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Top 10 Reasons I Like Dividend Growth Stocks

I believe dividend growth investing is one of the best investment strategies available. There are many reasons I like dividend growth companies and today I wanted to highlight some of what I feel to be the biggest draws towards dividend growth stocks compared to other investment options. Here you’ll find my top 10 reasons that dividend growth stocks are my favorite type of investment.

Dividend growth companies tend to be great businesses.   Companies who have demonstrated the ability to increase dividends year after year for quite a few years (minimum of 5) are doing something right.  Look at many lists of dividend growth stocks and you’ll find many blue chip, solid industry leading companies who have been not only increasing dividend payments but earnings for many years in a row.
Income from dividend growth stocks can outpace inflation.  When looking for stocks to invest in I look for stocks that have a reputation for annually increasing their dividend payment at a rate higher than inflation.  This means that when I am living off of my dividend income, that income will at least keep pace with inflation.  As my expenses rise due to inflation, so will my income causing me no concern about being able to cover my bills.
Dividends can have a compounding effect on your wealth.  During the accumulation phase of investing I am using my dividend income to buy more shares of dividend growth companies.  As time passes I will be receiving dividend payments on shares that I purchased with previously earned dividends.  In effect I will be earning dividends on my dividends.  This is compounding and nothing can boost your wealth over time like the effect of compounding income.
Dividend income can pay my bills.  Eventually I will reach my goal of earning enough dividend income to cover my daily living expenses.  At this point I can choose to collect my dividend payments in cash rather than reinvesting them.  I can then use that cash to pay all of my bills and I will no longer have to go to a job in order to earn money.  When you don’t need to rely on a job to earn money to pay your bills, but instead can afford to cover those expenses with dividend income, this is what I call financial freedom.  Dividend growth can help me reach financial freedom.

Growth Stocks


Dividend income keeps me from making stupid mistakes.  There is a lot of volatility in the stock market.  Prices will go up sometimes and prices will go down.  As an owner of stocks you must be willing to sometimes experience large price declines.  When stock prices are dropping it is easy to think that you need to sell your stocks before you have nothing left.  However, if your main focus is on dividend income then this can give you a pause.  Dividend income can help you get through the hard times when you might be tempted to sell.  As long as the underlying business of the stock you own is still good and strong there is no reason to sell just because it may fall slightly out of favor with the market.
Don’t have to sell off assets (shares of stock) in order to generate cash.  If you own investments that don’t pay out an income then in order to pull out cash to pay your expenses you will need to sell some of those investments.  Dividend income allows me to continue to own my stocks while still paying me an income to meet my expense requirements.  I will never have to sell my stocks if I don’t want to.
Dividend growth is a positive sign from a companies management.  Typically if management is raising a dividend rate it is because they feel good about the future prospects of the company.  They believe they will have the profits to support a higher dividend payout.  The last thing management wants to do is have to decrease the dividend because this will negatively affect the stock price.  I believe most managements are conservative with their dividend increases so they will not be forced to have a cut in the future.  However, this is not always the case.  Make sure you do your due diligence as to the safety of the dividend before investing.
Dividends continue to grow even during recession or stock price declines.  There are companies out there that have increased their dividend for 20, 30 and even 50 years or more.  They continued to grow their dividends right through the bear markets of the 80′s, right through the bursting of the dot com bubble and right on through the recent financial crisis caused by the housing bubble.  Owning shares of companies who are able to continue to do well through recessions, despite what stock prices may be, makes me very pleased.  You can feel good that your companies are doing their jobs and the stock price will recover once the economy gets back on track.
Dividends are taxed at low rate for most taxpayers.  In the United States, qualified dividends are taxed at a lower tax rate than the regular income tax rates.  This means I get to keep more of each dollar of my dividend income compared to earned wages and interest.  I can then use these dividends to buy more investments to make more money in the future.
Dividend income is passive income.  Possibly my favorite reason to own dividend growth stocks is because dividend income is passive.  My goal is to eventually accumulate enough shares of dividend growth companies that I will be able to cover all of my living expenses with the dividend income I am paid.  I no longer will have to work to be able to meet my obligations.  I will be able to do whatever I want whether that is travel, golf, watching sporting events or sitting at home playing video games and watching movies.  Monday morning will come and rather than having to go into the office, I will be able to wake up and decide to do whatever I want.  That will be because no matter what I decide to do, my dividend stocks will be doing their job and paying me a passive income.

There you have it.  These are my top 10 reasons for owning dividend growth stocks.  What is your favorite reason for liking dividend growth investing?  Please share your thoughts in the comments below!

Stock Market lap

Simple Things You Could Do To Make Money In The Stock Market

TIP! Damaged stocks are good, but damaged companies are not. A temporary downturn in a company’s stock value is the perfect time to get in at a great price, but be sure that the drop is, in fact, temporary.

The stock market can be exciting for all investors. The methods for investing will vary, depending on what your goals are and what your risk tolerance is. Regardless of the investment method you choose, a fundamental understanding of the stock market is essential. Here are some investing tips that will help you do just that.

TIP! Before you invest or entrust any money at all with an investment broker, make sure you take advantage of the free resources that are available to you to clarify their reputation. If you take the time to do some research, you will be less likely to become a victim of investment fraud.

Sound portfolios can generate returns in the area of 8 percent, while terrific ones may bring 15 or 20 percent. There are other options that can even go beyond that amount. However, picking a highly profitable portfolio is difficult and it will take a lot of knowledge and dedication.

TIP! Don’t be fearful to step out of the market. You are doing yourself a favor by giving up trading when you are experiencing difficulties in life that do not allow you to devote the necessary time to investment.

Before purchasing any type of stock, it is vital that you lay out your goals. For instance, you could be aiming to earn income with a very low amount of risk, or you could be aiming to increase the size of your portfolio. Many different goals call for different strategies, so identifying your goal is the first step towards a successful purchase.

TIP! Diversification of a stock market portfolio means more than just choosing stocks from many different sectors. Furthermore, you do not need to work every consideration into every trade in order to craft a sound investment strategy.

Opening a Roth IRA is a wise investment decision for anyone living within United States. Most citizens qualify if they are working or middle-class income earners. This type of investment has so many benefits and tax breaks that even if there is a medium level return, it can generate a large yield.

TIP! Make investments in areas you understand. Great investors, such as Peter Lynch and Warren Buffet, made their fortunes by investing in industries that they understood.

Know the limits of your knowledge and skills and stay within them. It is unwise to venture into purchasing stocks in industries that you do not know much about, or into companies you are not familiar with. Although you may be able to predict the future of any company, you won’t always understand companies that make oil rigs. Rely on the guidance of a professional financial adviser when it comes to stocks in industries you do not know.

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Growth Stocks

TIP! Do not allow your money to stay invested in a stock that is not making you any money. A stock which doesn’t move won’t ever make you a profit.

An excellent suggestion is discovering stocks that have slightly above average growth rates, but not extremely high. They tend to have more reasonable prices for their value compared to high-growth stocks. High-growth stocks are typically in hot demand, which pushes prices up even higher and they ultimately have trouble meeting the inflated demands of money-hungry investors.

TIP! Don’t fret over the daily ups and downs of your stock. There is always volatility in the market, and becoming concerned about short-term movement will not do you any good.

Learn as much as you can about accounting and financial management. You don’t need to get a degree to have a good understanding of the basic principles. These principals will help you to understand the stock market scoring system, and therefore, make wise decisions about your purchases and sales. Warren Buffet says that education is crucial to success and every man deserves a voice.

TIP! Keep a watchful eye on a stock’s trade volume. The trading volume reflects the amount of trading that the specific stock is currently involved in.

You will not find overnight success in stocks. It might take some time before a certain company’s stock begins to show some success, and quite a few people think they won’t make any money, so they give up too soon. Patience is a virtue you need when investing.

TIP! Stay open to the fluctuations of a stock’s price. The more a stock costs compared to its earnings, the more it will have to appreciate to give you a decent return.

A significant proportion of investors lean towards stable sectors during recessions and trade conservatively. During these times you should pay attention to new companies that are producing products for the future. Keep your portfolio diverse by backing companies that are are designing or promoting new technologies.

TIP! Keeping it simple applies to most things in life, and the stock market is no exception. Reduce your risk by keeping all investment activities, including examining data points, predicting and trading, extremely simple.

Before investing real money in the stock market, practice by playing a game. It doesn’t take much to practice. All you need to do is choose a stock, and jot down it’s current price and what your reasoning was for buying it. Then you want to follow the stocks performance over time. This lets you know how your strategy would work without any risk at all.

TIP! If you are using stock analysis to consider new investments, one of the first areas you need to consider in your analysis is the PE ratio, along with the total projected return on the stock. The price/earnings ratio should be no more than twice the value of the projected return.

Start with blue-chip and well-known companies. In a lot of cases, investing in large companies is relatively safe and helps you build a solid portfolio. You can start selecting stocks from smaller companies after you are familiar with the market and ready to branch out. Small companies have a larger growth potential, but also have a large risk for loss.

TIP! Buying stocks with which you are familiar is a good way to start investing. If you know of a stock which has previously experienced success or you know an industry really well, you should purchase some shares of this stock.

Many times you can look at the obscure investments for a great investing strategy. This involves searching for stocks that others avoid. You need to sniff out the potential of stocks in under valued companies. Companies that everyone wants sell for a premium. So, there is little upside to these. If you find small companies with positive earnings, you can identify a rose in the concrete.

TIP! You may be able to invest in the stock market through a retirement plan, such as a 401k. Though you can’t access your funds until you’ve retired, you will save on taxes by using a retirement account.

As you begin to invest into various stocks remember that cardinal rule when it comes to investing: Do not invest more than you can afford to lose. This almost goes without saying for high-risk investments. Even when dealing in long term, safe investments you need to be aware there is a possibility of a significant loss. Keep money needed to pay bills in a brick-and-mortar bank rather than the stock market.

TIP! Before you buy any stock, do your research. People are often too quick to decide that a new company is a good investment after reading about it’s existence.

Monitor the stock market before you actually enter it. Before investing, try studying the market for a while. In general, watching the market for three years is the recommended time before making your initial investment. Doing so helps you to understand how to make money on the market.

TIP! Contrary to the strategy of many, greed for higher and higher returns can turn a stock market profit into a loss. Being too greedy can result in your missing an opportunity to sell and ultimately losing money.

Do not invest a lot of money in stock of the company who employs you. While purchasing company stock might be prideful, there is a lot of risk involved. If your employer makes bad management decisions, both your investment and your paycheck will be in danger. However, if you can get discounted shares and work for a good company, this might be an opportunity worth considering.

TIP! Do not follow any unsolicited advice on investments. Your broker or financial adviser offer solicited advice, and that’s worth taking.

To maximize your chances for investing success, write out a detailed investing plan with specific stock strategies. Your plan should outline strategies which dictate when the right time to buy stocks is and when the right time to sell them. It must also include a clearly defined budget for your securities. This way you will know that you are spending only the money you have allotted for investing and choosing wisely with your intellect and not your heart.

TIP! Don’t let your emotions control your trading decisions and don’t obsess over trading decisions. If you have the urge to continue to watch a dropping stock, resist it.

The stock market certainly can be exciting, regardless of whether you plan to turn investing into a full time career or a part time hobby. To make it as rewarding as possible, you should follow the advice that was given to you in this article. It will help no matter what your investment preference is – stocks, mutual funds, or stock options.

Being aware of all of the details of more trading advice for the stock market today can be difficult. The article you’ve read should have provided you a nice amount of knowledge. Once you’ve absorbed this information, keep reading other articles to expand your information.

Financial Advisor

The Risks Your Financial Advisor May Not See

You may recall The Flying Wallendas. They were a danger-craved circus act. Best known for performing high wire acts without a safety net, the group was founded by Karl Wallenda in 1922.

A 73 year old Karl Wallenda tried walking along a wire rope strung between two high rise Puerto Rican buildings in 1978. Nearing the second half of his walk, a swell of wind sent Karl falling to certain death 120 feet below. Karl Wallenda tempted fate one too many times.

This parable is similar to the problematic situations shared among today’s market investors. The last 30 years have had a few scares, but more often than not, rolling the dice has produced riches for these market gamblers. It’s clear that investors and financial advisors have become complacent. Too many are walking a financial tightrope without a safety net because it’s the only way they know. They are grossly unprepared for anything but good weather.

The economic climate determines the market’s cyclical movement. Stagnation, inflation, strong growth, and deflation shape the direction of every type of investment. The economic weather forecast can be modified over time, but the last big wave of change happened long ago, making future movements much tougher to predict.

Financial Advice

What Are The Possible Forecasts?

Deflation

Many discussions about inflation center on concerns over the Federal Reserve ordering more money into circulation. Yet, that cause and effect situation is not guaranteed. Rather, deflation in the 1930s United States was a direct result of increased money production.

Increased quantitative easing from the Fed creates a counter reaction, where the rate of spending, or velocity, decreases considerably. Uncertainty about the future has restrained the desire to spend.

What investment groups work best when deflation occurs?

Interest rates are likely to fall. This means long-term, high quality bonds, such as Treasury bonds, should perform well. Overall, goverment bonds with longevity have a good chance to yield high returns through a deflationary period. 

Inflation

Rest assured the Federal Reserve hopes a boost in money supply leads to inflation.In fact, they have an official inflation target of 2%. Creating inflation may be simple and logical on the surface, but there’s some danger that inflation will shoot up higher than intended.

Inflation alters how people spend their money, which somewhat dampens the enthusiasm of heightened spending The target is not productive investment, but protection of wealth and lifestyle. The future’s volatility slaps a label of “risky” onto startup businesses and new products that would otherwise attract investors.

What investment groups work best when inflation occurs?

When prices rise, money is likely to flow to investments viewed as a store of value or physical assets that have practical use. Gold, real estate, and commodities are some examples.

Goldilocks

The Goldilocks premise counts on the economy’s ability to stroll across that high wire safely. There are a few variations of this possibility. 

First, there could be a revolutionary breakthrough on the horizon (along the lines of the automobile or computer) that creates strong economic growth. Goldilocks could be in the cards, but it’s not worth an all-in bet.

Miraculous industry expansion isn’t the only path to a Goldilocks situation: world banks (including the Federal Reserve) would have to print money in the right amount at the right time. This would give governments enough time to enact economic reforms to remedy its instability.

What investment groups work best when Goldilocks occurs?

Stocks. Stocks are a regularly solid investment in a Goldilocks situation, and for good reason. You’re in a solid position for Goldilocks if your current investments follow this strategy. If you aren’t convinced Goldilocks will be the ultimate outcome, you are walking that high wire into the wind without a safety net.

Stagnation

Stagnation occurs when the economy remains static in its current state. We may see inflation, growth, and deflation at times, but overall, the economy would not experience sustainable improvement over a long period of time.

What investments deserve attention during a Stagnation period?

Income producing investments should work well. When price appreciation is slow, income-driven investments help keep a stream of cash flowing in until growth becomes sustainable. A pro-active approach to trading also helps turn a profit in unsteady markets. 

So Which One Will It Be?

Intellect and education can take you far, but it can’t help anyone guarantee the future. Even Ben Bernanke, who gets his information before anyone else and controls the printing press, can only resort to educated guesses.

Guessing isn’t inherently bad, as long as you comprehend the situation you’re predicting. Sadly, numerous investors lack that information, and leave that up to a financial advisor that thinks they have the answers.

There is a silver lining: guessing is not required for success. You just need to think about diversification differently than the past. Diversification among stocks and the situations above becomes vital.

There are dark clouds approaching. Whether it comes our way remains to be seen. In any event, make sure you understand how your investment strategy is likely to perform under any scenario. Without adequate preparation, the coming storm could sink your investment ship.

Stock Market

An easy way to invest in the Stock Market

Before you start let me clarify that I do not intend to give individual advice but general information. The easiest way to invest in the stock market is, in my opinion, through a mutual fund, that is, a diversified portfolio of shares, a company registered in open versions that sell shares to the public at a price of supply and when the investor redeems request, the value of net supply. In simpler words, mutual funds meet many people‘s money and invest it in stocks, bonds and other investment vehicles. The value of the shares of a mutual fund is related to the value of all the shares it owns in a given time. The price can go up and down and therefore can win but also lose money, especially when investing in the short term.

There are many types of mutual funds. Some could be classified as index mutual funds because they mimic the portfolio of the major indexes such as the SP 500 or the stock market as a whole. The advantage of these mutual funds is that they often charge lower administrative costs of managing and spread risk among many stocks. There are also mutual funds that are actively managed, meaning that its administrators decide which stocks to buy, how to buy, when to sell, buy and in what sectors. Also fall in this category of mutual funds specializing in areas such as technology, financial institutions, oil, international stocks, and so on. In general, the higher the specialization of the fund and the lower the number of shares held, the greater the risk. It is important to mention that there are mutual funds that are called “load” and make it a charge, which can reach 5% or more when buying the shares. Imagine has begun to invest and you’re losing some of their money. F or this, I would avoid mutual funds and seek “no load”.

Stock Market Phone

In my opinion, one way less risky and less costly to invest in the stock market is through mutual funds indexed to diversify risk from hundreds of actions that mimic the overall market. You can buy funds directly from the issuing companies or through investment brokers. Visit several companies, consider whether you feel comfortable, if you offer valuable information or are simply trying to “sell”.

Some people may invest $ 50 a month; another may invest $ 200 or more. By investing every month in highly diversified funds with low administrative costs, avoid the risk of investing all the money when the stock price is inflated, distribute the risk among many stocks and to pay administrative costs low, you get more money for investment. Many people, who invested in shares of technology companies when they rose at inflated prices, lost a lot of money when the price paused dramatically. However, anyone who has been buying shares every month in mutual funds diversified among stocks, bonds and cash, and has held other investments, real estate and personal business for example, will probably not suffered so much from the vagaries of the economy.

Before investing is important to visit a licensed financial adviser can help you determine your goals, analyze your financial situation and make a plan to invest in a diversified portfolio. There are people who at one time should not invest in stocks. For example, if someone has credit card debt paying high interest rates which should pay those debts before investing. If the interest you pay is for example 18%, and the expected performance of a mutual fund is 8%, would pay the debt best business to invest in the fund. Similarly, who has been retired and need all the income to pay your expenses may not be investing in the stock. In general, who need to use the money before 10 years may not be investing in the stock because recent experience has shown there may be dramatic fluctuations. Hence those who are nearing retirement or who need the money in the next 10 years should take a conservative approach when it comes to investing in stocks. Conservative can mean investing a small percentage of the capital.

For all the above, consult a financial adviser would be a financial institution.


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Investment 2011

Does Your Investment Style Match Your END Goals?

Investment styles usually refer to value versus growth or active versus passive or small cap versus large cap… but choosing one style doesn’t necessitate you abandon the other and they may not help you reach your investment goals anyway. In fact, integration of all of these investment styles can really create a truly diversified portfolio.

Some advocates of one style over another argue for the returns their style produces… but the studies of such returns are only as good as the investors themselves. In fact, even investors in the top quartile can lose money if the markets are down significantly, such as the 14% Year-to-Date drop in the TSX.

Rather than arguing for one style over another, I’m going to help you discover what style is more natural to you… and then share a few ways each of the styles can help you achieve your end goals!

Know your Investment Styles

Each of us has a natural investment style… which is usually dependent upon our knowledge of investing as well as our broader personality as it relates to taking risks. If your not a risk taker in day-to-day matters, you’re likely going to gravitate to an investment style that is more conservative in nature. On the contrary, if you’re a risk taker in life and entrepreneur by spirit, you’re more likely to take calculated risks when it comes to investing your money.

Investment styles are more personal than they are financial… so rather than focus on the traditional value versus growth or active versus passive or small cap versus large cap styles, we’ll focus on the broader financial personality you exhibit and how that likely impacts your investment style.

First, we have the Saver. If you normally hate parting with money, you’re likely exhibit a saver’s financial personality. The Saver is meticulous in finding deals, researching before acting and rarely invests impulsively. You’re more likely to focus on the fundamentals of a company and be less swayed by the “hot stock tip” of the day. Rarely impulsive, the Saver is all about capital preservation more than maximizing returns.
Second, we have the Spender. If you love to make purchases, you’ll also love the latest stock tip. After all, you don’t want a “deal” to pass you by… in fact, you may never look at the fundamentals of the stock nor the technicals for that matter. All that research just slows you down from buying on impulse when it feels right! Cash doesn’t sit in your account… it gets “invested” as soon as possible.


Third is the Spark Plug. Are you willing to risk losing money for the potential of greater investment returns? In the typical “know-your-client” questionnaires, the Spark Plug is the one who will risk the most to make the most. Spark Plugs are confident in their investment decisions, so much so that when a stock drops in price, they’ll be the first to advocate for a doubling-down (which they usually call “dollar cost averaging” because it sounds more refined). The lower the stock price, the more excited they get knowing the potential of that little stock to double or triple in price. Emotion often drives their decision making… and consulting others is a formality… and even a nuance at times.
Fourth is the Security Seeker. Playing it safe is the motivation behind your investment decisions. Saving in a “guaranteed” financial instrument is where 90% of their money goes… and insurance products are investment tools. Conservative doesn’t begin to describe the Security Seeker… and if they do invest in a stock, it better be a big name that was around the past 20 years with a sizeable and reliable dividend payment.

Most investors discover they relate immediately to one of these styles, but also find affinity with one of the other styles at times. Typically speaking, these are the types of investments most commonly found in the portfolios of these investment styles:

Saver – Large cap stocks, Index ETFs, Dividend stocks (i.e. Johnson and Johnson, Proctor and Gamble, Intel, General Electric).
Spender – You name it… any investment is a good investment. Diversity is found in not being picky or being locked into a particular investment track.
Spark Plug – Leveraged ETFs, Initial Public Offerings (IPOs), “hot” Technology Stocks, and penny stocks (i.e. TZA or TNA, Groupon, little companies that make parts for Apple like Interdigital Communications – IDCC).
Security Seeker – Guaranteed Investment Certificates, Government Treasury Bills, Money Market Funds and big name stocks with history and future (i.e. McDonalds, Ford, IBM).

Matching your Investment Style to Meet your END Goals

Knowing your investment style and how your personality impacts your investment style can help you recognize why you may not be accomplishing your investment goals. And while you’ll never divorce yourself, nor should you, from your investment style, you might want to consider opening up to incorporating just a little bit of another investment style. If you do so, you’ll be more likely to reach your end goals!

So, before you start to invest, consider the END. Here’s how:

Evaluate why you invest – Before you start to invest, you need to begin by evaluating what you know and don’t know… and why you’re considering investing to help you reach your goals. Knowing why tucking money under the mattress won’t help you reach your goals will help you evaluate what investment styles you may need to adopt at times in order to reach your investment goals.
What is your investment Needs – If you were to spend all of the profits you make your first year investing, what would you spend that money on? The answer to that question will help you identify your most pressing need. Knowing what it is you are wanting to do with you investment capital will prompt you to expand your investment style.
Remember your Dreams – What do you want your future to look like? Do you want to start a business, retire comfortably, leave a legacy for your children, buy a home, or? Remembering your dreams focuses your investment styles to ensure they are working for you, not simply holding you hostage to meager results.

Knowing your investment styles and keeping your END in mind is a 10 minute review once a month, a worth-while investment of time to ensure you are on track to reach your investment goals. Rather than buying into the often less than helpful paradigm of investment styles such as value versus growth or active versus passive or small cap versus large cap, consider integrating your natural investment styles with one that is a little more foreign and experience the benefits of directing your investments rather than being controlled by some overarching investment style that isn’t helping you accomplish your investment goals!

investing in gold

The solutions for investing in gold

Many wonder how to invest in gold. We have mentioned in previous article that the solutions to invest in gold are six: the purchase of coins, the purchase of bullion, the opening of a gold deposit, the subscription of gold certificates, the signing of a mutual fund who buys and sells shares of gold companies, the subscription of an ETC (Exchange Traded Commodities) tradable on the stock exchange.

The first four tools are offered by investment banks (especially in Switzerland) that has a heritage of a certain size (a few million Euros):

> Coins. There is a wide variety of gold coins issued by governments around the world, the market value of which depends on their content of pure gold. Do not confuse the coins in precious metal coins commemorative coins collected by enthusiasts. The value of the latter, in fact, depends on rarity, design and finish of the issue, not the content of pure gold.

> Ingots. They can be purchased in different weights and sizes (usually range from one ounce to 400 ounces – one ounce equals 28.35 grams). Are considered as small ingots weighing less than 1,000 grams. There are 94 producers in the world of gold bullion in 26 countries.

> Gold Deposit. They can be opened with many large banks where the gold is stored in a vault. The bars (or coins) are stored, numbered and identified according to an official seal of guarantee. The investor pays for the service and filing of an insurance policy against theft.

> Gold Certificates. In some countries (especially in banks in Switzerland and Germany) are gold certificates allow investors to own gold without the physical delivery of the material. The certificates are for those who own them, a title of ownership while the bank keeps the gold material for the customer, who can still sell the certificates with a simple phone call to the bank.

Gold invest

Among small and medium savers solutions are popular for some years, especially two.

The first is represented by equity mutual funds that invest in mining companies in the gold mining sector, i.e. companies that are engaged in gold mining around the world. In general, if the gold price increases, the actions of these companies increase in value. Actually, however, not always the case. It should be borne in mind that this type of investment fund products are still affected by the trend of equity grants. During the financial crisis of 2008, these products have come to losing on average as high as 25%.
The second solution, we believe the most effective way to invest in gold without incurring the risks of equities, is to focus on ETC (Exchange Traded Commodities).

These financial instruments to allow small and medium investors to invest in commodities such as oil, agricultural products (corn, soy) and, of course, gold. The investors buy shares of ETC (which is negotiable on the stock exchange at any time during the hours of trading, as any equity security) and paid the money needed to buy a certain quantity of gold, which is stored in the form of ingots in the vault of a large international bank. Each installment of the ETC is, even if indirectly, to the property “physical” gold. So, if the gold price rises, even quotes the ETC move in the same direction. ETCs do not expire, meaning they can be purchased and held in the portfolio for several years.

In international stock markets gold is usually traded through financial derivatives (options and futures) whose operation is difficult to understand for investors who are unfamiliar with finance. The tools are simple Etc instead of derivatives, but not always. Pay attention, for example, the exchange factor, because almost all are priced in dollars. If the euro strengthens against the dollar is likely to have negative returns to the point of dismantling the possible rise in the price of gold.

However we can say that the gold Etc represent a suitable tool to small and medium savers are instruments that provide good diversification opportunities, particularly because the gold (and commodities in general) is not strictly correlated with the main markets investment such as equities and bonds.

gold


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The crisis bites, the stock markets shudder, the markets are afraid of the possible default of the United States and many investors on the gold link. The yellow metal touched new records every day even in current times where there is high inflation, and even the small investor is asked …

Investing

Investors in the stock market myths

Today if you show a person and asked him “What do you do?” ‘I am investor. .- Automatically invest in stock your brain processes information and the first thing is that you think ahead to Gordon Gekko or Warren Buffett, a person much smarter than you and probably millions.

Some time ago we discussed some myths of the bag, as the myth of the people who were ruined by investing in the stock market, which we explained that if it did, it did not follow some simple tips to invest in the stock market or made serious errors investor.

Today we talk about some myths in the stock market investor, because sometimes confuse some terms that are often far removed from reality.

1. A stock investor is a person with a lot of money.

To invest in the stock market need only saved some money that you will not need the coming years. It is true that there is no minimum amount to invest in stock, but if you put only 100 € will probably lose money since the cost will eat the commission. With € 1.000 to 2.000 can start investing in the stock market perfectly.

However, it is clear that the more capital you have, the more money you can invest and therefore receive higher profits.

Investors

2. A stock investor is a person with many studies.

I’ve always wondered what career to study and learn invests in stock market mastery. At this point I want to be totally accurate so that nobody can say “throw people adrift.”

I have always separated the intelligence of a college degree, because one thing leads you to the other. A doctor is not smarter than a vehicle mechanic, although some people insist on saying yes. If we put both of them a test, the doctor would respond better to the question “How many muscles of the human body,” but the mechanic would respond better to other questions based on the motor world. One thing is for intelligence and other knowledge in any subject.

We will not deny that at the time of investing in a career full of knowledge in finance is not going to help you, but I will not say that such knowledge can not buy on your own and end up learning concepts that a university has never heard

I know investors who have held more than 30 years and when they speak with a financial expert, the terms as derivatives, futures, warrants or they sound like Chinese ETF. We will not say they do not know what they are, but do not quite understand and therefore do not take risks. For example, I do not understand the currency market, so when you can not swim, you better not go near the pools.

One thing is to invest in stock market and understand all the other innovative investment vehicles, which some of these are investment products that helped produce the crisis we now live.

3. Investor is being constantly investing.

Perhaps we have been engraved image of the films that show us some brokers who spend 24 hours a day “purchase! Sold!!!”

As a general rule that stock investors earned more money are those that less buying and selling orders release. You got the real example of several traders who threw 315 orders a year and have had far less profitable than others with 15 orders.

I would not say that the bag is a game where the more you play, the more you lose, since it is clear that I do not think any games of chance, but when you exceed chance in buying and selling orders you tend to lose as you yourself are using the bag as a game and every day are not good to play.

On the other hand can be a stock investor and have no value in the portfolio. Not necessarily have to have money invested, as in specific times, it’s best to clean your positions so that may occur while we assess the appropriate time and company to enter.

There are investors who invest a February 12th and until December 24 give no other orders. Anyone can be an investor, although it is clear that in the bag there are many types of investors, large, small sharks and conservatives.

In short: No studies are needed, but you need to have a minimal understanding of the factors that drive the bag. Some people get the message in 5 months, others take years and some never stop learning. The bag is not a game of chance, but bad luck could come to be present and could not do anything about it.

And finally, when I talk to investors or people who advise when investing in stock market, usually found with two types of people.

That tells you that under a particular method will make you a millionaire and it’s very easy to do.
Anyone who tells you it is very complicated and you will start losing money.
Neither is right, though neither is 100% wrong. Nor is it as difficult as some paint it or you’ll get rich if you have not already had a large sum of capital. Remember that before getting rich, three factors are labor saving and investment, and you can not move to the third or fourth stage without going through the above. The only secrets to get rich

Then there is the investor who every month get a 40% return on the stock. In this tell him to take a walk to get some air.

medical-conditions

What is Dividend Investing?

In your reading this article then congratulations are properly in order.  You’ve worked really hard, saved your money and reached the point where you want to invest your money.  You might even know a little about dividend investing but you still have questions.

What exactly is dividend investing?

How is a dividend growth investing different from every other investment strategy?

Well this article is great introduction to dividend investing and shows you the power dividend through patient long term investing.

You’ve probably all heard the expression “buy low and sell high”. Well if you ask me that puts a lot of pressure on most everyday investors.  How do I know the know the difference between a cheap stock and bad stock?  If I’m lucky enough to buy a stock that rises when should I sell my position?  Not only does investing take a lot of knowledge and luck but it also takes a huge amount of time and effort.  On the other hand, a dividend investing strategy can be explained as “buy and wait for the checks to roll in”.  That’s right, once I buy a stock I’m expecting to hold it for at least 5 years and most of my stocks I NEVER plan on selling.

Wait a minute how can you make any money if you never sell the stock?  I’m more interested in the constant and hopefully growing stream of money that I will receive from the dividend stream of the stock.

As most people who have ever invested in the stock market know stock prices fluctuate.  Sometimes they will even fluctuate wildly.  In a exceptional year even a blue chip stock that is an industry leader can easily swing 50 or more percent.  This volatility has the potential to generate massive wealth to the stockholders provided they are able to time the ebb and flow of the market.  However the trouble with this approach is that it puts all of the burden of generate wealth onto the investor.

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Unlike most investing strategies, dividend growth investing is looking at stocks over the VERY  long term. Let’s take Fortis Inc. as an example.  I’m using Fortis as an example not because it is an incredible stock.  In fact in most ways Fortis is a very boring stock.  The company is primarily a utility holding company.  There is nothing very interesting about paying your electrical bill every month.  You won’t get rich over night owning this stock but don’t be too quick to ignore the company either.  Fortis operates  electrical utilities in five different Canadian provinces along three different Caribbean countries.   The reason Fortis is such an interesting company is that they have a long history of paying their shareholders cash dividends as well as increasing that dividend year after year.  Let’s take a look at the dividend history:

As you can see from the chart above in Fortis has raised their dividend every year since 1973.  In 1987 the price on Fortis stock closed at $4.75 but the company also paid out a cash dividend of $0.313 or 6.5%.  This constant and long term growing income stream is what dividend growth investors are looking in a company.

Over the long term history has shown that stocks can counted on for about an 8% annual return.  That being said on any given stock there will be year’s the stock performance will be much higher then average 8% return and there will be years that the stock’s performance will be much worse.  The beautiful thing about the dividend stream is that unless the company cuts its dividend (a clear sign that the company is not healthy) the stock holder can count on the dividend income regardless of the stock performance.

Let’s take a look at the 5 year stock chart for Fortis compared to the S&P 500.

As you can see from the above graph that the Fortis stock price did very well over the last 5 years.  However, more importantly you can see that there were fairly significant fluctuation in the Fortis stock price over the last 5 years.  The beautiful thing about thing about dividend growth investing, and the difference between all other forms of investing in that the dividend investor isn’t too concerned about the stock price because over a long enough time frame it is expected that most stocks will return close to the expected 8% annual return.  However in addition to the stock gains the investors gets to sit bad and collect dividends while he waits. For  our Fortis example that means an additional $5.14 that he collected since 2007 which works out to approximately 18% of the price that he paid for that stock in 2007.

Hopefully, this article helped demonstrate why dividend investing can be such a powerful tool.  I’d love to hear your comments; Why do you invest in dividend producing stocks?

invest-dividend

When To Buy Dividend Stocks

We have been receiving several requests from readers to help them determine when it is the right time to buy a dividend stock. First off, there are no easy ways to know when to buy dividend stocks or not. However, there are some key points to look at. Those key ratios and indicators will guide you to find the perfect moment when to buy dividend stocks.

When to Buy Dividend Stocks According To Dividend Ratios

Personally, I think that it is always the right time to buy dividend stocks… as long as the fundamentals are there. There are some key dividend ratios you must observe before buying a dividend stock.

A) Dividend yield and dividend payout

When I use a dividend stock screener, I always look for dividend yields over 3%. While I may be doing exceptions and buy lower paying dividend stocks, my main goal is to cover more than the inflation (for more info, read dividend vs inflation). Therefore, I consider a right timing to buy a dividend stock when the dividend raise to 3% or the stock value temporarily drops enough to show the dividend yield I am looking for.

B) Dividend Growth

Dividend raises are very important in a dividend portfolio. Since the purpose of dividend investing is to hold your stocks during several years; you want to make sure that your holdings will generate more money in the future. The 2 important ratios for dividend growth is the 1 year dividend growth and the 5 years dividend growth. The first one will tell you about the current situation of the company (if they are able to raise their dividend currently). The latter will tell you if they can maintain a steady dividend growth over time. I like dividend stocks showing a dividend growth over 5% (yearly and over 5 years). This tells me that there are solid dividend payers and that it is the time to buy this dividend stock.

single_payer

C) Dividend Payout Ratio

The dividend payout ratio must be lower than 75%. If you are looking at dividend stocks with a higher dividend payout ratio, you are looking at a stock that might encounter problem increasing their dividend payout over the long run. When you are looking at the right timing to buy a dividend stock, look at their recent dividend raise announcement and how was the dividend payout ratio. If they recently raise their dividend payout without impacting too much their payout ratio, this is the right time to buy this dividend stock.

When to Buy Dividend Stocks According To Other Financial Ratios

A) Price / Earning Ratio (P/E)

The P/E ratio is one of the most common financial ratios. It should be a must to be included in any stock analysis. The historical S&P 500 P/E ratio is around 15. Therefore, if you find a solid dividend payer showing a P/E ratio below 15, you may have found the right time to buy this dividend stock.

B) Revenue Growth

Dividend payouts are all about how much money is left in the company after taxes. Therefore, if you want another indicator of long term dividend growth, you should look at revenue growth. If the total sales are climbing on a steady basis, chances are that the dividend payout will increase accordingly. Steady revenue growth (1yr vs 5 years) is a good indicator as to when to buy a dividend stock.

C) Return on Equity (ROE)

The return equity gives you how much the money invested in this company is creating wealth. Having sales growth is good, but growing its profit and increasing the company value is much better. A ROE over 5% is suitable (and over 10% is even better!).

Is there a perfect timing to buy a dividend stock?

I just gave you a few indicators as to when buying a dividend stock. Those numbers are relatively easy to find using free investing websites. However, if your dividend stock meets those requirements, does this mean it’s the right time to buy it?

Since the goal of dividend investing is to select solid dividend payers which will increase their dividend payouts in the future; I’d say yes. However, it is important to look at what is the recent news around the company you are looking for and what are the potential opportunities and dangers.

For example, if you look at a pharmaceutical stock, it is important to look at their patent expiring dates (which equals to a decline in sales for a specific medicine) and what their pipeline look like (how many medicine are currently being researched). This is will also tell you a lot about when to buy this dividend stock.

Where to start looking at for any dividend stocks

The Seven Immutable Laws of Investing

I know, I know. I posted up an article a few months ago entitled “The 10 Laws of Value Investing,” which were my selection of ideas that I used as a guide for approaching investing. However, I found this document through Market Folly (one of my favorite blogs) and figured it was relevant enough, so I posted it here too. See the embedded version below. Email and RSS readers may need to come to the site to view it. If you can’t see the below doc, the original page is here.