Investment Articles

You probably don’t believe me. You probably think that successful investors have impressive IQs and “whizz kid” math brains. Some do. But, believe me, most don’t.

The common thread among most successful investors is far more mundane than that. What they have is discipline and an ability to conquer their emotions. Or as Warren Buffett puts it, “To invest successfully does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding the framework.”

If you’re still skeptical, think for a moment about poor Sir Isaac Newton, one of the most intelligent and influential men in history. Newton may have built the first refracting telescope, laid the groundwork for classical mechanics, and developed differential and integral calculus…but he didn’t have much luck when it came to investing.

In 1720, Newton owned shares in the world’s hottest stock, the South Sea Company. Claiming that he “could calculate the motions of the heavenly bodies, but not the madness of people,” he sold his South Sea Company shares for a 100% profit of £7,000 (about $1 million in today’s money).
So far, so genius…

But Newton, despite all his intellectual prowess, lacked the ability to keep his emotions in check. Just seven months later, swept up in the speculative mania surrounding the South Sea Company, he bought back into the stock…and lost £20,000 (or about $3 million in today’s money).

What Newton didn’t “get” (oddly enough for the world’s most renowned physicist) was the pendulum-like nature of the markets. That excesses in one direction in asset prices inevitably lead to excesses in the other direction in asset prices. Newton’s tale is a constant reminder to me in my work helping families and individuals preserve and grow their wealth.

As Buffett’s mentor, Benjamin Graham, put it, the one risk you can never eliminate is the risk of being wrong. But you can minimize this risk by subjecting your investments to a disciplined framework, such as the one we have developed for Bonner & Partners Family Office. This includes a well-diversified portfolio, a proven market-timing system, and quarterly reviews only of the core portfolio.

This may not sound sexy. But if Newton had used such a framework, while he may have missed out on his £7,000 profit on his South Sea Company stocks, he would certainly have avoided his crushing £20,000 loss.
According to a history of the South Sea Bubble, for the rest of his life Newton forbade anyone to speak the words “South Sea” in his presence.

Maintaining wealth for generations doesn’t happen by accident. In fact, the serious money knows that keeping money is even harder than making it in the first place. It demands above average returns from safe investments… significantly reduced tax liabilities… family coherence… and carefully thought out ways to pass on wealth to children and grandchildren. It’s in the spirit of these family offices that we bring you the first comprehensive look at what it takes to push your wealth to the next level and maintain it, not just for your lifetime, but for generations to come. Simply put, the Bonner & Partners Family Office is a wealth preservation forum for people who are serious about their money. We will soon invite a few non-family members to join us.

http://www1.internationalliving.com/opt/bfo

Knowing how to invest money in 2010 and beyond is crucial, because if you invest money too casually or invest too aggressively you’re asking for trouble if we revisit the credit crisis. Knowing how to invest in good times is one thing; and how to invest money in 2010 and beyond is quite another. Here we cover safe investments, bonds & bond funds, and stocks & stock funds with emphasis on funds.

Sovereign debt has become an issue. Some countries in Europe are awash with debt, and they are not alone. The U.S. has $12 trillion in debt, $40,000 for each person in the USA. Like the emperor’s new suit… the truth is now obvious. With interest rates at historical lows and inflation benign, how does anyone in financial trouble, including a country, borrow money to stay afloat? By paying higher interest rates to offset the risk of default. So, here’s how to invest money in 2010 and beyond while protecting yourself.

First, how to invest in safe investments. Keep a modest amount of money liquid for emergencies in a money market fund or savings account at the bank. Then, with the bulk of the money you have earmarked for highest safety, shop for CD rates. Here’s how to invest in CDs to earn better rates without tying money up for several years at a fixed rate. No one wants to pay penalties for early withdrawal, or to sit on a fixed rate as interest rates go up.

Build a CD ladder. For example, let’s say 1-yr, 2-yr, and 3-yr maturities pay 1%, 2%, and 3% respectively. Invest money in equal amounts in each initially… then rolling over the proceeds from maturity each year into a new 3-yr CD. Each year you will have a CD maturing, you’ll be taking advantage of the 3-yr higher rate each year, and as rates fluctuate you will be going with the flow. Now the question is how to invest money in 2010 and beyond to earn even higher interest income in bond funds, without high risk.

Bonds and bond funds have paid higher interest, and have been relatively safe long-term investments since interest rates peaked in the early 1980’s. You could earn a fixed 15% interest rate in high quality bonds issued back then, compared to as little as 5% in 2009. As rates fell over the years, bonds in general gained in value as well. The opposite will happen when rates go up. The price or value of a 5% bond will fall when investors can get more from new bond issues.

Bond funds were very popular in 2009 as investors chased higher interest income. Don’t chase yields and avoid long-term bond funds, because they will get hit the hardest when rates go up. Remember, bond interest rates are FIXED and you don’t want to own a fund holding long-term maturities of 10, 15 years or more. Shorter term maturities of 5 years or so are much safer because they mature in a few years and pay the bondholders (like a bond fund you may have money in) back their principal. So, invest money in short-term and some in intermediate-term bond funds vs. longer term funds. Then, consider the following.

Interest rates and inflation often move in lockstep. Higher inflation makes future interest payments to bond investors less valuable and causes bond values to fall as well. An INFLATION-PROTECTED SECURITIES FUND holds government debt securities (like bonds) that adjust their principal and interest payments over time to changes in the inflation rate. Give these funds serious consideration.

The first two investment categories were easy compared to: how to invest money in 2010 and beyond in stocks. For most investors equity (stock) funds, like bond funds, are the best investment because they offer diversification and professional money management. The question here is which equity funds to invest money in. Don’t invest only in diversified domestic equity funds like many investors do (these invest in the U.S. stock market). Go international and get into specialty funds as well to cover all the bases.

First, definitely invest money in a diversified international fund if you don’t already own one. Then invest modest amounts in the following fund types or specialty fund sectors: emerging markets, gold, energy, real estate, and basic materials. The major no-load fund companies are a good place to invest for variety and low-cost investing: Vanguard, Fidelity, and T Rowe Price. To cut costs even more buy index funds in any category you can find them.

If good times roll the above suggestions should at least put you in a well balanced position. If times threaten to get worse, you should be sheltered from the heavy losses many investors will take.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

It is tough to explain safe investments because no type of investment can be considered safe as well as lucrative. You will have to skip a feature – investments that provide good returns will include high risk factors and vice versa. In the following sections, I will be explaining certain investment procedures that are considered to be safe. I can already sense the excitement present in the minds of many millions as they read these lines. Block all sorts of negativity and approach the paradigm with a positive outlook. In addition, ensure that you have a smile when you see the positive returns piling up in your bank account.

One of the best and safest investments that is accessible to mankind is the savings bank account. It is very easy to start a savings bank account these days. You will have to visit the nearest financial institution and fill up certain forms. You will be asked to make certain payments and that is all. Now all you have to do is to wait until the maturity period when the interest rate will be added into the existing amount. The interest rate is known to vary – all the banks are decreasing the savings bank account interest rates because it is turning out to be less feasible to them. Yet, you get guaranteed returns.

Allow me to introduce other types of safe investment procedure – it is commonly touted as CD or certificate of deposits. In fact, there is not much difference between a bank savings account and a CD. The only advantage is the high returns that will be bestowed to you when the maturity period arrives. It is wiser not to withdraw the interest amounts. Allow it to add to the existing amount, and let the profits accumulate over a stretch of time.

Would you consider investing if the government is coming forth with an investment plan? Well, consider this as your lucky day then because if you are a citizen of the United States, then you can surely opt for securities that are brought out by the government. The niche might be a bit complicated for a commoner, but the profits associated with it are simply awesome. You will have to choose from the bills, notes, and even bonds issued by the official treasury. In some social circles, the same procedure is often stated as bonds.

Mutual funds come next in the queue of feasible investments. There are agencies that specialize in this niche. You will have to pass some of your savings to the agencies, who will in turn invest the same on various moneymaking ventures. The profits will be deposited into your account. A certain percentage will be taken by the agency that acts as the intermediary. Assured returns are tough to materialize with mutual funds. Yet, one will be able to assimilate higher returns if the economic conditions prove to be highly favorable to investors. This is one of the preferred investment methods that is opted by many millions all over the country.

The niche is still incomplete. There are plenty of other investment opportunities like fixed annuities. You are free to decide the options, and you will have to make sensible decisions that will prove to be highly beneficial to you at a later date.

Brittany Stanzas is a professional finance writer who works for http://www.zuuply.com
if you want more information on Investments feel free to check it out.

The best investment guide would cover investment options and investment strategy. This investment guide would be complete and start with basic financial concepts and expand to include the entire universe of investments. That’s a tall order, so let’s just start with a simple version, and talk about all of the investments in the world in plain English.

Your best investment is a good, complete investment guide. I’ve been tuned in to the world of investing for 35 years and have read over 100 books on investments and investing. Most of them center on the stock market or some form of investment technique or get-rich-quick scheme. Many are time sensitive and out of date by the time you read them. Many tell you how to invest money like the author did when he made his millions.

What you seldom get with an investment guide or book is an understanding of investment basics and a simplified blueprint of your many investment options. So, here’s your simplest and free best investment guide to all of the investments in the world. There are only 4 different investments or asset classes out there depending on how you categorize things. Once you bring it down to this level you have a basic framework to work with.

CASH EQUIVALENTS and other safe investments pay interest. Either your principal or rate of interest is fixed for a period of time. Examples include U.S. Treasury bills, money market mutual funds and bank savings accounts. Advantages include high liquidity (access to your money) and safety, low risk.

BONDS are long-term debt instruments and they pay more interest income than the above. Examples include U.S. Treasury bonds, corporate bonds and bond funds of various types. Advantages include relatively high interest income with a moderate level of risk.

EQUITIES or STOCKS represent ownership in a corporation. Examples include blue chip stocks, growth stocks and equity funds. Advantages include ample liquidity, growth and some income in the form of dividends. Risk is significant and profit potential is high.

ALTERNATIVE INVESTMENTS is our final category. Examples include real estate, gold, and foreign investments. Advantages include high profit potential and an alternative to stocks when they are out of favor. Risk can be significant here as well.

That’s about as simple as an investment guide can get. All investment options can be fit into one of these asset classes. The important thing is that you have a perspective, and that you understand the investment characteristics of any investment before you invest money. For example, someone pitches an investment to you. Where does it fit in our above format?

How does it rate in terms of: safety, liquidity, growth and profit potential, income provided and risk? All investment options can be and should be rated in terms of the above to assure that they fit your needs and risk profile.

If you learn how to invest you’ll have a means of supporting yourself for the rest of your life. Once you have a sound understanding of investment basics you’ve built a great foundation for learning how to invest. The best investment guide would cover both.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

The best investment portfolio for 2010 and beyond will hold stocks, bonds, and money market securities. Finding the best investment in each area is not possible or necessary. Coming up with YOUR best investment mix is. Let’s review your investment options.

I’ll keep it simple. If you invest at all you have an investment portfolio, which is simply a list of the investments you own. For example, if you have a 401k plan you probably picked a few different investment options from a list. Most of your choices were likely mutual funds. Even if you knew not what you were doing, you put together your own investment mix, your own portfolio. The question is whether or not this is the best investment mix for you.

If you are like 90% of the investors I’ve known and worked with as a financial planner, you don’t really understand this stuff. That’s why you should be invested in stock funds, bond funds and money market funds vs. individual securities like stocks and bonds. When you own funds professional money managers pick the stocks and bonds etc. for you and a pool of other investors. But you need to pick the appropriate mix of funds.

So, let’s take a look at the securities or funds you might own or be considering, and see if changes might be in order. I say “might own” because most people are not sure what they really hold in their investment portfolio. Sound familiar? Let’s start with your safe investments like bank CDs and money market securities. If you have cash invested in a money market fund, you have money market securities in your portfolio. The bad news is that you are earning very little in your safe investments. The good news is that you have a high degree of safety. Don’t keep all of your money here, but don’t bail out just because interest rates are low, either.

If you are risk adverse don’t be afraid to have 50% (or more if you are retired and older) of your investment mix safely invested. Sooner or later interest rates will go up… which brings us to the next area of investment options you might own. Bonds and bond funds (also called income funds) pay more interest, and billions of dollars flowed into bond funds in 2009 from every-day investors chasing higher interest rates. Check and see if any of your mutual funds fall into this category.

Income funds or bond funds probably treated you OK over the years, but this will change in a hurry when interest rates go up. Interest rates were at highs in the early 1980’s. They were at historical lows in 2009. When rates go up money market funds should be good investments and pay more interest in the form of dividends. Bond funds or income funds will lose money. That’s not a theory. That’s the way bonds work. If bonds or bond funds are a large part of your investment mix, or you are considering long-term bond funds, think twice. The risk is significant. Your best investment here is short-term and intermediate-term quality bond funds.

Now let’s look at the third category of investments you probably own or should own… stocks, commonly in the form of equity funds. These are the investment options that have likely caused you heartburn and acid indigestion over the past several years. There’s more risk here, but greater profit potential as well. The best investment mix for most investors: about 50% in stocks, preferably spread across a VARIETY of equity funds. Conservative folks might want to cut this to 25% or even less, but all investors should be familiar with the variety of equity funds that are available to them.

First, you need a GENERAL DIVERSIFIED domestic (U.S.) equity fund that basically tracks the U.S. stock market’s performance. Then, add a diversified international fund that invests in a broad range of foreign equities. You now have a leg up on most investors who miss opportunity by not investing abroad. You may want to add a small-cap or mid-cap fund that invests in smaller companies, because these funds can outperform in some market environments. Finally, consider non-diversified equity funds that specialize in stock sectors like real estate, natural resources, basic materials and precious metals for a smaller portion of your allocation to stocks.

The best investment portfolio going forward will contain stocks, bonds, and money market securities; but you will need to give your investment mix the attention it deserves. Hold some safe investments, avoid long-term bonds, and diversify your stock holdings. Uncertainty and risk in the investment markets is likely to remain high. When in doubt diversify across the three investment areas and within each of them.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

You can invest in bonds to earn more interest, but if you do invest in bonds beware: it’s at your own risk. Some of the safest and best bond funds are insured for credit risk and pay interest that is free from income taxes. None insure you against investor losses. And losses are virtually guaranteed when interest rates go up.

Some of the best bond funds today are municipal bond funds that are tax-exempt in terms of federal income tax on the interest earned from the securities in the portfolio. That’s the good news. It gets even better. Some of these funds insure the investor against default of the bond issues held in the portfolio. And then there’s the bad news called interest rate risk. It applies to municipal, corporate, government bonds and all of the mutual funds that invest in them.

The FDIC might insure you against loss in your bank savings account and the federal government will tell you on their web site that savings bonds are safe investments. But that’s not the same as when you invest in bonds, even the U.S. Treasury issue which is the safest long-term debt security in the world. Marketable securities called BONDS all have risk associated with their ownership.

Even the best bond funds in the land do not claim to protect investors against a rising interest rate environment. In fact, every bond fund in America warns potential investors of the potential losses. Every one of them put it in writing for all to see in the prospectus and other investor material.

The truth of the matter is that after 35 years of investing and as many years communicating with the average investor I’ve learned one thing above all else. People don’t understand the risks associated with bond investing. So let me save you thousands of dollars or so in the future by laying it out for you in simple terms.

Investors large and small have an intense interest in bond investing today because interest rates are at historical lows. People want to make more interest and that’s the primary attraction of bonds of all kinds. Visualize a piece of paper that promises to pay you 5% a year for the next 20 years or so. For a $1000 investment you get $50 a year in interest and then you get your $1000 back upon maturity in 20 years or whatever. That’s a bond, and the $50 figure never changes.

Now visualize the value of that same piece of paper as it continues to exist, if interest rates offered by new bond issues went up to 10% and paid $100 a year. And consider how unhappy you would be earning ½ the interest you could be earning with a new bond issue. With interest rates near all-time lows, the direction of future rates seems obvious to even the most casual observer.

The math need not be sophisticated or complex. Somebody will be willing to buy your piece of paper, but you won’t get anywhere near $1000 for it unless you hold on until it matures. Meanwhile, whoever holds it is making a lousy interest rate for as long as rates are higher than what your paper promises.

It doesn’t matter whether you own an individual issue or a bond fund. When interest rates go up these debt securities lose value because they become less attractive as income-producing investments. Long-term issues and bond funds that invest in them get hit the hardest. When interest rates are high and start coming down it’s a great time to invest in bonds. You earn an attractive income while the value of your investment goes up.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

For the first time stock investing was a losing proposition for a decade. The stock market lost ground from year-end 1999 through 2009. Stock investing for people owning equity funds was a disappointment to say the least. How should you invest in stocks in the future? Or… should you avoid them altogether?

The bottom line is that you need to invest in stocks if you want to get ahead financially. The real question is how to invest money in them without getting hurt in the process. And the truth of the matter is that few people know how to invest… period. Paint this picture in your mind: stocks (also called equities) have been the best investment since the great depression; and the stock market just had its worst 10-year period in modern times.

Unless you have the time, cash, and inclination to invest in real estate, equities are the best investment for every-day people. Bonds have returned about half as much and money in the bank about half as much again OVER THE LONG TERM. If stocks have rewarded investors with earnings of 10% a year, bonds returned maybe 6% and safe savings alternatives have paid closer to 3%.

To reduce your risk and still invest in stocks, just invest money in bonds and safe investments as well. Do not avoid equities, because safer investments do not have the proven ability to pay enough to offset taxes and inflation. If you earn 3% in interest in a year and inflation eats it up, you lose money after paying income taxes on your 3% interest earnings. Since stock investing is what will either make or break your financial plans for the future, let’s concentrate on this as our best investment for getting ahead over the next decade.

Make a resolution to keep ½ to ¼ of your investment assets in a variety of equity funds over the next decade with the rest in bonds and safer investments. For example, if you have a 401k at work you might spit your money equally three ways: equity funds, bond funds, and money market fund or stable account. That would make you a moderate conservative in terms of risk. Go with 50% in a variety of equity funds; and equal amount in the other two to be moderately aggressive.

Diversification is the first key to stock investing with less risk, and diversified equity funds give you this. The second key is to invest in stocks through a variety of equity funds. The stock market sets the pace for general diversified funds, but some funds invest money in specialized areas like real estate, oil and gold. Others invest money internationally. Include such funds in the equities portion of your portfolio.

The first 10 years of the new millennium is now history. Go forward and invest money on an even keel. If you decide to invest in stocks with ½ of your money in a variety of equity funds, add to your positions when you are now longer so invested; and take money off the table if you go over 50%. It’s as simple as moving money from fund to fund to stay on track.

Playing the stock market is not necessary to get ahead, and few every-day people who play win over the long term. Yes, you should invest in stocks; and the best investment vehicle for most of the people most of the time is equity funds.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

The best investment strategy for 2010 and beyond is not likely to be the normal investment strategy recommended year after year by many investment firms. Things ARE different this time. Here’s your basic investment guide of things to consider going forward.

Year after year the basic investment strategy or asset allocation recommended for most people: 60% stocks and 40% bonds. Stocks or stock funds are the growth element and bonds or bond funds are the safer investment that provides higher income in this asset allocation. In theory, losses in one should be offset by gains in the other. It’s time to review your present asset allocation. You might be taking more risk than you think you are.

Sometimes the best investment strategy is aggressive in nature; other times a bit of defense is called for. Rarely does chasing a hot asset class pay off for long. With the stock market up 60% in less than a year and high bond prices (super-low interest rates), that’s exactly what many investors are doing. At the same time some are chasing gold at historically high prices, and emerging stock markets that have been on fire (like China).

Your asset allocation has probably changed since you last looked due to fast changing markets. Take a good look, and then decide if your investment strategy is on track at an acceptable level of risk. If you are heavy into either stocks or bonds (or both) you might want to lighten up and diversify more. In 2010 and beyond the investment landscape could change considerably.

What if the financial crisis is not really over, or the U.S. dollar continues to be unstable? What if economic growth fails to materialize or interest rates soar? The USA has not been faced with more economic uncertainty in my time, and I’ve followed the economy and the markets since 1972. Here’s a basic investment guide to avoiding heavy losses should the going get tough again.

If you hold bonds or bond funds consider shortening your maturities and cutting your exposure. For example, if you hold long-term bond funds consider moving to intermediate-term and short-term bond funds. Rising interest rates will send bond prices (values) down, and long-term bonds will get hit the hardest. You will sacrifice higher interest income, but will increase safety with this investment strategy.

Stocks and stock funds may have moved up too far too fast in 2009. Don’t chase the stock market unless you want to speculate. Consider lightening up your asset allocation to stocks that closely follow the market in general. It’s quite likely that much of this move upward was “window dressing” by large portfolio managers who want to look good at year end. Some of it was no doubt caused by individual investors looking for higher returns in a low-interest-rate environment. Any bad news in 2010 could prompt these same investors to sell and send stock prices down.

Now that you’ve cut your asset allocation to bond and stock investments in general, where do you put this money? When in doubt CASH is king. Cash refers to safe, liquid investments like savings accounts, short-term CDs, and money market securities. Money market mutual funds are the easiest way for the average investor to put money into money market securities. With short-term interest rates at historical lows many investors have taken money out of these safe investments. If you want to play defense, increase your asset allocation to cash.

For offense consider moving money periodically into a variety of areas often overlooked by average investors… to broaden your diversification. For example, consider stocks in the following specialty sectors: basic materials, natural resources, real estate, foreign securities, and precious metals if you don’t already have money there. Mutual funds are available in all the above specialty sectors as well. Invest in increments to smooth out the risk of bad timing.

In times of high uncertainty don’t follow the crowd. Your best investment strategy is to survive financially with your investment assets intact. When the dust settles get more aggressive with your asset allocation. Meanwhile, cash is king; and diversify, diversify, diversify.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

It’s easy to invest when markets are running smoothly but when they are uncertain your confidence can be sorely tested. More uncertainty in investment markets means more risk and that means you will need to review your investment strategy.

Start with the basics. Focus on your goals and objectives. Write down your goals and the time frame for achieving them. If you have long term investment goals, remind yourself not to get too distracted with short term changes in the market. Your strategy may need fine tuning from time to time but if it has been well thought out, you shouldn’t need to make major changes. Reversing your strategy or pulling out of investing completely will cause you to lose value and lose time – both key ingredients for achieving your goals.

Review your attitude towards risk and reassess whether your investment strategy is a good fit for your risk tolerance. When things are going well in investment markets it is easy to take on more risk than you should. When markets become more volatile or uncertain you need to carefully assess how much risk you are taking and whether the returns reflect the risks. Find the right balance between risk and return so that you can achieve your goals while taking an acceptable level of risk.

Stay diversified. Markets can change quickly, and moving all your investments into one asset class might work in the short term, but it means you are taking on more risk by having all your eggs in one basket. When prices drop there are bargains to be had and astute investors will invest more at times when there is a market sell-off. If you understand what you are investing in, and have a good feeling for whether the return reflects the risk involved, you will make good decisions. Don’t sell in a panic. That way, you will crystallise any paper losses. Selling up and putting all your money into very safe investments will lower your return, possibly making your goals harder to achieve.

Evaluate all the options you have. This might mean getting more information from an expert who you trust. Don’t get caught up in sophisticated investments unless you understand how they work, what the risks are, how you will make money out of them, and in what time frame. Make sure that any advice you get is from someone with a balanced or independent point of view who can point out the downsides as well as the advantages of different investment options. Don’t be swayed by glossy brochures and slick advertising from companies tempting you to invest money with them. Stick to the hard facts such as you would find in an annual report or investment statement and consider the trustworthiness and track record of the people involved.

Confident investors have a long term plan that they stick to, they do their research, they aren’t swayed by emotions such as fear or greed, and they are successful at building wealth.

Liz Koh is no ordinary financial planner. After a successful career in management spanning more than twenty years, Liz set up her own financial planning company – Moneymax – in 1999. Since then, her mission has been not only to help people manage their money and increase their wealth but also to help people enjoy their lives – to the max! Her list of clients continues to grow through word of mouth and she is a regular contributor to several top newspapers, magazines and websites. Liz is the author of the best selling book – Your Money Personality: Unlock the Secret to a Rich and Happy Life, Awa Press, 2008, available from http://www.awapress.com

For Liz’s best tips for financial security, visit her website http://www.moneymaxcoach.com to receive your free 8-part eCourse on “8 Steps to Financial Freedom”.

There’s no doubt about it. Investing is tough today. As a new investor I once read that “today is always the hardest time to invest money”. Well, with today’s investment options personal investing is no walk in the park. Are there ANY investment opportunities out there?

There are basically four asset classes or investment options. Let’s see where we might want to invest money, and where we might want to lighten up. We start by looking for safe liquid investments like savings alternatives and cash equivalents. Short-term CDs, savings accounts, and money market accounts at the bank are paying less than 1%; and money market securities (like T-bills) and money market funds are paying even less. No investment opportunities here, but a safe place to invest money.

Our second category of investment options is bonds. The average new investor might own bond funds, but unfortunately knows little about them. When you invest money here you earn more interest than above, but you give up the high safety. With interest rates at or near all-time lows you do not want to invest money heavily here, because when interest rates go UP the value of a bond investment will go DOWN.

Stocks (often called equities) are where most investors invest money to earn higher returns and get real growth. In a questionable economy like today’s a blanket bet on the good old U.S. stock market is riskier than usual. In 2009 stocks were up 60% in a matter of months in anticipation of better times ahead. If good times don’t develop, look out below!

You can make money investing in stocks in just about any market because there are always at least a few investment opportunities out there. That said, the odds of a new investor finding them are about nil – unless he or she knows what to look for. When the stock market falls the vast majority of stocks go with it. This brings us to the last of our investment options, alternative investments.

When you invest money outside of the box you are searching for investment opportunities that do not fit into one of our first three categories… alternative investments. With the exception of real estate, the new investor rarely ventures here. Over the past few years professional money managers have paid more attention to these less traditional investments in search of investment opportunities.

In theory, there is always a good investment somewhere. And the world of investing is full of investment options, from aluminum to zinc. To mention a few: real estate, oil, gold & silver, copper, other commodities, currencies, and foreign securities. The good news is that the average investor can invest in these alternative investments by simply owning stocks and mutual funds.

Investing today requires that you pay attention to the trends in various sectors and industries. When the stock market heads south some industry sectors or specialized areas buck the general trend. If gold prices soar gold stocks and gold funds go along for the ride. When basic materials prices or the price of oil goes up, stocks and mutual funds in or invested in those sectors generally follow suit. In a bad U.S. stock market some foreign markets manage to prosper.

Investing today is a challenge as uncertainty remains high. Don’t avoid safe investments just because interest rates are low, and don’t rely heavily on U.S. stocks and bonds. Get familiar with alternative investments. Spread your wings and diversify.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals. Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.