September 2006
You are currently browsing the articles from General Finance written in the month of September 2006.
Investing in U.S. small companies stocks is another asset class that goes along with a diversified portfolio. We will look at the essential characteristics of small company stock.
- Investment objectives are growth and diversification
- High to low liquidity depending much on the volume of stock trades
- Expect high levels of fluctuation in pricipal and return because smaller companies tend to go under more than really big ones.
- Capital gains and dividends taxed in year you received.
- More volatile and risky than large cap stocks. Huge price changes can occur very quickly.
Written by mike on September 20th, 2006 with no comments.
Read more articles on Investing.
Another subset of international stocks is developed markets. These are 1st world countries with plenty of investment options.
- Investment objectives are growth and diversification
- Low to high liquidity
- Just like U.S. stocks; international stocks range from low to high in risk, but the pricipal and returns can fluctuate a lot.
- The tax features reflect emerging markets’.
- While more stable these countries are subject t economic, political, currency and liquidity risks.
- Different accounting standards.
Written by mike on September 19th, 2006 with no comments.
Read more articles on Investing.
International stocks can be categorized many ways. Here we will discuss Emerging Markets. Below you can find some characteristics of this asset class.
- The investments objectives for you are growth and diversification
- The Liquidity is low
- Fluctuation are principal and return is high
- Capital gains and dividends taxed in the year received in the country you earned it.
- Subject to political, economic, currency and liquidity risks
- Different accounting standards
Written by mike on September 18th, 2006 with no comments.
Read more articles on Investing.
The stock market is closely related to the health of corporations so the performance of the stock market often reflects what is going on in the economy.
When downturns come in to the U.S. economy it is also felt in the stock market. If you graphed out all the recessions from 1945-2000 you will see that $1 invested at the end of 1945 becomes $1,000 by the end of 2000. However, the most important aspect of this is to examine the economic recessionary periods and correlate it to the stock market performance. Immediately before, after or during a recession the stock market is almost always affected negatively.
Written by mike on September 17th, 2006 with no comments.
Read more articles on Stock Market.
When developing an asset allocation program you need to understand what your options are and what defines them.
Stocks
You can divide stocks into large, mid, and small cap stocks–strictly based on their market capitalization. Foreign companies are represented in international stocks. Owning some of each asset class you will lower your risk and help your portfolio’s performance in the long run.
Bonds
The U.S. government is the largest bond issuer in the world. The payment of interest and pricipal is backed by the U.S. Treasury. This being said, U.S. bonds are considered one of the safest investments in the world. Corporate bonds will typically offer a higher interest rate of return because their is a risk that the company could default. Municipal bonds are issued by state and local governments and any income made from this is exempt from federal taxes. International bonds are issued by foreign governements.
Cash Equivalent
Cash equivalents represent investments in short-term, high-quality securities like money market funds, Treasury bills, and certificates of deposit. These investments are much less risky and more liquid.
Real Assets
Real assets are those assets falling outside of traditional classifications of stocks, bonds, and cash equivalents. They have a value outside of the monetary units in which they are dominated and can help hedge against inflation.
Written by mike on September 16th, 2006 with no comments.
Read more articles on Investing and Stocks.
There was another report out recently that spelled the troubles of Americans when it comes to saving money. The U.S. had an average –0.5% saving rate last year—the lowest of any major economic nation in the world. The average household has over $7,000 in credit card debt. How is this sustainable?
It is not. Attitudes and culture must change in America to change it from spend spend spend to save for your future and a rainy day. Spending money on things you cannot afford is much more fun than contributing to your savings account. These problems are magnified when you look at the housing market. Manuy of the people already in debt were getting interest-only loans on their home or dangerous ARMs. Things for the average American will be getting worse very soon and the divide between the Haves and the Have Nots will expand further.
Written by mike on September 15th, 2006 with no comments.
Read more articles on Budgeting and Credit Cards.
Categories of Investments
Stocks
Bonds
Cash Equivalents
Real Assets
Written by mike on September 14th, 2006 with no comments.
Read more articles on Investing.
1920-1929: Black Thursday, October 24, 1929 marks the beginning of the Depression. The market had shown signs earlier in the year of weakness.
1930-1939: By the summer of 1932 the stock market had lost 86% of its market capitalization
1940-1949: After WWII the U.S. is the only economic superpower and begins the shift from war-time economy to peace-time.
1950-1959: Time of steady, sustained growth.
1960-1969: Early in the 1960s a tax cut had spurred growth , but the financing of the Vietnam War and the Great Society set up stagflation of the 1970s.
1970-1979: Double-digit inflation, stagnant economy, high interest rates, high oil prices all of which went a long way to bring about the demise of the U.S. manufacturing sector.
1980-1989: October 19, 1987 stocks fell by more than 20%, but it regained those losses by 1989.
1990-1999: 1995-1999 marked the only time the market had returned more than 20% for five straight years.
The early 2000s have not ended, but factors like Septmember 11, 2001, the market downturn of March 2000, the War on Terror and the accounting scandals will probably dominate this era.
Written by mike on September 13th, 2006 with no comments.
Read more articles on Investing and Stocks.
Now is the time to take advantage of the automobile market. Ford and GM are in some serious pain with bankruptcy looming as a future possibility. They are doing whatever they can to sell a new car to you. Take advantage of being in a strong position. Even foreign car dealers have better than normal deals to jump on.
Also, interest rates on vehicles are on the way up so strike while you can. Plus the 2007 models will be coming soon so dealers will want to get rid of inventory. Zero percent financing on a car is hard to pass up and it is hard for the automaker to make money. Therefore, it cannot last for too long.
Written by mike on September 12th, 2006 with no comments.
Read more articles on Household.
If you have money worries you are not alone. Real estate is on a downward trend, average income levels have flattened, goods and services are more expensive as is oil. More and more Americans owe significant amounts of money on their credit cards. Money is getting more expensive and if you have not already acquired lower rates on your loans and debt–now is the time. If you have been putting off paying back that credit card debt do it as soon as you can. Despite some reports the average American is not doing better than they were 10, 20, 30, 50 years ago. Americans have gotten into bad mortgages and the rising prime rate is making their lives difficult. The Fed is trying to curb inflation, but when the price of gas has doubled in the past few year it affects the entire economy and all goods and services become more expensive. Try to right your boat now because in the future it might be even more difficult to do.
Written by mike on September 11th, 2006 with no comments.
Read more articles on Household.
Investing in U.S. small companies stocks is another asset class that goes along with a diversified portfolio. We will look at the essential characteristics of small company stock.
