Category Archives: Investing

3 Ways to Creatively Diversify Your Investment Portfolio

3 Ways to Creatively Diversify Your Investment Portfolio | Money Savvy Living

 

When you think of investments, you probably think of putting money in a specific stock or mutual fund.  While those are probably the most widely known investment vehicles, there are a few other investment options that can help you to effectively plan for retirement and diversify your portfolio.

 

Zero coupon bonds— This type of security doesn’t pay interest (a coupon) to the investor, but is traded at a deep discount, providing profit at maturity when the bond is redeemed for its full face value.  These are typically long-term investments that can take ten years or more to mature to full face value.  One of the greatest advantages of zero coupon bonds is to reduce portfolio risk by locking in a known level of return on investment.  Investors can purchase different kinds of zero coupon bonds in the secondary markets that have been issued from a variety of sources, including the U.S. Treasury, corporations, and state and local government entities.

 

Annuities— An annuity is an insurance product that pays out income.  Annuities are a popular choice for investors who want to receive a steady income stream in retirement.

Here’s how an annuity works: you make an initial investment in the annuity (which is an insurance product), and it then makes payments to you on a future date or series of dates. The income you receive from an annuity can be paid out monthly, quarterly, annually, or even in a lump sum.  You can choose to receive payments for the rest of your life or for a specific number of years.  How much you receive depends on whether you opt for a guaranteed payout (fixed annuity) or a payout stream determined by the performance of your annuity’s underlying investments (variable annuity).  While annuities can be useful retirement planning tools, they are also known to have high investment expenses.

 

Managed futures— Managed futures are an alternative investment strategy in which professional portfolio managers use futures contracts as part of their overall investment strategy.  Managed futures provide portfolio diversification among various types of investment styles and asset classes to help diminish portfolio risk in a way that is not possible in direct stock investments.  Professional money managers, also called commodity trading advisors, typically monitor managed futures accounts.  A diversified managed futures account will generally have exposure to a number of markets such as

  • Commodities—cotton, cocoa, coffee, sugar
  • Metals or Energy—gold, silver
  • Agriculture—soybeans, corn, wheat
  • Equity Indexes—S&P futures, Dow futures, NASDAQ 100 futures
  • Currency—foreign currency, U.S. government bond futures

Introducing futures into a portfolio reduces risk because of the negative correlation between asset groups.  This means that when traditional markets are experiencing growth, managed futures are not doing as well, however, when traditional markets are not doing well, managed futures are typically profitable.

 

 

*Before implementing any particular investment strategy, make sure to fully research the risks, rewards, time horizon, and fees involved, either on your own or through the advice of a financial advisor.

Money Lessons We Can Learn From the Game of Monopoly

 Monopoly Money Lessons | Money Savvy Living

 

Guest post by Amy Nickson, writer at Working Moms Word

 

Monopoly—the classic board game, which is quite popular among children and adults for over 100 years, is way more than just entertainment for family fun night. While you can enjoy the fun of becoming a real estate tycoon playing this game, there are also many educational lessons to be learned as well. The game offers the opportunity for players to make budgeting, investing, and financial decisions, which can help in remaining financially prudent. Following are 8 money lessons which you can learn from the monopoly board game and can apply when managing your own personal finances.

 

Value of budgeting

A successful monopoly player is a good at budgeting. Because the concept is similar, you can apply the same formula while playing the game or creating your monthly budget as well. The board game can teach you to make a realistic budget based on your income and expenses. The winner of this game can easily meet his/her each expenses and save money.

 

Giving priority to an emergency fund

A monopoly player knows well how unpredictable the game is. The player should prepare beforehand to manage any situation. Just like unforeseen circumstances arise in a Monopoly board game, it can happen in your real-life financial situation as well. You never know when you will face an emergency—such as being laid off of a job or an accident—which can use up a savings account that you’ve taken years to build. You should have an emergency fund so that you can face the financial need with solid backup. Having such an emergency fund can minimize your chances of having to sell your assets or take out loans to meet your current obligations.

 

Being a responsible decision maker

The Monopoly game helps people learn to make a proper decisions through critical thinking strategies. For instance, all players should start with the same amount of money to play the game, but, the important thing is how well you can manage your money. While “luck” can be attributed to success in the game and in real life, you still have control over the purchases that you make and assess the risk/reward of each investment. You must learn to overcome whatever comes your way and still manage your finances properly.

 

Importance of negotiation

One of the most important tricks to win the monopoly game is proper negotiation. In real life you should have the skill to negotiate with many people such as creditors, utility suppliers, sellers etc. This will help you to get best finance deals and save your hard earned money as well.

 

Investing money wisely

To ultimately be successful, there are no alternatives to making wise investment decisions. You should invest your money to make it grow with time. You’ll have to take chances and invest your money instead of simply leaving it in the bank. But for this, you need to be updated on the financial market and know all strategies well. Think about your time horizon, risk tolerance, and diversification. For more information about investing read these articles:

Investing: How to choose which investment products are right for you

Investing: Growth vs value

 

No Excuses

You probably didn’t realize that playing Monopoly could teach players lessons about personal responsibility. You shouldn’t make any excuses about losing the game. Likewise, you should not skip any chance to win while you’re playing the game either. Just like in the game, your real-life financial decisions have consequences. Unlike the game, though, the real-life decisions can have long-lasting effects. Making the unwise financial decision to overspend on credit cards, for instance, can take you years—maybe decades—to pay off.

 

Significance of building a strong asset base

Remember, building a strong asset base will help you to get passive income—income which you are not actively involved with earning. You can easily live off the passive money and can save your active income—salary from your job or business income. In the monopoly board game, the number of properties gets the advantage and control over the board, but one must also consider the value of the assets. For example, it is much better to own Park Place and Boardwalk (higher value assets that yield higher returns), rather than Mediterranean, Baltic, Oriental, Vermont, and Connecticut Avenues combined (lower valued assets, which yield lower returns).

 

Taking care of assets

In order to win the game, it’s very important to make improvement on the properties you’ve bought. You should reinvest in your properties by building houses and hotels to improve your income and financial position. In your real life, it should be your constant effort to boost your assets and minimize your financial obligations. Thus, you can achieve financial freedom in the long run. The bottom line is, don’t rely on financial shortcuts because they can ruin your financial stability.

 

 

5 Ways to Invest In Your Children’s Future

Family Time ~ Have fun together!

Family Time ~ Have fun together!

Investing. Typically, when we talk about investing, we are thinking about putting money into stocks, bonds, or mutual funds in a retirement account or a savings account. There is usually a tangible goal in mind: being able to retire comfortably or paying for a child’s college education. That type of investing is definitely something that should be a part of every person’s financial plan. But that is not the only type of investing that is important.

We need to be investing in the lives of our children in a way that is far more critical: emotionally and relationally. Being a parent is so much more than just providing food, clothes, and shelter for a child. Raising a child involves teaching them values, morals, and ethics. Whether you are actually an involved participant in teaching your children this or not, they will acquire a set of values, morals, and ethics, or a lack thereof, depending on the upbringing they receive. So how do you actually invest in your children? How do you know you are achieving your goal when there are no quantitative measures? Here are 5 ways that you can concretely participate in your children lives:

1.  Eye contact—from the time a baby is born, they start to gain an understanding of the world around them and how much they are loved based on the eye contact they receive. Even as an infant, a worldview is starting to form. Take the time every day to look your child in the eye and tell him you love him—it doesn’t matter if your child is 6 months old or 16 years old.

Investment: Self-Worth—by looking in his eyes, you are telling your child, “You have value.”

2.  Say “I love you.”—this one may seem self-evident, but, trust me, you need to actually say it. Clearly communicating this simple message with your child often is critical. Through the trials that they will surely face in life—a mean kid at school, breaking up with a boyfriend, peer pressure—if your daughter knows that you, her parent, loves her, getting through these situations will be easier for her.

 Investment: Security—by actually uttering the words “I love you,” you are letting your child know, unequivocally, that no matter what the world brings their way, you are there for them.

3.  Give compliments—as parents, we are so used to telling our kids what they can’t do and what they did wrong, that is it essential to make a concerted effort to tell them when they’ve done something right. Just to get through the day without someone getting hurt, I feel like I am telling my kids every couple of minutes what not to do—a negative directive: “don’t throw the ball in the house,” “no wrestling by the fireplace,” “pick up your toys before someone trips over something and gets hurt…” Yes, this is a parent’s job, however, it makes it just that much more important to catch them doing something good. It can be anything, even something little: “you did a great job cleaning your room,” “thank you for mowing the lawn,” “I’m proud of you…”

Investment: Self-Esteem—each time you tell your child they did something good, you are building up their confidence.

4.  Spend quality time together—in order to invest in the lives of your children, you need to actually be there. Yes, face-time matters. Maybe you are busy traveling with your job, maybe you are putting in hours around the clock trying to get your new business off-the-ground, but you can figure out a way to carve out quality time for your family. In the grand scheme of life, will your children be able to remember that you went to their baseball games, cheerleading competitions, or awards ceremony at school? Will they remember sitting down and eating dinner together as a family? Will they remember you teaching them to drive? Will they remember being able to talk to you about major life decisions, such as college, a career path, or renting their first apartment? Perhaps, you time is limited due to circumstances in life that you can’t control, but that is not an excuse for not making the time you do have with your kids count. After all, it is entirely possible for a parent to see their children every day, but not really be there.

Investment: Yourself—investing time into your children creates memories for them. Someday when you are gone, the memories will still live on. Don’t live a life that will cause you to look back with the regret of “I wish I had spent more time with my kids.”

5.  Eternity—for me, this is the most important. You may have heard the saying, “the family that prays together, stays together.” I think there is a lot of truth to this. Honoring God as a family helps to keep other priorities in order as well.

Investment: Purpose—understanding that God has a plan for each of us, gives life meaning. Teaching my children about God is investing in their eternity.

Investing isn’t always dollars and cents, sometimes it’s just common sense.

3 Ways to Creatively Diversify Your Investment Portfolio

Photo by: Lendingmemo via Flickr

Photo by: Lendingmemo via Flickr


When you think of investments, you probably think of putting money in a specific stock or mutual fund. While those are probably the most widely known investment vehicles, there are a few other investment options that can help you to effectively plan for retirement and diversify your portfolio. Learn what zero coupon bonds, annuities, and managed futures are, and how they can benefit your investment portfolio.

Follow link to read the entire article.

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There is a lot of information to sort through when it comes to personal financial resources. The goal of Money Savvy Living is to make finding the answers you need easy.

Find books, workbooks, ebooks, video downloads, mp3 downloads, DVDs, and educational finance games to get your finances in order. Money Savvy Living has compiled a concise list of financial resources on the following topics:

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Investing Basics: how to choose the right investments

Build your nest egg of savings the right way.

Build your nest egg of savings the right way.

The idea of saving money for retirement, a child’s college education, or even a down payment on your first home may sound pretty easy, and most people understand the value and benefits of planning for the future; however, choosing what to invest in can be more confusing.

Whether you are investing in a savings account, personal IRA (individual retirement account), or a 401K through your employer, it is important to pick the right investments for you. So how do you know which investment options to choose? There are a few factors to keep in mind when deciding in which types of products to invest:

  • time horizon
  • risk tolerance
  • diversification

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