Walk With Money » Stock Market

Just How Safe is Your Money Right Now?

Robert Wilkinson — Mon, 01 Mar 2010 05:20:24 +0000

Even after the government took the opportunity to step in and bail out one of our largest insurance companies, the stock market still managed to find a way to completely tank, because many investors were not persuaded that this intervention was going to protect their investments. This is when you have to find confidence, knowing where your money is and feeling confident that it is safe. Here are some examples of questions that are coming up now that banks are going bankrupt and the stock market is taking a serious downturn, and the answers that indicate whether or not your money is safe.

Question - If I have a $300k annuity with AIG, is my money safe right now?

Answer - Yes, your money is safe. Investments that are wrapped in life insurance, annuities, are held by subsidiaries that are regulated on a state level rather than actually held by AIG. In other words, they are not involved at all in the federal bailout of the AIG holding company. The NAIC or National Association of Annuity Commissioners website can give you more information about insurance companies regulated by the states and their current status.

Question - With the stock market in its current condition, is now a good time to invest in ETFs or index funds?

Answer - Index funds have come highly recommended in the past, especially when linked to a larger portfolio. Make sure that you do not assign too much money to a single fund, like financial services, however. Generally speaking, broader is better when it comes to investing in funds, and diversity is absolutely your friend.

Question - I have put money into an annuity that is backed by Lehman. Now that Lehman is dealing with bankruptcy, what is going to happen to my annuity?

Answer - Companies like Lehman are actually only middle men, or brokers. Your annuity is actually owned by somebody else all together. Fixed annuities are not generally guaranteed by the FDIC or SIPC, but their downside guarantee will protect what you originally put in, even if you lose the earnings on it.

Question - I have two different $250,000 IRA accounts. Because they are two different accounts, is the FDIC going to insure me for the full $500,000 amount?

Answer - Yes, each IRA is insured by the FDIC for up to $250,000 per account and per bank. If you have two separate accounts and each is as a different bank, then this $250,000 limit is going to apply to each one individually. Spreading your IRAs around different banks, primarily those that are FDIC insured, is the right way to invest in these IRA accounts.

Question - Are money market accounts insured?

Answer - If the account is held by a bank, then it will be insured by the FDIC. If it is an account that is held by the brokerage instead, then it will be insured by the SIPC. However, the money market's performance is not insured, so it might be better to move your money into a high yield savings account instead for better safety.

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Originally posted 2008-10-29 05:43:34. Republished by Blog Post Promoter

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Pay Off Debt or Invest? Think About Your Rate of Return

Robert Wilkinson — Fri, 05 Feb 2010 09:20:27 +0000

Andrew writes in:

My girlfriend and I bought a home last year and qualify for the First Time Homebuyer Credit. When you include my share of this, I will be getting back around $4500 in my tax refund. This is a lot of money to me and I’m trying to decide what to do with it. About half will go toward an engagement ring, but I’m torn between investing the other half or paying off my $2,000 in credit card debt. I currently have a very low APR on the credit card and can pay more than the minimum each month. As a licensed broker, I am very involved with the markets and believe I can make 10-15% a year. If I can get a higher percentage return on the investments than the APR I pay on the card, doesn’t it make more sense to invest?

In essence, Andrew is comparing two rates of return here.

First, there’s his credit card. An investment in paying off a credit card has a guaranteed rate of return – the interest rate on the card.

On the other hand, there’s the stock market. An investment in the stock market might have a higher hypothetical payoff, but it’s not guaranteed at all.

Regardless of whether the year was 2008 or 2010, paying off a 9.9% credit card will net you a 9.9% annual return on your money. Alternately, if you were able to get a 10% return on your stock investments in 2008, you were an absolute magician.

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Savings Accounts vs. CDs: Where to Keep Your Money in 2010?

Robert Wilkinson — Fri, 22 Jan 2010 07:20:07 +0000

If you’re a savvy investor, you most certainly have a fair bit of cash tucked away for general spending and emergencies. The stock market is a long term investment and if 2009 taught us anything, it was to not have money you need to spend in the stock market. So where do you put the money you don’t want in the stock market?

There’s 3 main options to place your cash and get it FDIC insured for up to $250,000.

You can put your money in a checking account where you have fast and easy access to funds.
You can put your money in a savings account where you can take money out and put money in while still earning interest on your funds, or
You can put your money in a certificate of deposit, which typically has higher yields than savings but your money is locked into the account for the agreed upon term.

So where should you put your money? Well all 3 of course.

For money that you plan on spending you should keep in a checking account. It’s the easiest account to get money into and out of so it makes sense to keep spending money in it. You shouldn’t keep more than you need to however because you don’t get a return on your investment in a checking account.

This is where savings accounts and certificates of deposit jump into the picture. Your strategy becomes more complicated now because of the fact that you must lock in a rate when opening a CD.

So what is the best cash strategy for 2010?

If you pay attention to CD rates you know that they’re at the lowest levels since the 80s right now. So it doesn’t make much sense to lock in to a long term CD right now because they’re bound to increase when the unemployment rate drops and the Fed decides to raise interest rates. So there’s 2 main strategies you should consider. The first is to convert any maturing CDs you have into savings accounts.

The yields on savings accounts are not that much lower than what banks are offering on CDs so there isn’t that much incentive to lock in your money. You could keep your extra cash in savings accounts which will leave you ready to jump on a CD when rates start climbing back up. Just make sure you stay under the ...

Lending Club Review – Peer to Peer Lending, a Solid Investment and Borrowing Alternative

Robert Wilkinson — Fri, 15 Jan 2010 19:20:18 +0000

10 Comments

After the stock market crashed at the end of 2008, many people, including younger generations became very skeptical of the stock market and what it had to offer as a legitimate place to park your money. Peer-to-peer lending is a concept that has been around for a very long time, but the method as to how it was carried out was not always efficient at all. It went a little something like this:

Friend #1: Hey best friend, can I borrow $1,500 to get a new car?
Friend #2: Do you promise to pay me back?
Friend #1: Of course, you know that I’m good for it!
Friend #2: Ok fine, I’ll get the money to you by next week.

The truth is that these situations are very common. We enter into lending/borrowing agreements with friends and families all the time, and the lender enters into a situation with unlimited risk and no reward for their risk.

This is where a website like Lending Club comes into play. Lending Club is a peer-to-peer lending network that brings investors and borrowers together to satisfy both parties needs by offering a secure, legal, and efficient service. Those people who wish to take more control of their investments can lend money to borrowers, and borrowers who are tired of having limited options for choosing a personal loan product can try Lending Club.

How Lending Club Works

For Investors – sign up as a Lending Club investor

Deposit funds (via ACH, wire, check or PayPal).
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Receive monthly payments of principal and interest. There are no maintenance fees.

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Get quick approval on a fixed-rate, 3-year loan from $1,000 to $25,000
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Early Market Optimism, Dissecting the January Effect

Robert Wilkinson — Wed, 13 Jan 2010 15:20:04 +0000

What is the January Effect?

With 2009 mercifully behind us, believers in a bounce-back 2010 are staking their hopes on the “January Effect.” The January Effect, for those new to the concept, refers to how securities prices tend to rise in January. The main characteristic of this phenomenon is a rush to buy securities before the end of the year for a lower price, speculating that the price will go up in January, and then selling for a profit. There is also a strain of financial opinion which holds that market performance in January (good or bad) sets the tone for the entire rest of the year. For these reasons and more, January inevitably spells heightened interest in the goings on of the stock market – especially this year, when some analysts were already cautiously optimistic about an economic recovery. Today, we’ll take a look at this investment phenomenon with an eye toward its origins, historical significance, recent results, and potential impact on 2010.

(katrina.tuliao)

When Did The January Effect Begin?

History shows that the January Effect predates its discovery by investors. As InvestmentU.com reports, “…from 1925 to 1993, small stocks beat large stocks in January in 69 of the 81 years.” Nor was it particularly close, as the return difference between big stocks (2%) and small stocks (7%) was roughly five percentage points during those same years. However, it was not until the early 1980’s when a University of Chicago grad student named Donald Keim observed this as an historical trend. Keim’s research found that not only did small stocks outperform the broader market during January, but also that the bulk of this disparity took place, “…before the middle of the month.” It was Keim who publicized the January Effect to investors at large, many of whom since came to regard January as something of a magical, once-yearly money machine.

As alluded to earlier, there are also those who see a strong or poor January as predicting the entire year. On January 5, the Chicago Tribune boldly proclaimed that the January Effect, “…often, but ...

Top 10 Financial Blogs To Follow In 2010 By Category

Robert Wilkinson — Mon, 04 Jan 2010 23:20:07 +0000

Today, I’d like to share with everyone blogs that I read and think you should check out. For each blog, I will provide details on what is great about it so that you can understand better which blogs might be best for you. I hope that the following blog recommendations will help you find additional helpful resources on the web. I also hope that you will add your own recommendations in the comments. Without further ado…

Photo by dalequetepego via Flickr

Best Economic & Financial Insight Blog

Zero hedge is truly an amazing blog with some serious insight into the economy and the financial sector. While much of the information might be over the head of your regular personal finance blog reader, I believe it is good for individuals to expand their knowledge and read about some more complex topics. Additionally, one of my favorite aspects of zero hedge is the informed readership; as such, you can learn as much from the many comments for each post as you can from the post itself in many cases.

Who should read zero hedge:

Individuals looking for in depth analysis on the markets, the economy and monetary policy
Individuals who want to be a part of a well informed community of readers

Best Investing & Trading Blog

My favorite blog on trading and investing is Fund My Mutual Fund. While trades and investments are done through a model mutual fund, the analysis is excellent. The author Mark presents in depth analysis on many individual companies as well as broad stock market insight. He details every trade and documents his performance, which is insanely good.

Who should read Fund My Mutual Fund

Individuals looking to learn about active investing & trading
Individuals looking for companies to invest in outside the large, well known companies
Individuals who want to learn some basic technical analysis

Best Frugality Blog

Early Retirement Extreme is the journey of an individual who “retired” very early in life by slashing his expenses down to the bare minimum and living on the money he saved while working. The author discusses his journey to financial independence which included saving the majority of his income over several years and exchanging a materialistic lifestyle for one of frugality and freedom. He provides great advice on how to save money in various areas of life and a great perspective on living a very frugal life.

Who should read Early Retirement Extreme:

Individuals looking to embrace a more frugal lifestyle
Individuals who want to retire early

Best Blog For Young People

20smoney is my blog. It’s purpose is to educate young people to take the financial situation to the next level. 20smoney.com is more than a personal finance blog; rather, it assumes you have the basics down and focuses on the “next level” topics with regards to increasing income, generating better returns on investments and other economic related topics.

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The Great Depression: A Diary – Book Review

Robert Wilkinson — Sat, 14 Nov 2009 03:20:11 +0000

Benjamin Roth was a lawyer in Youngstown, Ohio during the Great Depression and kept a regular diary of his impressions during the era. The diary was required reading for his son who also became a lawyer at the firm he started, in order to understand what their clients went through. After the recent crash, it has now been published as a book called The Great Depression: A Diary.

The book is primarily a straight transcription of the original handwritten journal, with a few editor’s notes to provide a little additional background when needed. Each entry is dated, and it is very interesting to see the first-person perspective unfold over time. Indeed, imagine a “blog” back then and you’d get this. Roth was not an economist or historian, and simply wrote down what he saw.

Historical Similarities
It is easy to find many similarities between the recession back then and now. The stock market and real estate market boomed, speculation was rampant, and then it all collapsed. Banks were stuck with mortgages that nobody could afford to keep up with, and foreclosures were everywhere. Unemployment was very high, although it was 25% back then as compared to 10% now.

[9/19/32] It looks as tho the Democrats will win because everybody wants a “change”.

Sound familiar?

Roth considered himself a Republican, and did worry a lot about “a shift towards socialism” and inflation always being around the corner. The government did end up spending a lot of money to stimulate the economy, although not exactly the same way as now. On the other hand, many things that seemed like radical changes back ...

Why My Net Worth Is Now Negative Again

Robert Wilkinson — Sun, 16 Aug 2009 16:20:04 +0000

That’s most most lirly shocking. “WHAT DID TRENT DO?” I can presently sense the regular batch of critics in the feedback cracking their knuckles a lot much more than this one.

Really, the alter is pretty easy. I produced the option to stop counting the worth of my home as an asset in my net truly worth calculations. I also did the precise exact same with our automobiles.

Let’s back once more up a bit. I’m a big believer that calculating your net truly worth - which is your complete home minus your complete debts - is the best way to maintain track of your typical financial progress. If you’re producing great progress, your net truly worth will go up every and time you calculate it (or at least have a potent typical constructive pattern, because you can’t deal with the brief phrase fluctuations of the stock marketplace).

It’s pretty easy to calculate it. You can both use a personal finance gadget like Quicken or, a lot better but, >>>>create your personal net really worth calculator in a spreadsheet<<<<. I calculate mine every and month utilizing a spreadsheet (even though Icff08#17;m nsering gingukea extreme try when the new Mac edition is released later on on this yr).

As I talked about in the prior, >>>>I was using the assessed value of my house and as an asset for calculating my net really worth<<<<, and that pushed me properly into constructive territory typical. By this type of as the worth of my home as an asset, it was a biexss t t construcveone,000 truly worth.

But every and time I calculated my net truly worth, I asked myself about the home and the automobiles. Could thy truly be ...

Starting Small – $1000 or Less Investments

Robert Wilkinson — Sun, 16 Aug 2009 15:20:07 +0000

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Everyone has some type of curiosity in investing, but most individuals steer clear of it merely because thee particular which sts are , or whthey inespite not havi of money to work . 1 of the best issues that you can do when just >>>>beginning out in the world of investing<<<< is to begin little with investments of $1000 or a great deal a lot less. We are not talking about pouring $1000 into the stock marketplace and hoping for the best, but ir tinadvantage osocinating and lucrative investment automobiles that allow you to begin little, safely, while nonetheless constructing up a potent passive investment car.

If you have $1000 to make investments and are not yet particular how to make investments that money for the best results, then the internet is a fantastic way for you to uncover a great deal much more about the investments that you can make and precisely exactly where they can get you. If you want to produce a passive portfolio of potent investments that are safe and provide a respectable return, getting only $1000 to make investments can get you there, but only if you are smart about your investment technique and get the work essential to truly retailer about and weigh your options prior to any concrete options are produced.

1 of the best issues that you require to request your self is this: In what techniques is it possible to get the most revenue out of a $1000 investment? In some situations, while you may be in a location to make investments $1000 into a particular car, it nonetheless may not be the most lucrative solution. On the other hand, sometimes only an $1000 investment is required and it is a great deal much more than enough to turn a intense revenue by way of curiosity. If you have $1000 to make investments into some element but you truly truly really feel completely clueless as to what you ought to be investing ...

The History of the Stock Market

Robert Wilkinson — Fri, 31 Jul 2009 23:20:03 +0000

In recessions and booms alike, stock markets are generally at the forefront. Newspapers and monetary publications are awash in headlines about the Dow Jones, S&P 500, NASDAQ, growing stock indexes, falling stock indexes, purchasing, advertising, and so forth. And it is tempting to believe of a stock market as an impersonal mechanism in the sky, imposing its mandates on us at will. But this is not generally correct. In studying the track report of stock markets, 1 discovers that, in the words of economist Thomas Sowell: “markets are as personal as the individuals in them.” With that stated, stock markets and their effectiveness reflect the dominant issues, fears, and hopes of the investing public. We will appear at this track report, from the extremely preliminary stock markets ’til these days.

The Early Days of Exchange

Stock markets did not start as the super-groundbreaking, simultaneous, globally purchasing and advertising exchanges of these days. It was not till 1531 when the preliminary institution roughly approximating a stock market emerged, in Antwerp, Belgium. Nonetheless, as>>>> Investopedia<<<< notes, this was, “…the inito marketpla, m>nsem> stock.”r than ing and moting shares of companies (which did not but exist), brokers and lenders congregated there to “offer in company, federal federal federal government and even person monetary monetary financial debt problems.”pltered i600’s, when Britain, Fd the Netherlands all chartered voyages to the East Indies. Recognizing that couple of of explorers could ...