Investment Articles

The Thrift Savings Plan currently offers ten investment funds. Five are U.S. and international stock and bond index funds: they replicate the performance of broad market indexes. The other five TSP funds, the Lifecycle Funds, are professionally managed portfolios which consist of a specific target allocation of the 5 individual TSP index funds.

The TSP Funds contain a diversified portfolio of thousands of individual stocks and bonds. Investing passively in index funds such as these is generally considered to be a good retirement savings strategy. The alternative is for you or an investment manager to actively pick individual stocks and bonds to buy and sell. Apart from being impractical for individual investors, this latter strategy usually also leads to inferior investment results: research has shown that most professional active fund managers under-perform a passively managed portfolio of index funds such as the TSP funds.

Here’s a summary of the five primary TSP Funds:

The G Fund is invested in U.S. Treasury securities which are guaranteed by the U.S. government. The nice thing about this fund is that it’s practically risk free (your investment is guaranteed not to lose any money), and yet the interest rate is substantially higher than what you would earn in other safe investments like bank savings accounts, certificates of deposit, or money market funds. If you are very risk-averse, this is definitely the place to park your savings.
The F Fund is a bond index fund, invested in high-grade U.S. government and corporate bonds. Its performance is very similar to the private sector iShares Barclays Aggregate Bond ETF.
The C Fund is a U.S. stock index fund that mirrors the returns of the S&P 500 Index, which consists of large U.S. corporations. Its returns are essentially the same as the SPDR S&P 500 ETF.
The S Fund is invested in the stocks of small to medium-sized U.S. companies. It’s designed to complement the C Fund, so if you invest in both, you basically own shares in almost all U.S. stocks. There aren’t a lot of index funds that track these companies, but if you own both the TSP S Fund and C Fund, then your investment returns will correlate closely to a broad U.S. stock market index fund like the Vanguard Total Stock Market ETF.
The I Fund is allocated to international stocks. It allows you to diversify your portfolio by investing in the stocks of companies in more than 20 developed countries in Europe, Australia, and Asia. There are several private sector equivalents to the I Fund, including the iShares MSCI EAFE Index Fund.

The other five funds, the TSP Lifecycle Funds, consist of professionally managed investment portfolios designed to meet investment objectives for a specific target date (the date on which you plan to begin withdrawing your money). The L Fund assets are invested in the individual TSP funds (the G, F, C, I, and S Fund) according to a target portfolio allocation which is adjusted every 3 months. The target allocation starts out risky, with a large percentage of stock funds such as the C, S, and I Fund. As the target date approaches, each L Fund becomes gradually more conservative, by shifting a larger portion of your assets into bonds such as the F Fund and G Fund. This investment strategy assumes that, while you’re still a long time away from retirement, you’re willing to take on greater risks in order to increase your potential investment returns. Also, while you’re still at the start of your career, you have a longer period to recover from potential investment losses, considering that you’ll continue to make monthly contributions to your account for many years.

Depending on your personal circumstances and target retirement date, you choose one of the five L Funds: L Income, L 2020, L 2030, L 2040 or L 2050 Fund. The L Income Fund is the most conservative asset mix and assumes that you’ve already started withdrawing your savings. The L 2050 Fund is the most aggressive allocation, currently 90% stocks and 10% bonds.

Benefits and Disadvantages of Investing in the TSP Funds

Many investment advisors recommend that for long-term retirement savings, you buy and hold a low-cost, broadly diversified portfolio of domestic and international stock and bond index funds. With the available TSP investment funds, you can do an OK job at this. By investing in all five individual TSP funds, or in one of the Lifecycle Funds, you’ll have a decent portfolio, with an ownership share in thousands of U.S. and international stocks and U.S. bonds. And the TSP funds have extremely low annual expense ratios, several times lower than comparable private sector mutual funds and ETFs, keeping more of your money working for you.

So what’s wrong with the list of currently available TSP investment choices? Some investors want to own Emerging Markets stocks (in addition to the Developed Markets international stocks in the TSP I Fund). Or an allocation to real estate (REITs), or inflation-protected securities (such as TIPS). And some would even like access to more exotic investments like international bonds, high-yield bonds, and other hedges against inflation (commodities and precious metals like gold and silver). Professional advisors would differ on how suitable these investments are. Most would agree that TIPS are a good idea, and for more risk-tolerant investors, perhaps a small allocation to REITs and Emerging Markets stocks.

One great benefit of investing in an L Fund is simplicity: it’s a “set it and forget it” investment plan. You choose an L Fund, determine your monthly contributions, and the fund administrators take care of everything else: regular portfolio rebalancing, and gradually adjusting the asset allocation as you approach retirement. But there are also a few downsides. First, the L Funds with the longer time horizons are fairly risky allocations (for example, currently 90% stocks and 10% bonds for the L 2050 fund), and you should make sure that you can stomach the inevitable volatility as a result of owning a portfolio dominated by stocks. If you’ve owned stocks for the past decade then you already know this: it can be quite a bumpy ride. Also, some investors want more control over their exact portfolio components, when to rebalance, and how soon to start shifting the allocation to a more conservative asset mix as they approach their planned retirement date. Some investors also prefer a tactical asset allocation, shifting their mix based on asset class trends, economic circumstances or other criteria. Owning a portfolio of the individual TSP funds will work better for these investors.

Learn more about the TSP Funds and get daily price and performance updates at http://www.tspfolio.com/tspfunds

Contemporary art is, with very few exceptions, much cheaper than the work of past masters. This is true of generally all works of art, and especially of paintings and sculptures. Hence art investments are considered by some lucrative, since you don’t need that much money to start them. Yet as it often happens with investments, things are not as simple of that – there are some points to consider before you decide to invest in contemporary art.

Investing In Contemporary Art Is Not Necessarily Cheap

Good art, the one that has the potential to significantly increase in value in time, is never cheap. Contemporary art is no exception. Truth be told, only a limited number of current works of art are expected to become highly valuable in the decades to come. These are the best to invest in, yet of course they are for the most part already highly valuable, not to mention close to impossible to acquire, having already privileged possessors. The remaining art pieces, the affordable ones, don’t have a place in art history guaranteed, and investing in them will always be a bit of a gamble. Hence safe art investments are not at all cheap.

Invest In Contemporary Art If You’re Uncertain About the Economy

It’s generally agreed that investments in art are good for keeping your money safe during periods when there are great fluctuations in the economy. Good art is timeless, and its value almost never depreciates suddenly. Good art is no exception, yet note that safe investments are only those made in enduring pieces that are sure to be talked about in a few decades. Knowing how to spot these rare pieces is an art in itself.

Investing In Contemporary Art Will Not Make You Rich Overnight

It takes an art savvy with a lot of money to spend and extremely favorable market conditions to make a lot of money from an art investment. Most investments bring moderate gains, and this over a number of years. So, if you want to invest in contemporary art you don’t only need a nice budget, but also a lot of patience. If you’re not sure to possess the latter, then art investments may not be for you.

In conclusion, contemporary art investment are worth it, especially if they are used as a means to safe guard already acquired wealth, rather than for making a lot of money quickly.

If you are looking for best investment opportunities such as investing in art, wine, shares, gold, silver, property, etc. experts at Compare the Financial Markets will help provide valuable assistance.

The best investment strategy for 2012 and beyond will differ from the popular investment strategy offered by most investment advisers and financial planners today. The investment landscape has changed. Here’s a strategy for making the best of it.

Up until recent times you could stay out of serious trouble by simply allocating about half of your investment assets to stocks and the other half to bonds. That’s the traditional investment strategy often recommended for average investors, and most people deal with it by putting their money in stock funds and bond funds. Stock funds are the growth half of the equation and the risky part of the strategy. Bond funds are considered the relatively safe investment designed to pay higher interest income. Over the years losses in one fund type were usually offset by good returns in the other.

Welcome to the year 2012, where bonds and bond funds will likely not be such a safe investment. Stock funds are never safe and 2012 will be no exception to the rule. Asset allocation will be only half of the story going forward. Selecting the right funds within each category will be the other key to success. Let’s look at your best investment strategy in both fund categories, and the reason why certain funds will be your best choices.

Two things stand out about the so-called recovery the USA has supposedly experienced over the past few years. First, the economy did not recover as it has in the past after a recession – 9% of the working force is out of work. This makes for a weak economy and puts pressure on the stock market and stock funds. That’s why you’ll need to be careful about which stock funds you include in your investment portfolio.

Second, interest rates have been driven down to historically low levels to stimulate the economy in general and the pathetic housing market. Even with a 4% mortgage rate average folks can not qualify for a mortgage or afford to buy a house. Today’s ridiculously low interest rates mean savers can not earn a respectable interest income in truly safe investments. It also means that bond funds could be a trap in 2012 for people who don’t really understand bonds and bond funds. Let’s look at the best bond fund strategy first.

Even the best bond funds of the past few years could be big losers in 2012… if they hold long term bonds in their investment portfolios. When interest rates turn around and go back up the bonds they hold will lose significant value because new bonds will become available that pay more attractive (higher) interest income. Your best investment strategy for bond funds is to own funds that hold corporate bonds that mature in about 5 years to 7 years. CORPORATE BOND FUNDS pay more interest income than similar funds that invest primarily in government bonds. Funds that hold bonds maturing in 5 to 7 years (intermediate term bond funds) will be much less affected by rising interest rates than long term funds holding bonds that mature in 20 years or more. That’s a fact, and that’s how bonds work.

Your best investment strategy for stock funds will be to go with GROWTH AND INCOME funds that invest in high quality companies with a history of paying 2% or more per year in dividend income. If the stock market gets truly ugly in 2012 and beyond these funds will be your best bet to sidestep huge losses. In a bad stock market funds that pay little or nothing in dividends are usually the big losers.

Sometimes it pays to be aggressive and take on more risk. The year 2012 looks like a time to get more conservative and live to be a risk taker another day. Most investors need to hold stock funds and bond funds as well as truly safe investments like bank CDs. Your best investment strategy for 2012: allocate your investment assets with 40% going to INTERMEDIATE TERM CORPORATE BOND FUNDS and the same going to high quality GROWTH AND INCOME STOCK FUNDS paying 2% or more in dividend income. The other 20% of your investment portfolio goes to safe investments like bank CDs.

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.

During the economic crisis of the past decade, markets and industries crashed and hundreds of companies and millions of people were caught with their pants down. This ordeal has taught everyone the value of security during uncertain times. One of the surest ways to buffer yourself from economic crunches is by making sound investments. While there are traditional investment strategies available to first-time investors, alternative investments are rapidly gaining momentum, and for good reason.

Alternative Investments: The Basics

Alternative investments refer to investment strategies that go beyond traditional investments like stocks, bonds, cash, or property. Popular financial assets in the alternative investment category are:

1. Hedge Funds

2. Private Equities

3. Financial Derivatives

4. Venture Capital

5.Commodities

They also include several tangible assets including, but not limited to, the following:

1. Wine

2.Antiques

3. Stamps

4. Art

5. Coins

Characteristics of Alternative Investments

Unlike traditional investment strategies, alternative investments are not direct fixed-income or equity claim on the assets of an issuing body. They are complex in nature, so most of these assets are held by accredited, high net-worth individuals. They also tend to lack liquidity and have a low correlation to traditional financial investments such as shares of stock in a company. This low correlation adds to its appeal, especially with investors who are looking to diversify their investment portfolio (the low correlation coefficient will be discussed in depth in a later section).

Also, compared with more common investments like mutual funds, alternative investments have higher minimum investment requirements and fee structures. The cost of purchase and sale is relatively high. In addition, they are subject to less regulation. While this may be good on one hand, it also has the effect of limiting opportunities to publish verifiable performance data. Hence, historical data on risk and returns may be limited. This data could be useful in promoting an alternative investment to potential investors.

Because current market values of some forms of assets are difficult to determine at the least, it is imperative for investors looking to invest in alternative investments to conduct proper due diligence. This especially applies to tangible assets like artworks and wine.

Some investors consider alternative investments as a good means to diversify their portfolio, thereby reducing overall investment risk. However, this is not the only reason why more and more investors are now looking into expanding their financial prospects via alternative channels.

The Appeal of Alternative Investments: Low Correlation, Absolute Return

Although there are a number of alternative assets presently being offered in the marketplace, a common characteristic among these numerous options is their low correlation coefficients with both fixed income and equities. Low correlation is considered important when choosing assets for inclusion in a portfolio, primarily because assets that are relatively uncorrelated with both bonds and stocks tend to have minimal exposure to systematic market risk factors. Absolute Return Strategies – strategies that seek a low correlation to systematic risks in the market, make it their objective to attain relative independence from the underlying equity or fixed-income market benchmarks’ overall performance.

Absolute return does not come without its challenges, however. There are potential constraints on the upside. To illustrate, when broader stock markets are picking up, investors with low-correlation alternatives may see their portfolios performing weaker in relation to those with traditional assets. This somehow implies that absolute returns can be maximized in negative market climates and tend to underperform during positive economic climates.

The Economic Atmosphere for Alternative Investments

It would not be an understatement to say that alternative investments were, for the longest time, reserved mostly to high net-worth investors. The broader retail market finds the field of alternative investments difficult to penetrate because of reasons mentioned earlier in this article:

- High minimum investment sizes;

- High minimum fee structures; and

- Assets with no liquidity.

Recent years show a change – an evolution – in the economic atmosphere, where alternative investments are concerned. Progress in global financial markets has developed and provided greater opportunities and a wider range of products through which more investors can enrich their portfolios with alternative assets. Directional alternative assets like commodities, real estate and foreign currencies, as well as hedge strategies like buy-write become accessible to more investors through exchange-traded funds (ETFs), exchange-traded notes (ETNs), and mutual funds.

These options were not available until recently. With increasing entry points into alternative investments, investors now find themselves able to participate in innovative investment approaches that promise increased profits. If alternative investments appeal to you, now would be the best time to start investing in alternative assets.

PublicMining.org is a free resource about the mining industry for the discriminating mining investor.

It’s difficult to decide where to put your money these days.

I mean, really – what are our primary “safe” investment choices today?:

Bank account? Sure, however the paltry interest you’d receive would be completely outpaced by inflation. You would actually lose money keeping it in a checking (or savings) account.

Certificate of Deposit (CD)? Basically a glorified bank account. You’d get more interest than a normal checking/savings account, but not by much. The biggest downside is that you lose liquidity, since you have to “lock up” your money for a specified period of time.

Money market account (MMA)? Better than a CD in terms of liquidity, but pays less interest. You may get penalized if you write more than a certain number of checks. It’s a medium between a checking/savings account and a CD.

401k? This is perhaps the most UNsafe option of them all. Expense ratios are rising (the costs of using mutual funds, which typically make up a 401k), and the markets have dropped and or have been otherwise very volatile over the last few years. It will be a very long time until they stabilize again.

US Treasuries? Once considered the safest investment, the United States is increasingly becoming in danger of default on their debt. This fact led to the downgrading of the country’s credit rating. Would you feel safe putting your money somewhere that you might not see again, never mind earn interest?

Real Estate? Now we’re getting warmer. The only problem with traditional real estate is that it’s expensive! Having a 20% down is a must these days, and for most people, they simply don’t have that kind of cash.

So where is a savvy investor supposed to put money where he or she can profit, no matter if the investment succeeds or if the investment falls through?

Enter tax lien certificates. Tax lien certificates offer high returns with very little risk, which is precisely why less-savvy investors have misguidedly called them a tax lien certificates scam.

When back property taxes are owed, the county issues a lien on the property. Wanting to get their taxes, the county holds auctions for these liens which investors can buy (for the price of the owed back taxes).

Typically, the returns are between 16-18% which is set by the county to encourage delinquent owners to pay their taxes, and also interest investors in buying them.

Plus, because the lien is backed by a real asset (the property itself), if the delinquent owner completely defaults on the back taxes owed, the lien holder get the property free and clear.

There is a lot more great information about tax lien certificates available at http:/www.taxliencertificatesscam.com, along with resources to help you get safely started investing in tax liens.

U.S. Treasuries are considered one of the safest investments in the world. Why? Just take a look at the yield on the 10 year bond; despite the deadlock in Washington and the media induced fear that the U.S. may default on its debts, the world still believes that the U.S. will not renege on its debt. As a matter of fact, while the stock market declined recently because of inaction in Washington, the yield on the 10-year bond actually dipped below 3 percent (when investors buy Treasuries, the yield goes down). Because U.S. Treasuries are perceived to be risk-free, they are used as a bellwether for other bonds as well. Corporate and municipal bonds are compared to U.S. Treasuries to assess their risk; when the interest rate between a non-Treasury bond and a Treasury bond is wide (also known as spread), the Treasury bond is considered riskier, and vise versa. But just because the U.S. Treasury is assumed to be default proof, it does not necessarily mean that it is risk free. While default risk is important to consider, investors must also recognize that bonds exhibit other risks beyond default risk. Below is a list of the different types of bond risks investors should be aware of.

Default risk – is the risk the borrower (U.S. government, municipality, or a corporation) will not make interest payments as promised. Investors perceive U.S. Treasuries to be default proof because they believe the U.S. will always pay its obligations. Many investors falsely believe that municipalities are also default proof, but in 1994, Orange County, California defaulted on its debts.

Interest rate risk – is the risk that interest rates will change after issuance. For example, assume an investor buys a 10 year bond for $1,000 paying 4 percent annually, which means the investor will receive $40 per year for 10 years. The investor is exposed to interest rate risk because if interest rates increase, the investor will still receive $40, but the price of the bond will decline because no one would want to pay $1,000 for a bond paying 4 percent when the market interest rate is higher than 4 percent; the reverse is true if interest rates decline. The change in the price of the bond given a change in interest rates is measured using a term called duration.

Reinvestment risk – Continuing with the same example from above, as the investor receives $40 in interest payments every year, it is assumed that he/she will reinvest that interest payment at prevailing market rates. If prevailing market interest rates are below 4 percent, the investor is exposed to reinvestment risk because they will reinvest those payments at lower rates.

Liquidity risk – Liquidity is the ability to buy or sell an investment quickly without difficulty. Bonds do not trade the same way as do stocks. Whereas stocks are easily traded throughout the day on an exchange where there are usually thousands, if not millions of shares traded in a single day, bonds (except for U.S. Treasuries) are traded through bond dealers where trades occur much less frequently. This infrequency of trading within the bond market leads to stale prices and liquidity risk.

Spread risk – As mentioned in the opening, U.S. Treasuries are used as a bellwether for other bonds, and a bond’s riskiness is measured by the spread between its yield and that of a comparable Treasury. Hence, spread risk is the risk that the bond’s yield will widen against that of a comparable Treasury; the wider the spread, the greater the risk of the bond.

Downgrade risk – Bonds are rated by major credit rating agencies, despite whether investors still trust the rating agencies given the Mortgage Backed Security debacle. Nevertheless, bond ratings are important for many investors, especially institutional investors such as banks, endowments, pensions, etc. Such institutions have policies that prohibit them from owning low grade bonds, so they rely on the ratings to screen bonds. Downgrade risk is the risk that a bond will be downgraded by one or more of the credit rating agencies and lead to a sell off among those bonds.

I identified six risks of investing in bonds. However, there are additional risks that apply to complex bonds as well. When bonds have more unique features such as calls, puts, zero coupons, etc., the risks multiply. Many investors wrongly assume that if they invest in a bond and hold it to maturity, that they are not taking any risk. But as you can see from the various risks identified above, investors must be aware of the complexities associated with investing in bonds, and learn how to manage those risks.

ACap Asset Management is a Fee-Only financial advisory firm providing comprehensive financial advice specifically tailored for doctors’ needs.

Ara can be reached at aoghoorian@acapam.com, on the web at http://www.acapam.com, or on Facebook by searching ACap Asset Management.

In a previous article “Are Your Emotions Costing You Money,” I examined traditional and behavioral finance theories, and identified several biases that interfere with investors’ ability to make sound investment decisions. In this article we delve deeper into each of the biases, and explore simple, yet effective ways to overcome those biases. While there are a multitude of behavioral biases, this article will focus on three: mental accounting, anchoring, and overconfidence.

Mental Accounting – is the process whereby investors categorize their assets into separate mental “buckets”, and thus spend or allocate funds differently. Some examples: Susan receives a monetary gift for her birthday and uses it to go out for a gourmet dinner; Bill allocates his year-end bonus for Christmas presents; upon receiving his tax refund, Sam takes a vacation he hadn’t built in to his regular budget. Research corroborates these examples; people do tend to spend their tax refunds differently than they spend their normal wages. Interestingly, in the past several years surveys show that Americans are spending their tax refunds to pay down debt in an effort to deleverage their household balance sheets. When investors practice mental accounting such as those in the examples above, they tend to view and assess individual assets separately instead of as a part of a total portfolio.

Anchoring – is when an investor latches on to the first bit of information they receive and is unwilling to accept new information. Assume John purchased a home for $500,000 at the peak of the market and is now trying to sell his home in a depressed real estate market; he would be reluctant to list or sell his home for less than $500,000 because he is emotionally anchored to that “value” for his home. When investors exhibit the anchoring bias, they are unwilling to accept new information that is contrary to their the view that his home is worth $500,000 when it fact it might be worth much less. The risk here is that because John is anchored to his price, he may not be able to sell his home in a timely manner, which in-turn may have detrimental affects on his finances and portfolio, not to mention the possibility that the home value could decrease even further.

Overconfidence – Investors who are overconfident overestimate their ability to analyze data. Suppose Jane made some money on Cisco stock, she would begin to believe that she has a keen ability to identify all upward trending technology stocks. As a result, Jane would begin to buy more and more technology stocks, and thus her portfolio would become less diversified – diversification is one of the cornerstones of a balanced portfolio. Additionally, investors who are overconfident tend to not only have more concentrated portfolios, but also trade more frequently because they have an illusion of control that they can sell or buy at the “right time”. Many investors who exhibited the overconfidence bias during the dot-com era and the subsequent real estate boom, found themselves to be overexposed when that sector had a sharp reversal, and as a result lost most of their assets and wealth.

Overcoming Biases

As you have read, an investor’s emotions can have detrimental effects not only on his/her portfolio, but also on stress level. The good news is that there are ways to significantly reduce these effects. Here are five things you can do right now to avoid some common behavioral biases.

1. Stop watching the daily news. News networks draw ratings by evoking viewer emotions; TV is meant to incite not inform. Watching news every day causes investors to react emotionally, rather than analytically and strategically.

2. Don’t look at your portfolio everyday. Investors who check their portfolios every day tend to trade more frequently and take on more risk.

3. Don’t fall subject to the anchoring trap. Read contradictory news. Actively seek news stories that differ from your viewpoint, and give them equal weight.

4. When evaluating investments, don’t just look at the risk and return characteristics of that individual investment. Rather, analyze how that particular investment will impact your total portfolio, and determine whether it will enhance your total return, minimize risk, or both.

5. Lastly, work with a Fee-Only financial advisor to develop a sound financial plan that is specific to your needs. Remember that investing is a long term endeavor, so stick to that plan!

Behavioral finance is a relatively new field of study and academics are continuously researching new relationships between investor emotions and their finances. While financial experts have identified a multitude of investor biases, the three detailed above have the most acute consequences, and yet can be overcome when investors are willing to slightly change their habits.

ACap Asset Management is a Fee-Only financial advisory firm providing comprehensive financial advice specifically tailored for doctors’ needs.

Ara can be reached at aoghoorian@acapam.com, on the web at http://www.acapam.com, or on Facebook by searching ACap Asset Management.

The best time to plan your best investment strategy and pick the best funds for 2012 is now, because last year’s investment strategy and best funds could put you in the poor house by year end 2012. There’s a rocky road ahead for stocks and bonds, and you’ll need a new strategy and the right funds to keep your investment portfolio balanced and out of serious trouble.

For the average investor the best investment strategy will still revolve around bond funds and stock funds in 2012, but the focus will change. The best bond funds will be more defensive, and the best stock funds will be more conservative and income oriented. The USA and much of the free world is facing heavy debt problems on the one hand and slow economic growth one the other. Defense is the name of the game going forward. If you can sidestep heavy losses now and throughout 2012: you will be in a position to step up to the plate when the dust finally settles.

The best bond fund investment strategy is to hold SHORTER-TERM high quality CORPORATE bond funds – and NOT long-term funds that invest primarily in government securities. If interest rates take off long term bonds will fall substantially in value. A mutual fund holding issues that mature in about 5 years will be hurt much less than one that holds long term maturities of 20+ years. That’s not a guess. That’s how the bond market reacts to rising interest rates. I suggest going with corporate vs. government bond funds for two reasons. First, corporate bond issues pay higher interest than U.S. Treasury notes and bonds. Second, corporate America is in excellent financial shape vs. the U.S. government.

The best investment strategy in the stock department is to avoid or sell equity (stock) funds that invest heavily in growth and/or small-company stocks. These often pay little or no dividend income to investors, and in a volatile and declining stock market these funds can get clobbered. The best stock funds for 2012 will be EQIUTY INCOME large-cap funds that invest in high-quality major corporations with excellent records for paying above average dividend yields. A 2% to 3% dividend income might not make you rich, but a steady reliable income stream from America’s highest quality companies tends to cushion portfolio losses in a bad stock market.

Over the past several years I have included owning gold, gold stocks and gold funds as part of my recommended best investment strategy. For 2012 I no longer include gold in my investment strategy, primarily because gold’s price has become extremely inflated over the past few years. Gold has become more of a speculation than a hedge against inflation or disaster. Instead of holding gold I would suggest putting some of your investment dollars in an insured account at your local bank. Sometimes cash is king, especially when interest rates are extremely low and rising. Money market funds are the best funds for safety. When rates move up they should become quite attractive as a safe haven for investors.

Both the best stock funds and best bond funds for 2012 will be defensive in nature. They will also have something else in common… a low cost of investing. Keeping costs low is always an ingredient in the best investment strategy for average investors. Invest in low-cost no-load INDEX funds whenever possible to automatically increase your total returns by 1%, 2% or more year in and year out. That might not sound like much, unless you consider that you haven’t been able to earn 2% in safe liquid investments for the past few years.

In summary, your best investment strategy for 2012 and going forward: an even split between relatively short-term corporate bond funds and high quality large-cap equity- income funds. The best bond funds and best stock funds in these categories will be low cost no-load (no sales charges) INDEX funds with low yearly expense ratios. The best safe investments may be found by shopping local banks or credit unions until interest rates really take off. After that the best safe investment will likely be money market mutual funds.

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 no surprise that the rates of private number plates are on the increase, with the amount of infallible, incredible cars being produced in our modern society. With these personal products once being a tradition for luxury vehicles, it is becoming more common for people to represent themselves, a company or industry upon their vehicle. It is therefore, no further surprise that people wish to add the cherry to the top of their cake with a private and unique number plate to their car. With such high desire and demand, wide audience and high market; investing in private number plates could be the cherry added to your cake of business.

Many private number plate companies try to enable investment in this sector to be as simple and applicable as possible. With a few simple steps and tips, you can be well on your way to a very successful alternative investment. As the audience in this certain investment is wide, you are almost assured to always have a customer. From teenagers who have just passed their driving test, males, females, adults, businesses and companies and many more; the lisence plates may vary but can apply to many. A tip in investing personal or private lisence plates is to invest in those that seem fairly common, such as names and numbers.

Another path into investing private number plates for customers is to receive the desired plate by the individual and then hit an online search engine. Many private number plate companies behold ‘quick private number plate searches’ in which portrays as to whether that specific number is available or not. Names of individuals or companies, addresses, numbers and even initials can be entered into these searches as criteria. The plates will then be offered, which can then be referred to the customer and they can take their choice of the plate they think fits best. Purchase options are also available online, where there is a choice for you to have a free transfer service or to do a self transfer with a certificate which the customer can then take to their local DVLA office.

An alternative to this is to use the DVLA as your main buyer. This shares its advantages and disadvantages, such as the DVLA being well known and trustworthy but also possibly lacking the numbers and letters desired. If the plate you covet to purchase is not available directly from the DVLA however, Cherished Number Plate Dealers may be your answer. Here, more websites and search engines shall appear for you to do your ‘quick private number plate search’ as stated above.

Buying from reputable suppliers is also important for the best results in your investment. There are three main number plate dealer associations; The Association of Personalised Registration Traders (APRT), The Cherished Numbers Dealers Association (CNDA) & Members of the Institute of Registration Agents & Dealers (MIRAD). All of these associations willingly offer help to any possible or certain investors. There are other dealers that you can get involved in, but levels of professionalism can vary. This does not however lower the individual dealers; it just means that it could be considered a question as to whether they wish not to be a member with a trade organisation.

This is beginning to prove to be a safe investment, whether for mid-term or long-term periods of time; with share prices falling and an increased demand for the product. The biggest tip that can be given is that the investment should of course be researched so that you can find for the right path which suits your needs and availability.

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Can you always find a winning investment? What about when the markets are in turmoil either from economic forces, nature’s disasters or political forces?

The answer depends upon two factors: how you define “winning”, and when you want the stock, ETF or fund to produce gains.

When the markets are in turmoil and almost everything is dropping there may be safe havens that can be defined as winning investments. These include: bonds (or bond ETFs and bond funds), money market cash accounts, and high yield dividend paying stocks, funds or ETFs with trong long-term history of always paying their dividends. Winning investments in these situations can also be based on the concept of buying low with the idea of holding the position for a mid to long term measured in years, not days, weeks or months.

While most software programs that provide buy – sell recommendations are based on immediate trends there are a few programs that allow you the option of configuring them so you can pick long term investments or safe investments. You can do this in a variety of ways. One method would be to include a few “safe” type positions in your regular groups so that when most ETFs, stocks or funds are underperforming the analysis will shift towards these safer positions that will then reduce risk while offering modest gains.

Another method would be to create a group of high dividend yielding investments, either stocks themselves or ETFs or mutual funds. By setting the buy rules based on long term investing you would reduce turnover and volatility while maintaining minimum risk with modest gains or income.

Fundamental analysis can also be used to find long term investments. This is the method used by Warren Buffet. This method requires careful study of potential positions over many days and weeks before a buy decision is reached. When the markets are down or in turmoil such analysis coupled with the willingness to reap results in the distant future can bring excellent gains.

Who can best utilize these approaches?

Everyone. Some investors think these approaches don’t apply to them because they want to make money “today” or because they are either nearing retirement or are retired. But when the markets are convoluted putting pat of your portfolio into safe areas is simply a way to reduce risk and maintain your portfolio’s value. Retirees today need to remember that life expectancy is growing and keeping a vibrant portfolio with long term potential is critical.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana.

View his software at: http://www.dynamicinvestorpro.com