Real Estate vs. Stock Market Investing

It’s a choice between taking a left and taking a right…

One offers substantial growth over the other, the catch is most people can’t see the winner without reading on. 

Right now, we are in a critical stage with our country’s economy.  The recession has allowed us to see that property values do not continually increase over time, Blue chip stocks can fall just as quickly as small-cap stocks, and that money is not 100% safe from devaluation anywhere including houses. 

Even though we’ve been shaken up a bit, the principles of investing must be interpreted between real estate investing and stock market investing.  The facts that come forth will be able to point you in the right direction.

 

Real Estate Facts:

The United States’ growth in real estate was created by a higher demand for houses in the early 2000’s.  This increase demand grew the property value of each piece of real estate.  Now that we can see real estate values can stop, the growth has turned into a decline.  The real estate value swing will not just be a year or two, but has the potential to continue downward for a couple of decades until properties are in demand again.  It will take this long because of the large base of property owners at this current time is quite large.  Unfortunately, the amount of buyers who want to increase their real estate properties are quite small.  Until real estate is seen as valuable and creates demand within the market, the value of real estate will not be above the inflation rate per year.  This results in you losing money per year until real estate values go up which could be a long time. 

 

Stock Market Facts:

Investing in stock market indices will result in a 7% real gain above inflation.  Buying in the lower times in a stock market will result in the biggest capital gains once the market has corrected itself back to a healthy standard.  While this point is impossible to predict, buying incrementally along the path of the stock market will ensure that you will be prepared for maximum growth when the stock market self corrects its prices. 

By investing in the stock market, you will see much higher rewards and unlike real estate investing, your money will actually make you more money.

Has Buffet Called the Bottom?

Anyone who has ears and eyes can tell that the recent volatility in the stock market has been almost too much to bear. With the collapse of many large financial companies, it can put fear in just about everyone’s portfolio…except the richest man in the world, Warren Buffet. In fact he is seeking out opportunities to grow in the heavily discounted financial sector of the market.
Buffet has been offered a specialty package of $5 billion in preferred stock and $5 billion in an 8% discounted common stock. This deal was specially given to Buffet, who could actually afford this amount of capital to invest. Since Buffet’s actions, the stock market has remained calmed and rightly so because when Buffet goes in for a large buy, it could very well mean the bottom has occurred leaving only positive upward movement.
It is very possible that Buffet’s timing is not correct, but even if it is off by six months, investors who do have the extra capital to invest should begin scrutinizing their options of stocks that they could purchase.
Stay tuned for my next article in stock pick scrutinizing for safely investing in the stock market.

Feel free to leave me comments about this article.

Investing: Which Company is right for me?

As for where you can buy stocks, it is best to consider the following questions.
1. Would I rather spend less per trade and trade online, the impersonal way, or spend more money and trade through an actual stock broker over the phone?
2. Does my bank have an established program to trade stocks through?
3. How much money do I have to start trading?

If you would rather spend less per trade transaction, look around at the many different online brokers that will offer good deals for new customers such as 10 free trades, $100 to start investing, or free investment newsletters. Some of these popular companies are E-Trade, Ameritrade, and Scottrade. Buying and selling through these online stock brokers will allow for you to instantly see if your transactions have cleared appropriately in a timely manner.
If you would rather place an order for a stock through a live broker, you will want to look more into companies such as Bank of America, Fidelity, Merrill Lynch, and many others that have headquarters located in all major large cities such as Chicago, Atlanta, New York, and San Francisco. The advantages of placing an order over the phone to a live broker are the comfort of ease of the orders, you do not need instant online access, and it is literally only a phone call away.

It will be much easier and less stressful if you are able to buy and sell stocks through your existing bank account. All you will need to do is have access to the online banking, establish an investment account on the bank website, and link your existing bank account to the investment accounts. By doing this through your existing bank, you will be able to dodge unwanted charges between stock brokers and the transfers of funds back into your bank account. This is also a good way to keep track of your money and where it is at all times.
The amount of money that you will be starting with does depend on whether you can establish an investment account with some companies. For online stock brokers, a basic minimum account opening of $500 is standard for most companies. If you are interested in investing with larger established investment firms, you initial investment capital will need to be at least $1,500 to $2,500 depending on the investment firm.

Investing in Stocks: What are all these different types?

I believe stocks to be the most valuable and value creating way to invest. I also believe now is one of the best times we have seen in the past 20 years to get into investing. Sure, the stock market is very panicky right now, but that has only led to very large discounts on great stocks that have not lost their value at all. Before we jump into stocks that are very appealing to me, let me go into some of the different types of stocks and what to expect from each genre of stock.
Growth Stocks – These large sized companies do not pay a dividend, but instead reinvest their earnings into ongoing projects in order to maximize their company growth. A good example of a successful growth stock is Apple (APPL).
Value Stocks – Small to medium sized companies that are trading at less than their actual value based on financial data. Value stocks can reap large growth rates once the market reacts to the appropriate value of the stock’s worth.
Blue Chip Stocks – Blue Chip stocks are large companies that are considered low risk, safe options for a slow growth rate. Blue chips usually offer a modest dividend percentage of the stock price usually ranging in the 1 to 3% range. Large sums of money can stay most safely here when investing with stocks.
Domestic Stocks – Any stock that is home and does its business nationally is considered a domestic stock.
ADR’s – ADR stands for an American Depository Receipt of a stock that is supported by a U.S. bank for the shares that the bank owns in order to transfer all dividend yields from the original countries currency to U.S. dollars. ADR’s are popular and an excellent idea for anyone wanting to gain international stock exposure while being able to have actual realized stock gains in U.S. dollars.Penny Stocks – Any stock that trades at a lower price, usually below $5, and is considered to carry much more risk and experience more volatility than the rest of the market. Penny stocks are usually traded on smaller stock markets such as the AMEX stock exchange, Over the counter bulletin board stock exchange and others. While penny stocks are very risky, the flip side is their quick and high dollar gains which ends up either losing or making you a lot of money.

Shedding light onto the World of Investments

Investing may be one of those words that makes you run in the opposite direction, but investing can be simplified to wisely using your money to work for you. What is meant is that investing allows for you to place your money into something, whether this is stock, bonds, Certificate of Deposits, or many other options we will get to, that will allow it to grow itself over time returning back to you more money than you started out with in the beginning.This is the secret to how the rich maintain their wealth and how you too can retire at an earlier age. But, we must caution you, investing wisely is the only type of investing that you should do.This is just a start, a start on a road to creating money work for you. I will cover the basics of investing and move on towards how to invest. It is important to learn the basics right now before you start investing.Types of Investing:*Stocks - stocks are partial ownerships in a publicly traded company. This is a company that has allowed itself to be bought and sold in small portions, called stocks on a stock market. Stocks can flucuate up or down and can be bought or sold in any whole number amounts. Stocks are considered to carry a higher inherent risk than other types of investing. It is ideal for investors who would like to see gains in their investments with the balance of carrying a higher level of risk of losing their money.*Bonds - Bonds are a more conservative approach to investing that allows for you to give companies a certain amount of money and for this company to pay you back the amount you lended the company plus a percentage of the total amount borrowed by the company. It is ideal for people who do not want to lose their investment money but would like to have a small return on their investment.*Mutual Funds - Mutual Funds are a collection of stocks that are managed by a team of professional stock analysts who choose what company's stocks to buy to add to this mutual fund portfolio. This is considered a medium risk investment. It is ideal for people who are not wanting to have high risk like with stocks, but would like moderate returns on their investments.*Real Estate - Buying real estate for the purpose of an investment allows for investors to have a safe place to keep their investment with a high probability of seeing their investment increase. This type of investment takes time and should not be rushed into until all details and understanding of real estate buying have been diagnosed.To be continued... continue reading other Investing articles by Matt

Snow Ball Your Debt Away!

Debt, its the ever consuming problem our country is deeply faced with. And it effects many, many people. If you have found that you are one of these who needs help freeing themselves from debt, read on. I know what you will read will help you to get back onto your feet.

Its Called the Snow Ball Effect. It consists of laying all of your debts in front of you, which includes everything from school bills, credit cards, house payments, medical bills, car payments and everything else that you owe money on. Once everything is laid out, pick the smallest debt that you have and focus all of your extra money from each month on paying off this one lowest debt. It may only be for $50, but once you see and feel the freedom from one debt payment, you will have the confidence and courage to stand up against your other debts. Keep reading to see how to do it.

How do you "focus all of your extra money from each month"? This requires discipline.
You need to make a budget. List the payments you have to make, and then list the amount of money you have coming in each month. Your essential payments are your debts, food, clothing, and shelter. However much money you have after meeting all of your essential payments, you can put a percentage of this money towards your debt.

Say you have $1,500 each month that you earn and all of your essential payments equal $1,200. You have $300 for the rest of the month that you can spend on entertainment, shopping, or going out to eat. Instead of spending all $300 each month on these luxuries, save 1/2 of the $300 towards your debt. This way you can begin to pay off your debts with the smallest one at a time. This will create your snow ball effect to a debt free life.

Let me know if this was able to help you or if you have any other questions that I can help you answer about snow balling your debt away.

-Matt

Staying Away from Online "money makers"

I thought it would be very valuable for me to quickly give you a run down on my past experience with online money makers. If reading this, you've probably found an idea that was very convincing that you would make lots of money for practically no work. Well, let me just say that the old saying "If its too good to be true, it probably isn't" applies completely to online money making schemes.

Some of the most popular are the online paid surveys. While there are a limited amount of actual real surveys that pay you online, none of them come from websites that look like they were thrown together, or have titles such as paidonlinesurveys.com, freesurveymoney.com, or twentydollarspersurvey.com. These are all schemes to get people to pay $10-$40 for a "subscription" to a list of paying suveyers. These surveyers do not really pay you, but instead if you go through all of their hoops, you will end up having to buy certain products in order to get gift certificates instead of real money.

Also, craigslist is notorious for online jobs that where you have to pay for information or software. Do not fall into these traps. They rely on people who buy this software to simply market to others on all sorts of websites to buy this same "software" through them instead of really having a legitimate business idea. You will be glad you did not throw your money away on these.

Always Check with scambusters.com if you are suspicious of a money making scheme online.

Now for a few ideas where you can actually make money online.

Writing: If you have experience writing in certain subjects there are many websites that will pay you to publish articles, reviews, or opinions on topics that are relevant for their needs. Some of these are about.com. The minimun monthly pay for about.com is $750.

ChaCha.com pays people to be human search engine guides. This pay is around $.25 per question you answer. Not too bad if you would like to do searches for people's questions.

associatedcontent.com pays their writers per people who visit their media content that is published onto their site.

These are some of the legitimate sites that you can actually make money. I would love it if this guide has been able to help you and save you money from an unethical online money making scheme. Send me a note!

All Things Personal Finance

Welcome to my blog on all subjects that focus on your personal finance. This blog has the sole purpose of using my passion to write and instruct others through the common messes and myths of personal finance.
It is my goal to lead others through this website to a debt free life, a life that is not burdened by bills to pay. It is my vision for personal savings to become a reality for families across the world. Rainy days come, we cannot stop those, but we can, together, create umbrellas of safety money in order to be prepared for the tough times.
My interests range for new business start ups, to stock market investing, and personal finance.
So, thank you for walking on this journey with me, and look through the content on this page to see what would be useful for you. If you are like most people, the stock market may seem like a distant world with people using a different language who somehow make money. I will continually write on how to simplify the stock market to a simpler level for understanding.
Keep coming back to see what weekly updates and topics come up on my blog. You can bookmark my page for quick reference back to this page.

Thank you for viewing and I hope this blesses your life,
Matt