Q. I am searching for a guide or any practical resource that can help me think or get me started about how to and where to invest money?
My money situation is not good for the time being as I only have started my job career now, but I am thinking of the future where I can spare some money.
Thanks.
My money situation is not good for the time being as I only have started my job career now, but I am thinking of the future where I can spare some money.
Thanks.
A. Standard investment advice is that you should invest in a diversified mix of stocks, bonds, and money market funds. If you are like most people you will invest part of your money aggressively in stocks, and part conservatively in money market funds and bond funds. However, some young people will go all stocks, and some very conservative people will go all money markets. The links below have on-line questionnaires which will give you an idea of how to do "Asset Allocation," determining how much to put in each type of investment.
You want to buy a diversified portfolio of stocks as individual stocks are too risky. Highly knowledgeable people can buy a properly balanced portfolio, but most folks have a difficult time balancing things on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Back in 2000, Some people bought all Internet stocks; they got burnt when they all crashed together. You have to diversify across industries. Unless you know what you are doing, it is best to buy mutual funds that will diversify for you. Buy no-load, low cost funds. Mutual funds should have expense ratios of less than 0.5%.
If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free.
I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. The Vanguard Total Bond Market Index Fund is good for a bond fund. The Vanguard Target Retirement funds can be good all-in-one stock and bond funds for an IRA. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.
Buying a house instead of renting will save you a lot of money in the long run. You don't have to pay rent and you build equity in your house instead. Buying rental property can be a good investment for some people. However, being a landlord can be hard work, and many people are not good at it. If you don't know how to handle deadbeat renters, you can have trouble.
If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.
I will warn you that there is a tremendous amount of stock investing books and websites that teach stock investing strategies that don't work. Particularly bad are people that teach "technical analysis" systems that sound impressive, but don't work.
Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.
You want to buy a diversified portfolio of stocks as individual stocks are too risky. Highly knowledgeable people can buy a properly balanced portfolio, but most folks have a difficult time balancing things on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Back in 2000, Some people bought all Internet stocks; they got burnt when they all crashed together. You have to diversify across industries. Unless you know what you are doing, it is best to buy mutual funds that will diversify for you. Buy no-load, low cost funds. Mutual funds should have expense ratios of less than 0.5%.
If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free.
I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. The Vanguard Total Bond Market Index Fund is good for a bond fund. The Vanguard Target Retirement funds can be good all-in-one stock and bond funds for an IRA. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.
Buying a house instead of renting will save you a lot of money in the long run. You don't have to pay rent and you build equity in your house instead. Buying rental property can be a good investment for some people. However, being a landlord can be hard work, and many people are not good at it. If you don't know how to handle deadbeat renters, you can have trouble.
If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.
I will warn you that there is a tremendous amount of stock investing books and websites that teach stock investing strategies that don't work. Particularly bad are people that teach "technical analysis" systems that sound impressive, but don't work.
Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.
What do financial advisers think of timeshares?
Q. After seeing family members have some really bad experiences with timeshares I'm trying to compile a free download help guide of how to get out. My family members did get out, but I was curious why their financial advisers didn't advise them a. to not purchase, or b. get out. I polled them, and they said they all told their financial advisers about this liability in their portfolio, but none of them said a word about it. I think this is strange? Opinions from actual CFP greatly appreciated!
A. Timeshares are a discretionary expense to prepay for vacation accommodations. The sales pitch is:
- You are a fractional owner in a property
- There is a financial advantage to taking vacations using a timeshare
- If you don't/can't use the timeshare, it can be rented out
As you have learned, the sales pitch is not a balanced assessment:
- Annual maintenance fees increase over time, making them less competitive against just renting for a few days.
- There are few buyers if you want to sell in order to end the annual fee. Other vacation options are cheaper and can be exercised at any time.
- The usage restrictions (entire week, single location, popular weeks blocked out) and limited locations, if the timeshare remains in business, limit the rental opportunity.
Since a timeshare is not an investment any more than a vehicle is an investment, it cannot be managed as a liability. So, what's your question? It is a purchase that has already been made. There is no reason why a CFP would tell a client that they made a poor purchase choice.
The correct question is: I want to save money on vacation expenses and not lose money on the deal. Will a timeshare arrangement meet those requirements?
As you already know, the answer is that it will not.
It is NOT a liquid asset since all that you are buying is a "right to use".
There is no guarantee that you can sell what you bought at a similar price.
Your vacation choices may change over time such that what worked at the time of purchase is no longer suitable in the future. You are "locked in" to the options available at the time of purchase.
- You are a fractional owner in a property
- There is a financial advantage to taking vacations using a timeshare
- If you don't/can't use the timeshare, it can be rented out
As you have learned, the sales pitch is not a balanced assessment:
- Annual maintenance fees increase over time, making them less competitive against just renting for a few days.
- There are few buyers if you want to sell in order to end the annual fee. Other vacation options are cheaper and can be exercised at any time.
- The usage restrictions (entire week, single location, popular weeks blocked out) and limited locations, if the timeshare remains in business, limit the rental opportunity.
Since a timeshare is not an investment any more than a vehicle is an investment, it cannot be managed as a liability. So, what's your question? It is a purchase that has already been made. There is no reason why a CFP would tell a client that they made a poor purchase choice.
The correct question is: I want to save money on vacation expenses and not lose money on the deal. Will a timeshare arrangement meet those requirements?
As you already know, the answer is that it will not.
It is NOT a liquid asset since all that you are buying is a "right to use".
There is no guarantee that you can sell what you bought at a similar price.
Your vacation choices may change over time such that what worked at the time of purchase is no longer suitable in the future. You are "locked in" to the options available at the time of purchase.
Do you know of any global property website guide?
Q. Do you know a place where I can find information about buying residential property not just on my place but on the "global property" market? I wanted to try out and do buying and selling of houses, and I wanted a place where I can read about this kinds of stuff, like house prices, house rents and yields, buying guide, etc. Hope there are Realtors out there who knows a good site or two.
A. Global Property Guide http://globalpropertyguide.com is a site which provides all the data you need on buying/renting houses or appartments. It has a Buying Guide, an estimate of house prices (only in upscale areas), info on taxes, market trends, etc.
escapeartist is helpful too but in my view, global property guide is more informative. Plus they do research on a lot of countries.
hope this helps.
escapeartist is helpful too but in my view, global property guide is more informative. Plus they do research on a lot of countries.
hope this helps.
What are the Pros and Cons of Renting your home as an Investment? How do you make the investment work for you?
Q. To your advantage that is?
This is all new to my husband and I and we're looking for feedback from people who have experience in this and are making money in this type of investment. Thank you!
This is all new to my husband and I and we're looking for feedback from people who have experience in this and are making money in this type of investment. Thank you!
A. There are not enough pros to offset the biggest con- that is you'll eventually lose the excellent tax benefits when you sell your home. As a married couple you'll shelter up to $500,000. in capital gains. This is only for principal residences and more particularly you must have lived in the house three of the last five years.
Sell your home- take the tax advantage then consider buying an investment property with some of the proceeds. And find a competent real esate broker to guide you through the process.
Sell your home- take the tax advantage then consider buying an investment property with some of the proceeds. And find a competent real esate broker to guide you through the process.
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