://www.businessinsider.com/
Business Insider is the fastest growing business news site in the US. Our mission: to tell you all you need to know about the big world around you. The BI Video team focuses on technology, strategy and science with an emphasis on unique storytelling and data that appeals to the next generation of leaders – the digital generation. Video Rating: / 5
5 Basic 401k Investing strategies to get higher returns in your 401K Plan. Learn how to pick 401k Investments. 401K (Retirement Investing)
[401K Retirement Investing] Basics of 4 01k Investing. 5 Basic 401k Investing Strategies. In 2017 It has never been more important for us to learn how to invest than now.In order for us to retire in the future we have to learn to invest our money to the best of our ability through a combination of 401K and other investments.
1. Discover Your Fund Choices: (Step 1)
Find out what investment choices are offered in your current employer’s plan. The fund choices, and number of available choices to choose from are going to vary from company to company. If you do not know what is offered ask your human resource department where you can find this information, and what provider they use.
Examples of 401K plan providers include John Hancock, Vanguard, and Fidelity to name a few.
Typically your provider will have an account you can access online where you can manage your 401K investments, research rate of return, fund choices etc. Log in, or create an account online to begin to perform your analysis.
The analysis may take you a few hours depending on the volume of funds you want to look at so you might consider breaking up your research into one hour blocks so you do not get burnt out.
2. Select the Criteria of the Funds You Want to Analyze (Step 2)
My 401K plan has roughly 60 investment choices. Yours may have less, or it may have significantly more, it all depends. If you have more than 100 choices I would consider selecting criteria important to you so your analysis will not consume your life. Here are examples of criteria you may want to consider to cut down on the number of funds you are going to look at:
– Rate of return over last 5 years, and last 10 years. (Example: Look
at funds that have the highest 5 – 10 return on investment)
– Fee ratios
– Are you more of a risk taker, or more conservative?
As you go through this process make sure you are writing down the fund names and ticker symbols as you go. If you can extract the data to excel that may be your best bet to save the most time.
Example: Fund Name: Fidelity Contra Fund: Ticker Symbol FCNTX.
I would highly suggest using Microsoft Excel. If you do not have excel considering using a binder or notebook so you can keep your notes easily organized.
3. Learn About the Funds (Step 3)
It is always hard for me to believe that so many people do not know what they are investing in when it comes to their retirement account, but they know so much about sports, or their favorite reality T.V. show. Generally speaking….through your 401K provider’s website you should be able to read about the funds online. I personally look at the following things:
– Top Holdings (What stocks make up this mutual fund?)
– Are the individual stocks in this mutual fund companies I would want to own?
– What is this funds long term track record, how long has the fund be around? I usually like to invest in something that has been around close to ten years or more.
– What is the expense ratio?
– How Risky is the fund?
Take notes as you go so you do not have to redo the work later.
If a financial advisor regularly comes to your company to give market updates try to meet with him (or her) to learn more about your retirement plan funds. The advisor should know these funds very well, and should be able to help guide you in this area. This does not mean you should avoid doing the research. If you have done your research ahead of time you can get their opinion on what you are thinking of investing in.
4. Utilize Free Resources such as Yahoo Finance to Aid You in the Research Process (Step 4)
Yahoo Finance is one of the most simple investment websites you can use to do additional research on your provider’s funds. In my particular plan the thing it was missing was stock charts.
I wanted to visually see how the fund was performing, and so I went to Yahoo Finance to do my research. If you cannot see the chart performance on your mutual fund I would highly, highly recommend taking the time to do this step.
Generally speaking you want to see a slow and steady increase in fund price over a long period of time. I’m looking for stable long-term growth for last 10 years, or more.
5. Choose Investments or Reallocate Your Current Investments (Step 5)