Investment Articles

There will be little doubt in any investors mind that if we judge the ‘best stock pick’ like Warren Buffett then we can think of matching the might of one of the best investor of the century.

Warren Buffett says, the most important seven words ever written about investment is by his teacher and mentor Benjamin Graham which says “Investing is most intelligent when it is most business like”.

Whether you are picking individual stocks or buying a business all together, the fundamentals that is required is the same. “This is the single most important thing to understand about Buffett’s investment approach: Buying stocks means buying a business and requires the same discipline.”

Generally 90% of investors involved in stock investment are all traders. Traders and Investors are not the same. Investors think like a business man before buying a share of a company and traders go by technical analysis of stock prices. It is not that technical analysis of stock price is not good for evaluating an investment, but evaluation of stock shall not be limited just to technical analysis (when stock prices fall buy shares, and when it rise sell it to make profit). This is so simple, and everyone who has access to stock trading can do it (buy and sell). But investors do not just buy shares they considers “buying stocks is same as buying a business”. They evaluate a stock in a much wider scale than just technical analysis. We will discuss here those parameters (in addition to technical analysis) which Warren Buffett most likely uses to evaluate and decide his “best stock pick”. Warren Buffett would like his followers to get an answer to all the below question before they go ahead and buy a share.

How good is the Business of this company?

1. Is the business simple and understandable?

2. Does the business have a consistent operating history?

3. Does the business have favorable long-term prospects?

The author is a big enthusiast of the process of investment and inspires to set up a highly successful online business of himself. He is a firm believer in the concept of ‘working for self can make this world a better place to live’. http://www.getmoneyrich.com

Everyone has heard about a friend of a friend who knew a guy that had a sister who got involved with a company just before they went public, made a small seed investment and when the company went public she made millions.

Real Pre – Public investments in companies that are built to last with solid executive management and board of directors all wrapped in a industry that can still flourish in a recession are extremely difficult to find and impossible to be part of unless you are ‘in the know’, meaning you are the auditing or contract attorney for the company filing with the SEC, the accounting firm doing the third party audit, the consulting firm who is putting together the corporate strategies for the company or the investor relations industry that is gearing up for the publicity and promotions campaign to run in a post offering environment.

Typically the invitation to invest in a pre-public company comes in the form of a Direct Public Offering after the company is divided into shares with a private placement memorandum and before the third party audit and before and during the comments stage of the S1 filing. If you are fortunate enough to invest in a company with the above description you will most likely being offered deeply discounted stock (cheaper than what will be offered in the public market) which means you will (if the offering goes as planned) increase your initial investment amount by 200+ percent.

This is not at all a rare instance. Getting invited to invest in the pre-public, seed capital stage is actually quite simple if you know who to talk to. The best companies to become aligned with are ‘go public’ facilitation consultants and corporate turnaround consultants. These groups take companies public for a living and can usually plug you right in when the company is qualifying with the SEC and needs to have 40 investors on the book to qualify to go public (on the OTCBB). Simply contact the company and they will typically give you a quick information form to fill out to collect your name, phone, investment history and investment threshold.

It’s a fact, once you started investing in solid pre-IPO stock investments, you will dump your broker and never buy stock the traditional way again. Now get out there and experience the power of seed capital investment!

Are you an investor that wants to feel the power of a Pre IPO investment first hand? Are you interested in investing in up and coming technology companies, alternative energy companies with massive contracts to fill, Chinese companies with incredible capabilities that are now expanding to the US public marketplace? Then you need to start getting emails from Princeton Corporate Solutions. Get updates on the latest IPO’s a few months or even weeks before they go public. Click Here to get more information: http://spreadsheets.google.com/viewform?formkey=dEl2aEhJLXZIYmhfbUp6VWVqTURnUmc6MA

Our image of a canny investor might be clad in pinstripe, testosterone- fuelled and a ruthless risk-taker. Yet he is in serious danger of being outperformed by those of a more feminine persuasion.

One of the largest studies of investment activity, carried out at the University of California in 2001, showed that men traded 45% more often than women. Yet their average risk-adjusted returns were 1.4% less. Another large survey by DigitalLook found that women’s portfolios grew by 3% more than the FTSE in the year ended 31st July 2004, while men’s lagged 1% behind.

Since then the evidence for female supremacy in the investment markets has been steadily mounting. Now psychologists can identify the character traits that make up a winning investor. They’re also pinpointing those traits that explain why more men end up counting their losses in the markets.

What are those attributes that put one a cut-above the other? Women’s better investment performance may be down to the simple fact that they are:
More cautiousWomen’s portfolios are more balanced and diverse. They also choose more low risk, less faddy, options.
Less competitiveWomen invest less of their ego in a deal. They’re less motivated to prove their financial prowess to others or to be in it for the thrill.
More consistentWomen have been shown to back a less volatile portfolio than men. They’re also better at tuning out the ‘information’ that others may over-react to and riding out the ups and downs of the markets.
More patientThey engage in less fund hopping, trade less frequently and hold investments for longer. Those that trade most frequently earn the lowest returns, studies by Barber and Odean (2000) and Carhart (1997) have found. This is true of both individuals and mutual funds.
Better researchersAlthough women on the whole are less experienced investors than men, they will research more thoroughly and be less swayed by the herd.

Sure, these aspects of the female psyche also make women more conservative investors than men. And so they may not reap the stratospheric profits (or make the mega losses) that men do. But, by investing in funds that are consistently good over time women’s net returns are higher. And isn’t that what counts in the end?

Of course, many men have what it takes to make them top-notch investors. But their winning traits may not be the customarily masculine ones. The truly top male investors may be more in touch with their feminine side than we’d think.

Apart from a lack of estrogen and fewer handbags, what else accounts for the winner-loser divide? There are three key psychological traits that, when it comes to making the savviest investment decisions, can trip men up every time.

These are:
Attitude to riskMen are less risk averse than women and will back portfolios that are more uncertain. They’re more likely to put all their eggs in one basket instead of opting for a safer, more diverse portfolio. Men’s higher earnings and greater net worth also makes it easier for them to take greater risks than women. A US study by Wang in 1994 also showed that women are more likely to be offered safer options than men, by advisors who expect them to be risk-averse.
OverconfidenceOverconfidence is consistently found in more men than women, research shows. And this is especially true in male-dominated arenas such as finance. They overestimate the returns their investments will bring and the certainty of the return. They also have a misjudged overconfidence in the accuracy of their own knowledge and over-rate their own ability. In a Gallup study, both men and women expected their portfolios to outperform the market but men expected theirs to outperform it by a greater margin.
The herd instinctConstantly monitoring the market can fuel men’s over-activity and cause them to act irrationally. Men are more likely to get drawn into financial follow-my-leader games and information cascades. They also fall foul of being too well informed, instead of tuning out the endless stream of news and financial information and sticking to an annual portfolio review.

Despite women having more of the innate skills that could earn them the best returns, still lamentably few of them are in the game. Male investors outnumber females by eight to one, and a mere 3% of hedge funds are headed by a woman. Simonne Gnessen, who owns Wise Monkey Financial Coaching and has a predominantly female clientele, says women could do with borrowing some of that male over-confidence. “Many women have exactly what it takes to reach dizzy financial heights,” she commented, “the only thing holding them back is knowing that they have it and acting on it.”

Professor Karen Pine is a renowned researcher in Developmental Psychology as well as being a popular women’s writer. Currently she is Professor of Developmental Psychology at the University of Hertfordshire. Professor Pine’s research has been published extensively in international academic journals and presented at conferences worldwide. Women’s issues have always been at the heart of Karen’s interests and her wide-ranging research includes non-verbal communication, money management and body image. She has featured regularly in the media, on television programmes such as Channel 4 News and Richard and Judy and in news media from the Independent in the UK to the Sydney Morning Herald in Australia.

http://www.karenpine.com
http://sheconomics.com

The old saying “History doesn’t always repeat itself, but often rhymes”, is based more on fact than fiction. By studying the US Economic Recession History, you should better understand how current recessions may affect your financial life today.

I focus on recessions simply because they have a dramatic effect on 401k balances and investments in general. During the last recession, which was officially from March of 2001 through November 2001, the major market indexes plummeted. The Nasdaq Index declined over 70% from it’s high within a year surrounding the recession. This index still hasn’t recovered. It is still only half of where it once was.

Could you have avoided this downfall by studying the US Economic Recession History? Maybe, but maybe not. Let’s look at the problem. The National Bureau of Economic Research (NBER) is the official agency that determines when recessions begin and end in history. Since recessions have such a detrimental effect on our investments, wouldn’t it be nice if they would notify us when one is beginning? Yes it would, but they don’t. The Nasdaq Index lost over 43% from its high before the NBER determined we were in our last recession. It took them 9 months after the beginning of the recession to announce it had begun. Is this a fluke? Unfortunately not. The official notification of the beginning of the last 4 recessions came an average of 228 days after they had already begun. This is an 8 month delay.

The way numbers work, if you lose 50% of your portfolio, you must earn 100% just to break even. If you had $100,000 and lost 50% ($50,000), you are left with $50,000. You must double this (100%) in order to break even. This is why it seems to be twice as hard to regain money after losing it. It took the Dow Industrial Index and S&P 500 Index around 6 years to get back to even after the last recession.

Let’s pretend you’ve lost 43% of your portfolio and are determined NOT to lose any more. You sell your stock funds and put your account into the safety of the money market. Your account is now safe for the rest of the recession. Will knowing the US Economic Recession History help you determine when the recession is over? Once the recession is over, you definitely want to move back into stocks so that you don’t miss the next increase in the market. After all, you need to make almost 100% just to break even!

NBER announced the last recession was over on July 17, 2003. Unfortunately they announced it was over in November of 2001! Yes they didn’t determine the last recession was over until nearly 2 years later. Had you had your investments strapped down for the winter winds of recession, you could have missed the excellent recovery period that typically follow recessions. The end of the last 4 recessions were officially announced an average of 522 days (17 months) after they were over.

Studying the US Economic Recession History may be helpful for some, but I don’t find it very helpful in managing investment portfolios. I find that tracking Supply vs. Demand in the investment markets is a much better way to protect assets. When supply begins to outweigh demand, simply change the portfolio to a more conservative stance. This usually happens near the beginning of recessions and you have plenty of time to switch your portfolio to safety. The opposite occurs near the end of recessions. Demand shows back up and you begin to change the portfolio to one of moderate risk.

The upside to recessions is the fact that periods of expansion last about 5 times longer than recessionary periods. There were 10 Recessionary cycles since 1945. The recession side of these cycles lasted on average 10 months. The expansion side lasted on average 57 months. If you can protect your money during the 10 recessionary months you won’t have to spend a lot of the expansion months trying to get back to even. You can instead be exploring new highs for the portfolio.

John M. Norquay
Chief Compliance Officer
PivotPoint Advisors, LLC

Help your 401k through the recession with 401k Plan Facts

Many people think they know how the stock market operates, but they usually have a very simplified understanding of the actual processes that drive the values of companies up and down. It is common knowledge that you can gain, or lose, a lot of money on the stock market; however, many people don’t understand the terminology and the processes that go into determining whether shareholders will ever see a penny of the profits that a company brings in. If you are interested in making investments that will also be profitable for you, it’s time to learn a little bit more about dividend yield and how it is calculated.

The first thing that you have to understand is that just investing in some public stocks on the stock market isn’t going to guarantee that you get a big fat check in the main once a month without having to do anything. Not all stocks are valuable in the same way, and it is only dividend investing that actually shares a portion of the company’s profits with those that have invested their money in it. When you invested in dividend stocks, you are in the best position to receive an attractive dividend yield, which is an actual percentage of the company’s profits divided amongst its shareholders.

Those investors that are interested in seeing how much money their stock investments are actually earning them would do well to learn how dividend yield is calculated. You can find out the yield of any dividend stock simply by dividing the annual dividends per share by the price of the share. It is important to be able to do this math for yourself to avoid getting sucked in by ratios that sound like they will be good for your portfolio, but are not as attractive when you really investigate the amount that you stand to make.

People invest in the stock market for many different reasons, and the ones that are interested in maintaining a portfolio with consistent cash flow will be interested in those stocks that offer the highest dividend yield. It’s important to be wary of companies that seem to be offering payout ratios that sound too good to be true, because they often are. Most investment experts recommend that you stay away from any company offering a payout ratio of over sixty five percent.

Ready to get started? Learn more about investing and dividend yield at http://www.DividendYieldLive.com today!

Security in the language of business economics is the written (or electronic) evidence of ownership that provides the right to receive property or some other benefit that is currently not in direct possession of the holder. That is a pretty boring way of saying it is a piece of paper that says you own a chunk of a company or at least a chunk of its profits.

The most common forms of security are Stocks and Bonds, the buying and selling of these forms of security are the bread and butter of the stock market exchange. Both stocks and bonds are a type of corporate security. Bonds represent a debt of the corporation while stocks represent ownership or equity interest in the operations of a company.

Bonds Come In All Flavors and Sizes

A bond is a tool used by companies to raise money to invest in their business. The bond signifies the promise of the corporation to pay back the price of the bond with interest paid throughout the life of the bond at preset periods of time.

Bonds are good for investment because they tend to provide a safer return on the investment but still provide relatively high dividends.

Bonds are very flexible which is why they are such an attractive type of investment. They can be registered to a certain person, a group of people or, as it is more common, they are made payable to the bearer. The bondholder, whoever he may be, receives his interest payments by redeeming coupons attached to bond. These characteristics make bonds an excellent form of cash, which gives interest but is generally easily liquidated when needed.

However, companies would struggle if asked to pay all their bonds at once which is why it is common for them to pay them gradually through serial maturity dates or by using a sinking fund that saves a certain percentage of profit in order to pay outstanding bonds. It is smart therefore to make sure what type of policy the company you buy bonds from so there are no surprises when you need to cash in your bonds.

The main type of bond is the Mortgage Bond. This bond represents a claim on a real, specific property. These bonds are of the safer types and ordinarily results in bond owners receiving a priority treatment if financial difficulties occurred. However it seems like the irresponsible selling and dealing in mortgage based investment securities triggered or at least played an important role in the current housing, credit and mortgage crisis. It therefore pays to check what kind of mortgage bonds you buy into.

Another important bond type is the Collateral Trust Bond. The security for collateral trust bonds is an intangible property, often stocks and bonds that the company owns. This type of bond guarantees that if the company can’t pay your bond you get a piece of their company. This does not seem to be much help because by then the company is not likely to be worth much.

An interesting type of bond is the Convertible Bond. This hybrid bond adapts to varying circumstances. It can be exchanged for common shares at specified prices that can change over time. This bond is attractive because it can be very effective obtaining funds at a low interest at the beginning of a project when income is low but encourages conversion of bonds (debt) to ownership (stock). It is also a good option for clients that obtain a price protection on their investment without losing the possibility of profit provided by the stock feature. Obviously this is an attractive bond in periods of market uncertainty.

Another type of hybrid bond is the Income Bond. The Income Bond has a fixed maturity but you only get interest paid on it if the company also earns it. Historically these bonds appeared when railroads were “reorganized” which is fancy for gone bankrupt and bought by another corporation. The new owner offered this hybrid type of bond which was good for bond holders because it meant they didn’t lose everything and allowed the company to wait until they were making a profit to pay dividends on the bonds.

Linked Bonds are yet another hybrid type of bond where the interest returns are linked to some standard value, like the price of gas, a cost of living index, a foreign currency or a combination of all the above. These bonds were popular in the states during inflationary periods and are not as common today. They are still used in countries where the fear of inflation deters investors from buying fixed income bonds. The idea is that there is little benefit in getting a 10% interest on your investment if the price of bread or the overall cost of living has risen by 30%. Linked bonds are designed to guarantee the return on your investment is real and not just a numbers game.

As you can see there are all kinds of bond securities to invest in. Bonds may be one of the safest and smartest investments for people who don’t want the risk of buying and selling stocks but still want the potential for high returns on their investment. The hybrid bonds provide the best balance between security and profit potential. However no portfolio or circumstances are the same so contact a certified agent to find out what product is best for you.

Andrew Latham.

Read more articles on Language Learning at my Teach Yourself Blog.

This investing guide is geared toward investing for beginners. As such, this investing guide will keep it simple starting with the best investment in 2010 for the new investor or anyone who is not real confident when it comes to investing. Later we put together a model best investment portfolio.

For the new investor who wants to keep things real simple yet participate, the single best investment for 2010 and beyond is a moderate-risk balanced mutual fund. These funds go by various names like asset allocation, lifecycle, and/or target retirement funds. All of them make life easy for the new investor by offering a balanced portfolio of stocks, bonds, and safe money market securities.

Investing for beginners is then simply a matter of picking a balanced fund that fits your risk profile: conservative, moderate, or aggressive. Traditionally, these funds have moderate investment portfolios where the investor is about 60% invested in stocks with the remainder in the other two investment areas, mostly bonds. Conservative versions will be heavier in bonds and the money market, and aggressive funds could have you 80% or more in stocks.

A glance at the fund literature will show you how they intend to invest your money. I suggest that the new investor go with a moderate balanced fund, plus a money market fund for added safety and flexibility. Money market funds are the safest type and pay interest in the form of dividends. For example, if you have $10,000 to invest consider putting $6000 or $7000 in a moderate balanced fund and the remainder in a money market fund of the same fund company. You are now a moderate conservative.

Should the new decade start out poorly for investors in general, you’ll have $3000 or $4000 in dry powder that can be moved to the balanced fund when stock and/or bond prices are lower. Meanwhile, it should be safe. Now, let’s expand our investing guide keeping our focus on mutual funds. Balance will be the key to investing due to several uncertainties: the future direction of interest rates and inflation, the value of the U.S. dollar vs. other currencies, and questionable growth in the U.S. economy.

To deal with the above future uncertainties, here’s a model best investment portfolio that diversifies even further. The following are all types of mutual funds, which makes investing for beginners as simple as possible. First we list the fund type, followed by what it invests in and a suggested investing guide for asset allocation (what % of investment assets to put there). Remember, stocks are also called “equities”.

Moderate Balanced (stocks and bonds) 50%

Money Market (safe income securities) 25%

International (foreign equities) 10%

Gold (precious metals stock) 5%

Natural Resources (oil, energy sector) 5%

Real Estate (real estate equities) 5%

TOTAL 100%

In the above portfolio 25% of your money would be safely invested earning interest. About 20% would be in bonds, which are in the balanced fund. The rest would be in stock investments, spread out across various stock sectors.

If you are a new investor and want to test the waters with caution, I suggest going with a moderate balanced fund with a money market fund for backup. For the more adventuresome types… at least look into the other types of funds in the above portfolio. If you truly want to keep it simple, the single best investment for most people over the years has been a balanced fund where professionals manage a portfolio of stocks and bonds for you.

Such a fund should be the single best investment in 2010 and beyond as well. Stocks are your growth engine; and bonds pay relatively high interest in the form of dividends. This balance creates a portfolio with a moderate level of risk.

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.

To learn to invest informed and learn how to invest with confidence most people should break the subject down into two parts: investment basics and investing. By tackling topics or articles in the following order you can learn how to invest money as an informed investor without wasting too much time and effort.

First get a handle on basic financial concepts, terms and investment basics. Every investment in the world can be evaluated based on just a few simple characteristics. Don’t invest money in anything until you know if it fits YOUR needs for such things as safety, liquidity, growth, and income. Only if you invest informed can you avoid the costly mistakes that are caused by picking an investment that’s not right for you.

Then, as a basic investment guide, focus on stocks and bonds because this is where you are most likely to invest money in the future. Once you have a handle on these securities, its time to get familiar with investment markets and how to invest in them. If you don’t understand the stock market, for example, your knowledge of stocks (equities) is of little value in the real world of investing.

Learning all about mutual funds should be your next step and shouldn’t be difficult now that you know stocks and bonds. After all, these securities are where most mutual funds invest money for their investors. And mutual funds are where most investors invest money in stocks and bonds in 401k plans, IRAs and other accounts. There are thousands of funds to choose from but 99% of them fall into 1 of 4 general categories.

You should also get familiar with other investments like money market securities and annuities before you move from the INVESTMENT GUIDE phase of your education to the INVESTING GUIDE segment. In other words, before you can learn to invest informed you’ll need a clear understanding of all of your major investment options and how they compare in terms of their basic investment characteristics. This is not as difficult as it sounds since the universe of investments can be condensed into only 4 different categories or asset classes: cash equivalents (safe, liquid investments), bonds, stocks, and alternative investments.

Investing is the art of putting an investment strategy together and managing your money at a level of risk that’s within your comfort level. Once you understand the investment end of things you need a game plan in the form of a complete investment strategy. Asset allocation is the single most important part of any strategy; and your portfolio asset allocation over time will be the main thing that determines your success or failure as an investor. Concentrate on learning asset allocation: how to invest money (in what proportion) across the 4 asset classes mentioned above.

Now you’ll also want to learn to apply various investing strategies or tools to help offset risk while earning higher than average investment returns. The two important things to understand when you get started in the learning process are the following. Learning how to invest is easier than you think if you take the subject one step at a time in a logical sequence. Second, learning to invest informed is actually a two step process: learn investment basics, and then learn investing.

Don’t get discouraged if you don’t understand something in an investing article you are reading. Back up and search for another article that covers the topic or area that confused you. For example, if you are confused by an article on bond funds it’s probably because you don’t understand bonds in general. Most people don’t. Most people don’t get much out of an adventure novel, either, if they start reading on page 47.

Take fear and anxiety out of investing. Learn to invest informed.

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.