What You Must Have BEFORE Starting Your Portfoilio and Investing!

You should only begin your investing and portfolio if you meet these criteria.  And there are some very big reasons as to why.  We are going to talk about this today and make sure you are ready to start your investing and portfolio.  Here are some MUST haves you need to make sure of before you start investing.

1. MUST HAVE, Health Insurance.  If it be through your employer, independent agent, or Obamacare.  You must have health insurance period.  One trip to the hospital and your entire portfolio could be wiped out.
2. MUST HAVE, Disability Insurance.  What if you get hurt or injured?  How are you going to pay your bills and have an income.  I suggest Long Term Disability in most cases.
3. MUST HAVE, No Credit Card Debt.  If you make money with your investments only to turn around and pay off credit cards, what have you really gained?
4. MUST HAVE, At Least 2 Months Salary in the Bank.  Disability Insurance does not kick in and start paying right away.  It also does not cover 100% of your salary.  You must have cash on hand to cover this intermediate time before your Disability Insurance kicks in.
5. If you are married, this must be accomplished by BOTH spouses, PERIOD!

These are the simple must haves before you start regularly investing.  But there is one exception. 
You MUST start investing in your employers 401K or 403B plan right away IF they have matching funds and invest only the amount you have to in order to get the maximum matching by your employer until you have the rest of your must have list completed.  Once you have your must have list completed and you have some extra cash on hand, lets say $2000.00 or a little more.  Then you are ready to find a good Financial Advisor to get you started building your basic mutual fund holdings in your portfolio.

When you get to the stage of investing in Individual Stocks once you have a good firm foundation in your portfolio of mutual funds, then I highly suggest that you start building as part of your portfolio some individual stocks.  You individual stock holding should be NO MORE than 1/3 of your portfolio.  As a younger investor you need to focus on stocks that have room to grow.  As an older investor you should be more conservative, looking for some individual stocks that have room for some growth, but excellent dividends, but still make you money but perhaps at a little slower pace.  The older investor should also be thinking about adding Income Mutual Funds to their holds and relax on growth, especially if you have retired.  I am retired and consider myself in this position of investing in more Income Funds that are going to assist me in my retirement.  There are some very good ones out there.  But right now, the best bang for your bucks is going to be FKINX.  Very low cost and about 6% interest on your shares.  Nice help with those monthly bills and having a little extra cash that Social Security may not provide for you.

So be careful and do the right thing before starting your portfolio.  Are you a younger investor or are you an older investor.  Your choices in your investment strategy will be different.  Your financial advisor will be able to assist you with that.

One closing note.  MOST financial advisor will NOT recommend individual stocks due to corporate restrictions and possible lawsuits if they make a recommendation and you lose all your money.  That is a big part of what this BLOG is about, because your financial advisor is most likely not going to give you buying recommendations on any specific individual stock. I will tell you what my opinion (not a recommendation) is if you ask...but the ultimate choice is yours to make and your responsibility for success or failure.  All you have to do is email me or place your questions in the comments section below. Just for shits and giggles, did you know Rite-Aid Pharmacy (RAD) is up over 80% since August 2013?  Guess who owns shares?  THIS GUY!

Gus S.

Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

When to Sell and When to Trade/Transfer.

Everyone has heard the term "Buy Low and Sell High" well that may or may not be true.  Just because you see a small slump does not mean to panic.  With Individual Stocks there is a good time to sell most definitely.  But remember that Mutual Funds are more of a long term investment, where that is usually not the case with Individual stocks that need to be more closely monitored to produce you an income potential. 

Have I had duds for Mutual Funds?  Absolutely but when the market takes a high swing like it is now and they are still not making money this is something definitely to be mindful of and look at this mutual fund.  You must question yourself, are there better things in the market and within your family of funds that is going to make you money instead of losing it.  About a year ago I had a Principle Emerging Market fund that I trusted my Financial Advisor on.  It was a dog, a dead dog. I should have done my homework prior to letting him put me in this fund and I would of found it had a much greater history of losing money than making any money.  I switched Financial Advisor due to various personal reasons.  My previous Financial Advisor was good, he just made a mistake here and put my money in a bad location on this particular Emerging Market Fund.  When it got back up to break even, I transferred the funds to another Principle holding.  These kinds of transfers with in the same family of funds are free with no penalties or charges to you. After switching Financial Advisors going from LPL to J.P. Morgan Chase I made the call on my own to transfer these funds into a Principle S&P 500 fund I liked.   But it is very important when transferring funds it is always in your best interest to stay within the same family of mutual funds to avoid charges and fees.  Since I chose to do this in July of 2013, this transfer to the Principle S&P 500 fund I personally chose has warranted a 8.5% gain, instead of bouncing around an losing money in the Emerging Market Fund I had prior.  I don't know about you, but I would much rather see an 8.5% increase in the past 4 months, than having a fund that is bouncing around up and down for years making me no money.  Money is the name of the game.  If you are not making money in a market like this something is definitely wrong in your portfolio or with your mutual fund and stock choices.  So never be fearful of finding a better choice.  You just have to be smart about it.

Do remember that the market changes.  What is good for you today may not be good for you a year or two from now.  Especially with Emerging Market Mutual Funds and Individual Stocks.  Mutual Funds are mainly funds that you can get it and forget it.  You just sit back and watch it grow.  Will the have bad years...absolutely.  Will they have good years...absolutely.  But you must follow the history and do your research.  If the good does not out weigh the bad significantly then there is an issue that you may need to be taking a second look at.  Having a mutual fund make 20% this year, 15% next year losing 5% the follow is not bad.  Yes it had a bad year, but overall you made 30% in the last 3 years or an average of 10% per year.  It is for sure a hell of a lot better than a passbook savings or CD at the bank or even an Annuity.  So who came out better, them or you?  I will take a 10% or more average anytime.

My personal goal is to make at least 10% a year in my portfolio.  Will I achieve that 100% of the time.  No, and most likely you will not either.  But over time everyone should make 10% or more in their mutual fund holds and individual stock holdings.  If over a haul of 3 years or more you are not averaging at least 10% or more you need to be sitting down with your Financial Advisor and having a very serious talk on how you together can form a plan to get you there.  Since the recession of 2008 the opportunities of making big advances in your portfolio are there.  If you have failed to make these huge advances in your mutual funds there is definitely a big problem that needs to be worked out with your financial advisor.

Lets talk about Individual Stocks for just a moment.  Many people including the so called experts have a wide variety of opinions.  I watch CNBC daily.  I also watch Jim Cramer everyday and have it set to record everyday.  Somehow there are always fast differing of opinions, even by the so called experts.  I tend to like Jim Cramer very much.  Do I think that he gives good advise?  Yes.  But I don't agree with him on everything.  Sometimes after doing my own research I agree with him 100% on a stock.  Sometimes I think he is have a dream or fantasy.  So no, I do not take all of Jim Cramer's advise at face value and nor should you.  You must do your own research and form your own educated opinions based on this time and effort you have put into doing good hard research of your own and finding what you feel confident and comfortable investing in.  Individual stock are more of a guessing.  Lets look at Pfizer for example.  A good company.  Has had some slow grow periods but it is up on the market for 2013.  All of a sudden they get a huge lawsuit over one of their most popular medication.  What is going to happen....WHAM the stock takes a big hit and down it goes.  This is why you must have a different strategy with Individual Stock than you do with Mutual Funds.  The buy low and sell high adage works lots better with Individual Stock.  Sit back and what for your 20% to 30 % increase on the stock.  Sell!!!! Taking your money running and waiting for your next opportunity to reinvest in another promising stock.  When to revisit and rebuy in this example.  When Pfizer does take a big hit due to a lawsuit or deregulation of one of its medications.  Again taking advantage of buying low and selling high after its recovery.  Never be afraid to take your profits and run with an individual stock.  Okay you make $1000 today but if you would have waited 3 days you could of made $1500.  So what?  It is better than waiting those 3 days and seeing your profits dwindle to $200.  Then you take that $1000 and you add it your buying power and buying more stock when the opportunity is good and you have done your research to avoid a dog.

Gus S.


Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

Something for the Indiviual Stock Investors

I have thus far focused on building a good base in our portfolio with Mutual Funds.  But those that like to dabble with Individual Stocks I have not forgotten about you.  So I am going to address a few things for them today.  Those new to the market should NOT be investing in Individual Stocks until you have a good base in your portfolio of mutual funds and you have a clear understanding of how the stock market works.  However, you should listen and look at some of the stocks I am going to talk about as this will help you prepare for the future when you are ready.

Buying Individual Stocks is totally different than buying mutual funds.  But if comes with a greater risk.  If you are not a person that can afford time in your schedule to monitor your Individual Stock holding everyday then my suggestions is that Individual Stocks are probably not you.  You should have a good knowledge base of the stock market and how things work.  Be able to do research before you buy and sell and know when to take your money and run.  We are going to take a look at some of these things together.

Doing your homework and research prior to buying or selling and individual stock is a MUST!  Don't go and buy a stock with out researching first.  You are just setting yourself up for disaster.  Pull up the stock online.  Look at the profiles and key statistics and the analyst recommendations.  Read articles about the stock you are interested in on the Internet.  Also I recommend watching CNBC, especially Jim Cramer.  Do I always agree with him.  Heck no!  But he recent talked about a stock in my personal portfolio that I latched on to long before he wised up to it, plus I got the 2:1 split.  Yes, I like Jim Cramer, but sometimes I do not agree with him on investment strategies and some times he simply misses the boat like with DSW. But on the other hand, do I agree with all the analyst's recommendations.  Absolutely not.

So lets look at DSW for a moment.  DSW split on November 4, 2013.  Does this mean you totally missed the ship?  Well not exactly as there is plenty of room for this stock to grow.  The stock split significantly below its 52 week low prior to the split.  Since the split it is currently up about 8%.  Brean Capital is calling for sell.  I disagree with them.  The overall stock analyst rate the stock at 2.4 (1=Buy and 5=Sell).  So it is right in the middle in more of a hold pattern.  I do not think this is a bad time to buy the stock, but if sure would have been nice if you could have gotten in on the split in November.

Lets take a look at Facebook (FB).  This is not a stock that I have in my personal portfolio.  It has an analyst rating of 1.8 making it a buy.  Why do I not have FB in my portfolio.  Well you can only fill your account with so many stocks.  But I agree.  This is a good buy right now.  This is not a stagnant company.  They are going places and coming up with new and better things everyday.  Mark Zuckerberg is no fool and he did not bring the company public to lose money.  He took nothing and made it into something.  And that something continues to grow.  I think you are safe here if you hold on for a long stretch.

Here are some other individual stocks that I am going to recommend you take a look at and do your own research.  I simply cannot talk about them all.  Take a look at VEEV, BBY, GME, VFC (better hurry as it splits 4:1 in December), TJX, GILD, TIF to name a few.

I would like to make one more suggestion to you.  Do NOT use your Financial Advisor and the company they work for to do your individual stock investing.  Have some extra cash and call it your "play money" that if you lost it all you would not go bankrupt or hungry or compromise your household status day to day.  You individual stock "play money" should be a small part of your portfolio.  Not the major stuff that you are dependent upon for your future.  Start with a reasonable amount that you can afford.  Do not drain your bank account.  And build and build on that money you set aside and buy and sell your way to more money.  Don't depend on your bank account to keep funneling more and more money into your individual stock account.  I suggest opening up an account with a discount broker.  I personally use Scottrade.  They charge $7.00 per trade to buy or sell and most important to me is that I don't get mass emails in my inbox from them and they don't keep my phone ringing off the hook.  But they are easy for me to access if I every need assistance, have a question or do not understand something on their website or perhaps an error message or warning I may have gotten.  I simply pickup the phone and call the local branch office and they are always great at answering my questions.  Your local branch is listed once you login to your account for easy access.

Thanks everyone.  Hope you enjoyed todays information and I wish you all the best of success.

Gus S.


Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

Bond Mutual Funds as part of Your Portfolio Base

Bond Funds are a good thing to have in the right proportion.  So why have bond funds in your portfolio?  Well, here is the basic answer.  As stock prices rise bonds tend to go down.  But when stocks fall due to recession, market corrects etc., then bond prices tend to go up.  So you may lose money in one place but make it back up in another with the use of bonds in your portfolio.

Currently I do not have any bond funds in my portfolio due to my personal situation.  However that was not always true.  They add stability to your portfolio and help prevent you from taking huge financial losses during a market pullback or stock market correction. (we will talk about pullbacks and correction in another posting in the future).  Again, there are literally thousands of good bond funds out there.  I suggest you stay in your family of funds you already own if possible.  (remember your discounts)  Talk with your personal financial advisor and review several bond funds that have a good track record before making your final choice that you feel is right for you.  Always remember in the stock market, what goes up will come time and what comes down will go back up.  Bond Mutual Funds help you in limiting your losses in a down market.  A good bond fund in your portfolio to limit your losses in your base funds is highly suggested.  Why take the gamble?

Gus S.

Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

What is Gus doing in the Stock Market right now?

Today the Dow closed at 16,009.  This is another record high for the Dow this year.  What to we need to look forward to?  17,000 up to 18,000 on the Dow before the run is over.  They continue to hold back on raising interest rates and this is good for the stock market.  This run is only expected to go higher through the spring of 2014 and now they are starting to talk even longer as with new Chairwoman Janet L. Yellen as the head of the Federal Reserve, who states she will continue on with the current plan with no increase in interest rates in sight at this time.

If you invest in Individual Stocks you need to be closely watching the markets and take your money and run when you have an increase in that individual stock of 20 to 30 percent or more in profits.  Take your money and run and reinvest your profits in other viable prospects.  A lot of individual stocks are announcing stock splits.  I have some of these upcoming splits in my portfolio but I never invest in a slip that is less than 2:1 and if not splitting below it's 52 week low.

In the past two days I sold two individual stocks in my portfolio at a profit and purchased a new individual stock that I felt would fit good in my portfolio.

Now is the time to be closely watching your individual stocks if you are at that point in your portfolio.  I do NOT recommend individual stocks for the new and less savvy investor that does not have a good base in their portfolio and no ready to spread their wings yet into this sector.

Gus S.


Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

Foreign and Emerging Market Mutual Funds to Broaden your base.

Up front I will tell you I am not the best expert on Foreign and Emerging Market Mutual Funds.  Simply because they do not fit into my personal portfolio due to my age and retirement.  Younger investors that are gainfully employed and investing in the Stock Market and the point of building your base.  These types of Mutual Funds need to be there.  For retired or near retirement investors I must discourage these funds due to volatility. 

What is the difference between Foreign and Emerging Market Mutual Funds?

Well the simple answer to this question is Foreign Market Mutual Funds invest in various foreign market stocks from around the globe that make up the mutual fund.  While Emerging Market Mutual Funds are made up from companies from a specific country.  Like all Mexico stocks, all Japan stocks, all Middle East stocks etc..

There are many good Foreign and Emerging Market Mutual Funds out there.  Literally thousand.  But as that is not a position I am in I cannot advise on the good ones.  That will need to consult with your personal financial advisor.  I will say I use to have a Principle fund or these types and I found them to be total dogs.  I waited until I got back to even after many years of waiting and sold them and reinvested the money into a profitable Principle fund I liked and that is now making me money and has my money working for me.  You can make some big bucks in Foreign and Emerging Markets but you must have lots of patience and wait for the big payday.  Retired or near retirement cannot afford to wait for that kind of big payday due to shorter lifespan ahead of them.  Thus why I do not recommend them for those in this situation.  Retired or near retired individuals need to have their focus totally elsewhere than a younger investor looking to grow their portfolio.  I will talk about the older investor later as we progress in my Blog.

Gus S.


Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

Broaden Your Base With Small Cap Mutual Funds and Healthcare Funds

In my last posting we talked about broadening our Mutual Fund Base and Large Cap Funds.  Today I am going to address further broadening that mutual fund base with Small Cap and Healthcare mutual funds.

There are literally thousands of Small Cap and Healthcare funds out there to invest in.  Again I suggest staying within your family of funds whenever it is to your best advantage.  Small Cap Mutual Funds will mainly consist of smaller companies of which most you may not have heard of before.  They are not your S&P 500 type stocks like Wal-Mart, Google, Apple, Exxon, etc.

We are going to address the Small Cap Mutual Funds first.  They are a very important part that should be in your portfolio of funds.  There are many excellent choices to make within various families of funds such as Franklin, Fidelity, J.P. Morgan, T. Rowe Price, etc.   Try to stay in your family of funds for this one.  I know Franklin has many choices of Small Cap Funds.  So it is not like your are stuck with only one choice.  Personally I sold off my Franklin Small Cap Fund.  But it was due to changes I needed to do to my age, retirement, and personal need.  As you age and time goes on you will need to make changes in your portfolio too and have these discussions with your own personal financial advisor.  The Small Cap Funds will further broaden your base, which is what we want.  Sliding you into another sector of the market that you very much need to be into to keep your growing portfolio balanced and broaden the base of your portfolio.  As I stated, these will not be the big top 500 companies, but smaller and less known companies.  But this does NOT mean they are a bad choice to invest in, as they are definitely not.  One fund I had in my personal portfolio for many years was the Franklin Small Cap Value A fund. (FRVLX).  It has a good history, a good Morning Star Rating and is up 28.65% year to date.  A very viable fund to invest in if you are in the Franklin family of funds or wish to get into the Franklin family of funds.  Make sure to talk with your personal financial advisor and see if they have some good choices of some Small Cap funds within your family of funds you can invest in.  I am sure you will not be displeased as it is a necessary part of building and broadening your base with mutual funds.

Next lets talk briefly about Healthcare Mutual Funds.  Well this is a no brainer.  What will always be here?  Healthcare.  As our population continues to age and we repopulate with more and more children, and more and more people get sick and need all types of medical care, our healthcare system will continue to grow.  A good Healthcare Mutual Fund is never a wrong choice to put in your portfolio.  What is my personal favorite?  It has to be T. Rowe Price Health Sciences (PRHSX).  Even if you have to go outside your family of funds to get it, this is the one for you.  It is Zacks #1 rated healthcare fund and has a Morning Star rating of 5, which is the best.  PRHSX is 41.27% year to date and has a great track record.  If you are not investing to broaden your base with this healthcare mutual fund something is definitely wrong.  This is by far the best choice of any other fund, so there is no need to talk about any others.

Of course I hope this information continues to be useful in build and broadening the base of your portfolio as it continues to grow.  We will continue with broadening this base in my next posting.

Gus



Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

I have a good Base. What next?

Once you have a good base started of with you and your financial advisor are comfortably with.  Then it is time to start spreading your wings just a little and building upon your portfolio.  So how do you do this is your question?  The answer is pretty simple really and I think your financial advisor will agree.  You need to start by broadening your base with mutual funds that focus in other areas of the market.  By this I mean focusing on looking at other mutual funds that focus in different sectors such as Large Cap, Small Cap, Foreign, Healthcare, Bonds, and Emerging Markets.  All have a place in your portfolio and you should not limit yourself to just one of these choices.  When some are up and making you money, some may be down or staying steading and not making you much money.  But remember, the market is always changing and you need to be there to collect on these profits as the market shifts.  Now you ask what are the differences in these markets.  There is a lot of good information on the internet that will explain what each one is.  I will give you a brief summary, but you need to do further research yourself and talk it over with your financial advisor for a more in-depth understanding.  Different types of mutual funds will be focusing on different sectors of the market and will contain many stocks from within that sector.

Large Cap:  These are going to be your big companies.  Things like Coke (KO), Apple (AAPL), Exxon (XOM).  Right now the market is doing EXCELLENT with large cap markets and is currently a good place to be invested.  But remember things change.

Small Cap:  This is similar to your Large Cap Mutual Funds, but they invest in smaller companies within the stock market and tend to stay away from your giant S&P 500 stocks.

Foreign:  This is exactly like it wounds.  They are mutual funds that invest in overseas markets and companies such as Japan, China, England, etc.

Healthcare:  One thing you can always count on is Healthcare.  This is a market that is here to stay.  With the aging population and continued growth of our country you know that people will always need healthcare...Obamacare or not.  These mutual funds would include any healthcare sector company like pharmacies, hospitals, drug companies, medial property investors, health insurance companies, etc.

Bonds:  The bond sector is live government bonds.  The kinds of bonds like you may invest in through your bank.  I do not suggest bond investing through the bank, but I do suggest bond mutual funds.  The rule of thumb...when the stock market is up bonds go down.  When the stock market goes down, bonds increase in value.  Having both in your portfolio helps to balance your holdings and helps protect them to some extent.

Emerging Markets:  These funds are very similar to Foreign Market Mutual Funds.  But here is the biggest difference.  They invest in specific country's markets or a group of certain countries.  Not a lot of companies from all parts of the world like a Foreign Mutual Fund.  By this I mean the Emerging Market fund you purchase may only invest in Mexico companies, or Japan, or Middle East or African companies, or they make two countries like Mexico and Japan etc.  Emerging markets tends to be a little volatile.  Most are down in the market right now.  But when is a good time to buy?  Yes, when prices are low.  Wait for your big gain and collect your cash.  Personally I got out of the Emerging Markets Funds due to my retirement and their volatility and wanted to take a more conservative approach.  But there is justification in this market and they can make you lots of money if you invest at the right time and are willing to wait to collect a big payoff.  Most financial advisors will recommend them.  But you need to be at the right place in your portfolio to add one.

My recommendation right now as the market looks today and what is forecast for the future at least through spring of 2014.  Start with a good Large Cap Mutual Fund.  Get some money in that sector that you are comfortable with.  Try to stay with a fund within your already established family.  But there are many good funds that also may not be in your current family of stocks.  Lets say your portfolio that you have begun with is in the Franklin Fund of families.  If you invest enough in the Franklin family of funds you will get a discount on your purchases.  But it is not always bad to go outside your family of funds either.  I actually have a portfolio of 2 main families of funds.  Franklin Funds and Principle Financial Funds.  I then have a few other mutual funds that are outside my main two families.  But do not make every purchase and investment you make always from a different family of funds.  You would be doing yourself a disservice.  What are some good Large Cap Funds I could suggest?  AMANX which is up 25.33% year to date.  I have personally owned this fund since 2006.  Went through the recession of 2008 when the market crashed and I am still up 81% on this fund in my portfolio.  Good history and has been a good profit for me.  Only issue, VERY small family of funds.  Lets take a look at FGRAX from the Franklin Fund Family (recommended family).  This fund has some great holding that I like and is up 30.98% year to date.  I personally just added this fund to my portfolio after dumping a couple of other individual stocks.  Another to look at is CMNWX.  This is a Principle Financial Fund and doing quite well as it is up 21.89% for the year.  Lets look at FLCSC from the Fidelity family (recommended family).  Has been doing great this year and is up 30.42% year to date.  Took a bath in the recession of 2008 as all Large Cap Funds will when the market is down.  But it has made a great recovery.

These are just a few of thousands of Large Cap Mutual Funds for you to consider in making your choices as you start to broaden the base of your portfolio.  I will continue down the path we have started in broadening the base of your portfolio next time.  I will make sure to talk about Small Cap Mutual Funds next time, which is very important to help broaden the base and make your portfolio more stable.  Any question, just leave a comment and ask or email me directly.

Gus

Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

Should I Invest in Emloyer 401K/403B if I Invest with a Finacial Advisor?

Should you invest in an employer 401K/403B plan at work if you use a financial Advisor outside of work?  I see this question all the time from people I have worked with over the years, friends and family members.

The simple answer is ABSOLUTELY!  And here is why.  Many employers have gotten away from those good old pensions people use to get from money put into your pension fund by your employer.  They are now moving to 401K/403B plans.  Many think this is a bad thing.  But really it is to your benefit due to more flexibility in how you choose to invest your money.  Pensions were usually setup in low paying and safe Annuities.  Thus you the employee have no say so as to how the funds in your pension were invested and often getting extremely low interest rates.  With many employers will match part of your base salary percentage rate and make a contribution to your 401K/403B up to a certain percentage.  This is usually between 1 to 5 percent of your base salary in matching funds.  Meaning, if your employer pays 3% as a match for your base salary in the form of an annual contribution to your 401K/403B this is FREE money contributed to your retirement.  But here is the catch.  If your employer says we will contribute up to 3% in matching funds of your base salary and you only contribute 1% to your 401K/403B with that employer, your employer will only match your 1%.  So ALWAYS invest in an employers 401K or 403B plan of the match your employer will give you, plus any extra that you can afford in your budget.

The next reason to always invest in an employer 401K/403B is due to the tax benefit.  All money you put into your 401K/403B through your employer is deducted before taxes are taken out of your pay check.  Thus adjusting the taxable income of your paycheck in your favor, thus resulting to less taxes you have to pay to the IRS come the end of the year.

Next reason is because you can take the 401K/403B information to your independent Financial Advisor, review the choices and options you have and have him help you with choosing good investments/mutual funds to invest your money in and in what ratio's with your employer 401K/403B plan.  Any good Financial Advisor will do this for you and at no cost, because they know down the road much of this money in the future is going to be entrusted into their hands.  Never ask those 401k/403B employee representatives for advise as 99% of the time they are not truly Financial Advisors.  They are merely salesmen there to sign you up for the employee plan.  Any advise these guys extend to you is purely a guess and usually hogwash. 

Even if your employer does not making a matching contribution you should still make contributions yourself to your 401K/403B!  Again, due to the tax benefits.  It is much better to take the tax benefits of your contributions than getting your paycheck, cashing it and writing a check to your independent Financial Advisor because then the money has been taxed and therefore you lose the tax benefits of putting in your employer 401K/403B plan.  But, you say I want my money with my independent Financial Advisor instead of my employers plan.  Good for you, wise choice.  But you have to be savvy in doing this.  Allow your employer 401K/403B plan with your employer to grow for a while and get your matching funds if any for that year.  Once it has grown to around $20,000 dollars or more, go to your independent Financial Advisor and tell him to roll like half to three quarters of that money over into a Roth or 401K plan with him.  You avoid any taxes, the transfer is usually free with most Financial Advisors and the company they represent (they want your money) and you now have benefit of a "real" Financial Advisors who will help you to control and monitor your investment choices as you work together to invest wisely for your future.  This will offer you lots more flexibility as to how you invest your money.  For example, your employer will contract with a family of funds.  Lets say they use Fidelity as their contracted family of funds to choice from.  Problem is you can only chose from the Fidelity family of funds and only from the funds they give you a choice of, not their entire family of mutual funds.  Once your money gets rolled over to your independent Financial Advisor into a Roth or 401K plan, you have more choices.  You get the choices of more Fidelity funds, or you can place your money into another family of funds.  I do not like having more than a couple family of funds in my portfolio.  As explained in other blog postings there are many great families of funds out there like Fidelity, Franklin, T. Rowe Price, Principle and others that your Financial Advisor can assist you with.  Once your money is rolled over to your Financial Advisor your can all invest in individual stocks if you want to give that a try at some point in the future.  For the new and average investor I do not recommend individual stocks.  They are time consuming and require a lot of monitoring and pampering.

So think about things I have shared here and please, ALWAYS use your employers 401K/403B plan if they contribute matching funds or not.  Take advantage of the tax benefits and then roll your money over to your Financial Advisor as your money grows in your 401K/403B plan.  Hope this information is found of benefit to you today and I think it is a very important subject that needed to be addressed.

Gus S.

Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

Job Report came out today. Stock Market Up.

Today the floor of the Stock Market closed at another all time high of 15,761.78 due to a "Strong Job Report".  So what does this really mean?

I rely little on things like the monthly Jobs Report and Unemployment Reports.  Why?  Simply they are unreliable numbers and do not show the true meaning or value of the numbers to the average person to make them truly meaningful.  Today it was announced that 204,000 new jobs were created.  What they fail to tell you is what kind of jobs?  With research you can get this in formation if you dig and search.  What kind of jobs were these?  Were they mainly minimum wage or slightly above minimum wage jobs?  Where they part time or full time?  Where they $100,000 a year jobs?  How many people left one job for another job because it pays $0.05 more per hour.  The Unemployment rate is still at 7.3%.  So how many of the 204,000 new jobs are actually good paying jobs putting skilled workers back to work?  Very few.  In poking around looking at government websites and Internet articles, the overwhelming majority of these jobs were in minimum wage jobs in the retail, food, and hospitality industries.  Why?  The answer is easy.  They are beefing up for the holiday season to collect the consumers holiday spending cash when we all go out shopping in retail stores and eating more fast food on the go.  This report in my opinion was NOT a "Strong Job Report".  It was a normal annual occurrence of which few of these jobs will be retained after the holiday season if over. 

http://finance.yahoo.com/blogs/breakout/united-states-underemployment-why-wrong-jobs-propped-today-162511421.html

Also, Unemployment figures are never a good indications of our nations true unemployment rate.  Why?  Because less and less people each month naturally fall off the unemployment radar.  It is not that they got employment, in most cases it is due to they are no longer eligible for unemployment benefits.  And these people fly under the radar and are not counted in the actual unemployment figures.  Another group that is NOT counted in unemployment figures are hundreds of thousand of people living in states like North Carolina that cut their state matching in unemployment and these unemployed are getting less than half the normal unemployment benefit because the Federal Government pulled their unemployment funding in this North Carolina (and other states) as they were not meeting the states minimum requirement to get Federal contributions/funding to those people on and eligible for unemployment benefits.  Thus as the Federal Government is not paying out any money for unemployment benefits to these states, the people getting unemployment in those states are NOT counted in our unemployment rate figure of 7.3%.  If all these people were included from these states that are currently excluded from federal compensation that 7.3% figure would be much higher.  Also, many other states have cut the weeks of eligibility for unemployment benefits in half or more.  Again, these people get thrown off unemployment benefits sooner, but that does not mean they are employed.  Again flawing the "True" unemployment rate.

My advise is to not worry yourself about these kinds of things.  Their are few long term effects on the stock market, good or bad.  And if you have a well put together portfolio with a good base of mutual funds you have nothing to worry about. 

Gus

Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

Twitter's (TWTR) Opening Day!

After my posting yesterday regarding Twitter (TWTR) you may be asking, so what is the rest of the story and how did the opening go?

Well, the ticker was scheduled to start ticking on the NYSE at 9:45 a.m. EST for Twitter and there was a one hour delay.  I sat here in my chair watching and the first trade did not go off until 10:45 a.m. EST.  As soon as I saw the opening price of $46.00 a share, up $20.00 per share from what they announced their opening would be I was disappointed with the fleecing they were sticking it to the investors.  In the first hour of trading we saw over 68,000,000 shares fly off the shelf.  That's over 1,000,000 shares per minute.  After the first hour of trading orders started slowing down. 

The day range was $44.00 per share to $50.09 per share and at the closing bell ended at $40.90 and is up in after hours trading slightly.

So did I buy any Twitter's (TWTR) stock today?  NO! And here is why.  The opening price was over inflated and a fleece on investors.  Twitter opened above its own one year projection of $40.00 per share, which should make any investor stop and think.  The price of it's opening announcement of $26.00 was inflated $20.00 per share to open at $46.00 dollars per share.  If they had opened it at $26.00 per share as announced with a one year projection of $40.00 then it would have been a buy.  But definitely a pass when it opened at $46.00

You are interested in Twitter and want to know when to buy?  Well, my personal opinion is I think we are going to see a lot of investors taking a bath from their purchase today.  I think they are going to have to hold it for quite a while to get a decent return.  If you bought shares at the high of $50.09 today, you will have to wait until the stock increases to $60.11 just to see a 20% profit.  I do not see Twitter hitting this mark for quite a while.  I expect to flatten out when all the bunk is over with at around $19.00 to $27.00 per share.  When that happens I would consider buying.  But still be prepared for a wait to get your 20% or more upward trend making it viable to sell and collect your profits.  Personally I NEVER sell an Individual Stock until it is up over 20% and it is worth my while to take my money and run.

The so called "experts" however declare the opening day of Twitter (TWTR) a success.  I could personally not disagree more.

http://finance.yahoo.com/blogs/breakout/4-reasons-twitter-ipo-rocked-where-facebook-rolled-192651553.html

Why I disagree I have already explained.  But I think the wise investor will be waiting for Twitter to flatten out and continue to monitor it until it becomes a stock they are willing to take a chance on in their portfolio.

Gus



Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

Twitter IPO Going Public Tomorrow

Twitter (TWTR) will be going public tomorrow (11/07/2013) on the NYSE.  It is predicted to open for trading between $20 to $30 per share.

Is Twitter a good buy to add to my portfolio?  Yes, No and Maybe.  For the new or average investor the answer is strictly "No" as you are probably not a savvy enough investor to handle what is sure to be a volatile stock, as most social media IPO's tend to be,  example Facebook (FB).  "Maybe" good for the savvy investor that has money to play with and can ride the long haul if necessary if Twitter tanks.  "Yes" if the stock takes a big drop from its opening price point.  This gives you a lot of growth potential for the stock to rise up later when it starts to catch up to the companies true evaluation.

I have Twitter on my radar screen.  I will be closely watching it tomorrow and for the next week or so.  If I see something I like I will buy.  If not, I will pass.  There are many more IPO's coming up all the time and I will wait for a better opportunity.  If you are a new, casual or average investor I do not recommend individual stocks at all in your portfolio so do not even think about buying.  You will be doing yourself a favor.


Gus



Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.

Mutual Funds To Start Your Base

In the first posting of my blog we talked about building a good mutual fund base in your portfolio.  This should be done first when starting to invest.  If you have not done this, then you should be getting that done soon and fixing your mistake when starting your portfolio.

For many people they simply do not know where to begin and that is what we are going to talk about in this posting.  Getting a good start and building on it will give you that good base so that later you can start venturing out and spreading your wings later.  Remember, this will not happen over night and it is also dependent on the amount of money you have to initially invest and what you feel comfortable with in making your commitment to monthly contributions to your investment portfolio.

First I would give a general statement that about 1/3 of your portfolio should be in low to moderate risk mutual funds and keep that ratio throughout your investing lifespan.  This giving you 2/3 of your portfolio to branch out with into other areas.  Some may be low risk, some may carry a very high risk and everything in between as well as investing in to specific sectors of the market including some individual stocks later on as you become more savvy.

Secondly, check with your Financial Advisor as to the best kind of account for you.  The types of accounts you may have choice of include are; Brokerage Accounts, Traditional IRA, Roth IRA, and the more rare Inherited IRA.  Each comes with their own sets of rules, pros and cons, limitations and tax benefits.  Your financial advisor should review these with you and share this information about each type of account so that you can decide together where is the best place for you to start.  One hint I will give you up front is, if you plan on early retirement prior to age 59 and a half a Roth IRA may not be a good place for you.  But again talk to your financial advisor about this.  The only way to get an Inherited IRA is if you are the sole beneficiary of someone else's IRA.  This might be from a parent or other family normally.  It is NEVER a good idea to cash out an IRA you inherit from a family member as you will get socked with a 30% tax penalty.

So now you ask, what are some good mutual funds of which to start my base with in my portfolio.  Well there are literally tons of them.  Remember to first pick a family of funds and stay in that companies mutual fund family.  Again, some good family of mutual funds would include Franklin, T. Rowe Price, Fidelity, Principle, Vanguard, JP Morgan, Oppenheimer. My personal portfolio mainly consist of Principle and Franklin family mutual funds.  So lets look at some of their funds together.

FGTIX is a Franklin family mutual fund.  I feel this is a good place to start with many newer investors for several reasons.  It is a mutual fund made up of many other mutual funds combined and about 12% bond hold.  This making this a very balanced choice and at a reasonable price per share.

AMECX is in the America Funds family and has been in my personal portfolio for many years.  Good steady annual returns.  This fund has a nice blend of both stocks and bonds which you want to see as part of your good base in your portfolio.  The price per share is good on this mutual fund making it attractive and has a good Morning Star rating.

ABALX is another America Fund family member.  I prefer AMECX that I have in my personal portfolio a little better.  I think it is a little more aggressive and carries a little better Morning Star rating.  But this would not be a bad selection either in forming the base of your portfolio. 

Make sure and check these mutual funds out.  Look at the performance and holdings in these funds.  That will give you a good idea of the kinds of things you are seeking in building your base.  After forming a good base in your portfolio with a balance that you are comfortable with then you will be ready to branch out more and start spreading you wings.  I will be talking about spreading our wings in the near future. 

If you have any questions for me, just let me know and I will be happy to give you my opinion.  However as always, review things with your personal financial advisor before making any final decision.

Gus

General Stock Investment Information

For those of you just wanting to get started in investing in the stock market or even for those of you that feel you are pretty well informed.  It is my desire to make this blog applicable to all ranges of investors with various knowledge bases.  Here I am going to be giving out stock tips and information.  To let you know a little about my knowledge and experience, I have been interested ever since High School in investing.  After college I decided it was time to head out on that adventure of preparing for the future.  Really it is never to late to start investing.  But the younger you get started the better.  I studied investing and business classes in addition to my nursing courses.  Now retired after 30 years of working in nursing and business management I have time to share the knowledge with others.  I still study the stock market on a daily basis, reading articles, looking at information and continue to buy, trade, sell, and hold in accordance with the holds of my own personal portfolio.  Over the years I have only lost money on one stock investment in the past 30 years and that was due to my own stupidity when I new better that take the gamble.  I invested in a penny stock and bought tons of shares for $500.  Well that was a $500 lesion well taken to heart and I will not be doing that again.  Can you make profits on a penny?  Yes, but the odds are against you.  I will not be taking that gamble ever again.

I am going to outline next some simple advise for both new and old investors.  Many make very simple and basic mistakes when investing which is hurtful to them financially and to their portfolio.

1. Make a Commitment:  If you put money in to invest, do not take money out.  If you are investing money that you really cannot afford and foresee in the future a need for that money, do not invest it.  Sometimes it takes a while to see a good return on your investment.  Frequently buying and selling like a day trader is highly discouraged.  This is just to risky.
2. A good portfolio will consist of a good base of Mutual Fund investments, not a lot of Individual companies.  Why?  With an individual company you have all your eggs in one basket.  If the company does bad, then you do bad in your portfolio.  Mutual Funds provide a lot less risk and they have their assets spread out over many stocks, bonds, other mutual funds etc. so they can absorb a hit on an individual stock/company.  For a good balanced portfolio a good range of Mutual Funds is the best way to get started.
3. But a good range of mutual funds when investing you should have some that focus on Large Cap Growth, Small Cap Growth, Short Term Bonds, Long Term Bonds, Emerging Market Funds etc.  Your Financial Advisor can help you find a good mix of differed Mutual Funds of which to add to your portfolio.
4. Try to keep your Mutual Funds investments within the same Family of Funds.  But this I mean there are many good companies out there, some of which have thousands of separate funds to invest with.  One of my personal favorites is Franklin Templeton.  T. Rowe Price is another good family, and so is Fidelity.  Principle is a good family as well, but I find myself being more careful when making portfolio choices with them.  Why try to stay in the same family company?  Because after you hit certain levels in dollar amounts you invest they give you discounts.  Discounts are more money in your pocket instead of theirs.  Also when staying in a family of funds, if you find a mutual fund ends up being a dog and not meeting your expectation you can freely move that money to another fund within that family at NO cost to you.  Where if you moved to a different family of funds it would cost you some bucks.
5. Should you use an Online Investment company:  The answer is simply NO for the new or average investor.  Do not get me wrong there are several good Online Investment companies.  I personally Scottrade.  But I do not consider myself the new or average investor.  E-Trade is another good company online as well.  These online companies can provide perks and cheap trading cost.  But the problem is they offer no financial advise to investors.  So unless you are an old pro and savvy investor, an online service is not the place for you to be.  I use Scottrade for what I call my "play money".  Yes, I know what I am doing on my own, but I have a totally different strategy investing using Scottrade than I have with my primary accounts which I use Chase Bank Investments which is a part of J.P. Morgan/Chase.
6. Make sure you get a good financial advisor with a good company.  There are many good investment companies and remember that stockbrokers are a dime a dozen.  Find a good company and financial advisor that works for you.  If they are only giving you advise to invest in the products of the company that they represent, then run fast and find a different stockbroker and perhaps a different company to deal with.  If your stockbroker is not willing to look at your suggestion and strictly advises investments/mutual funds held within their companies umbrella this is definitely NOT in your best interest and you need to move on and find someone else.
7. Mutual Funds are the base of any good and safe portfolio.  For the new or average investor starting out I suggest that you work your way towards building that base with well rounded, moderate risk growth funds to start out with.  A mutual fund with 100% stocks in it is lots more volatile and carries a higher risk.  But they certainly have their place, but not in a new or building portfolio.  I have a high risk 100% stock mutual fund (AMANX) in my portfolio and it is blowing the roof off my portfolio with a 78% gain since I purchased it PRIOR to the 2008 recession.  It survived the recession pretty well and surged to be the top performing mutual fund in my portfolio at this time.  It is a Large Cap mutual fund and Large Cap funds are doing great right now due to the record breaking markets.  But for the new investor building their base in their portfolio I suggest getting two to three good blend mutual funds to get started.  As you build them to a good level then think about branching out into specific mutual fund markets such as Large Cap funds, Small cap funds, Bonds funds, and Emerging Market funds.  A good blend mutual fund will give you a little of everything and is a much safer risk to you when starting your portfolio or as you build a good base.
8. When is the best time to invest?  The simple answer is ALWAYS!  There is no bad time to start investing.  But the best thing you can do is again make a commitment.  Find in your budget what you can afford to invest on a monthly basis.  Even small amounts of $25 to $100 is good.  But more is always better if your household budget allows.  DO NOT invest money you really cannot afford.  Putting money in should always stay there.  This is your future and your retirement.
9. What does it cost to get started investing in Mutual Funds?  The cost is pretty reasonable for the average person ready to begin investing.  I know for most Mutual Funds, especially within the Franklin Funds family it is usually a minimum one time investment of $1000.00 to get started.  But after the initial buy in, you can invest any amount you wish whenever you wish.  Most funds are like this, but I have seen some that are lots less to get started even a $1.00 initial investment and others as high as $10,000.00.  But the normal initial buy in to get started is usually $1,000.00.  After an initial buy in you can invest monthly as little or as much to the Mutual Fund that fits into your budget.

I will continue to write in this blog on a fairly regular basis as to stock tips, hot stocks and mutual funds and give you my opinion for consideration. Of course any advise I give is purely my opinion.  I am NOT a licensed stockbroker and any advise you read in this blog should be reviewed with your financial advisor before making any final decision in your portfolio.

Gus