Don’t Get Too Hung Up on the Value Investing vs. Growth Investing Debate

If you go by the conventional wisdom, investors come in two varieties.

On one hand, you have investors who ply their trade in the belief that the past performance of a stock has clues to its future performance.  Technical investing, as it is commonly known, depends much on behavioral aspects of investing, with stock charts being the main tools of the trade.

On the other hand, you have investors who believe that investing success lies in researching the business of the company on a fundamental level, and digging deep into a business? ability to generate profits over a long term.

Fundamental investing is further divided into growth investing and value investing.

Traditional media, and indeed a surfeit of financial publications, both online and offline, take pains to point out the differences between the value investing and growth investing approach.

But at the root, all investing is value investing.

To understand this, we need to go back to the basic principles of fundamental investing. Continue Reading

What is DRIP Investing and How Can it Grow Your Wealth?

drip investing

A great deal of focus has been placed on dividend investing lately, and for good reason: Dividend stocks (especially dividend aristocrats) often have solid fundamentals, and can usually weather stock market downturns.  On top of that, you receive regular income from dividend stocks.

Stocks that pay dividends are paying out portions of their profits to shareholders.  This money is paid out monthly, quarterly, semi-annually, or annually, and is paid out regardless of share price.  You can use dividend income for whatever you want; it’s yours and can’t be taken back.

One aspect of dividend investing is taking part in a DRIP – a Dividend Re-Invesment Plan.  Let’s explore what DRIP investing is and how it can grow your wealth.

What is a DRIP?

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Say Goodbye to Paper Bonds, Say Hello to Electronic Bonds

Treasury

You know those paper bonds that you got from Grandma and Grandpa as a kid?  Well kiss those goodbye!  Yup, as in non-existent.  It looks like the Treasury is being forced to make some serious cut backs and one of those cutbacks is physical United States savings bonds.  The Bureau of the Public Debt made this announcement on July 12, 2011.

The official date for a 100% phasing out of paper treasury bonds is slated for January 1, 2012 according to Treasury Direct.  Their goal is to save the US tax payer 70 million dollars over the course of five years with this new procedure.
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Buying Physical Gold: The Basics

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Economic turmoil has many concerned about the future — including the future of the dollar.

All of the talk about another round of quantitative easing has some worried that hyper-inflation is right around the corner.  Since gold is seen as a hedge against inflation, it isn’t surprising that some feel that physical gold is a protection against the problems that can come when the Fed is pumping trillions of dollars of created money into the economy.

Others are just worried that the economy is on verge of complete collapse, and that physical gold might be the best currency available if the entire economy falls to pieces.

But before you jump on the gold bandwagon, it’s important to understand some of the basics of investing in physical gold.
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How to Change Your Stock Allocation for Value Informed Indexing in Response to Valuation Shifts

I explained in an earlier article here (“A Better and Less Risky Way to Invest in Stocks”) why you need to take into consideration the price at which stocks are selling when setting your stock allocation.  Stocks offer lower returns and greater risk when purchased at high prices.  So those who go with higher stock allocations when stocks are cheap and with lower stock allocations when stocks are overpriced can expect to be able to retire five to ten years sooner than those who follow Buy-and-Hold strategies, according to the academic research of the past 30 years.

The purpose of this follow-up article is to offer guidance on how to know when to change your stock allocation and by how much.  I suggest a four-step process: Continue Reading

TD Ameritrade Online Stock Trading Review

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Stock trading has come a long way in just over a generation and TD Ameritrade has been a part of that history for more than forty years. It was only thirty years ago that stock trading was still done by calling a stock broker who called a specialist who took part in an auction process that would eventually result in you, the client, owning stock.  Although this still happens today, much of the stock trading now takes place using computer technology.

To see how computers have had a remarkable effect on the investment markets, in 1961 the New York Stock Exchange reached trading days of 4 million shares sold.  Today, because of new technology, over 4 billion shares are traded on some days.

Because of this new technology, much larger volumes of trades can now take place and more trades means more business for brokers.  That extra demand has given rise to a virtually endless supply of online brokers that made the stock market accessible to all consumers at a price they can afford.

In the following TD Ameritrade review, we’ll see what makes this broker tick and why they may be a good fit for your investing needs. Continue Reading

What You CAN’T Hold in an IRA

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We hear a lot about what we CAN hold within our individual IRA accounts, but never anything about what we CAN’T hold within them.  A Roth IRA or Traditional IRA is an appealing financial vehicle since you have a wide range of choices versus something like a 401(k) plan where you are limited to a number of mutual funds to pick from.  We all know that investments such as stocks, bonds, mutual funds, index funds, ETF’s, and annuities can be held within an IRA.  The list goes on and on but you should be aware of the types of investments that are barred from these accounts.  Watch out for the following investments, since they’re not allowed in a tax deferred retirement account!

What you can’t hold in an IRA:

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