Every business can use a helping hand financially, from the big to the small. Many investors will avoid infesting in small businesses because of the lack of security involved with them, but there can be great profits to be made with this kind of company if you know what to look for. Choosing the right business to invest in will make all the difference in determining whether your money turns to profit or not. Here are some tips that should help your small business investment go as smooth as it possibly can.
When you first get involved with small business investment, you may want to steer clear of new businesses. Even if they sound like they will be amazing to work with, there is just going to be too much risk involved with a new business for it to be worth your time. After you know your way around investing a little more, you may look into putting money into an up and coming business, but not until then. You need to be able to make wise decisions about your money, and that may only come with experience. Focus on established small businesses before you do anything.
Once you have selected an established business to invest in, you may want to have a look at their business plan to see what the goals are for the future. As an investor, you should have a say in what goes on with the financing for the business. If you feel that there would be better ways for your money to be spent, be vocal about that. Then you can make sure that the small business has a chance of succeeding beyond where they are right now. If you are not able to put forth your opinion about the business financing, then you need to go somewhere else with your money.
It is always a good idea to choose businesses in markets that are expected to grow rather than decline. While you cannot predict how the market is going, it would be illogical to invest in DVD players over Blu-Ray players nowadays based on what people are starting to buy. The same comparisons hold true in almost all markets, so just be safe about throwing money into a company that is headed down the wrong path. You can trust your instincts for a lot of this process, and ultimately you should be able to see profits from your small business investment.
Sean Johnson is an Investment Advisor for http://www.inquest.biz an Investment Referral Service for investors requesting information on specific investments.
Yesterday's best investment portfolio might not be the best investment strategy for most folks in 2011 and beyond. For the past decade bond funds were the best investment vs. stock funds. Going forward your portfolio might need a few adjustments to keep you out of trouble.
For many years mutual funds have been the average investor's best investment vehicle, and a simple portfolio formula has worked quite well. Diversifying with a bit over 50% in diversified stock funds and 40% or so in bond funds has worked to keep the average investment portfolio out of serious trouble leading up to 2011. But this might not be your best investment portfolio going forward. In the past decade diversified stock funds have struggled while bond funds were steady performers. As a result investors large and small have loaded up on bonds and the funds that invest in them. Before 2011 turns to 2012 a change of fortune could be in the cards.
Investment trends leading into 2011 included higher prices for stocks, oil, gas, gold, silver and other commodities. And late in 2011 longer-term interest rates headed upward, which sent bond prices down. If such trends continue and inflation heats up, the best investment portfolio going forward will NOT be one that's heavy into bond funds (also called income funds). Simply put, when inflation and interest rates heat up bond funds lose value. Your best investment strategy here is to cut back on these funds if you have significant exposure. Favor short-term and intermediate bond funds and sell or avoid long-term funds. The latter can get hit hard when interest rates and inflation go up.
In the stock (equity) fund arena, broaden your horizons. Most people rely heavily on general diversified stock funds that invest primarily in domestic (U.S.) stocks. Your best investment strategy here is to include international funds in your portfolio for world-wide diversification. Then consider non-diversified specialty funds that specialize by holding stocks in these sectors: energy or natural resources like oil... real estate... basic materials like copper and aluminum. Although gold funds have been one of the best investment options going into 2011 - if you missed gold's big move don't chase gold at $1400 an ounce or more.
The best investment portfolio for 2011 and beyond will also include the only funds that are really safe investments: money market funds. These pay interest in the form of dividends with a share price pegged at $1. If interest rates and inflation go up these funds should hold their value AND pay increasingly higher dividend yields. Money funds, unlike bond funds, benefit when interest rates rise.
Keep in mind that interest rates and inflation had been low and/or falling for many years heading into 2011. This has kept bond prices rising, because the FIXED interest income bonds pay has looked increasing attractive to investors. That's the real reason millions of investors still see bond funds as their best investment. If trends reverse your best investment portfolio will be one that's conservative in the bond funds department... more broadly diversified in stock funds... with money market funds for safety.
What if you make these changes to your investment portfolio and trends don't change? You'll still have a broadly diversified portfolio for 2011 and beyond that's balanced across the asset classes. And your best investment portfolio over the long term is always one that is well diversified and balanced.
Author and former financial planner James Leitz brings 40 years of investing experience to readers in his complete investing guide for beginners, INVEST INFORMED. Learn how to invest starting with investment basics in plain simple English. To get up to speed on both investments and investing money for 2011 and beyond visit Jim at http://www.investinformed.com now.
There are many reasons for investors to be optimistic about the coming year, particularly when it comes to domestic equities. Although there remains a lot of negative opinion about the state of the economy and, most importantly, the rate of recovery that the economy will enjoy, the reality is that the economy will start to showing very positive signs of strong recovery in the coming year.
Ultimately, there are two things that are weighing on investors' minds when it comes to the current state of the economy. The first is high unemployment. At 9.6% national unemployment, there is no question that this should be a primary focus area for a lot of investors. Without people working, there is no chance that the economy can really get off its feet. Assuming the economy remains at this level, the forecast for next year is that this important rate will drop to 9.1%. Even with such an improvement, the unemployment rate will remain terribly high. Whether it is enough of an improvement to turn the economy around is another matter.
According to information at the Associated Press, unemployment needs GDP growth of roughly 3% so that the unemployment rate stays the same. At GDP growth of 5%, the unemployment rate would start dropping. (As a point of comparison, India's GDP Growth rate was 8.8% at the end of the first quarter of 2010, so we are not aiming too high with a GDP growth rate of 5%; it just seems high given today's growth rate of 2%).
The reality is that US GDP is really only expected to increase to under 3% for 2011. This puts continued stress on unemployment, which is evidently expected to remain high at just above 9% for all of 2011.
However, the other part of problem that many investors and economists see for the US economy is housing. Although many recessionary periods recover with a good and healthy boost to housing starts and other building projects, this did not happen with the latest recovery. With housing starts for 2010 expected to come in at 580,000 adjusted units (well below the 1.65 million starts on average between 2000 and 2008), there needs to be a significant increase to call an end to these housing troubles.
That's where the good news lies. With an expected 880,000 units for 2011, housing starts are expected to increase more than 50%. This may seem impossible given how many fewer people are expected to be heading back to work, but when you consider that consumer spending has been steadily increasing (people want to spend money), the boost to housing may be exactly what is in store.
And with housing returning to what many people believe is a normal sign of recovery, the future should remain particularly attractive for investors in domestic equities. After all, there is already a great deal of convincing data that points to a good recovery for domestic equities, including increased profits, greater durable goods orders for many sectors and the latest ISM manufacturing data showing a good contribution in the way of exports and domestic business investment.
So while some uncertain remains out there, the long term prospect for the economy is actually quite strong.
Chris has more than 17 years of financial services experience. He currently manages a website about Traditional Top Mattresses at QMattresses.com. For people seeking greater comfort, the website also looks at Pillow Top Mattresses as well as more than half a dozen specific brands of mattresses. Drop by the site and see the wealth of information for yourself.
The Market is telling us something very important. Are you listening?
Investors who choose not to listen will pay the ultimate price. No, not with their life, even worse. They are becoming indentured servants to their 'day-job'.
A major crack has been exposed from the manipulation of the Fed & Congress. This is very serious stuff. This is the type of stuff that brings people into the streets. And it all is happening right now.
Take a look at this price chart of US State Debt. It's falling off a cliff.
This picture clearly shows that people are abandoning state debt by the billions because they are very concerned with what is happening.
This price chart for "MUB" (National Municipal Bond Fund - the largest exchange traded fund in the US) is dropping rapidly because the majority of what is inside this dying monster is state debt.
So what secrets is this chart telling us?
The States are in bad shape. One of two things is baked into the cake for sure:
1) There will be a state that defaults on its debt, or
2) The US Government is going to have to bail out a
handful of states (they may be doing it already).
Prudent investors and investors who thought they were being conservative are losing their futures.
What you are looking at was the second safest investment in the world, US Municipal Bonds (US government bonds debt being the first - please no laughter).
Something seriously wrong is going on and it appears that no one is paying attention or even noticing.
What this price chart of Municipal Debt is saying is that there are going to be some state defaults. Europe has Greece, Ireland, Portugal, Spain, Italy and Belgium. And the US has California, Nevada, Illinois, New York and New Jersey.
What worries me most is that risky behavior is being promoted by the Fed, the Treasury, the Congress and the Executive Office. They all want Investors to buy stocks so people can feel marginally richer. But we don't as a country [feel richer] because only the top 10% of the country owns stocks.
And while the government wants you to buy risky stocks they are penalizing any safe, prudent behaviors like saving money, buying bonds and paying down your house. Why else would the government have lowered interest rates to zero or close to zero on your savings, CDs and bonds...not to mention the trillions in dollars that they have printed?
They (the US government) clearly want Americans to spend, trade and speculate their futures. And to what end? So the banks can be whole again?
So what is the end-game?
Where does this all lead?
How does this end?
Who gets hurt the worst...or the least.
These are questions I answer every month in my Insiders Club gatherings. And for those of you that have not been to one I will answer this question tomorrow in my follow up to this posting.
And if you know investors who choose to "weather the storm" forward this to them so they've at least been warned.
Speak with you in a couple days with part 2.
Together, we are growing and protecting your wealth,
RC Peck
PS - There are four algorithms that my clients have been using to avoid Wall Street's toxic actions for the past decade. From signaling investors to buy gold and silver in 2004 to signaling 401(k)s to go to cash before the market plummeted in 2008, combine them or keep them separate and you have a straightforward system that clearly signals when and where to buy. Proven Investment Algorithms.
RC Peck, CFP? Fearless Wealth | Investment Independence Helping Individuals Reach Financial Independence Sooner, Faster, Safer. http://www.FearlessWealth.com.
With over 20 years of investment success, RC Peck is a Certified Financial Planner, Registered Investment Advisor, and an NLP Practitioner, which means he knows what you should do to grow your money and how to get you to do it.
The 30 Day Financial Turn Around Starts Here
Do you want your portfolio to be in the top.1% of all money managers by doing less? Skeptical?
Good...you are in great company. http://www.FearlessWealth.com/30-Day-Turnaround
How to invest money in 2011 depends on whether there is a bond bubble and whether or not the bubble bursts or at least deflates. First we'll explain a bond bubble and how it will affect bond funds. Then, we get down to how to invest in funds just in case the worst happens in 2011 or 2012.
It's harder for most people to understand a bond bubble than it is to understand a stock bubble like we had in the year 2000. That's because most folks don't understand the securities involved - let alone know how to invest money in them directly. Hence, people rely on bond funds that own these debt securities in their portfolio to do the management for them. Stocks and bonds are both securities that trade in the open market once they are issued to the public, and the price of both fluctuates. The same is true of the price or value of funds that invest in either of these securities. In 2011, it's time to think twice before you invest money, or if you have money invested in bond funds.
A bond bubble refers to extremely high prices in the market for longer-term debt securities called bonds, and this is a result of interest rates falling to extreme lows. Because rates have fallen for so long and have fallen so far leading up to 2011, prices have gone way up. This is because these securities pay what looks like a high interest income that is fixed and never changes. All of these securities also have a fixed date when they mature, which means the owner is paid back the principal borrowed by the bond issuer, which is usually $1000. In simple terms, you don't need to be concerned with the details if you invest money in bond funds because the fund deals with the details. You just need to know how to invest and where to invest money in these funds.
When any financial bubble deflates, prices fall. When a bubble bursts, prices fall severally. Memorize these two rules on how to invest in bond funds, just in case there is a bond bubble. First, if interest rates go up prices will fall. Second, long-term funds will get hit hardest, intermediate-terms funds will fall less, and short-term funds will be much less affected. Long-term funds pay considerably higher interest income, but in 2011 they carry much more risk.
Short-term bond funds hold issues that mature is just a few years. Hence the fund won't get stuck holding them for long if interest rates soar. On the other hand, long-term funds hold issues that mature in 20 years or so. If rates soar, they have two negative choices: sell at a loss or hold on and hope things turn around. If investors panic and cash in their funds, the fund company must start selling bonds in their portfolio to raise cash to pay folks back. As selling intensifies, prices tumble even more. That's the worst scenario: the bond bubble bursting. So, the question is how to invest your money in bond funds in 2011 without too much risk?
Invest your money in funds with AVERAGE MATURITIES in their portfolio of 7 years or less. These will be labeled as intermediate-term and short-term funds. If you have money in long-term funds, switch it over. If you have new money to invest, avoid long-term funds. If there is a bond bubble and it does deflate or burst, you can put money into longer-term bond funds later when prices are down. Until then, how to invest your money amounts to: better safe than sorry in 2011.
Author James Leitz teaches investment basics, stocks, bonds, mutual funds and how to invest in his investing guide for beginners called INVEST INFORMED. Put Jim's 40 years of investing experience to work for you and get up to speed at http://www.investinformed.com. Learn how to invest.
It's time to decide where to invest money and where not to invest for 2011 and beyond. The flow of money and the investment tide could be changing, so you'll want to invest money with your eyes wide open going forward. Here we look at safe investments, stock funds vs. bond funds and gold.
What does the flow of money and a changing tide have to do with where to invest in 2011 or 2012? Where money flows in - prices rise. Where it exits from prices fall. In recent years gold has soared to all time highs. In the stock funds vs. bond funds arena investors have flooded bond funds with money inflows of hundreds of billions of dollars as bond prices climbed. Stock funds watched money run for the exits. There had been a rising tide in gold and bond fund prices as 2011 approached the scene. This will change if investors decide to invest their money elsewhere.
WHERE TO INVEST MONEY IN SAFE INVESTMENTS: Safe investments pay interest, and very little of it these days. If you see a higher interest rate on what appears to be a bank CD, look twice before you invest money. Make sure it is federally insured by the government because there are misleading imitations out there. If you have money in a retirement plan at work or with a life insurance company, check to see if they offer a fixed or stable account option. These safe investments often pay the best rate around. Do not invest money in the average bond fund if you need high safety. For 2011 and 2012, these are not necessarily safe investments. Go with safe money market funds instead.
WHERE TO INVEST MONEY TO EARN MORE INTEREST: For almost 30 years as INTEREST RATES FELL, bond funds were the place millions of average investors put their money to earn higher interest income, with relative safety. With interest rates near record lows the risk of owning these funds now somewhat offsets the potential rewards. Rule #1 in regard to bond funds: when interest rates go up, fund prices (values) fall. Rule #2: long-term fund prices fall the most. Do not invest money in long-term funds unless you are willing to bet that interest rates will fall further in 2011-2012. Instead, go with a mix of short-term and intermediate-term funds.
WHERE TO INVEST MONEY FOR GROWTH AND INCOME: In the stock funds vs. bond funds debate for 2011, stock funds are the favorite in the growth department. Bond funds are not growth investments. Frankly, I'd shy away from stock funds that invest your money in growth and smaller-company stocks that pay little or no income in the form of dividends. Instead go with general diversified stock funds that invest in large-cap company stocks that pay good dividends. It will be nice to have some dividend income in case the tide for stocks goes out. Consider putting some money in real estate stock funds for income and to add even more diversification to your portfolio.
In 2011 and 2012 the issue of where to invest money will likely focus on stock funds vs. bond funds. Gold is bound to be in the headlines as well. At over $1300 an ounce, gold has become a speculation. If you invest in gold keep one eye on the exits. The average investor needs to invest with a long-term strategy that includes both stock funds and bond funds. Go for dividends in the stock category and avoid long-term in the bond department. Invest money like the investment tide was ready to turn, because it could in 2011 if INTEREST RATES RISE.
Author and former financial planner James Leitz brings 40 years of investing experience to readers in his complete investing guide for beginners, INVEST INFORMED. Learn how to invest starting with investment basics in plain simple English. To get up to speed on both investments and investing money for 2011 and beyond visit Jim at http://www.investinformed.com now.