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Your Questions About Invest In Gold Stock

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Thomas asks…

I want to start buisness with 1 lakh rupees?

I have 1 lakh rupees and i want to start my own bisness.Please provide me some useful tips.Where to spend money? andwhich produch should i start with?i have 1 lakh.Should i go for real estate or gold or stock market or anything else.I want some good replies.Thank You.

Justin answers:

Hi , you can invest your money in stock market. I have the right person that gives you a maximum return with the minimum risk and with the guaranteed agreement their name is dhavalraj soni from share khan stock broking ltd. He is doing p.m.s. Services. So you are earn best return with no work and safe side of your money. Just contact me i will help you every thing with government agreement so……………

Steven asks…

How can I invest on welfare stocks? Which stock exchanges are best for investing in welfare?

I predict that welfare is going to keep rising in the future. Welfare for the rich and for the poor. So can I invest in SSI, Medicaid, Obamacare section 8 housing and corporate bailouts. I want to cash in on all this welfare.

Justin answers:

Invest in gold instead. It’s an investment in the inflation tax, which is a general case of what you are referring to. That way, you’re right regardless of whether the new money is used to benefit the poor via welfare or rich via corporate welfare. Either way, it’s printed money given to a protected class.

Ken asks…

Why is the economy so bad and what do you see happening in the future?What should we do to protect ourselves?

Will the dollar eventually become worthless? Should people be buying silver or gold and stocking up on food? Any suggestions on what people should do?

Justin answers:

The economy will get better. Usually economies, like the one in US, go through booms/busts. Currently we are in a bust. We’ll get out of it. Our nation has been through worse economic times- the Great Depression. Yet we got through it and I’m sure we’ll get through this one.

Will dollar become worthless? No, I doubt it. Though its worth has decreased, I doubt the FED and govt would let it become OVERLY worthless. Things can get better and I think our next President can help with this problem (esp if we find a way to cut down spending, which has led to debt, and devaluation of dollar).

What do I see happening in the future? I see that the economy will still be weak for now, but no worry. It will be okay. I heard that some expect it to get better by the end of this year. Yes its a long time. ANd yeah many will feel hardships and I’m not happy about that. But our economy can rebound and projections (at least what I hear) show us rebounding starting end of this year. I also heard some promising news before (Sacramento’s home sales have gone up somewhat and other small, yet good news).

Why is our economy so bad? Well, Cynthia…its a complicated issue. I’m not totally familiar as to why it is so horrible, but I do know a good amount of things as to why it is.

Check out this article by the BBC which explains the mortgage problems perfectly– (nice article on the American housing problem)
news.bbc.co.uk/2/hi/business/7073131.stm

To sum it up though, mortgages were given out to many people, a large number of whom weren’t able to afford it. The housing market, throughout the last ten, fifteen years, has been pretty strong. So that is why a lot of mortgages were given out, there was high demand. Unfortunately, a lot of people weren’t able to pay these mortgages back. To make things worse, some of them were adjustible rate mortgages so rates were high. Also, interest rates rose during this time, so they became more expensive. In the end, a lot of people were unable to pay them back. That was a huge problem. Banks weren’t getting the money needed to help pay down houses (big problem). Thus, they themselves were stuck with less money on hand and many homes became foreclosed.

Things were even worse with other problems too. There was a huge credit crisis. For a long time, many people were spending a lot (overly) on credit. They built up a LOT of debt. That just made people go into debt too. As a result, people were stuck with loss homes and very high debt from credit.

Another big problem was there were a lot of fradulent mortgage lenders too. They committed fraud and fooled people about how much the rates of the mortgages would be. As a result, a lot of people became scammed and this only added to the high prices of mortgages.

So home ownership has gone far down. The housing market is AWFUL. Its a very sad problem…and there are so many cases of fraud and debt. (Foreclosures +).

Unfortunately, that’s not the only problem. Gas prices have gone up in recent years. The problem was partially caused by huge demand. China and India have very high demand for gas. So, gas prices went up. Oil supply was also low. Bush’s wars in Iraq and Afghanistan added to tension and fighting in the Middle East. As a result, oil producers wanted to produce less (due to tension). Also, speculators, seeing this situation, caused the prices to be high too (they based their investing and selling on the situation of gas).

As a result, food prices went up. Why? Well many companies transport food and other supplies to different nations. With high prices of fuel, prices went up for these companies. They were force to put high prices upon food producers as well. Unfortunately, that led to high prices of food. Farmers have had a rough year too. Ethanol could be blamed as well. Some say that because less ethanol is used with food, there is less of it (ethanol is being used more for production of cleaner oil instead of making food). So that is possibly why corn prices shot up as well. Lastly, bad weather has hit different farms and areas in Asia and all across the world. That includes the storms and floods recently. So, food prices have gone way up.

Lastly, beside food and gas prices, there is the problem of the dollar losing value. This comes from high national debt (made by huge national deficits). Thanks to Bush’s tax cuts to the rich (which, unlike cuts in taxation to middle class and poor), the economy wasn’t really helped and the deficit grew. Furthermore, Bush also spent a lot of money, especially on the two wars going on (which we would spend less on if we had a good plan for both countries. Even anumber of conservatives agree that we haven’t had good plan for Iraq and Afghanistan until lately for the former…the surge worked, but yeah things are still kinda messy). But yes, the high spending and poor fiscal policy has hurt our economy. Its made the debt grow. That’s a bad thing…with debt growing, there needs to be a way for it. So, more dollars were printed. More dollars printed means that its supply has increased. With an increased number of dollars, their value went down. So things became pretty expensive and as a result, inflation went up.

The FED, noticing that we were possibly in a recession (some disagree so I’ll call it slow growth/slowdown, which nearly everyone agrees with), have tried to combat this problem. They had their best intentions in mind and in my mind, they did what they could. They lowered interest rates to help improve and encourage economic growth. Lower interest rates usually do that. They did their best. Unfortunately, there was a side effect. Lower interest rates caused more inflation. That is a problem with low interest rates- higher prices. As a result, we have high prices and inflation.

Unfortunately, the FED can’t raise rates without causing problems. See, with the housing crisis, and mortgages already having trouble being paid, they can’t raise intrest rates. Doing so would, as I mentioned before cause problems. It would make mortgages cost more (since some of them do depend on interest rates). It also would reduce economic growth, which is needed in this pretty slow economy.

I’m not sure what people can do about this…

But they can-
1. Cut down on their vehicle usage and use alternative energy/less usage of cars.
2. Buy cars with less MPG.
3. Be careful when buying mortgages and using credit. The govt needs to fight mortgage fraud and educate homeowners. They also need more programs to help people with such issues (to help them prepare, etc).

My brain’s tired…so I can’t go into solutions for the govt sorry..I hope I helped nonetheless! And no people shouldn’t be buying silver and stocking up on food. Things will get better, and it would not be good to be scared and start stocking up.

John asks…

What do people tend to do more of when the value of the dollar goes down?

I want to invest in stocks and want to see which company I should invest based on your answers.

Justin answers:

When the value of the dollar goes down, the export of home manufactured goods goes up.
Normally people buy a lot of gold and silver as safety too.
Walmart and Macdonald’s have been really good as of late.
Since the dollar is cheaper, it’s easier to acquire by those who want to buy it like the EU or UK…but financial institutions have totally messed up things so there is a bit of market insecurity, according to the media.
Ford had some sales up. I read in the newspaper they need to expand workers shifts to put out as many cars as possible, even with the current crisis.

Robert asks…

Is trading account necessary for dealing in gold etf in India ?

I want to invest in gold etf. Is trading account necessary to deal in gold etf or is there is any other means available. Also, please let me know the best gold etf to invest in India. Thanks in advance

Justin answers:

Tushar,
Gold ETF stands for Gold Exchange Traded Funds, means funds which are listed and purchase and sold through stock exchanges, in order to purchase you require demat account for the same.

The best gold etf funds are kotak gold etf fund, HDFC gold etf fund and reliance gold etf fund

http://mutual-funds-personalfin.blogspot.com/2011/11/best-gold-investment-options-in-india.html

Mutual funds come up with another option which is fund of fund option, means they invest in gold etf funds and investing in such gold fund of fund you don’t require demat or trading account.

I feel if you don’t want to go ahead with demat account then best is go with fund of fund
the best fund of funds are
Reliance Gold savings fund
HDFC Gold Fund.

Check this link help you understand more about different options of investing in gold.

Http://mutual-funds-personalfin.blogspot.com/2011/11/best-gold-investment-options-in-india.html

http://mutual-funds-personalfin.blogspot.com/2010/09/tax-treatment-of-gold-etf.html

James asks…

What could be some good companies to invest in?

i just got a fortune that says “Golden investment opportunities are arising.”
Should I invest in gold?

Justin answers:

Get a second opinion – go and eat at another Chinese Restaurant.

Seriously, there is no way that anyone can pinpoint stocks or commodities that will rise; if they could there would no need for them to work or toil for a living. And OF COURSE they will not share their secrets or knowledge with others ( who wants to give up their gravy train? ).

Your best option is to do lots of DD, or research on companies you like. Check out their financial health, their management style, their products/services, and their market potential. Then select the stocks you like, and observe their charts for a while – to see if they are being manipulated in any way, and to see how they rise and fall.

Once you have enough experience, you can start buying some stocks. Or buy Gold, or Silver, etc.

And then the fun begins – you are exuberant when it goes up, and distressed when it drops. You may lose sleep, and develop stress syndromes, during periods of great decline. You may spend all your stock profits on the doctor and medicines, and shrinks. Then the IRS takes even more away at tax time.

Better to go and eat at many Chinese restaurants until you get a fortune like ” marry a very rich woman “. Now That’s a one to be followed!

Charles asks…

What is a better investment today? Is GOLD better now then USA investments?

A few yrs ago it was a GOOD thing & easy to make money with stocks & bonds & mutual funds. I was watching a site where it showed how QUICKLY the debt is increasing. It was going up about $1000 a second. Is it better to invest with GOLD now rather then continuing with the above mentioned investments?

Justin answers:

I believe the gold bubble will burst soon.

Richard asks…

When Bush’s monkey at the FED inject a trillion dollar bailout into the economy hows the inflation going to be?

I would suggest investing in gold and guns.

Justin answers:

I note they want to raise the statutory “limit” on the national debt from 10.5 TRILLION dollars to 11.2 TRILLION dollars. This means they are spending money they don’t have to buy crappy debt from these banks.

I’m stocking up on ammunition and canned goods.

Grandpa

Mark asks…

What are the best stocks to invest in?

I am thinking about investing in stocks and am not sure which would be the best stocks to actually invest in.

Justin answers:

Before I give information on individual stocks, you need to figure out whether you know enough about stocks and can do the homework on the stock picks. Even if people give you suggestions here, you still have to do your homework on each one. If you do not have the time nor inclination to study individual stocks, then maybe you should just invest in index mutual funds or Broad Based ETFs (Exchange Traded Funds, mostly indexed mutual funds that trade on most exchanges like a stock. You buy and sell these like stocks).

Here’s more info and guided tour of whether you should try individual stocks or mutual funds or ETFs:

http://techfarm.blogspot.com/2007/07/how-do-i-start-investing.html

Now, if you do know how to do homework on individual stocks, and wish to create a diversified portfolio of 5-10 individual stocks in different sectors, here are a few suggestions for you to start DOING HOMEWORK on.

1. Basic Materials:
a. FCX (Freeport McMoran, Gold and Copper)
b. ATI (Allegheny Technology)

2. Consumer Discretionary:
a. GME (Gamestop) — Major gaming cycle is here (3 major consoles), large Generation Y
b. NTRI (NutriSystem) — obesity problem is a long term trend
c. SNDA (Shanda Interactive) — Chinese Online Gaming Company. Chinese Middle class is growing, and I can see them getting addicted to online games.
D. JBX (Jack in the Box) — Regional fastfood (growth to be national) with Mexican Qdoba grill exposure. You remember the Chipotle (CMG) spinoff by Mcdonalds?
E. CKR (CKE Restaurants) — Carl’s Jr. Fast food and other fastfood chains. Good small cap fast food long term growth at a reasonable price?

3. Consumer Staples:
a. UL (Unliver) — Much cheaper and better growth
than PG (Procter and Gamble)
b. HANS (Hansen) — Growth Drink Company
c. PEP (Pepsi) — Large diversified drink company
d. CEDC (Central European Distribution) — Central
European drink company)
e. WBD (Wimm Bill Dann) — Fast growing Russian
Diary and milk company. Look at the chart! Wait for
pullback?

4. Energy:
a. Integrated Oil:
COP (Conoco Philips)
b. Drillers:
ESV (Ensco)
GSF (Global Santa Fe)
c. Refiners:
VLO (Valero)
TSO (Tesoro)
d. Oil Sands Exposure
CNQ (Canadian Natural Resources)
e. Oil Services:
HAL (Halliburton)
SLB (Schlumberger)
f. Oil Shipping/Services
TDW (Tidewater)
g. Rigs and other oil services:
NOV (National Oilwell Varco)
RIG (Transocean)
h. Coal:
BTU (Peabody Energy)

5. Financial Services:
a. Brokers:
GS (Goldman Sachs)
LEH (Lehmann)
b. Banks:
JPM (JP Morgan)
IBN (Icici Bank) — Indian Bank
KB (Kookmin Bank) — Korean Bank
NBG (Natonal Bank of Greece) — Greek Bank
c. Exchanges:
NYX (New York Stock Exchange-Euronext)
CME (Chicago Mercantile Exchange)
d. Others:
LUK (Leucadia), a mini Berkshire Hathaway
e. Online Broker:
ETFC (E*Trade Financial)
f. HXM (Homex) — Mexican Homebuilder

6. Healthcare:
a. Big Pharma: (I don’t really like big pharma)
MRK (Merck)
PFE (Pfizer) — Value play.
B. Biotech:
GILD (Gilead) — Great pipeline
c. Medical Equipment:
MDT (Medtronic)
ISRG (Intuitive Surgical) — Robotic surgery
d. Healthcare Insurer:
AET (Aetna)
HUM (Humana)
MOH (Molina Healthcare)

7. Industrials
a. Aerospace/Defense:
BA (Boeing)
BEAV (BEA Aerospace)
TDG (Transdigm Group)
b. Congolomerate:
GE (General Electric) — Large cap to come
back
c. Infrastructure:
CAT (Caterpillar)
MDR (McDermott)
FWLT (Foster Wheeler)
d. CX (Cemex) — Mexican Cement company.

8. Technology:
a. AAPL (Apple)
b. GOOG (Google)
c. NVT (Navteq) — they make digital maps for GPS
d. SIRF (Sirf Technologies) — they make chips for
GPS
e. GRMN (Garmin) — They make GPS products
f. RIMM (Research in Motion) — Blackberry maker
g. GLW (Corning) — Optical and flat panel display
play.
H. FNSR (Finisar) — Optical equipment under $4
speculative play.
I. LVLT (Level 3 communications) — Speculative
under $6 optical equipment play.
J. CSCO (Cisco) — Networking equipment
k. AKAM (Akamai)
l. DOX (Amdocs) — Billing software company

9. Telecom:
a. AMX (America Movil) — Latin America/Mexican Telecom play. This is a great growth area at a good price
b. T (AT&T)
c. NIHD (NIHD Holdings) — Latin America Telecom
d. BRP (Brasil Telecom)
e. VIP (Vimpel) — Russian Telecom company

10. Utilities
a. SZE (Suez) — French Utility with growth

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Your Questions About Investing In Restaurants Return

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Donald asks…

stuck on accounting problem?

The Fairway Restaurant chain had a 10% return on a $71,000 investment in new ovens. The investment resulted in increased sales and an increase in income that was 4% of the increase in sales. The increase in sales was:

a. $7,100.
b. $71,000.
c. $177,500.
d. $710,000.

whats the answer and how did u get the answer??

also

The Groovy Movie Chains has invested in a snack bar for its store, where individual pizzas would be prepared and sold. The investment cost the company $50,000. The company expects a sales volume for the new product to be 12,000 pizzas a year. Variable materials, preparation, and marketing costs are expected to be $1.75 a unit and fixed costs are estimated at $18,000 a year. Based on a desired 12% ROI, what should Groovy Movies charge as the selling price per pizza?

the answer to this one is $3.75 but im not sure how to get to it. can you explain this solution please ??
i just figured out the first question but im still lost on the second question.

Justin answers:

C 177,500

Investment 50,000 x 12% = 6,000 net return + 18,000 FC = 24,000 Contribution Margin

Sales less VC of $21,000 (1.75 x 12,000 pizzas) = $24,000 CM
Sales then must be $45,000 / 12,000 = $3.75 Sell price

John asks…

How should I allocate my 401(k)?

I want to start investing in my company’s 401(k), but am lost as to how I should allocate. I’m 24 and just want to be smart about it! I work for Darden Restaurants, so could also buy company stock at a 15% discount (that’s the ESOP fund below). They have Target Retirement funds, but I thought I could earn a better return allocating myself.

I have these funds to chose from:

Davis New York Venture Fund (A)
Harbor Capital Appreciation (Instl)
Vanguard Target Retirement 2035
Vanguard Target Retirement 2045
Vanguard Strategic Equity (Invstor)
EuroPacific Growth Fund (Class A)
Vanguard Target Retirement Income
Vanguard Target Retirement 2005
Vanguard Target Retirement 2015
Vanguard Target Retirement 2025
Vanguard Total Bond Market Index
Vanguard Extended Market / INV
Vanguard Total Intl Stock Index Inv
Vanguard Institutional Index Fund
Aston/Tamro Small Cap/I
RVST Stable Capital Fund II
Darden Company Stock Fund
PIMCO Total Return Fund (Inst)
Darden ESOP Stock Fund

Someone help! :)

Justin answers:

Do not do the Target Funds.
Put 20% in EuroPacific and 20% Pimco (each)
10% In the Darden ESOP (don’t overload the company you work for)
10% Astro/Tamro
10% Harbor Capital
10% Davis NY
10% Vanguard Stategic
10% RVST Stable
That’s what I would do for 3 months! Reviewing after each month!

Thomas asks…

i have been asked to invest money in a restaurant?

ok here is the skinny.my brother is look n to open a restaurant.
and ask me to invest. he has been in the business a long time and he knows it well.he has opened several and has failed . i feel the reason he has failed is does does peaple wrong he gets greedy doesn’t pay the bills
i will give you a few details
the last time he asked my dad for money .business was doing very well
or at least that what he told me.he was always at the golf course always had a few friends with him getting drunk.
He always come to my house and brag and put me down.
i told be careful because what goes up must come down. well fast forward a few months. he never pad my dad he lost his restaurant
he had to move in with me cause he had nowhere to go.
he began to recieve letters from food venders he owed money.The IRS
labor department where he didnt pay his peaple. he filed a police report
that some broke in to the safe and stole money and tried to collect
insurance . which later he was charged for for.
Its a shame but my mom and i think the same about him he will try to
screw any one around if has chance to make money off them.
He could not pay me rent but he drove a jag and always had his clothes pressed
I have kept tellin him do the right thing,Karma, what you sow is what you reep be humble work and don’t look for the fast buck.what you put out comes back. put out bad and bad comes right back.Any way enough with the details. He asked me to invest some money in a resturant. i first thing i told him is i cant trust you.
but i believe if he applies him self he can make successful.
So my ques is how do i protect my self and make sure every thing is on the up and up. contract lawyer,accountant, bussines lawyer?
He mentioned he would give me a good return on my money
Time out i dont want good return can go buy a CD at the bank and get secure return i want to be part owner what do i do i really would like for my wife and i to qiut our 9to5 have something that can be ours
HELP PLEASE?
what percentage do i own depending on how much i put in? how much is it worth?
can accountant tell me or business lawyer?
i have to protect my investment there has to be a contract

Justin answers:

You more or less answered you own question. If you invest with your brother, you will have to spend just about all your time in that restaurant because he won’t. Sure he could change and finally learn from experience, but I would not want to have to find out the hard way that he is still the same irresponsible playboy as before.

Ken asks…

How could I make millions in the franchise business?

Or a lot of money?

I plan on having a high paying career and I also plan on investing it in the market, putting more of it in a Roth IRA and putting some of it in franchising. I know I don’t have a million dollars laying around but I am just curious which franchises DO NOT cost very much AND give you VERY high return and make you A LOT.

For example. There is someone who lives in my town who I know owns 3 McDonalds Franchises. He already had money to put in them but his restaurants are VERY successful and his is obviously making A LOT.

How could I be able to do this?

Justin answers:

The thing about a franchise is it’s a investment. For example, a subway franchise can be had for 100,000. But it will only make 60,000 a year and then that is also based on you working it. If you buy 4 of them and pay someone 35 to 40k at each place to run for you, and you spend x time between them checking up and ordering etc you can make 80k on a 400k investment. That’s a 5 year payback and gravy after wards. Same with his Micky-d’s, You have to have money to do this to start with. BAnks wont loan full amount, esp now.

Chris asks…

Math home work that is not working out with me please help me!!?

Venture capital. Henry invested $12,000 in a new restaurant. When the restaurant was sold two years later, he received $27,000. Find his average annual return by solving the equation 12,000(1+r)^2=27,000.

Justin answers:

Get r alone

27000/12000=(1+r)^2

squareroot(27000/12000)=1+r

squareroot(27000/12000)-1=r

r=.5

average annual return=$7500

Robert asks…

Rectangular stge. One side of a rectangular stage is 2 meters longer than the other. If the diagonal is 10?

meters, then what are the lengths of the sides?
2. Venture capital. Henry invested $12,000 in a new restaurant,. When the restaurant was soldtwo-years later he recieved $27,000. Find the average annual return by solving the equation 12,000(1+r)^2= 27,000

Justin answers:

First question. Sides are 6 & 8 meters. 36+ 64 + 100.

Charles asks…

Help us with this math equation from Math 209?

Venture capital. Henry invested $12,000 in a new restaurant. When the restaurant was sold two years later, he received $27,000. Find his average annual
return by solving the equation 12,000(1+r)^2=27,000.

(: thanks!!

Justin answers:

(1+r)^2=27000/12000=2.25
1+r=1.5
r=0.5=50%
God bless you.

Steven asks…

I want to start a Restaurant Franchise, but don’t have the money. Are there any investors who invest in this?

I have a lot of experience in QSR(Quick Service Restaurants), and I have been wanting to buy a franchise and run it. I however do not have the money, and can’t get a loan that would be of the size I would need in order to have the money for the build out, equipment, and cash on hand. The Build out is around $225,000, and $50,000 Cash on Hand. The initial franchise fee is $25,000. I want to find an investor that wants to be behind the scenes, but can have the money to start this franchise. We could do this as a 50/50 partnership down the line, until the investor has made X% of the investment, and then I would be able to take over full time. So if the investor would put in $300,000; and wants 200% return, then once $600,000 has been paid back to the investor, then we would part ways, and I would continue on my own. Please let me know if anyone knows of what steps I can go about in order to do all of this.

Thank You!

Justin answers:

There are very few investors that are willing to invest more than what your own stake in the venture is without some assurances as to the success of the venture whether that be by control of the business or verifiable cash flow. If you have nothing at stake then there’s no assurance of fiscal responsibility. Reasonable cash flow expectations can be discounted to give a net present value to help determine the value of the investment.

Even so, no one will invest and consider the profit distribution as a buy out of their interest in the venture, if anything you will have to buy them out yourself to take the business back but the dividends paid would be an expectation as part of the ownership, they would expect to have a 50/50 share of the profit with any buy out of their 50% share coming out of your share of the profit not theirs. Your best bet may be to join a peer to peer lending website and propose the terms that you wish and see if people are willing to put money into financing your venture. If you present sufficiently attractive terms and assurances then your project may be financed, if not well then you don’t get the money. The idea of a peer to peer lending site is that it may be easier to find 15,000 people each willing to risk $20 on your dubious claims of a return then it would be to find someone willing to risk $300,000 on your word.

James asks…

Henry invested $12,000 in a new restaurant.?

Venture capital. Henry invested $12,000 in a new
restaurant. When the restaurant was sold two years
later, he received $27,000. Find his average annual
return by solving the equation 12,000 (1+r)^2=27,000.

Justin answers:

12,000 (1+r)^2=27,000

Divide 27,000 by 12,000

you get : (1+r)^2 = 2.25

Get rid of the ^2 by doing ^1/2 (or square root) on each side

you get: 1+r = 1.5

isolate for r, you get 0.5

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Your Questions About What Is Wrong With The Stock Market Today

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Charles asks…

Its the 1930¨s all over Again ? with all the political wrong decisions……….?

It’s the 1930s All Over Again
by Llewellyn H. Rockwell, Jr.
by Llewellyn H. Rockwell, Jr.

DIGG THIS

Jittery stock markets, an economy drunk on credit, and politicians calling for varieties of dictatorship: what a sense of déjà vu! Let us recall that the world went bonkers for about ten years way back when. The stock market crashed in 1929, thanks to the Federal Reserve, and with it fell the last remnants of the old liberal ideology that government should leave society and economy alone to flourish. After the federal Great Depression hit, there was a general air in the United States and Europe that freedom hadn’t worked. What we needed were strong leaders to manage and plan economies and societies.

And how they were worshipped. On the other side of the world, there were Stalin and Hitler and Mussolini, but in the United States we weren’t in very good shape either. Here we had FDR, who imagined himself capable of astonishing feats of price setting and economy boosting. Of course he used old-fashioned tricks: printing money and threatening people with guns. It was nothing but the ancient despotism brought back in pseudo-scientific garb.

Things didn’t really return to normal until after the war. These “great men” of history keeled over eventually, but look what they left: welfare states, inflationary banking systems, high taxes, massive debt, mandates on business, and regimes with a penchant for meddling at the slightest sign of trouble. They had their way even if their absurd posturing became unfashionable later.

It’s strange to go back and read opinion pieces from those times. It’s as if everyone just assumed that we had to have either fascism or socialism, and that the one option to be ruled out was laissez-faire. People like Mises and Hayek had to fight tooth and nail to get a hearing. The Americans had some journalists who seemed to understand, but they were few and far between.

So what was the excuse for such a shabby period in ideological history? Why did the world go crazy? It was the Great Depression, or so says the usual explanation. People were suffering and looking for answers. They turned to a Strongman to bail them out. There was a fashion for scientific planning, and the suffering economy (caused by the government, of course) seemed to bolster the rationale.

All of which brings me to a strange observation: when it comes to politics, we aren’t that much better off today. It’s true that we don’t have people running for office in ridiculous military suits. They don’t scream at us or give sappy fireside chats or purport to be the embodiment of the social mind. The tune is slightly changed, but the notes and rhythms are the same.

Have you listened carefully to what the Democrats are proposing in the lead-up to the presidential election? It’s just about as disgusting as anything heard in the 1930s: endless government programs to solve all human ills. It’s as if they can’t think in any other way, as if their whole worldview would collapse if they took notice of the fact that government can’t do anything right.

But it also seems like they are living on another planet. The stock market has a long way to fall before it reaches anything we could call low. Mortgage interest rates are creeping along at the lowest possible rates. Unemployment is close to 4%, which is lower than even Keynesians of old could imagine in their wildest dreams.

The private sector is creating a miracle a day, even as the stuff that government attempts is failing left and right. The bureaucracies are as wasteful and useless as they’ve ever been, spending is already insanely high, debt is skyrocketing, and there’s no way that any American believes himself to be under-taxed.

The Democrats, meanwhile, go about their merry business as if the public schools were a model for all of society. Oh, and let us not forget their brilliant idea of shutting down the industrial economy and human prosperity so the government can plan the weather 100 years from now. We can only hope that there are enough serious people left to put a stop to this harebrained idea.

But before we get carried away about the Democrats, let’s say a few words about the bloodthirsty Republicans, who think of war not as something to regret, but rather the very moral life of the nation. For them, justice equals Guantánamo Bay, and public policy means a new war every month, and vast subsidies to the military-industrial complex and such other Republican-friendly firms as the big pharmaceutical companies. Sure, they pay lip service to free enterprise, but it’s just a slogan to them, unleashed whenever they fear that they are losing support among the bourgeois merchant class.

So there we have it. Our times are good, and yet we face a choice between two forms of central planning. They are varieties of socialism and fascism, but not overtly: they disguise their ideological convictions so that we won’t recognize that they and their ilk have certain predecessors in the history of political economy.

Into this mix steps Ron Paul, with a message that has stunned millions. He says again and again that government is not the way out. And even though his political life is nothing short of heroic, he doesn’t believe that his candidacy is about him and his personal ambitions. He talks of Bastiat, Hazlitt, Mises, Hayek, and Rothbard – in public campaign speeches. And let no one believe that this is just rhetoric. Take a look at his voting record if you doubt it. Even the New York Times is amazed to discover that there is a principled man in politics.

It is impressive how crowds are hard pressed to disagree with him. How much good is he doing? It is impossible to exaggerate it. He provides hope when we need it most. You see, the American economy may look good on the surface but underneath, the foundation is cracking. The debt is unsustainable. Savings are nearly nonexistent. Money supply creation is getting scary. The paper-money economy can’t last and won’t last. One senses that the slightest change could cause unforeseen wreckage.

What would happen should the bottom fall out? Scary thought. We need ever more public spokesmen for our cause. In many ways, the Mises Institute bears a heavy burden as the world’s leading institutional voice for peace and economic liberty. So does LewRockwell.com. And we are working in every way possible to make sure that the flame of freedom is not extinguished, even in the face of legions of charlatans and power-mongers. Even though the politics of our times is as dark as ever, there are bright lights on the horizon.

July 28, 2007

Llewellyn H. Rockwell, Jr.
Thanks, Asawalli,
but im trying to give answer to soo many question from regular and honest hard working people, who is asking every day: Why the world is up side down?

Justin answers:

Wow!!! You are an expert. I think I cannot answer this.
You should be in Government or working on Wall Street.
There are no bright lights. It is time for our civilisation to fall, as the Egyptians, Greeks and Romans did.
Immorality brings the fall of economy, as history can prove.
If we rely on money we will be very disappointed!

Mark asks…

Wrong time to begin investing in 401(k)?

I am 23 years old. Given the recent stock market downturn, I have recently turned my attention to saving for my retirement. I know the correct 401(k) investment allocation for my age is supposed to be heavy in stocks, light in bonds and less risky investments. However, would it be unwise to allocate more in bonds and less risky less rewarding investments, at least until the stock market finds somewhat of a bottom? I know I’m young, and can tolerate the risk long term, but it seems like a good idea to stick with stable funds, bond funds, anS&P 500 equity index fund, and other vehicles of low market risk. On the other hand, is it a good idea to invest heavily in stocks, knowing that there are 40-50 years ahead of me during which the storm can easily be weathered? If I just put my first dollar into a 401(k) today, Oct. 27 2008, generally what allocation approach would best suit me given my age (23) and the volatile market? Thank you!

Justin answers:

Hi myeys–

First, if the company is matching you are getting free money- so in any case max out your 401k if you can afford it no matter what you decide to do with it.
Second, what are your choices? I personally think that 20% in fixed income at your age is enough. S&P500 index is one good pick and you need some international– I like about 30% of your equity portion in international , at least, which will include about 10% emerging markets. You are one of the lucky ones, IMO, lots of time to grow your wealth and your question is a common one and a very good one. Also, check out other investment sites that are dedicated to answering questions like yours. Morningstar.com has a forum, rest you pay, but it is a good site. Www.moneyrec.com is a site developed for your investment questions- free to new users.

Best of Luck, keep asking and keep learning!

Grace

John asks…

What the hell is wrong with GM? Somebody that works for GM, please let me know?

I have no clue what GM is thinking anymore. The economy is not doing great at all, a lot of people are losing their jobs, monday was one of the worst days ever with the stock market, all the other car companies are lowering there prices and making cars more affordable (especially with the SUVs) And GM is making it even harder and less affordable. I went car shopping last week and was checking out the Saturn Outlook or the GMC Acadia and saw 72 month financing at 0% and got a price from Saturn which I can afford. Then today I went to GMC to see how much the Acadia would cost a month and they informed me that GM doesn’t offer 72 months anymore, and the most is 60 months and its not even 0%, its 1.9%. (And that’s with every GM, including the Saturn Outlook, and they just took away the 72 months as of yesterday)

I just went from looking forward to buying a GM to not being able to afford the monthly payments. I just want to know with the economy not doing to great at all and people cutting back on costs, why they would raise they’re prices and make them less affordable, if anything they should have lowered them. Are they trying to lose money?

Justin answers:

I don’t work for GM, but I do know that GM is experiencing the same economic problems as the rest of the nation. I mean, GM is turning in some of their worst quarterly reports in its history. They need money badly, and they need it now. This example you had in just an example of them trying to get quick cash. Even though they are turning away potential buyers, those that do buy are giving them more money which can be used in the short term.

Robert asks…

Would Obama, Dems Kill 401(k) Plans?

OBAMA’S PLAN TO SEIZE YOUR 401K
Would Obama, Dems Kill 401(k) Plans?
October 23, 2008 10:47 AM ET | James Pethokoukis | Permanent Link | Print
I hate to use the “S” word, but the American government would never do something as, well, socialist as seize private pension funds, right? This is exactly what cash-strapped Argentina just did in the name of protecting workers’ retirement accounts (Efharisto, Fausta’s Blog). Now, even Uncle Sam isn’t that stupid, but some Democrats might try something almost as loopy: kill 401(k) plans.

House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created “guaranteed retirement accounts” for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, said that since “the savings rate isn’t going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.”

A few respectful observations:

1) McDermott is right when he says the savings rate isn’t going up. But the savings rate doesn’t include gains to money you invest in the stock market. It ignores the buildup of net worth. (If you bought a share of XYZ Corp. in January at $100, for instance, and its value doubled by December, the savings rate measure would still value that investment at $100. In short, the savings rate is a phony number.)

2) So based partly on the above faulty logic, the $4.5 trillion, as of the start of the year, invested in 401(k) plans doesn’t count as savings.

3) Ghilarducci would have workers abandon the stock market right at the bottom of the market. A stupid idea, according to Warren Buffett: “I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: ‘Put your mouth where your money was.’ Today my money and my mouth both say equities.”

4) Ghilarducci would offer a lousy 3 percent return. The long-run return of the stock market, adjusted for inflation, is more like 7 percent. Look at it this way: Ten thousand dollars growing at 3 percent a year for 40 years leaves you with roughly $22,000. But $10,000 growing at 7 percent a year for 40 years leaves you with $150,000. That is a high price to pay for what Ghilarducci describes as the removal of “a source of financial anxiety and…fruitless discussions with brokers and financial sales agents, who are also desperate for more fees and are often wrong about markets.” Please, I’ll take a bit of worry for an additional $128,000.

5) What effect would this plan have on an already battered stock market? Well, I would imagine it would send it even lower, sticking a shiv into the portfolios of everyone who didn’t jump aboard. But I am sure the Chinese would love to jump in and buy all our cheap stocks to fund the retirement of their citizens.

My bottom line: If you believe in the long-run dynamism of the American economy, then you have to believe in the stock market. Listen to superinvestor Buffett, not the prof from the New School.

Do you think this is a good plan?

Justin answers:

I dunno’ where you get this stuff, but I do know that because all of these things have to go through a long and involve legislative process and eventually they have to be signed into law by the president. After that, if anyone objects to a given law it will be challenged in court. Of course anything can happen, but as a rule very few things of a radical nature ever get passed. Worry about real things, not stuff that totally foolish!

Paul asks…

politics of our time is as dark as ever, but with a bright ligths in the horizon?

politics of our time is as dark as ever, but with a bright ligths in the horizon?
Its the 1930¨s all over Again ? with all the political wrong decisions……….?
It’s the 1930s All Over Again
by Llewellyn H. Rockwell, Jr.
by Llewellyn H. Rockwell, Jr.

DIGG THIS

Jittery stock markets, an economy drunk on credit, and politicians calling for varieties of dictatorship: what a sense of déjà vu! Let us recall that the world went bonkers for about ten years way back when. The stock market crashed in 1929, thanks to the Federal Reserve, and with it fell the last remnants of the old liberal ideology that government should leave society and economy alone to flourish. After the federal Great Depression hit, there was a general air in the United States and Europe that freedom hadn’t worked. What we needed were strong leaders to manage and plan economies and societies.

And how they were worshipped. On the other side of the world, there were Stalin and Hitler and Mussolini, but in the United States we weren’t in very good shape either. Here we had FDR, who imagined himself capable of astonishing feats of price setting and economy boosting. Of course he used old-fashioned tricks: printing money and threatening people with guns. It was nothing but the ancient despotism brought back in pseudo-scientific garb.

Things didn’t really return to normal until after the war. These “great men” of history keeled over eventually, but look what they left: welfare states, inflationary banking systems, high taxes, massive debt, mandates on business, and regimes with a penchant for meddling at the slightest sign of trouble. They had their way even if their absurd posturing became unfashionable later.

It’s strange to go back and read opinion pieces from those times. It’s as if everyone just assumed that we had to have either fascism or socialism, and that the one option to be ruled out was laissez-faire. People like Mises and Hayek had to fight tooth and nail to get a hearing. The Americans had some journalists who seemed to understand, but they were few and far between.

So what was the excuse for such a shabby period in ideological history? Why did the world go crazy? It was the Great Depression, or so says the usual explanation. People were suffering and looking for answers. They turned to a Strongman to bail them out. There was a fashion for scientific planning, and the suffering economy (caused by the government, of course) seemed to bolster the rationale.

All of which brings me to a strange observation: when it comes to politics, we aren’t that much better off today. It’s true that we don’t have people running for office in ridiculous military suits. They don’t scream at us or give sappy fireside chats or purport to be the embodiment of the social mind. The tune is slightly changed, but the notes and rhythms are the same.

Have you listened carefully to what the Democrats are proposing in the lead-up to the presidential election? It’s just about as disgusting as anything heard in the 1930s: endless government programs to solve all human ills. It’s as if they can’t think in any other way, as if their whole worldview would collapse if they took notice of the fact that government can’t do anything right.

But it also seems like they are living on another planet. The stock market has a long way to fall before it reaches anything we could call low. Mortgage interest rates are creeping along at the lowest possible rates. Unemployment is close to 4%, which is lower than even Keynesians of old could imagine in their wildest dreams.

The private sector is creating a miracle a day, even as the stuff that government attempts is failing left and right. The bureaucracies are as wasteful and useless as they’ve ever been, spending is already insanely high, debt is skyrocketing, and there’s no way that any American believes himself to be under-taxed.

The Democrats, meanwhile, go about their merry business as if the public schools were a model for all of society. Oh, and let us not forget their brilliant idea of shutting down the industrial economy and human prosperity so the government can plan the weather 100 years from now. We can only hope that there are enough serious people left to put a stop to this harebrained idea.

But before we get carried away about the Democrats, let’s say a few words about the bloodthirsty Republicans, who think of war not as something to regret, but rather the very moral life of the nation. For them, justice equals Guantánamo Bay, and public policy means a new war every month, and vast subsidies to the military-industrial complex and such other Republican-friendly firms as the big pharmaceutical companies. Sure, they pay lip service to free enterprise, but it’s just a slogan to them, unleashed whenever they fear that they are losing support among the bourgeois merchant class.

So there we have it. Our times are good, and yet we face a choice between two forms of central planning. They are varieties of socialism and fascism, but not overtly: they disguise their ideological convictions so that we won’t recognize that they and their ilk have certain predecessors in the history of political economy.

Into this mix steps Ron Paul, with a message that has stunned millions. He says again and again that government is not the way out. And even though his political life is nothing short of heroic, he doesn’t believe that his candidacy is about him and his personal ambitions. He talks of Bastiat, Hazlitt, Mises, Hayek, and Rothbard – in public campaign speeches. And let no one believe that this is just rhetoric. Take a look at his voting record if you doubt it. Even the New York Times is amazed to discover that there is a principled man in politics.

It is impressive how crowds are hard pressed to disagree with him. How much good is he doing? It is impossible to exaggerate it. He provides hope when we need it most. You see, the American economy may look good on the surface but underneath, the foundation is cracking. The debt is unsustainable. Savings are nearly nonexistent. Money supply creation is getting scary. The paper-money economy can’t last and won’t last. One senses that the slightest change could cause unforeseen wreckage.

What would happen should the bottom fall out? Scary thought. We need ever more public spokesmen for our cause. In many ways, the Mises Institute bears a heavy burden as the world’s leading institutional voice for peace and economic liberty. So does LewRockwell.com. And we are working in every way possible to make sure that the flame of freedom is not extinguished, even in the face of legions of charlatans and power-mongers. Even though the politics of our times is as dark as ever, there are bright lights on the horizon.

July 28, 2007

Llewellyn H. Rockwell,

Justin answers:

You really expect anybody to read this?

I suggest you put it on youtube, explained by a beautiful woman in a bikini. Then somebody actually might pay attention.

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Bloomberg: Leon Black investing Dartmouth money stirs ethics debate

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Bloomberg: Leon Black investing Dartmouth money stirs ethics debate

In all, about 13.5 percent of Dartmouth's $3.5 billion endowment is managed by firms that are related to trustees or investment committee members, says Justin Anderson, the school's spokesman.
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Your Initial Step in Developing a Customized Investing Strategy

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Investing Rule Quantity 1: Know Thy Self

Often when it comes to investing people’s initial reaction is to ‘outsource’. They think they need to discover somebody who is a profession monetary adviser, go someplace to meet a financial adviser, or speak to someone who can consider what they have and multiply that investment. When it arrives to investing, we typically first appear at outdoors sources.

Two Untrue Investing Assumptions:

We falsely assume monetary advisers who post the biggest returns are exactly what we all require.
As an illustration, many individuals think of investing this way:

One would believe a football quarterback would just require to discover the quickest operating back in the league and give that person the ball. We do the same thing financially, we scour the financial track information, inquire pals and acquaintances, for a person who has offered them “a excellent return”. Assuming somehow the key to great investing is ‘out there’.

This can be an extremely dangerous approach to investing. Rather, you require to study your self (the most important element in any investing decision) and then tailor your strategy accordingly.

Thus, we falsely assume that good investing is all about the returns. Good investing is, rather, investing that respects your dangers, values, advances your objectives, and is conscious of your timeframe.

2. We falsely assume that investing demands unattainable experience knowledge for the typical person. Therefore, your choice is both to turn out to be an professional the the field or hand off the investing. – so many of us hand off the investing decision. Good investing, however, is investing you understand.

In both of the over examples we see that good investing involves knowing yourself.

Why is knowing yourself so essential when it arrives to investing?

Investments are not one dimension fits all. Investment choices vary from individual to individual.

Here are issues in the investing globe that differ from person to person:

Investing objectives. Often we have an quantity we wish to save. That quantity may be an real quantity, (i.e. $10,000 for kids’ college) or a general quantity to go over a purpose (i.e. enough for kids’ college). Obviously the much more particular 1 can be the better.
Investing purposes. You may have some money for a car buy, some money for kids’ school, and some money for retirement.
Investing time frames. You might have some money for a automobile purchase in two years, some money for kids’ school in ten years, and some money for retirement in twenty years.
Investing risk ranges. You might think the even worse possible situation would be to lose ten% on an investment while an additional is good with a 20% loss. As this kind of, you prefer less in exchange for smaller sized returns while an additional is prepared to accept more volatility in exchange for higher returns.
Investing understanding and expertise. You may be a person who has by no means purchased a mutual fund prior to, or you might trade person shares every day.
Investing values. One person might be comfortable owning a mutual fund that has a little proportion of a questionable stock keeping whilst another may be completely against such a possibility.
So when you decide you want to enter the investing area, be certain you look inward prior to searching outward.

Know the answer to every of the following concerns prior to you seek outside advice:

For what purpose are you investing the money?
How much do you want to commit?
How long will it be till you need the money?
How a lot money will you need/want when your time frame for the investment ends?
Understanding what you know about investing these days, how a lot danger (1-ten) are you prepared to take?
Are you willing to educate yourself about investing? At this stage at least you can think about searching for someone to assist you with your investing. And throughout the investing process remember, no 1 knows you much better than your self.

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The Dogs of the Dow Are Outperforming Their Index

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The Dogs of the Dow Are Outperforming Their Index

The Dogs is an investing strategy that buys and holds equal dollar amounts of the 10 best-yielding dividend stocks of the Dow Jones Industrial Average (DJINDICES: ^DJI ) . The strategy banks on the idea that blue-chip stocks with high yields are near
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Your Questions About Investing For Dummies

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Steven asks…

The Intelligent Investor?

I’m 14 and I’m almost finished with Value Investing for dummies. Would The Intelligent Investor baffle me or can I handle it? I have the termonolgy almost down.

Justin answers:

I didn’t find it difficult at all, but I was 18 when I read it. You can always try. Reading material that is demanding is the best way to increase knowledge.

Thomas asks…

Do you invest in the stock market? What kind of investing strategy do you use if you do?

I’m a college student taking BS Business Administration with major in Entrepreneurial Management and planning on investing some of my savings. My mentor told me about investing in the stock market, rather than in a bank.
Please share your ideas about this.. Thank you very much.

Justin answers:

Yes I do invest in the stock market and have been doing so since I was eleven years olds and have been working in the stock market for 45 years. Based on my experience, you mentor is correcct.

BUT – Before you spend $0.01 on any investment, you must know what you’re doing, why you’re doing it and how to do it. Before you invest in any security, the first investment you should make is in yourself, and the best investment you can make is by educating yourself.

Start your education by learning why you should invest and the importance of being able to make your own decisions or how the pro’s make theirs.
Here is some reading material that can get you started in the right direction, You don’t have to read all of them, but at least look at them and select those you may have an interest.
Beating the Street by Peter Lynch
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
Investing for Dummies by Eric Tyson
How to Make Money in Stocks” by William O’Neil
24 Essential Lessons for Investment Success by William O’Neil
The Intelligent Investor, by Benjamin Graham
Common Stocks, Uncommon Profits, by Philip A. Fisher
One Up on Wall Street by Peter Lynch
Stocks for the Long Run, by Jeremy Siegel
The Interpretation of Financial Statements by Benjamin Graham
What Works on Wall Street by James O’Shaunessey
You Can Be a Stock Market Genius by Joel Greenblatt
Your Money and Your Brain by Jason Zweig

Get into the habit of making daily visits to some websites like MSN Money and Yahoo Finance. (http://moneycentral.msn.com/home.asp , http://finance.yahoo.com/

Other website that can provide instructions and help with procedures and terminology are Investopedia – http://www.investopedia.com/ Visit some of the more professional websites like Zacks Research – http://www.zacks.com/ Smart Money – http://www.smartmoney.com/ Investors Business Daily – http://www.investors.com/default.htm?fromad=1
Naveller – http://navelliergrowth.investorplace.com/portfolio-grader/
Some of these web sites will have advertisers who are worth looking into also. And remember, if they offer free information, get it.

Attend all the free seminars you can, just be careful and don’t get pressured into anything you really don’t want or need. Most schools offer courses in finance and economics, but very few will have courses on the mechanics of the investment markets, if they do try taking the course. You may want to consider on-line courses, the New York Institute of Finance use to have such courses. Try to get some fee information from the stocks exchanges they all have (had) free booklets, SIAC and some of the regulators (FINRA SEC MSRB CBOE) may provide some free literature.

And when you think you want to invest/trade, try some paper trading to test your skills without spending you money http://simulatorinvestopedia.com/ http://www.moneyworks4me.com/
and/or http://www.tradingsimulation.com/

You at least have made the right decision to start investing, this is the first big step and it won’t be your last. Keep taking those steps forward and along the way never take the advice from people that are not in the market or try to tell you not to invest.

Good luck on your journey, study hard and you’ll invest well.

Charles asks…

What information do you need to feel confident about investing?

What information do you want to have in order to feel empowered and/or confident about investing or making a specific investment?

Someone telling you what to buy?

Someone telling you when to buy it?

Someone telling you how to buy it?

Justin answers:

Definitely not listening to anyone else unless you have researched the source, can have a free trial and are wanting to gain knowledge. If you do choose that path make sure the strategy sounds logical to you and the person tells you that not every pick is a winner.

Really the best way to invest is to educate yourself about the investment vehicle. All the “Dummies” books are great for that.

If you’re speaking about stock investments, books and some websites are a great place to start. I recommend Stock Investing for Dummies (no offense). It’s good book for understanding the basics. I would also recommend How to Make Money in Stocks by William J. O’Neil. It’s also a good one because it tells you what kind of fundamentals to look for in a stock, a bit about how to look for patterns in stock charts and how to protect your capital. It’s the first book I read when I started my stock trading and a very good place to start. Any questions about terms or anything go to Investopedia.

Feeling confident about investing comes from knowledge and having a plan. For example, with stock investing you want to have answers to questions like: how will I choose a stock, how much of my portfolio will I invest in any one position, when will I get out of a stock and more questions like these. If you have the answers to each part of investing in and maintaining an investment you will have the confidence you need.

David asks…

How to invest in the stock market?

First time using the stock market. What should I invest in? How do penny stocks work? Is investing in penny stock worth it? How can I invest the least and gain the most? What would be good for my 1st investment?

Justin answers:

Do some research on investing first, before doing anything else.

Start with some basic books to teach you the fundamentals. Two excellent reads are The Complete Idiot’s Guide to Investing and Investing for Dummies. Before doing anything, make sure you have enough in savings in case things go south for at least 6 months.
You need to learn also some important concepts in investing, such as dollar-cost averaging and compound interest – two of your best friends to make money for the future.
Also you need to think of what you are investing for exactly.
You first need to pick a company to invest through. Some of the best are Vanguard, T. Rowe Price, Fidelity, and Schwab. Avoid the big banks like the plague. Don’t let them rip you off with loads (sales charges) and fees. Check how much the company charges you as an expense ratio. A good one might charge you 0.2-0.8 %. If they charge more than 1% than go somewhere else. And if they charge any kind of 12b-1 fee, hold on to your wallet and RUN.

The question you need to answer is WHY you are investing. Different people have different goals. Is it for more income? For retirement? For someone’s education? Plus how old are you and how long do you want to invest? How much risk are you willing to assume?

These are all very critical questions and they will determine what kind of investments are right for you. Don’t believe anyone who has a “one size fits all” kind of investment. For stocks typically you are talking about at least a 5 year investment period. If less, consider getting into bonds or a bond fund instead. Many people choose an appropriate mix of the two.

If you want to get into the market but don’t know what stock to pick, consider an index fund. Instead of throwing all your eggs into one basket (one company), index funds can invest you in dozens, hundreds, or thousands of companies all at once and so there is less risk. This protects you if any one company or industry runs into trouble. For bonds, the returns are less, but more solid.

If you are thinking of retirement, consider a Roth IRA. Your money grows tax free, and when you retire you can withdraw it tax free as well.

Getting individual stocks make more sense if you really want to buy stock at a place you work at, or want to really get involved and are the hands-on investor type.
Penny stocks are really the sewers and ‘hoods of the internet – few people make a lot of money there, and even fewer newbies.
If you want to be more passive and have things grow over time, index funds make more sense. If you want to see some of the variety out there, for more information, try looking at

https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc

and play with it, comparing funds with more or less risk.

Do some reading online such as
http://www.vanguard.com/us/insights for some important investment truths.

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