Making Investment Plans

Steps In Investing

Step 1: Meeting Investment Prerequisites-Before one even thinks of investing, they should make sure they have adequately provided for the necessities, like housing, food, transportation, clothing, etc. Also, there should be an additional amount of money that could be used as emergency cash, and protection against other various risks. This protection could be through life, health, property, and liability insurance.

Step 2: Establishing Investing Goals-Once the prerequisites are taken care of, an investor will then want to establish their investing goals, which is laying out financial objectives they wish to achieve. The goals chosen will determine what types of investments they will make. The most common investing goals are accumulating retirement funds, increasing current income, saving for major expenditures, and sheltering income from taxes.

Step 3: Adopting an Investment Plan-Once someone has their general goals, they will need to adopt an investment plan. This will include specifying a target date for achieving a goal and the amount of tolerable risk involved.

Step 4: Evaluating Investment Vehicles-Next up is evaluating investment vehicles by looking at each vehicle’s potential return and risk.

Step 5: Selecting Suitable Investments-With all the information gathered so far, a person will use it to select the investment vehicles that will compliment their goals the most. One should take into consideration expected return, risk, and tax considerations. Careful selection is important.

Step 6: Constructing a Diversified Portfolio-In order to achieve their investment goals, investors will need to pull together an investment portfolio of suitable investments. Investors should diversify their portfolio by including a number of different investment vehicles to earn higher returns and/or to be exposed to less risk as opposed to just limiting themselves to one or two investments. Investing in mutual funds can help achieve diversification and also have the benefit of it being professionally managed.

Step 7: Managing the Portfolio-Once a portfolio is put together, an investor should measure the behavior in relation to expected performance, and make adjustments as needed.

Considering Personal Taxes

Knowing current tax laws can help an investor reduce the taxes and increase the amount of after-tax dollars available for investing.

Basic Sources of Taxation-There are two main types of taxes to know about which are those levied by the federal government, and those levied by state and local governments. The federal income tax is the main form of personal taxation, while state and local taxes can vary from area to area. In addition to the income taxes, the state and local governments also receive revenue from sales and property taxes. These income taxes have the greatest impact on security investments, which the returns are in the form of dividends, interest, and increases in value. Property taxes can also have a significant impact on real estate and other forms of property investment.

Types of Income-Income for individuals can be classified into three basic categories:

1. Active Income-This can be made up of wages, salaries, bonuses, tips, pension, and alimony. It is made up of income earned on the job as well as through other forms of noninvestment income.

2. Portfolio Income-This income is from earnings produced from various investments which could be made up of savings accounts, stocks, bonds, mutual funds, options, and futures, and consists of interest, dividends, and capital gains.

3. Passive Income-Income gained through real estate, limited partnerships, and other forms of tax-advantaged investments.

Investments and Taxes-Taking into tax laws is an important part of the investment process. Tax planning involves examining both current and projected earnings, and developing strategies to help defer and minimize the level of taxes. Planning for these taxes will help assist investment activities over time so that an investor can achieve maximum after-tax returns.

Tax-Advantaged Retirement Vehicles-Over the years the federal government has established several types of retirement vehicles. Employer-sponsored plans can include 401(k) plans, savings plans, and profit-sharing plans. These plans are usually voluntary and allow employees to increase the amount of money for retirement and tax advantage of tax-deferral benefits. Individuals can also setup tax-sheltered retirement programs like Keogh plans and SEP-IRAs for the self-employed. IRAs and Roth IRAs can be setup by almost anyone, subject to certain qualifications. These plans generally allow people to defer taxes on both the contributions and earnings until retirement.

Investing Over the Life Cycle

As investors age, their investment strategies tend to change as well. They tend to be more aggressive when they’re young and transition to more conservative investments as they grow older. Younger investors usually go for growth-oriented investments that focus on capital gains as opposed to current income. This is because they don’t usually have much for investable funds, so capital gains are often viewed as the quickest way to build up capital. These investments are usually through high-risk common stocks, options, and futures.

As the investors become more middle-aged, other things like educational expenses and retirement become more important. As this happens, the typical investor moves towards more higher quality securities which are low-risk growth and income stocks, high-grade bonds, preferred stocks, and mutual funds.

As the investors get closer to retirement, their focus is usually on the preservation of capital and income. Their investment portfolio is now usually very conservative at this point. It would typically consist of low-risk income stocks and mutual funds, high-yield government bonds, quality corporate bonds, CDs, and other short-term investment vehicles.

Investing In Different Economic Conditions

Even though the government has different tools or strategies for moderating economic swings, investors will still endure numerous changes in the economy while investing. An investment program must allow the investor to recognize and react to changing conditions in the economy. It is important to know where to put your money and when to make your moves.

Knowing where to put your money is the easiest part to deal with. This involves matching the risk and return objectives of an investor’s plan with the investment vehicles. For example, if there is an experienced investor that can tolerate more risk, then speculative stocks may be right for them. A novice investor that wants a decent return on their capital may decide to invest in a growth-oriented mutual fund. Although stocks and growth funds may do well in an expanding economy, they can turn out to be failures at other times. Because of this, it is important to know when to make your moves.

Knowing when to invest is difficult because it deals with market timing. Even most professional money managers, economists, and investors can’t consistently predict the market and economic movements. It’s easier to understand the current state of the market or economy. That is, knowing whether the market/economy is expanding or declining is easier to understand than trying to predict upcoming changes.

The market or economy can have three different conditions: (1) recovery or expansion, (2) decline or recession, (3) a change in the general direction of its movement. It’s fairly easy to observe when the economy is in a state of expansion or recession. The difficult part is knowing whether the existing state of the economy will continue on the course it’s on, or change direction. How an investor responds to these market conditions will depend on the types of investment vehicles they hold. No matter what the state of the economy is, an investor’s willingness to enter the capital market depends on a basic trust in fair and accurate financial reporting.

Stocks and the Business Cycle

Conditions in the economy are highly influential on common stocks and other equity-related securities. Economic conditions is also referred to as the business cycle. The business cycle mirrors the current status of a variety of economic variables which includes GDP, industrial production, personal disposable income, the unemployment rate, and more.

An expanding business cycle will be reflected in a strong economy. When business is thriving and profits are up, stock prices react by increasing in value and returns. Speculative and growth-oriented stocks tend to do especially well in strong markets. On the flip side, when economic activity is diminishing, the values and returns on common stocks tend to follow the same pattern.

Bonds and Interest Rates

Bonds and other forms of fixed-income securities are highly sensitive to movements in interest rates. The single most important variable that determines bond price behavior and returns is the interest rate. Bond prices and interest rates move in opposite directions. Lower interest rates are favorable for bonds for an investor. However, high interest rates increase the attractiveness of new bonds because they must offer high returns to attract investors.

An Introduction To Birth Control

The dictionary defines birth control as “a regimen of one or more actions, devices, or medications followed in order to deliberately prevent or reduce the likelihood of a woman becoming pregnant.” Birth control has become imperative in today’s world, due to the global rise in population, need for family planning and also to safeguard oneself from unwanted pregnancy.

There are various methods of birth control that one can adopt, including the withdrawal method, or coitus interruptus; barrier methods like condom, diaphragm, cervical cap or contraceptive sponge; chemical methods like contraceptive pills, contraceptive patch, or the progesterone-only pill (POP); intrauterine methods; fertility awareness methods and more. Other than the preventive methods, one can also adopt abortion methods like surgical abortions, chemical abortions and herbal abortifacients to end unwanted pregnancies. Some permanent birth control solutions are surgical sterilization, which includes tubal ligation for women and vasectomy for men.

Although there are many alternate methods of birth control available in the market, the most commonly used methods are contraceptive pills and condoms. Contraceptive pills or oral contraceptives consist of a pill with doses of synthetic hormones like progestin or estrogen, taken orally by a woman to prevent pregnancy. The contraceptive pills are considered to be a reliable mode of preventing pregnancy, but can sometimes also result in certain side effects like obesity, headaches or depression in some women. Condoms were traditionally manufactured for men but now are available for female users. Condoms serve a dual function, as they not only help in avoiding pregnancy but also prevent sexually transmitted diseases like HIV/AIDS.

In Canada and the US, contraceptive patches are also fast gaining popularity. A woman applies contraceptive patches on her skin for a week, and they release synthetic hormones to prevent pregnancy. They act in the same manner as contraceptive pills. Contraceptive patches in Canada and US are sold under the brand name Ortho Evra, and are sold only by prescription.

With the advances in science and technology, we might witness new innovations in birth control methods; however, in order to choose the right mode of birth control one must consult one’s doctor.

Scooters – What Are the Features of a Scooter?

Scooters are quickly becoming a popular choice for cost conscious consumers looking for an economical way to get around town. Scooters have many benefits from low costs to above average fuel efficiency. However, when looking to purchase a scooter there are many features that you’ll either get standard or can upgrade. Here are some of those features:

Front Hydraulic ABS Disc Brakes Scooters can come with hydraulic anti-lock braking system (ABS) disc brakes on the front wheel. Hydraulic ABS disc brakes is a safety system on motor vehicles which prevents the wheels from locking while braking. Providing the best possible brakes to have because they provide the best stopping power.

100 MPG Scooters can get up to 100 miles to the gallon. While this may occur with the newer and higher end models, this kind of gas mileage makes this scooter very fuel efficient and economical. This vehicle is the perfect alternative to cars and motorcycles to save on gas and keep extra money in your pocket!

Electric Start / Kick Start Most scooters come equipped with an electric start. The electric start starting system makes starting simple for anyone. They can also come equipped with a kick start. The kick start can also be used at any time.

4-Stroke Engine Gas motor scooters come equipped with up to a 250cc 4-stroke engine. These engines typically have the ability to go up to 55 miles per hour (MPH). With an engine this size, there is enough power for two people to ride.

Fully Automatic Transmission Scooters also have installed a fully automatic transmission. Operated by the simple to use ‘twist & go’ throttle acceleration in other words with a fully automatic transmission there is no clutch or gear shifting at all.

Storage Most scooters come equipped with a large storage compartment located underneath the seat. This extra storage can be used to put all your items that you would normally put in a car glove compartment. Other storage may include a detachable rear storage trunk to put bigger items such as a briefcase, laptop, or luggage.

Scooters come equipped with many features including front hydraulic abs disc brakes, fuel efficiency of up to 100 mpg, electric start / kick start, a 4-stroke engine, fully automatic transmission, and storage space.

The Best Investment Funds for 2014 and Beyond?

Here we go one step beyond the basics and suggest that the best investment funds for 2014 and beyond could be funds that invest money in alternative investments. You can debate whether diversified stock funds or bond funds will be the best funds to invest money in, but your best investment could be funds that invest money in alternative investments like gold, oil, and maybe even real estate stocks.

Informed investors know that you should invest money in more than one area in order to have a diversified portfolio. Most investors think that the best investment strategy is to own the best funds, and that your only choices are diversified stock funds and bond funds. Few have a handle on the arena called “alternative investments”. Where do you think the smart investors will invest money when neither stocks (in general) nor bonds look attractive and safe investments are paying record low interest rates?

The top dogs look around for opportunities that are “outside of the box” in search of their best investment alternatives. Welcome to the world of alternative investments. As an average investor trying to find the best funds you might want to broaden your horizons as well. If our economy continues to be lackluster and interest rates rise in 2014 and beyond both diversified stock funds and bond funds could take a hit. So, where can you invest money for higher returns if things turn sour in 2014 and/or 2015?

Gold is not cheap anymore but it is well below its highs as I write this. Gold funds invest money in stocks in the gold and silver mining industry, and they took a major hit in 2013. Historically, gold has been one of the best investment alternatives in times of high uncertainty and crisis. Gold funds might be one of the best funds if things get ugly in 2014 and beyond. They may or may not be your best investment, but adding them to your portfolio at this time to add more diversification could be a good idea just in case.

Another alternative investment that’s a candidate for best investment ideas: oil and other natural resources. Your best funds to invest money in here and keep things simple are called natural resources funds. They too have proven to be good performers when the stock market in general is having a rough time. You might think that gasoline prices at the pump (and oil prices) are high now, but think back a few years. Prices can always go higher, even in a bad economy.

And then there’s real estate as an alternative investment. This industry has recovered from the financial crisis lows, in no small part due to low interest rates. What will happen if rates climb as the economy sputters? Investors usually invest money in real estate with borrowed money. The truth of the matter is that interest rates are still low by historical standards. Real estate funds can be one of your best investment alternatives as investors rush in to buy before rates climb further. The best funds here invest money in real estate investment trusts and other companies in the real estate sector, like home builders. Caution: when rates rise significantly the real estate industry can sputter.

Why do I suggest that the best funds in 2014 and beyond could be those that invest money in specialized sectors like gold, natural resources and perhaps real estate? Historically, in bad times for the economy and stock market in general these industries can attract money as investors search for the best investment alternatives to invest money in. Both stocks (in general) and bonds are selling near historical highs. Bonds have been on a thirty year roll, and stocks have climbed 150% in less than five years. Neither looks cheap by any standard.

In your search for the best investment alternatives to make your money grow, sometimes you need to look outside of the box. You need to invest money so that some of it is safe and available for future opportunities. And in times like 2014 and beyond it’s a good idea to further diversify into alternative investments. The simplest and best investment vehicle for the average investor is mutual funds. The best funds to add to your portfolio are those that can swim against the tide when it goes out.