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You Invest Your Time in Facebook—Will You Also Invest Your Money?
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Even if you are not an investor or likewise even if you are not on Facebook, it would have been hard to ignore all of the recent press about Facebook becoming a tradable stock. This action captured the attention of even those with no prior interest in investing.
Have you purchased any Facebook stocks? Do you plan to? Some people chose to invest in Facebook more for the novelty of it than anything else. Websites were willing to share single stocks in the social media giant for those who wanted a small sliver of the pie. You can even give a share of Facebook as a gift.
Although purchasing a single share in Facebook may be a little costlier than buying shares in larger numbers, some casual investors will enjoy showing their love for the social media site in this way. If you are new to investing, this might be a fun way to test the investment waters. A guaranteed way to build interest in the stock market is to invest in companies/brands that you actively use and believe in.
If you would like to read more about Facebook’s IPO (initial public offering), check out this article: LA Times—How to buy a single share of Facebook stock .
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- Wednesday…Late Post on Investing….
- Still Wednesday here….
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May 29, 2012
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How Your Economic State Affects Your Investing Risk Tolerance
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We have already covered how both age and personality affects your investing risk tolerance. But there is one more obvious, but important factor that helps to determine how open you are to investment risk—your own financial state. Basically, this involves how well that you are doing financially, how stable your situation is, and how much liquid assets you have available to apply to investing.
Some people do not start investing until later in life due to the instability that can occur in early adulthood while you are just getting on your feet. Once you have a steady income, it is wise to begin investing in some capacity.
Naturally, if you only have a hard-to-part-with $500 to invest, you may understandably be concerned to devote those limited funds to aggressive investment options. However, if you have tens or hundreds of thousands of dollars saved up that is simply stowed away, you may be more willing to take on some more unpredictable investments. Additionally, the more funds that you have to invest means that you can diversify your portfolio more, striking an ideal balance between higher and lower risk options.
Before you begin investing, it is wise to ensure that your financial house is in order. Then you can plan to save funds on a regular basis which can in turn be invested in the hopes of a positive return. If your employment situation is unstable or you have accumulated unsecured debt (credit cards, medical bills, etc.) that needs to be paid off, these more urgent issues should be addressed prior to starting your investment plan.
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- The Biggest Threat to your Investment Money
- How Age Factors into Your Investing Risk Tolerance
- Determining Your Investing Risk Tolerance
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May 25, 2012
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How Personality Plays into Your Investing Risk Tolerance
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We discussed how age can factor into your investing risk tolerance, but regardless of whether you are young or old, there is something to be said about personality’s influence on this trait. Let’s be honest—some people are born daredevils and some people are perennially cautious. Although we could spend hours discussing what determines our personality and what is the “ideal” personality type, we know that different people crave different levels of risk, both in life in general and investing in particular.
As I mentioned previously about my own quiz results, my tendency is towards low risk investments. Much of this is due to my nature as a generally cautious person that likes minimal controlled risk. Adrenaline junkies, however, thrive on risk and the unknown, and therefore are more likely to invest in high risk ventures that could offer large returns if successful—or alternatively, serious losses if “luck” is not on their side.
Sometimes when we risk nothing, we gain nothing. A family member of mine contemplated investing in Microsoft when it was a young company and the stock was cheap. Little did they know of the technology empire that would soon unfold, and if they had decided to invest, they would be a millionaire right now. Sometimes inaction is your worst enemy.
Being either too squeamish or too reckless in regards to investing is not desirable. It is ideal to strike that delicate balance, and to temper any natural tendencies with a constant attempt to make informed investing decisions. Information can help conservative types to take chances that they can feel comfortable with, and it can help aggressive investors to focus on investing options that offer some reasonable risk with the possibility of good returns.
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- Determining Your Investing Risk Tolerance
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May 24, 2012
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How Age Factors into Your Investing Risk Tolerance
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There are a few factors that can contribute to your overall risk tolerance level. A major one is age, and in turn, your proximity to retirement.
If you are younger, you can afford to be a little more adventurous in your investing, because time is on your side. In fact, it is encouraged that you diversify and invest in some higher risk/higher return stocks.
However, as you edge closer to retirement, it is recommended that you gradually adjust your risk level. The reason for this is simple—if you are closer to retirement, you do not have as much time to recover from a potential downturn.
Because the markets are volatile, those who are younger in age can spend their lifetime weathering the storms as they accumulate wealth over time. Those closer to retirement will want to taper their investments in more volatile stocks and to instead focus on nurturing the earnings that they have gathered over time.
Risk tolerance may also go down with age. Think about the difference between a new driver in his late teens and an experienced driver who is a senior citizen—who tends to drive more carefully? Normally the senior citizen will be more conservative in their driving habits, often even overly cautious.
This modification in driving according to age and declining ability is comparable to what can happen with older investors—they become a little less willing to “test the limits.” Similarly, an older driver who does get into an auto accident has less of a chance to survive and recover, as does an older investor who sustains a significant investment loss.
However, there are other variables that can also determine risk tolerance even later in life, including the person’s general attitude towards risk and the amount of available assets. Due to our modern extended life span, investing does not end near or at retirement—it just gets modified accordingly.
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- The Biggest Threat to your Investment Money
- How Your Economic State Affects Your Investing Risk Tolerance
May 23, 2012
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Just Call Me a Coward
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In the last post, we talked about determining your risk tolerance, and I provided a link that offered an interesting recording and quiz on the subject. Although I already kind of knew what my investing risk tolerance was, I took the quiz myself to find out. Here is what I got:
My risk tolerance quiz results tells me essentially that I am a coward. 
The quiz confirmed what I already knew—that I am not very adventurous in regards to investing. I have never been a gambler, and to me, investing sometimes feels an awful lot like gambling.
When I signed up for a 401K (retirement savings account) at a previous employer, we went through an informational session that actually gave me a lot to remember. Rather than just essentially sign up for a glorified savings account, I did add in some low-risk mutual funds that I handpicked. However, when the economy tanked, and I lost at least half of the small amount that I had, I got out.
If you have a low tolerance for risk, there’s good news and bad news. The good news is that I will probably never be at risk of becoming a compulsive gambler.
The bad news, as I learned when I signed up for my 401K, is that just having savings over a lifetime will produce an unsustainable retirement. Using an exponential example, the presenter explained how you would have to have millions of dollars saved up in order to maintain a decent existence when you reach retirement. This sounds dramatic, but the numbers speak for themselves, and the problem primarily is due to inflation over time. You need a high rate of investment return to meet the demands of tomorrow’s higher costs as a result of inflation over time.
Due to my age in particular, I can stand a little risk if it means an improved long-term result. Clearly ‘diversification’ is the word that I need to remember.
What type of investor are you? Feel free to comment below and share your outlook.
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May 22, 2012
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Determining Your Investing Risk Tolerance
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If you are new to investing, one of the first steps that you should take is to determine your risk tolerance. Simply put, are you a gambler or a play-it-safe? If you have been to Las Vegas before and have had no problem risking your concrete money for potential reward, then you may also prove to be an aggressive investor.
I recently came across a helpful webcast sound recording and quiz about this very subject. The recording is about 4.5 minutes long, and covers the subject of risk tolerance. Upon taking the quiz, it should help to determine your tolerance for risk and in turn how it affects your investment style.
Financial Straight Talk Tolerance Quiz
Some factors that can determine your risk tolerance (as discussed in the webcast) are age/proximity to retirement, personality, and economic state. We can discuss these factors in more detail at a later point. But you can be sure that they definitely can play into the answers that you provide for the quiz, whether you realize it or not.
Why don’t you take some time today to listen to the recording and take the quiz for yourself? I will share my results next time.
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- It’s Time for Your Financial Fitness Exam
April 28, 2012
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The Basics of Money…. Next?
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We have covered the basics about money, debt reduction, saving, investing, and budgeting here for the last several weeks. I will be moving to the health and fitness blog next week and you will have a an author here that will take you to the next level of money and finances.
Take time to review the past posts and the assignments that you have been doing to get your financial house in order. Here is a quick review of the things we have covered.
1. Spend less than you make.
2. Begin debt reduction and eliminate credit card debt by paying down either the least balance to the most, the highest interest rate to the least interest rate cards, or you choose. But do it.
3. Begin saving an emergency fund.
4. Investigate ways to save on insurance premiums, grocery bills, and utility bills and apply the savings to the debt reduction.
5. Make sure your coverage on all the policies you own give you the coverage you need. Update information to get the best rates.
6. Find a financial professional to consult with if needed to give you the guidance you need to move forward with your financial goals.
7. Learn how to set financial goals and stick with them even if you only have a small amount of cash to work with.
8. Learn about investing and growing your money after you have established your emergency fund and paid down your debt.
9. Practice the 80-10-10 theory. Live on 80 percent of your income, save 10 percent and give 10 percent away.
10. And maybe the most important thing we have learned these past few weeks is to be grateful and giving.
I have enjoyed learning and pointing you in a direction to financial success, now let the journey begin to wealth and financial security. Come by and check out the health and fitness blog from time to time. There you will find the same thread of belief….everything in moderation. And that includes Chocolate.
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- Friday – Debt Reduction Here We Come
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April 21, 2012
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Friday’s View on Investing.
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Every good financial plan has a place for debt reduction, less spending, giving and investing. Individual ideas on investing run the spectrum from investing far into the future with college savings plans for newborns all the way to not saving past today because there is no promise of tomorrow. Where do you fall on the investing spectrum?
Most people see the value in investing some part of their income for the future. A small portion of Americans save up into the millions of dollars for the future and their money keeps growing. A small portion of Americans are on the other end where they can’t begin to think of investing because they can ‘t even pay their bills today. The rest of us lie somewhere in the middle. Maybe you have a retirement program at work where your employer contributes but you can’t maximize on that because you cannot afford to contribute anything else.
Maybe you have a savings account started but something always seems to get in the way of growing that money. The car needs repair, the furnace needs service, your little one fell at the playground and needs a cast on a broken arm. Life gets in the way. That is why it is so important to have a financial plan.
A financial plan can be altered and it can be changed. But if you have a written plan for where you want to be financially in 5 years, 10 years, and by retirement age you can make adjustments during life to make sure you have the money you need at any given time.
Tips: Work on becoming debt free first. At least get rid of credit card debt.
Save something every payday, if not in a retirement account than at least in a savings account that is protected. Having the money in a different place than your wallet or your check book will make you think before you spend it.
When you work overtime, make sure that some of the extra money goes to paying down debt or is invested in a savings plan. If you work two jobs, take a portion of income from the lowest paying job and save or invest after your debt is paid.
Your assignment this week: Evaluate how much debt you need to pay off and how long it will take you. Set a goal for when you can begin to save and invest.
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March 23, 2012
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Still Wednesday here….
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Today I have not only been overwhelmed with work, we are babysitting my son’s dogs, and I am trying to research investing ideas all in the course of 24 hours. Anyone else need more time in their day and money in their bank account? Is investing the answer to the money question because I don’t think any of us will find more time in our day.
I want you to check out www.etrade.com Remember that I don’t endorse any product, only provide information on all of them but I find that E trade offers an easy to use site with many options.
When you first get to the site or any financial site for that matter, look to see if it is FDIC protected. That is one plus. Check to see if it is user friendly meaning can you figure out where to go with a click or is it confusing? Does it offer many options for investing such as rolling over your IRA or automatic withdrawal from a current checking account to your new retirement account? The site must be easy to find and easy to manage or it won’t be useful to you.
Look through the site to see if it offers the products you need and educational information on those products. Is there an address and contact phone number so that you can talk to a real person if you have questions?
Don’t invest the first time you go to the site. Visit the site a few times to make sure that it stays current and is easily accessible. Check with the Better ‘Business Bureau for their record of the investment company you are looking into.
Now go to www.etrade.com and see if you can locate all of the suggested items from the above paragraph. Compare it to other investment sites so you get the feel for how they work before you invest. Then take a few days to think it over before making that first investment step.
Your assignment this week is to investigate 1 or 2 sites and compare the ease with which they function. Let us know what you find.
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- Investing…And Tax Time.
- Where Do I Invest?
- Sites to Get an Education about Investing
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March 15, 2012
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Wednesday is for Investing.
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Investing is such an overwhelming topic for most women. I know until recently, I haven’t given it much thought. I did some casual investing over the last 10 years and have been able to use that money for a vacation but I have not seriously invested in my retirement because I am married.
What does that have to do with anything is my feeling now. I love my husband but I clearly should have been working on my own retirement savings and now I am playing catch up. My goal for retirement is slightly different then his and here is why. Men look at retirement differently than women. It only makes sense that we should look at money differently as well.
What are your retirement goals, or have you given it much thought? I am not convinced that I need the million and a half that the experts say I need but I know that I need enough for my living expenses, medical expenses, and some entertainment. And I also know that I cannot rely totally on my husband and his retirement. First it isn’t enough and second it isn’t fair to him.
So, I am looking into adding to my retirement from my employer. But what if you don’t have a retirement at your job or if you loose your job. It might behoove you to investigate opening your own retirement account through an independent financial company. I am investigating several, Fidelity is a common and reliable one and there are so many more. Your homework for this week is to think about and talk about your retirement goals. Find out what is available through your employer. Next week we will begin looking at individual companies and their products. Until then……
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