Investing Archives - Faithful with a Few

How to Invest Money and Combat Debt

By // by guest

[The following is a featured post discussing the idea of investing a small amount of money in order to pay off debt. This is something that I have done with mixed results so far.]

In days gone by, it was commonly believed that the specter of debt could only be overcome by reducing expenditure and committing to a frugal lifestyle. While this remains solid advice, however, it is not necessarily the most productive method in an age of technological advancement and advanced money making opportunities.

Although it may sound a little unorthodox, the prevailing contemporary theory requires individuals to invest capital in pursuit of greater returns. This money can then be used to repay debts more effectively, without forcing households to struggle against a back-drop of austerity and long-term uncertainty.

How to Speculate and Accumulate: 3 Ways to Spend More and Generate Additional Income

With this in mind, how exactly can modern-day speculation inspire you to boost your income and stave off debt? Consider the following:

Embrace the Financial Markets

While access to the open financial markets was once exclusive to professional traders and large commercial institutions, the development of sophisticated online trading platforms and educational resources have removed many of the pre-existing barriers to entry. As a result of this, numerous markets are now within reach of independent traders with minimal dollars.

This has exposed everyday citizens to a diverse range of financial products and derivatives, from trading forex and currencies to exchanging carbon credits. While you will needs patience and knowledge to succeed, there is ample opportunity to build wealth through this method.

Understand how to Create a Stream of Passive Income

Passive income is a term used to describe capital can be generated without the completion of a direct action or the sale of a commodity. It allows you to speculate and accrue wealth that is entirely separate to what you earn through traditional working methods, which in turn can be used to clear a significant amount of your total debt.

There are several options of this type to suit alternative risk appetites, with the latest high yield checking accounts providing a low-risk avenue for growth and real estate investments available to those with more income and a desire to achieve greater returns.

Do not Underestimate the Rewards of Hard-work

While it may sound old-fashioned and overly simplistic, hard work remains one of the most effective methods of boosting your income and combating personal debt. This does not necessarily mean that you have to work for 12 hours a day in a number of physically demanding jobs, however, as those of you with a viable industry skill can use it to work from home and freelance in your spare time.

Website developers, content writers and software developers remain in constant demand in the current economy, and this has created opportunity for proactive individuals to market themselves as an independent contractor.

As a general rule, speculating to accumulate does require a certain degree of disposable income in order to generate any sort of return. This can be minimal, however, so as long as you are willing to commit this sum in the pursuit of reducing your debt then you can achieve outstanding results over time.

How Ethical Trading May Be Encouraged

By // by guest

Ever since the financial crash in 2008, this hasn’t necessarily been the case and now, in 2014, scapegoating for problems seems to be worse than it ever has been before. Banks and large trading institutions may have caused some of the problems that ultimately led to the crash, but small scale investors were also causing issues.

Here we will look at ethical trading and how the concept of social trading allows us to trade in a manner that allows us to keep a clear conscience.

What Do We Mean By Ethical Trading?

When the financial crash happened, many banks and institutions were punished for unethical trading. This means that they invested money in areas where they shouldn’t have, gambling money that wasn’t theirs to lose.

Ethical trading on such a large scale would mean that a bank will only spend money that is theirs, or will only use your money if you’ve given them explicit permission to do so (as you can with some types of account). Even then, when a bank invests this money, they should look to invest in products and projects that are perceived to be ethical.

As well as this, as was the issue in 2008, banks must also be seen to be staying within the banking code of conduct, observing rates rather than trying to manipulate them.

How Can Ethical Trading Be Practiced On A Small Scale?

Although many banks have had issues with the law and unethical trading in the past, single, small-scale investors have fared much better and, the majority of the time, they are trading well within the code of conduct.

If you trade at home on a trading platform, it is highly likely that you’re already what is considered to be an ethical trader; staying within the rules and only trying to make an honest living.

Issues with individual traders generally only arise when people are given access to insider information; something that is both illegal and immoral.

Passing On The Word: The Benefits Of Social Trading

Social trading acts as an online forum for investors, where people can meet, chat and discuss trades. Because of the fact that brand new investors can speak to those with far more experience, this is the perfect place to spread the message of ethical trading to those who are inexperienced and likely to succumb to pressure.

[How much can you rely on social media in your investing?]

Social trading looks as though it could very well be the future of forex trading, and it’s available through almost any ECN broker. With this in mind, now is the perfect time to learn from the lessons of 2008. So, consider the way you trade, ensure it is ethical and spread the word. Together, we can make the world a better, fairer place.

Why You Need Life Insurance Before Investing

By // by Kevin M

When people begin to invest money, they’re usually hungry for early results. They may approach investing with the conviction of a recent convert, saving and investing as much money as they can, even to the point of neglecting other needs, such as putting life insurance before investing. This is understandable, and quite natural, particularly if you are either young or relatively new to investing.

In spite of your enthusiasm, it is important to make sure that you have a few basics covered before you begin investing. One of those basics is life insurance.

You’re Not Ready To Invest Unless You’ve Covered The Contingencies

Investment advisers and financial planners commonly recommend that before you begin investing you should have a well-stocked emergency fund. That can include anywhere from 3 to 6 months of living expenses. The purpose of the fund is to make sure that you are protected from any income disruptions or large expenses that might force you to tap your investment portfolio ahead of schedule.

The fund enables you to carry on with the business of life, while keeping your investment portfolio protected from early withdrawals.

In essence, what an emergency fund does is cover a contingency – a temporary loss of income, or the unexpected arrival of a big expense or two. A life insurance policy functions similarly as a contingency plan. It creates a basic survival plan for your family or any other dependents that you have in the event of your death. This is a fundamental need, which means you should have adequate life insurance before investing.

Future Wealth Won’t Take Care Of Your Family If You Die Before You Get Rich

There is sometimes a thought that you don’t need life insurance, since your investment portfolio will eventually grow to the point where you will be effectively self-insured. This notion is especially popular among the young, since the prospect of their own death seems so remote.

The problem with this thinking is that it may be many years before you reach the point of being anything close to being self-insured through your investment portfolio. Let’s say that right now you have $10,000 to invest, but you fully expect it to grow to over $100,000 within the next 10 years. Maybe at that point you will be something close to self-insured, but what happens if something happens to you between now and then? What happens if you die when you only have $20,000 in investments?

Future wealth will not protect your family if something were to happen to you today. That’s the whole purpose of life insurance – as a contingency to take care of your family’s financial needs before you have the money that a large portfolio will provide.

The Cost-Benefit Of Life Insurance Is Much Higher Than An Equivalent Investment

One of the biggest advantages of life insurance is that you can quite literally buy six figures in coverage for just a few hundred dollars per year. This is especially true if you are in your 20s or early 30s. You may be able to buy $250,000 in life insurance for just a few hundred dollars per year.

If you are just starting out as an investor, it will take you many years – even decades – to accumulate that much money.

There may sometimes be the thought to keep your expenses as low as possible in order to maximize the amount of money that you have available to invest. If a large life insurance policy is only going to cost you $500 or $1,000 per year, it won’t be taking much away from your investment efforts.

And the benefit that you will have as a result of paying the relatively small premium will be enormous for your family.

Life Insurance Before Investing – Just In Case Your Investment Plans Don’t Quite Turn Out

It’s natural to be optimistic when it comes to investing. In fact, optimism is virtually essential to a new investor. But it is a sad fact that investment plans don’t always turn out the way we want them to, despite our best efforts.

Stock markets crash, individual investments blowup, and sometimes we need to tap investment portfolios early for unexpected reasons. The point is, investing is never a guarantee.

And just in case it doesn’t turn out as well as you hope, your life insurance policy can back you up with a plan to cover your family in the event of your death.

Life Insurance Should Be Seen As A Form Of Investment Diversification

You’re probably well acquainted with the idea of investment diversification. But not all diversification efforts are neatly contained within an individual portfolio. Some of the best forms of diversification you can have will be outside your portfolio. This can include an emergency fund, fixed income investments (like bank assets), and real estate.

But insurance can also be a form of diversification. As discussed above, it is a fail-safe against your death, at least until the time arrives that you have enough money saved and invested that you no longer need to maintain the policy.

If you can think of life insurance as a financial instrument that complements your investment portfolio, having it will seem more logical. And not having it can seem like an exercise in being penny wise, and pound foolish.

If you are an investor, especially a new one, do you have a credible life insurance policy – just in case? If not, then you need to make sure you pick up some life insurance before investing another cent!

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How Social Media Can Affect Your Investing

By // by Khaleef Crumbley

If you want to know what your friends are up to, look at funny pictures of cats, or scope out deals at your favorite stores, social media is a great tool. More and more people are turning to social media for other things as well, such as help with making investment decisions. A look at the specifics of how people use social media to shape their investment plans can help you decide if such an approach is right for you.

Younger People Lead the Way

Image via Flickr by thetaxhaven

The results of one survey published at marketwire.com revealed that the group most likely to use social media to make investment decisions is people under 40. The same survey found that this age group is three times more likely to believe that information received through social media is credible than other age groups. Overall, 40% of investors use social media as part of their financial game plan, and that number is likely to continue growing.

It isn’t just the young and the folks with limited assets who look to social media. Individuals with a high net worth are also seizing hold of the trend. As stated at hewinsfinancial.com, another survey found that “high net worth adults that are online are using social media for investing purposes at a rate that is higher than the general population!”

It becomes clear that investors want social media to impact their investment decisions. As financial advisory firms and other companies take note of this, they are more likely to use social media as a way to connect with clients.

How Businesses Use Social Media

Image via Flickr by Jason Howie

A report released earlier this year by the SEC states, “companies can use social media outlets like Facebook and Twitter to announce key information…so long has investors have been alerted about which social media will be used to disseminate such information.” This go-ahead opens the door for increased company-investor communication.

Financial advisors are taking full advantage of the opportunity presented by social media. A survey conducted by Accenture found that out of 400 financial advisors, 73% said that social media has led to an increase in client transactions and 77% said that it helps with client retention. Indeed, social media helps financial advisors communicate efficiently and easily with clients, and it makes the task of keeping up with industry news easier.

How Investors May Misuse Social Media

With the above being said, it’s obvious that the world of social media has a lot of sound information to offer to investors. When financially savvy individuals stick to official, reliable sources, they stand to benefit from their social media experience.

However, a note of caution is in order. If you follow the link to the Hewins Financial website included earlier in this article, the page it takes you to has an introduction all about how emotions can negatively impact your investments. One of your friends boasts on social media about an investment that paid off, and you decide to invest in the same stocks, just when those stocks are about to fall. Eventually you get locked into an unprofitable cycle of buying at high prices and selling at low prices.

In another scenario, the buzz on social media about a certain investment might make you doubt official sources of information. If all your friends on Facebook say one thing, but an official source says something to the contrary, which are you likely to believe?

Should Social Media Impact your Investment Plans?

When considering the pros & cons of annuities — resources for any type of investment, really — take the time for introspection. What are your specific long-term and short-term financial goals? Who do you trust to help you with those goals? Once you have a clear picture in mind, start searching for information.

For every source of information, ask yourself, “Is this advice coming from an expert, or did Great Aunt Helga just get over excited about her portfolio?” “Is this information up to date?” “What is this source’s motivation?” Tweets, blogs, and status updates from well-reputed experts and financial advisory firms are the best places to look.

If you’re new to the world of investing, don’t make any of your decisions based on what you see on social media. Educate yourself about the basics of investing, and don’t be afraid to meet face to face with a financial advisor. If you decide to trust that advisor, look for that person’s company’s social media sites.

As social media steps into more and more aspects of daily life, it becomes increasingly important to know the advantages and the potential pitfalls that can come from it. Keeping your emotions in check and your goals in front of you will help you make wise decisions.

Secure a Healthy Financial Future: Start Planning Today

By // by guest

In these times of economic uncertainty, it’s tempting to stuff your cash in a shoe box or mattress and forget about financial planning. However, planning is more important during monetarily unstable times than it is during those points when the money and credit are flowing easily.

To navigate the treacherous waters of today’s economic climate, you must be financially savvy, and the best place to start is with your own personal accounts. The money-motivated decisions you make today can and will affect your future stability and your ability to provide for your family.

Budgeting: The Basics

The most important thing you can do to improve your financial situation is to establish a realistic budget and follow it. Establishing a budget involves much more than figuring out how to spend less than you earn; it also involves setting aside money for savings, emergencies, and special occasions. Here’s how to establish a basic budget for your family:

Track your income and expenditures for an entire month. Include everything you spend money on – even your morning coffee.
Look for areas where you can reduce your spending. If you’re eating out excessively, this is a great place to start.
Put it in writing. Write down the amount that you will spend each month on the following categories: housing, food, clothing, transportation, entertainment, and other bills. This is your basic budget.
Don’t forget to factor in savings. You should tuck away a pre-determined amount each month without fail. Treat your savings account like another bill that must be paid. In fact, take the percentage set aside for savings right off the top.
Monitor your budget and make adjustments where necessary.

4 Tips for Building a Sound Credit History

If you want the American dream – a house, a car, and a business – your life will be infinitely smoother if you have a solid credit rating. Your credit score not only determines whether or not you will get credit, it also determines how much you will pay in interest for credit extended to you. Following are four ways you can improve your credit history:

Pay all of your bills on time. Paying your bills late or failing to pay them altogether dramatically lowers your credit rating. Be sure to always pay your bills regardless of how small or unimportant they may seem. Something as simple as forgetting to pay for your magazine subscription can have surprising consequences.
Monitor your debt-to-income ratio. A good debt-to-income ratio is anything that falls under 36-percent. The lower your number, the higher your credit rating will be.
Do not max out your credit lines. In fact, try to only use 10-percent of your credit limits. For example, a credit card with a limit of $1,000 should have a balance of $100 or less.
Establish a mix of credit. Your credit report should show a mix of credit lines including home, auto, and revolving-credit accounts. Never rely too heavily on one type of credit. It’s also a good idea to keep older accounts open even if you’re not using them as older accounts carry more weight than newer accounts.

Now back to that car or house you’ve been eying; it doesn’t have to be entirely unobtainable if you don’t have the ideal credit history. For those situations that put you in a bind, there are companies that will help individuals in your situation, like Auto Credit Express. These sites will help you find the right loan that will fit your budget and credit status, though it is critical that you are realistic with what kind of loan you will be capable of paying.

How to Make Sound Investments

If you want a secure financial future, you have to make sound investments. While stuffing your money in a lock box might keep it safe from thieves, it will not prevent you from losing money. You see, your money will never be worth as much as it is right now as it loses value over time due to inflation. To stay ahead of the game, you must make sound investments in order to help your money grow in value.

One of the best ways to keep your money safe and help it grow is to place your savings in interest-bearing bank accounts. While you may not get a high return on money placed in these types of accounts, you will not lose money. Put aside a smaller amount of money for investments. Place the bulk of the money into low-risk ventures like saving’s bonds and Unit Trusts. Once you have a solid foundation of secured savings and low-risk investments, you can start venturing into investments that pose higher risks and rewards such as the stock market.

Securing a healthy financial future doesn’t happen overnight. You must make sound decisions regarding your finances each and every day in order to live within your means, maintain your credit rating, and save for the future.

photo credit: Freedigitalphotos.net