Investment Articles

In Part One of this article, we highlighted strategies that proactive investors can use to better protect their financial security. The strategies mentioned in Part One were more oriented toward the investment account as a whole.

However, most securities claims involve allegations of unsuitability and/or breach of fiduciary duty regarding investment products and/or investment advisory services. Given the number of investment options available to investors today, it is easy for an unscrupulous stockbroker or investment adviser to take advantage of an investor, especially an inexperienced investor.

The following strategies can be used by the proactive investors to avoid some of the more common complaints in securities claims.

1. Choose appropriate classes of mutual fund shares to reduce expenses. Fees and other expenses reduce an investor’s return. Therefore, no-load mutual funds and/or exchange traded funds should generally be an investor’s first choice due to their reduced fee structure.

If an investor chooses not to use either no-load funds or exchange traded funds, A shares and B shares are the only type of mutual fund shares most investors should consider. Many investors immediately lean toward B shares since they do not require the investor to pay front-end sales charges, or commissions. B shares, however, may not be the best choice for the long-term investor due to the higher annual fees associated with B shares.

Generally speaking, A shares are often a better deal for a long-term investor due to the fact that annual fees for A shares are typically less than the annual fees charged by B shares. If an investor has a large amount of money to invest, A shares often offer breakpoints to reduce any applicable sales charges.

Breakpoints are not generally offered on B shares. B shares are often a better deal for short-term investors, since B shares do not impose a front-end sales charge. While B shares generally carry higher annual fees and often impose deferred sales charges if an investor redeems the shares within a specified period of time, the holding period during which deferred sales charge are applicable is usually relatively short.

The investor’s ability to redeem B shares without penalty within a short period of time also allows the investor to minimize the effect of the higher annual fees of the B shares. Some mutual fund companies offer to convert B shares into A shares after a certain period of time has elapsed. Each investor must evaluate their own situation to determine the choice that is best for them.

Investors with managed accounts should always check to see whether their advisor is using A shares or B shares in the management of their account. In most cases, it is generally agreed that advisors should only use A shares in managed accounts due to the lower annual fees charged by A shares and the fact that most mutual funds offer to waive sales charges for A shares held in managed accounts.

Another factor favoring the choice of A shares over B shares in managed accounts is the deferred sales charges on B shares. Since managed accounts often involve frequent reallocations of the account’s assets, holding B shares in a managed account may ensure that the value of the investor’s account is reduced by the payment of deferred sales charges.

2. Use breakpoints, when possible, to reduce the commissions on mutual fund purchases. Most mutual fund companies offer investors a discount on front-end sales charges once an investor has invested a certain amount of money in their mutual funds. Most mutual funds begin to offer such discounts once an investor has invested a cumulative total of $50,000 in their funds, with additional discounts for certain levels of additional investments. Recommendations spreading investments among a multitude of asset classes may be cause for questioning, especially when large amounts of money are being invested and/or the recommended amounts are just below breakpoint levels.

3. Get more than one opinion. Medical patients are often advised to get a second opinion on major medical decisions. Decisions affecting one’s financial security are equally important. Unsuitable investment advice can drastically affect one’s life. Unfortunately, some people holding themselves out as financial planners and investment advisors may be more interested in selling insurance and investment products than in the quality of the financial advice they are providing.

4. Avoid the variable annuity trap. Without question, variable annuities are one of the most over-hyped, most oversold, and least understood investment products. A much publicized article in the Wall Street Journal reported that annuity salesmen at an annuity “boot camp” were instructed to treat potential annuity customers “like blind twelve-year olds,” and to tell customers that the annuities were “like credit cards.”

The NASD and the SEC are investigating various complaints regarding the sale of these investment products and have already imposed sanctions in some cases. The high fees and expenses associated with variable annuities, along with their lack of liquidity and their negative tax aspects, make them an unwise investment choice for most investors.

Annuities can also have devastating effect on an investor’s estate plan, resulting in most of the investor’s money going to the company issuing the annuity rather than the investor’s heirs and loved ones.

5. Don’t buy life insurance for investment purposes. A popular mantra among insurance agents is that variable life insurance is the “Swiss army knife of financial planning.” Anyone who hears such advice should look for another financial adviser. If an investor needs life insurance, then they should buy life insurance that guarantees the amount of protection needed, which is the intended purpose of insurance.

Life insurance is neither intended for or appropriate for investment purposes. The high fees and expenses associated with insurance are totally inconsistent with one of the basic tenets of investing, namely to minimize loss of principal so as to maximize the amount of money working for the investor. While it is illegal for an insurance agent to misrepresent the nature of an insurance product, recent cases involving the alleged misrepresentation of life insurance as retirement/ investment programs demonstrate the need for investors to get advice from more than one investment advisor to better protect their interests.

6. Beware of “black box” financial planning and portfolio recommendations. Many financial advisers will offer to provide customers and potential customers with financial plans or asset allocation plans. The price for such plans can range from free to thousands of dollars.

In most cases these are created with software programs based upon the input entered by the financial adviser. While investors are warned that “past performance is no guarantee of future returns,” and we scoff at fortune tellers predicting the future, that is exactly what is generally used in creating such plans, historical returns or “guesstimates” of future returns, resulting in the familiar “garbage in, garbage out” scenario.

Furthermore, such software programs can be easily manipulated to produce whatever results are desired. Most of the commercial software programs are based upon a financial theory known as Modern Portfolio Theory, which is known to have an inherent bias toward certain types of investments.

By manipulating the input data in favor of the preferred investments, certain results can be guaranteed. This inherent instability of such computer programs has led one expert to refer to such programs as “error-estimation optimizers.”

James W, Watkins, III is an attorney, a CFP professional and an Accredited Wealth Management Adviser. His areas of expertise include wealth preservation, wealth protection and fiduciary law. He is CEO of InvestSense, LLC, a registered investment adviser firm located in Atlanta, Georgia. For additional articles and information, visit http://www.investsense.com. Mr. Watkins can be contacted at tawj3@yahoo.com and followed on Twitter @InvestSense.

Many individuals and groups are continuously seeking alternate ways to diversify their investment portfolios and enhance their capital for the present and the future. Alternative investments are an exceptional way to help build your retirement and recover any previous loss. Many investors are already taking advantage of these types of investments. There is an asset class that many individuals are not aware of – investing in animated movie projects. A majority of financial advisors are not experienced with this realm of investment. As word spreads and it becomes more conventional, there will be more information available about investing in animated movie projects, but I’m here to share some useful information with you now about how to recover your previous investment loss and build your retirement for the future. Although this may not be for everyone, it is something to consider.

Animated movie projects are a familiar investment option to major studios, venture capitalists, and institutional investors. Many individual investors are not aware that this alternative investment option is available to them as well. While this is an option for individuals, they must be accredited investors, or high net worth individuals. There are two ways that individuals and groups (corporations) can invest in these projects; private placement memorandums and hedge funds.

3D and RealD animated movies are the trend of the present and near future in film, as far as profitability is concerned. While the target market for live action films is generally adults, The target market for children (age 6-14) is $50 billion, which is the largest children’s market and is the primary focus for Disney. Although animated films are geared toward children, they include romance and humor that adults can appreciate. Just like any other investment there are risks. The norm for most investment products is, “the greater the risk the higher the reward”. When investing in animated movie projects, these risks are mitigated by many factors.

Animated movie projects offer a way to diversify your portfolio with alternative investments and be a part of something unique. More importantly, they offer the potential for substantial returns. Animated movie projects make for an attractive investment considering their diversity and uniqueness. Investors can be updated and involved in a projects’ success from start to finish. This is a rarity for individuals who are not in the business. Many alternative investments don’t involve much activity besides gaining maturity or value. These projects are also produced locally by veteran talent of the industry.

Kate Bouillion specializes in finding funding for entertainment content and intellectual property needs across various genres with OntaireMedia in Austin, Texas. For more information or a Free Report, visit our website at http://www.anivest.com

One of the best ways to save for the future is to invest your money in the right products. Putting your extra money somewhere where it has a chance to grow in value is a good move. Any wrong move will only make you lose your hard earned savings.

What you should do then is to be extra careful in choosing investment products. Make sure it’s within your budget and not something that many people are investing in at the moment. Following the trend is never a good idea, according to the experts. It’s what they call “portfolio envy” which prompts people to be envious when they see the others around them making money. But instead of having this attitude, you should rather focus on your individual goals and not follow those of your neighbor’s actions.

Another move you should take is to make regular investments at specific intervals. While you are still earning a regular income, it would be ideal to consider the so-called target date funds. This type of funds usually adjusts its mix of investments according to your anticipated retirement date.

Reconsider your decision of investing in bonds. Putting your money in treasury bonds may be seen as a safe move but it isn’t always so. You should know that when interest rates go up or the fiscal situation in the U.S. deteriorates, for instance, you could lose money from your treasury bonds notably when you’ve invested on the long-term ones.

A good alternative is to continue to invest in stocks especially if you’re still young. If you want to go with bonds, make sure to choose the short-term ones only. Experts recommend the treasury securities which are inflation protected than the 30-year treasury bonds.

A word of caution, though. If you will be using your money in the coming years, it’s not ideal to invest in the stock market. It would be better that you put your money in an online bank savings account that provides a high interest.

In addition, be responsible enough and do your research in the investment products you buy. Don’t rely too much on a stockbroker who may just be making money from you and not giving you the right advice. There have been many cases of stockbrokers who just pushed their clients to invest in the more expensive products with the end goal of earning higher commissions. You would benefit more if you get a financial planner that charges you a set fee in exchange for his advice on investments.

Your retirement account is also a good investment opportunity. But don’t assume too much when it comes to the amount you’ll get for retirement. You have to adjust your expectations if possible.

Finally, your home can be a good investment as well but don’t just expect too much. You can beautify your home if you want to add value to the property but don’t think that you can sell it right away in the event the need arises. The housing market has its ups and downs so again, proper research is necessary before making any decisions.

For information on bankruptcy, finance, credit, bankruptcy lawyers and more, visit http://onlinebankruptcyblog.com.

The Junior ISA will likely be launched in November 2011 and has in some ways been designed as a replacement for the Child Trust Fund, which was discontinued after the current government came to power.

What was the Child Trust Fund?

The Child Trust Fund was introduced by the previous Labour government to encourage saving on behalf of children. Parents were given a £250 CTF voucher when their child was born that they could invest in a choice of investment products. They were given another £250 voucher upon their child’s seventh birthday, although few reached this age before the scheme was discontinued. Parents were also able to invest up to £1,200 a year in the account, with interest gained on this plus the invested voucher. The idea was for children to then have access to the accumulated amount from their eighteenth birthday. This scheme will continue for children who already had a Child Trust Fund set up on their behalf but without the seven year payment from the government. This means that for the most part things won’t change for those who have a Child Trust Fund.

The Junior ISA

The Junior ISA will be in place of the Child Trust Fund. Children born before or after the period the Child Trust Fund was in operation for will be eligible. Parents won’t get the two payments from the government, therefore saving the government money, which was the main reason for the Child Trust Fund being scrapped.

The Junior ISA will offer tax free savings meaning a good opportunity for parents to save on behalf of their children so they have some funds to begin their adult life with. It will have many of the benefits of a regular ISA in terms of the tax free benefits. Accounts will be available from High Street Banks, Building Societies and other ISA Providers.

As with an adult ISA, investments will be able to be made into a Cash ISA or Stocks and Shares ISA according to parents’ preference. This can be split however parents see fit.

How Much can be Invested?

The amount parents will be able to invest will be increasing from the limit of the Child Trust Fund. It will likely increase from £1,200 to £3,000 a year. The reason there is a limit is so there isn’t a potentially endless amount of tax free savings.

The money will be locked into the account until a child turns eighteen. At this age the account will automatically become an adult ISA. It can then be withdrawn or can be invested in further according to the rules that apply to a regular ISA.

If parents are able to invest the full amount of around £3,000 a year, with interest it could be worth over £100,000 after eighteen years. Even for those who can’t afford to invest such a high amount a little each month could build up to a significant amount over an eighteen year period. Some have criticised the government for withdrawing the payment they contributed but over an eighteen year period the two £250 payments were only the equivalent to £28 a year or £2.32 a month.

Andrew Marshall (c)

Jump Savings will be launching a Junior ISA Plan when the scheme begins. For more details visit their website.

To be really basic there are pretty much just a few different types of mainstream investments. They are stocks or shares, property, bonds and cash. Now if you haven’t done any investing before I may have just terrified you. Just try to remember that most things in life sound complicated or confusing when you first start learning about them.

OK, so when we look a bit deeper into it, there are quite a few sub-categories for each kind of investment. And each area of investing comes with its own challenges, positives, negatives and quite a steep learning curve as well.

The good news is, that when you are a new investor you will probably start out slowly and so you’ll learn about each type of investment as you’re ready to “play” with them.

The next question to ask yourself is “What type of investor am I?” Most people will fit into one of these categories and either be a conservative, middle of the range or an aggressive investor. And you may find that once you have some experience in investing, your style of investing may change also. Particular types of investments also usually fit into one of two categories – high risk or low risk.

The share market can be very intimidating for those new to investing and I recommend getting some other investing experience before tackling this type of investing.

Many people start their investment journey as conservative investors and will most often invest in cash-type investments. What I mean by this is that they invest their money in very conservative financial vehicles, such as interest bearing accounts at a bank, mutual funds, retirement funds, Government-backed bonds, and Certificates of Deposit. These are very safe investments that grow over a long period of time. These are also low risk investments in a way, but often don’t even keep up with inflation. It also means you are relying on other people to invest your money wisely and that you have absolutely no control over it.

Modest investors are still fairly conservative and will often invest a good part of their portfolio in cash investment products, while at the same time some may try their hand in the stock market, others may purchase property and most moderate risk investors will be looking at low to moderate risk investments.

The more aggressive investors generally do a lot of their investing in the stock market, which can be quite a volatile market. If you plan to get into share trading I strongly suggest doing at least one course that has been recommended to you by someone you trust and then to paper-trade (practice trading – real trades, but without actually buying them) for at least six months. Aggressive investors will look at business ventures along with higher risk property deals and are often will to put the larger part of their portfolio in higher risk opportunities.

So let’s say you’re an aggressive investor and you find an older apartment building. You would plan to invest even more money renovating the property, which can be risky if you have not calculated all the outcomes correctly. You would invest this way because you anticipate being able to increase the rental fees for each apartment or perhaps you were looking to flip the property for a net profit. This can be very lucrative and it can also cause bankruptcy. Usually it comes down to how well you do your homework and how much experience you have.

Property in any given area tends to go through cycles, so again you need to be educated before you jump into any “deals of a lifetime”, especially if everyone is jumping in at the same time. Usually by that time all the real deals have been snapped up by the savvy investors and you are looking at the peak of the cycle, just before it starts to decline. I will go into cycle details in much more depth in future posts. Oh, and it’s not just property that has cycles – just something that you should be aware of.

If you’re seriously considering investing you first need to decide what risk level you are comfortable with and how much money you have to start out with. Seriously, there are very few people who get rich working for someone else, so you’re on the right track, because you’re going to look after your own money way better than anyone else in the long run. Just remember – especially when you’re starting out – that any money you plan to invest, you must be comfortable with the idea of losing it. You mustn’t invest with money you can’t afford to lose.

Julie started investing from an early age, owning her own 7 days a week business at 18 years old, and has continued throughout her life to educate herself on multiple investment strategies. Her main focus has been residential property investing. She has owned multiple rental properties, renovated 11 homes, performed sub-divisions, bought off the plan, been successful with property options and now lives on over 110 acres in rural South Australia. While she leans toward property investments, she has also educated herself with many other investment vehicles and encourages others to do the same. Looking into a variety of investments can help you decide what investing strategies are a good fit for you.

American investors lost trillions of dollars as a result of the bear markets of 2000-2002 and 2008. As a result of such losses, mutual funds companies are beginning to offer so-called absolute return mutual funds. The goal of an absolute returns strategy is to achieve, positive, more consistent returns under all market conditions. While the power of consistent returns has long been recognized, investors should be aware that the new absolute return funds often use different approaches in trying to achieve such results, some more questionable than others.

The focus on absolute returns has been long overdue. While many investors and investment advisers focus primarily on returns, smart investors realize that the true secret to successful investing is managing investment risk. Legendary investor Benjamin Graham first advanced this concept decades ago. Investors would be well advised to read Charles Ellis’ classic, “Investment Policy-Winning the Loser’s Game” (the more recent edition simply goes under the title of “Winning the Loser’s Game”) for a simple explanation of the concept. Simply put, the concept of absolute returns simply follows the Wall Street axiom of “don’t tell how much you made, tell how much you were able to keep.”

Many investors lost money in the recent bear markets because they adopted the popular static buy-and-hold approach to investing. But the recent bear markets offered further proof that the buy-and-hold approach is fatally flawed in that it fails to recognize the cyclical nature of the stock market. What most investors do not realize is that the buy-and-hold approach is based largely on a famous study known as the BHB report and a misrepresentation of the study’s findings.

Some financial advisors will mislead investors and tell them that there is no reason to make adjustments in one’s portfolio since the BHB study found that asset allocation, not individual investments, accounted for 93.6% of investment returns. What the BHB study actually found was that asset allocation accounted for 93.6% of the variability of investment returns, not the returns themselves,

Looking at only three types of investments, stocks, bonds and cash, the BHB study concluded that the variability of a portfolio’s investment returns increased as more money was allocated to the more volatile investments. In retrospect, this seems to simply be common sense. The key takeaway for investors is that the BHB study, however, did not study the determinants of actual investment returns, did not claim to do so, and made no representations regarding same.

Advocates of the buy-and-hold approach to investing often offer numbers regarding the cost of missing the “best” days of the stock market. As a trial attorney, I am always interested in the other side of the story, what is not being said. In this case, what is not being said is that recent research indicates that the benefits of avoiding the “worst” days of the market far outweigh the cost of missing the “best” days of the market.

A recent study by Javier Estrada of the IESE Business School found that missing the “best” 10, 20 and 100 days of the stock market (defined as the Dow Jones Industrial Average) during the period 1990-2006 reduced an investor’s returns by 38%, 56.8%% and 93.8%, respectively. On the other hand, Estrada found that avoiding the “worst” 10, 20 and 100 days of the stock market improved an investor’s returns by 70.1%, 140.6% and 1,691%, respectively. The study found similar results for the period 1900-2006. The difference in the numbers is due in large part to the fact that investors have to earn more, sometimes significantly more, than they lost just to break even and the time spent in making up for such losses constitutes an opportunity cost for an investor.

So what does this mean for investors? Does this mean that investors should engage in short-term market timing to avoid market corrections? Not at all, as trying to time the short-term swings in the stock market would be both costly and virtually impossible.

Absolute return investing simply acknowledges the cyclical nature of the market and then takes advantage of such nature to maximize potential performance. Those familiar with the classic book,”The Art of War,” will recognize this strategy of using the nature of things to one’s advantage as a cornerstone of General SunTzu’s strategies, but it is equally applicable to investing.

The truth is that most investment portfolios fail to take advantage of the nature of the market, as they contain too many investments with a high correlation of returns, meaning that the investments react in like manner to market conditions and therefore fail to provide an investor with adequate protection against downside risk. A 2007 study by Schwab Institutional reported that 75% of investor portfolios studied were inappropriate for the investor in light of the investor’s goals and/or financial situation. This unfortunate situation is often due to the shortcomings of the commercial asset allocation/portfolio optimization software often used by financial planners and investment advisers.

Fortunately, investors wishing to implement an absolute returns strategy can do so on their own and save the costs and expenses involved with mutual funds. There are a number of investment products currently on the market that can greatly simplify the process of constructing an absolute returns portfolio. By heeding the advice of General Tzu and focusing on investment alternatives that have varying levels of correlation of returns and monitoring the stock market to decide when portfolio reallocation or substitutions may be appropriate, an investor can effectively manage investment risk and improve their potential for investment success.

James W, Watkins, III is an attorney, a CFP professional and an Accredited Wealth Management Adviser. His areas of expertise include wealth preservation, wealth protection and fiduciary law. He is CEO of InvestSense, LLC, a registered investment adviser firm located in Atlanta, Georgia. For additional articles and information, visit http://www.investsense.com. Mr. Watkins can be contacted at tawj3@yahoo.com.

In the current financial marketplace, with low interest rates and market volatility, getting a really good return on your investments is difficult to achieve. Most investors are always looking for that special product or stock that offers extra special returns. However, to get the sort of returns that are significantly above average requires not just excellent research, analysis, financial advice – and luck; it also requires courage, as you are entering into the realms of risk-taking.

It is a truism that risk and reward go hand in hand – the bigger the potential investment return, the greater the potential risk of loss. So the question is, when it comes to investing your hard earned savings, have you got the stomach for what could be a roller coaster ride, in order to ensure you get the best possible investment returns?

As an investor, your attitude to risk is crucial and should be one of the first things that you discuss with your financial adviser. But discussing it is perhaps not enough, as it allows subjectivity to creep in, both on the side of the investor and adviser.

This is why several financial adviser firms now use risk-profiling tools to provide objectivity to the whole investment planning process. These tools are not just gimmicks but provide the basis for a meaningful discussion that is not “led” by the adviser.

The results can be surprising and can highlight gaps between an investors’ actual and perceived risk tolerance. They can also show disparities between the investors’ risk tolerance and current asset allocation. Also, if you are investing as a couple, both of you should take the test separately because it can highlight differences in attitudes that need consideration.

There are various tests out there, including some sophisticated online options. Several providers of investment products also offer risk and asset allocation tests but these should be treated with caution as they veer towards recommending their own products. Personally, I quite like the simplicity of questionnaires provided free by some financial advisers as they are quick and easy to complete, make you think and can lead to a productive dialogue with the adviser.

Most tests measure an investor’s risk tolerance and create a risk profile for that investor, along with a recommended asset allocation strategy.

Obviously other factors also come into play, such as an investor’s risk capacity. In other words, the investor may be willing to take risks but may not be financially well placed to do so. So the ability to absorb losses should also be taken into account.

Similarly, age and timescales have an impact. For example, whilst the attitude to risk of investors approaching retirement may still be gung-ho, they should perhaps consider safer investment options. On the other hand, even cautious younger investors looking at an investment window of 10 to 20 years will actually find that the likelihood of losses in equities is small and the returns greater. For them, equities carry far less risk than someone on a short timescale.

A final thought. Taking the test alone can help you, as an investor, understand your attitude to risk and whether your existing portfolio is right for you but it cannot help you pick products or investments. This is where you still need to talk to a quality financial adviser.

Chris Flood, MA (Oxon), MBA, is a marketing and management consultant based in Bristol UK. He writes articles on investments and financial planning as well as other subjects. To discover your attitude to risk, please go to http://www.kelland-gloucester.com/attitude-to-risk.asp.

Further information about Kellands Gloucester and its investment services can be found at http://www.kelland-gloucester.com

Banks offer a variety of products that involve different amounts of risk tolerance and reward. Many people are turning to CDs (Certificates of Deposit) as a safe way to invest their money while getting a good rate of return. But just how do CDs work and how secure are they?

How CDs Earn You Money for Both Short and Long Term Savings Goals

A Certificate of Deposit can be bought at any time and does not constitute opening an account, the way you would with a checking or savings account. Like a savings account, a CD earns interest, however it can earn substantially more because of the way it is built. With a CD, you agree not to withdraw your money during a certain period of time. As a result, the bank, such as Aurora Bank, rewards you by paying you compound interest on your deposit every day, and putting that interest toward your balance at the end of each month.

Getting Started with a CD

Banks want your business, which is why many of them are offering great CD rates that consistently beat the national average. Terms lengths can be as short as six months, to as long as five years with many different levels in between depending on the bank of choice. You can also buy multiple CDs with different deposit amounts and maturity rates to ensure that you have access to cash when you need it, while still getting the historically higher rates that CDs offer over traditional savings accounts.

Secured by the Federal Government

Unlike some investment products, CDs are backed by the solidity of the federal government. For member Banks, the FDIC insures bank deposits for up to the maximum amount allowable per person, per bank – including CDs. Not all bank products are FDIC insured, making CDs a safe way to store your money while making it earn extra income for you. Whether your savings goals are short term, long term or both, a Certificate of Deposit is a great way to earn a nice return just by saving your money.

That’s because CDs work on the principle of compound interest. Interest is compounded daily and paid back to you every month. You can even choose to have your CD automatically rollover into a new set term at its maturity date. However, if you know what to look for, a CD can offer several advantages over a traditional savings account.

Jess Hall writes out of Jersey City about different investment opportunities, including what to look for to find the best CD bank. Always looking for a trusted financial institution for advice and tips she tends to look to Aurora Bank FSB more often than not.

How to become better at managing money? The best way to start is to avoid making costly mistakes that will be pulling you down and taking months or even years to recover. Many financial blunders are easy enough to avoid once you know what to watch out for.

1. Decision Paralysis

Today there are so many choices, so many financial products and so many offers. It all bundled with financial jargons. It becomes really difficult for one to understand. Also there is plenty of information available on the web, on the media and on the neighbourhood. This makes decision making much more complex. All these things coupled with the fear of making a wrong financial decision lead us to the DECISION PARALYSIS. We don’t take any decision and start postponing it.

2. Ignoring Personal Finance

Most of us think that we need to work hard to make money and build wealth. I agree that you need to work hard but that is not enough. You work hard for money. How the hard earned money can be left idle? If you could focus on your personal finance, your money will start generating passive income with which you can achieve your financial goals with comparatively less effort.

3. Peer Pressure

Peer pressure plays a notorious role in taking wrong investment decision. One feels very safe when he takes the decision, which everyone around him/her has taken. But a product suitable for your colleague or your cousin need not be suitable for you.

4. Too early to plan retirement

You may be saying ‘who me? I am too young to be thinking about retirement”. It is not so! Rethink. You should have started thinking about it yesterday. Because time flies quickly. If you were smart, and planned for retirement when you are young, your retirement years will be really those “Golden years”. If not you need to compromise and you need to work longer and retire later than others.

5. Trying to make quick buck

Risk-Return Tradeoff Principle is a very basic and profound investment principle. Low level of risk is associated with low potential returns, whereas high level of risk is associated with high potential returns. So as to generate high returns one need to tolerate high risks. If you are comfortable only with low risks, you can expect only low returns. No one can defy this basic principle. A scheme cannot deliver high returns with low risk. There were no such schemes in the past. There are no such schemes in the present. There will not be such schemes in the future too. Finance company deposits which assured high interest rates have defaulted. One of the latest examples would be the ponzi scheme by Madoff. Whenever you hear about such schemes with low risks and high returns, you understand it is an illusion. It is better to ask more questions and get it clarified, instead of making assumptions.

6. Investing in things you don’t understand

If you are choosing to invest in a scheme which you don’t understand then you will also not understand what type of returns to expect. Do you understand the Highest NAV Guaranteed Schemes? Who gives the guarantee and what is guaranteed? Do you understand Futures and options completely? Ultimately from where does money come if you are profiting and where does the money go if you lose?

7. Investing in what is hot

If you are investing in what is hot, then you are following the crowd. If you follow the crowd, you will get what others are getting. You will not get anything more. You need to be fearful when others are greedy and you need to be greedy when others are fearful. So don’t go by the market trend or the hot pick of the month. Think like a contrarian and follow value investing.

8. Too many cooks

If you have different agents or advisors for different investment products (insurance, mutual funds, stocks…….), then none of them will know your complete picture. Their advice will be very limited and biased towards their products only. Too many cooks spoil the soup.
How to fix these financial blunders?

Give priority to your personal finance and spend some quality time on that. We all work for money. So we need to efficiently manage our money to secure our future.
Set your financial goals like kid’s higher education, buying a home or retirement with more details. Work out a personalised comprehensive financial plan to achieve the goals. Then create an action plan for the year in sync with the comprehensive financial plan. Be committed to your financial plan.
Obtain assistance from a professional financial planner who has knowledge and access to all financial products in the market. Ask the right questions and understand the plan and products before proceeding on the same.

These tips will refrain yourself from making those financial blunders and managing your money better. To know more about it you can download FREE SEPCIAL REPORT by clicking the link http://www.holisticinvestment.in

In the past, traditional energy companies represented excellent investment opportunities for savvy individuals. With more importance being placed on green sources of energy, an individual may be considering investing in alternative energy. When considering an alternative energy investment, most individuals are faced with three investment products to choose from including mutual funds, ETF’s, and stocks. Each of these options represents certain advantages and disadvantages over the next and it is up to the individual investor to determine which best fits his or her needs. Climate change, political pressure, and the demand for new sources of energy all represent compelling reasons to consider alternative energy investments.

Mutual funds may be the best way to invest in alternative energy for individuals that have time for their investment to grow incrementally. Individuals that are interested in investing a lump sum or who want absolute transparency in their investments should consider ETF’s, or exchange traded funds. ETF’s make it possible for an investor to know exactly which companies their money is going to. Purchasing individual stocks is a good way for an individual to make a concentrated investment, but they are much more volatile and place the individual at a greater risk of losing their money.

There are also specific industries that fall under the umbrella of alternative energy which may represent unique investment opportunities. For instance, an investor may have a personal interest in such alternative energies as geothermal energy, wind, or solar energy. By purchasing ETF’s, an investor can determine exactly which corporations his or her money goes to. An investor that has a preference for solar energy, for example, but who does not have a favorable opinion of ethanol will have the opportunity to focus his or her investments on that particular energy while avoiding the other.

When it comes to investing in any type of energy, whether it is alternative energy or more traditional types, an investor should carefully and thoughtfully consider every purchase. As with any other type of investment, there are risks associated with placing money in alternative energy investments. An individual should never invest more money than they can comfortably afford to lose. By carefully researching each company and gaining a better understanding of the way that stock is traded, a person can make a better decision regarding when and how much of their money they are going to invest. Savvy investors understand that when it is done correctly, it is possible for the benefits to outweigh the risks of investing.

For more information on investing in investment opportunities usually or normally not found in the marketplace, click here!

Sean Johnson is an Investment Advisor for http://www.inquest.biz an Investment Referral Service for investors requesting information on specific investments.