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	<title>Investing Advice | InvestingAdvice.com</title>
	
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		<title>Is a Series EE Bond a Good Investment?</title>
		<link>http://investingadvice.com/is-a-series-ee-bond-a-good-investment/</link>
		<comments>http://investingadvice.com/is-a-series-ee-bond-a-good-investment/#comments</comments>
		<pubDate>Mon, 07 May 2012 14:47:17 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Bonds]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=382</guid>
		<description><![CDATA[<a href="http://investingadvice.com/is-a-series-ee-bond-a-good-investment/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2012/05/Is-a-Series-EE-Bond-a-Good-Investment-133x150.jpg" class="alignleft wp-post-image tfe" alt="Is a Series EE Bond a Good Investment?" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2012/05/Is-a-Series-EE-Bond-a-Good-Investment.jpg"><img src="http://investingadvice.com/wp-content/uploads/2012/05/Is-a-Series-EE-Bond-a-Good-Investment-133x150.jpg" alt="Is a Series EE Bond a Good Investment?" width="133" height="150" class="alignleft size-thumbnail wp-image-383" /></a>Even though the stock markets largely recovered from the significant declines of 2008 and 2009, many of the investors and savers who lost money are anxious to avoid similar drastic ups and downs in the future. Those investors are more likely to seek out investments that offer a greater degree of stability and security.</p>
<p>In recent years it seems like there are fewer investment options that are reasonably secure for investors who are concerned about preservation of capital. One of these options is the series EE bond issued by the U.S. government – also known as a “savings bond.”</p>
<p>Here’s some investing advice about whether series EE savings bonds are a good investment choice for you.</p>
<li><strong>Security</strong>. Despite the warnings of some investment professionals, U.S. savings bonds are generally considered to be among the absolute safest investment options. While a U.S. government default is theoretically possible, it remains a highly unlikely occurrence. Many improbable and unexpected events have happened in various investment markets over the years, but the U.S. government has never defaulted on its savings bond obligations.</li>
<li><strong>Series EE Bond Interest Rates.</strong>  Series EE savings bonds pay a fixed interest rate. The rate of interest for a newly issued bond will be calculated with reference to the 10-year U.S. Treasury Note, and will be fixed for 30 years. The rates for each newly issued series EE bond are calculated twice per year. Interest is credited monthly, and compounded semiannually. Because of the high degree of safety and security that’s associated with savings bonds, the interest rate will generally be low compared to other investments. An investor won’t get rich buying savings bonds, but they won’t have to worry about losing their money either.</li>
<li><strong>Tax Advantages.</strong> Series EE bonds provide certain tax advantages that may be desirable to some investors. While interest paid on series EE bonds is generally subject to tax on the federal level, such interest is exempt from state taxes. For investors in high tax states, this can provide a significant boost to their effective rate of return. Furthermore, such interest may also be exempt from federal tax when the bond proceeds are used to finance higher education costs.</li>
<li><strong>Longer Time-Frame.</strong> Series EE bonds are intended as a long-term savings vehicle. Any bondholder who seeks to redeem their bond less than five years after they purchase it will have to forfeit three months of interest gains. On a relatively low-paying investment this can be a significant hit. Therefore, savers who choose series EE bonds should be prepared to keep their money in bonds for a significant period of time. </li>
<li><strong>Convenience.</strong> If you’re interested in buying Series EE Bonds, note that banks and credit unions no longer sell paper bonds. Instead, you’ll need to sign up for an online account at <a href="http://www.treasurydirect.gov">TreasuryDirect</a> and buy new bonds within your account. The online account is highly convenient because you can link it directly to your traditional banking or checking account, which provides for easy transfers in and out of TreasuryDirect.</li>
<p>In short, series EE bonds are most suitable for an investor seeking close to absolute security and willing to trade potential investment gains to get that security.</p>
<div id="crp_related"><ul><li><a href="http://investingadvice.com/why-investors-should-consider-muni-bonds-now/" rel="bookmark" class="crp_title">Why Investors Should Consider Muni Bonds Now</a></li><li><a href="http://investingadvice.com/should-you-be-buying-tips-now/" rel="bookmark" class="crp_title">Should You Be Buying TIPS Now?</a></li><li><a href="http://investingadvice.com/diversify-your-portfolio-to-manage-risk/" rel="bookmark" class="crp_title">Diversify Your Portfolio to Manage Risk</a></li><li><a href="http://investingadvice.com/money-market-funds/" rel="bookmark" class="crp_title">Money Market Funds</a></li><li><a href="http://investingadvice.com/tweak-your-portfolio-in-case-of-inflation/" rel="bookmark" class="crp_title">Tweak Your Portfolio in Case of Inflation</a></li></ul></div>]]></content:encoded>
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		<title>Investing Advice on How to Choose a Mutual Fund</title>
		<link>http://investingadvice.com/investing-advice-on-how-to-choose-a-mutual-fund/</link>
		<comments>http://investingadvice.com/investing-advice-on-how-to-choose-a-mutual-fund/#comments</comments>
		<pubDate>Thu, 05 Apr 2012 15:19:16 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Mutual Funds]]></category>
		<category><![CDATA[investing advice]]></category>
		<category><![CDATA[mutual fund]]></category>
		<category><![CDATA[mutual fund fees]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=377</guid>
		<description><![CDATA[<a href="http://investingadvice.com/investing-advice-on-how-to-choose-a-mutual-fund/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2012/04/Investing-Advice-on-How-to-Choose-a-Mutual-Fund-150x150.jpg" class="alignleft wp-post-image tfe" alt="Investing Advice on How to Choose a Mutual Fund" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2012/04/Investing-Advice-on-How-to-Choose-a-Mutual-Fund.jpg"><img src="http://investingadvice.com/wp-content/uploads/2012/04/Investing-Advice-on-How-to-Choose-a-Mutual-Fund-150x150.jpg" alt="Investing Advice on How to Choose a Mutual Fund" width="150" height="150" class="alignleft size-thumbnail wp-image-378" /></a>Mutual funds have long been a popular option for many investors, whether an investor is looking to invest many thousands of dollars at a time, or just a few hundred. Mutual funds are managed investment pools that can invest in publically traded companies, corporate or treasury bonds, real estate interests or just about any other type of investment vehicle.</p>
<p>The mutual fund structure allows an individual investor to diversify his or her investment risk and to follow a particular investment focus by making a single investment in the fund. But with literally thousands of different mutual funds available, what should you look for when deciding on the right one for you?</p>
<p>Here is some investing advice on some of the factors you should consider to help you choose a mutual fund.</p>
<li><strong>Mutual Fund Focus.</strong> Make sure that the mutual fund you invest in has a focus or mandate which matches the type of investment strategy you’re looking for. For example, if you have a positive outlook on large U.S. companies, then look for a mutual fund that invests in those types of companies.</li>
<li><strong>Go Beyond the Name.</strong> When you’re considering different funds, make sure you do enough due diligence so that you know precisely what you’re getting. Don’t make assumptions as to what a given mutual fund invests in simply based on the fund’s name. Many “Global” mutual funds sometimes have 90% or more of their assets invested in U.S. companies, for example, so if you’re looking for non-U.S. international exposure you’ll have to go elsewhere. Take a close look at the fund’s investment objectives and philosophy, as well as what their 10 largest holdings are, before you invest.</li>
<li><strong>Experienced Management.</strong> Unless a mutual fund seeks to passively track an index like the Dow or the S&amp;P 500, it will require management expertise and decision-making. While it’s important to understand that a fund which has performed well in the past won’t necessarily duplicate its performance in the future, you should consider how the fund’s managers have handled success and adversity throughout the years.</li>
<li><strong>Look Closely at Fees.</strong> Every mutual fund is going to charge fees for their management service, but you must be sure that you aren’t overpaying. Depending on whether you use a broker or not, you might be able to invest in many mutual funds without having to pay the sales charges that you might otherwise be subject to. Also pay close attention to how much you’re being charged each year (usually expressed as a percentage of the amount you’ve invested). You should expect to pay very little for funds that don’t require any significant judgment or expertise (such as market index funds), but significantly more for funds that focus on investments in opaque or complex international markets.</li>
<p>The mutual fund structure is very powerful and offers investors an opportunity to participate in investments that they wouldn’t otherwise be able to. But like any other investment there are risks, so it’s important to make sure that any investment you’re considering is a good fit for your needs and investor profile. </p>
<div id="crp_related"><ul><li><a href="http://investingadvice.com/what-are-etfs/" rel="bookmark" class="crp_title">What Are ETFs?</a></li><li><a href="http://investingadvice.com/investing-in-mutual-funds/" rel="bookmark" class="crp_title">Investing in Mutual Funds</a></li><li><a href="http://investingadvice.com/are-etfs-right-for-you/" rel="bookmark" class="crp_title">Are ETFs Right for You?</a></li><li><a href="http://investingadvice.com/actively-managed-etfs/" rel="bookmark" class="crp_title">Actively Managed ETFs</a></li><li><a href="http://investingadvice.com/why-investors-should-consider-muni-bonds-now/" rel="bookmark" class="crp_title">Why Investors Should Consider Muni Bonds Now</a></li></ul></div>]]></content:encoded>
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		<title>What is Dividend Investing?</title>
		<link>http://investingadvice.com/what-is-dividend-investing/</link>
		<comments>http://investingadvice.com/what-is-dividend-investing/#comments</comments>
		<pubDate>Mon, 12 Mar 2012 15:24:03 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Basics]]></category>
		<category><![CDATA[dividend investing]]></category>
		<category><![CDATA[investing advice]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=368</guid>
		<description><![CDATA[<a href="http://investingadvice.com/what-is-dividend-investing/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2012/03/What-is-Dividend-Investing-150x150.jpg" class="alignleft wp-post-image tfe" alt="What is Dividend Investing" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2012/03/What-is-Dividend-Investing.jpg"><img src="http://investingadvice.com/wp-content/uploads/2012/03/What-is-Dividend-Investing-150x150.jpg" alt="What is Dividend Investing" width="150" height="150" class="alignleft size-thumbnail wp-image-369" /></a>There are different ways to invest, including stocks, bonds, mutual funds, exchange traded funds, certificates of deposit and numerous other investment vehicles. Even if you decide to invest in stocks, you’ll still have to choose between different types of stock profiles, including growth stocks and speculative stocks.</p>
<p>One popular type of stock investment strategy is investing in companies that pay regular cash dividend to their shareholders. Some investors believe that assets which generate regular income can be preferable in many respects to relying solely on the capital gains prospects of non-dividend paying stocks. Many dividend paying companies are large blue-chip companies that are leaders in their markets. </p>
<p>Here is some information and advice for coming up with your own dividend investing strategy.</p>
<li><strong>Dividend Yield.</strong> A given stock’s dividend yield is a percentage that’s calculated by dividing the amount of dividends that are paid for a single share of stock over the course of a year, by the market price of that share. For example, a company that pays a $0.55 per share dividend each quarter has a yield of 2.93% when the market price of the stock is $75 per share. (The calculation is (0.55*4)/75 = 0.0293.) Because both the dividend amounts and share price change over time (in fact, the share price is likely to change many times over the course of the day), the yield will also change over time.</li>
<li><strong>Higher Dividend Rate Doesn’t Always Mean a Better Investment.</strong> New dividend investors are often tempted to seek out those companies that pay the absolute highest dividend yield. The thinking is something along the lines of “why should I settle for a blue-chip company that pays a 3% dividend when company X pays a 12% or 15% yield?” The answer is simply that in many cases a significantly higher than market dividend yield is a sign of an unsustainable yield, a company that will soon experience significant financial problems, or both of those things.</li>
<li><strong>Pay Attention to Dividend Coverage.</strong> “Dividend coverage” is a measure of how much of a company’s cash flow goes towards paying the dividend to its shareholders. The lower the dividend coverage percentage, the better. A lower number means that the company still has plenty of cash left over to expand and grow the business, even after paying the dividend. A company that’s paying too much of its cash flow towards the dividend might have difficulty maintaining that dividend rate in the near future, or even growing its business.</li>
<li><strong>Plan For Dividends, But Don’t Rely on Them.</strong> There are many companies that have increased their dividends every year for the last 10, 20 or more years. While this is often the sign of a strong company that will continue to increase (or at least maintain) its dividend in the future, there is never any guarantee of future dividends. Companies change, markets change and the world changes. During the market downturn of late 2008 and into 2009, for example, hundreds of companies cut or even eliminated their regular dividends. While many of these companies have since reinstituted their dividends, some of those have only done so at greatly reduced rates.</li>
<p>Dividend investing can be a great foundation of your portfolio. By selecting a good balance of strong companies that have a history of paying consistent dividends, you’ll have cash flow from your dividends to help mitigate any market downturns.</p>
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		<title>Why Investors Should Consider Muni Bonds Now</title>
		<link>http://investingadvice.com/why-investors-should-consider-muni-bonds-now/</link>
		<comments>http://investingadvice.com/why-investors-should-consider-muni-bonds-now/#comments</comments>
		<pubDate>Thu, 26 Jan 2012 15:37:50 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Bonds]]></category>
		<category><![CDATA[bonds]]></category>
		<category><![CDATA[investing advice]]></category>
		<category><![CDATA[muni bonds]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=364</guid>
		<description><![CDATA[<a href="http://investingadvice.com/why-investors-should-consider-muni-bonds-now/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2012/01/Why-Investors-Should-Consider-Muni-Bonds-Now-150x150.jpg" class="alignleft wp-post-image tfe" alt="Why Investors Should Consider Muni Bonds Now" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2012/01/Why-Investors-Should-Consider-Muni-Bonds-Now.jpg"><img src="http://investingadvice.com/wp-content/uploads/2012/01/Why-Investors-Should-Consider-Muni-Bonds-Now-150x150.jpg" alt="Why Investors Should Consider Muni Bonds Now" width="150" height="150" class="alignleft size-thumbnail wp-image-365" /></a>The past year has been a nerve-wracking one for many investors. The major stock market indices have been relatively flat, but there have been lots of volatility in the shorter term movements. And it seems like there’s always a threat of some new piece of news sending the stock market sharply downward.</p>
<p>While safe investments like certificates of deposits are paying interest at near record lows, there is still an opportunity to access a respectable rate of return without having to expose investment funds to the risks of the stock market. This opportunity comes in the form of municipal bonds, which are issued by state and local governmental entities to raise funds for public works projects.</p>
<p>Here is some information and investing advice on why you might want to consider investing in municipal bonds now.</p>
<li><strong>Easy to Purchase.</strong> Initiating a position in municipal bonds, either directly or through an investment fund, is relatively easy. While it’s not quite as easy as going to the local bank and opening a CD, interested investors can often purchase individual municipal bonds through their brokers or investment managers, and they can also purchase one of the hundreds of mutual funds or exchange traded funds focuses on municipal bonds.</li>
<li><strong>Tax Benefits.</strong> Traditionally, one of the strongest selling points of municipal bonds is that the interest income that’s received from the bond is exempt from federal income tax. In addition, in some cases the income will also be exempt from state tax. The higher the tax bracket an investor is, the higher the effective return they’ll receive from municipal bonds. These benefits are still strongly in place today, and can make munis a good investment for many investors.</li>
<li><strong>Recent Returns Have Been Favorable.</strong> As of mid-December, the 2011 year to date performance of each of the major stock market indices was within just a few percentage points of zero. (The Dow was up a few percentage points, while the NASDAQ and the S&amp;P500 were both down a few percentage points.) By comparison, many municipal bond funds are up over 10% percent year-to-date (not including dividend payments of 5-10%), and some are up even more.</li>
<li><strong>Default Risk is Still Comparatively Low.</strong> Several high-profile financial experts sounded an alarm just a year ago, claiming that because of fiscal difficulties faced by many states and municipalities, defaults on municipal bonds would soon start happening in large numbers. Despite these forecasts, however, the market-wide default rates on municipal bonds have not risen. In fact, muni bond default rates are currently slightly below their historic averages.</li>
<li><strong>Stock Market Volatility is High.</strong> The recent levels of stock market volatility are simply too much for many investors to bear. Diversified investment vehicles like municipal bond-focused mutual funds have been much less volatile in recent years.</li>
<p>Like any other investment opportunity, you need to be comfortable with committing any of your investment portfolio to municipal bonds, whether it’s in the form of individual bonds or a muni bond mutual fund or exchange traded fund. Learn as much as possible about any muni bond investment before you invest.</p>
<div id="crp_related"><ul><li><a href="http://investingadvice.com/is-a-series-ee-bond-a-good-investment/" rel="bookmark" class="crp_title">Is a Series EE Bond a Good Investment?</a></li><li><a href="http://investingadvice.com/are-etfs-right-for-you/" rel="bookmark" class="crp_title">Are ETFs Right for You?</a></li><li><a href="http://investingadvice.com/investing-advice-on-how-to-choose-a-mutual-fund/" rel="bookmark" class="crp_title">Investing Advice on How to Choose a Mutual Fund</a></li><li><a href="http://investingadvice.com/diversify-your-portfolio-to-manage-risk/" rel="bookmark" class="crp_title">Diversify Your Portfolio to Manage Risk</a></li><li><a href="http://investingadvice.com/what-is-dividend-investing/" rel="bookmark" class="crp_title">What is Dividend Investing?</a></li></ul></div>]]></content:encoded>
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		<title>How to Choose a Discount Broker?</title>
		<link>http://investingadvice.com/how-to-choose-a-discount-broker/</link>
		<comments>http://investingadvice.com/how-to-choose-a-discount-broker/#comments</comments>
		<pubDate>Wed, 16 Nov 2011 15:20:40 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Basics]]></category>
		<category><![CDATA[discount broker]]></category>
		<category><![CDATA[investing advice]]></category>
		<category><![CDATA[stock trading]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=357</guid>
		<description><![CDATA[<a href="http://investingadvice.com/how-to-choose-a-discount-broker/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2011/11/How-to-Choose-a-Discount-Broker-150x150.jpg" class="alignleft wp-post-image tfe" alt="How to Choose a Discount Broker" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2011/11/How-to-Choose-a-Discount-Broker.jpg"><img src="http://investingadvice.com/wp-content/uploads/2011/11/How-to-Choose-a-Discount-Broker-150x150.jpg" alt="How to Choose a Discount Broker" width="150" height="150" class="alignleft size-thumbnail wp-image-358" /></a>If you plan to do any serious investing, you’ll need to go through a broker. Full service brokers offer a variety of financial products, do extensive research for their clients and provide individualized investment advice, but all this service comes at a high price. Discount brokers are a less expensive alternative.</p>
<p>For those who prefer to save money by handling their own investments, a discount broker is the best option. But all discount brokers are not created equal. They offer different services, features and fees. </p>
<p>Here is some information and advice to think about when considering a discount broker.</p>
<li><strong>What costs are involved?</strong> Discount brokers charge a set amount per trade, but that’s not necessarily all you’ll have to pay. Some charge account maintenance fees, inactivity fees, check writing fees and other fees that can increase your overall cost. Depending on your trading habits, however, some of these fees may not apply to you.</li>
<li><strong>What are the minimums?</strong> Nearly all discount brokerages have a minimum opening balance requirement. If you can’t or aren’t willing to meet that requirement, you’ll have to take your business elsewhere. There are also other minimums that you’ll need to be aware of. For example, some brokerages require investors to make a minimum number of trades each month in order to get the best rates. If you’re not a heavy trader, you’ll end up paying more per trade.</li>
<li><strong>What kinds of investment products do they offer?</strong> If you’re interested in investing in more than just stocks, it’s important that you make sure the broker will allow you to do so. There are plenty of brokers that offer mutual funds, index funds and derivatives. However, some charge more for trading these, so be sure to inquire about fees.</li>
<li><strong>Do you have access to research?</strong> While most discount brokers don’t do research for individual investors, many have begun to offer access to reports and other materials that will help you make informed decisions. If this is something that interests you, choose a brokerage that provides it.</li>
<li><strong>What kinds of features are offered?</strong> The services offered vary considerably from brokerage to brokerage. Some are no-frills operations where you can do little more than pay your money and make your trades. Others offer features such as automatic reinvestment plans that use your dividend proceeds to buy more stock and interest-bearing accounts that pay a small amount of interest on un-invested funds. If you find such features useful, they may be worth any extra cost.</li>
<p>A good discount brokerage offers the services you need at a price that won’t eat up a large portion of your earnings. Check out all your choices, both online and locally, to find the discount broker that best meets your needs.</p>
<div id="crp_related"><ul><li><a href="http://investingadvice.com/are-etfs-right-for-you/" rel="bookmark" class="crp_title">Are ETFs Right for You?</a></li><li><a href="http://investingadvice.com/online-investing-pros-and-cons/" rel="bookmark" class="crp_title">Online Investing Pros and Cons</a></li><li><a href="http://investingadvice.com/investing-advice-on-how-to-choose-a-mutual-fund/" rel="bookmark" class="crp_title">Investing Advice on How to Choose a Mutual Fund</a></li><li><a href="http://investingadvice.com/minimizing-the-risks-of-online-trading/" rel="bookmark" class="crp_title">Minimizing The Risks Of Online Trading</a></li><li><a href="http://investingadvice.com/what-are-etfs/" rel="bookmark" class="crp_title">What Are ETFs?</a></li></ul></div>]]></content:encoded>
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		<title>Should You Be Buying TIPS Now?</title>
		<link>http://investingadvice.com/should-you-be-buying-tips-now/</link>
		<comments>http://investingadvice.com/should-you-be-buying-tips-now/#comments</comments>
		<pubDate>Wed, 07 Sep 2011 14:47:09 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Bonds]]></category>
		<category><![CDATA[inflation]]></category>
		<category><![CDATA[investing advice]]></category>
		<category><![CDATA[TIPS]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=350</guid>
		<description><![CDATA[<a href="http://investingadvice.com/should-you-be-buying-tips-now/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2011/09/Should-You-Be-Buying-TIPS-Now-150x150.jpg" class="alignleft wp-post-image tfe" alt="Should You Be Buying TIPS Now" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2011/09/Should-You-Be-Buying-TIPS-Now.jpg"><img src="http://investingadvice.com/wp-content/uploads/2011/09/Should-You-Be-Buying-TIPS-Now-150x150.jpg" alt="Should You Be Buying TIPS Now" width="150" height="150" class="alignleft size-thumbnail wp-image-351" /></a>One of the most basic tenets of investing is that U.S. Treasury bonds are some of the safest investments one can make. They’re backed by the federal government, and they are practically guaranteed not to lose value. But when inflation rises, they can’t always keep up, and that means you could still come out behind in terms of buying power.</p>
<p>Treasury Inflation-Protected Securities, or TIPS for short, offer a solution to this dilemma. They are Treasury notes and bonds as well, but the principal and interest are indexed to the inflation rate. In effect, they’re inflation-proof.  But that doesn’t mean they’re fool-proof. </p>
<p>Here is some investing advice to consider if you’re thinking about buying TIPS.</p>
<li><strong>You won’t get rich by investing in TIPS.</strong> They should only be used as a low-risk component to a diversified portfolio. Interest is significantly lower than the returns for most other investments, and while it’s unusual to lose money with TIPS, the only way you’ll see large gains is if there is an unusual amount of deflation after the investment term is up.</li>
<li><strong>If deflation occurs during the bond’s term, the benefit of investing in TIPS will be reduced or eliminated.</strong> Think opportunity costs – if you hadn’t had your money tied up in TIPS, it could have been earning more interest elsewhere. However, investors are guaranteed 100% of their principal, so at least you won’t be losing the money you put into them.</li>
<li><strong>TIPS are long-term investments.</strong> They are usually sold with 5-, 10- or 20-year maturity dates.</li>
<li><strong>TIPS may be purchased directly from the government, which sells them at auction.</strong> You may submit a competitive bid, which allows you to specify the yield you will accept, or a noncompetitive bid, which guarantees that you’ll get the number of shares you want but requires you to accept the yield that is determined at auction. Competitive bids must be placed through a broker, bank or dealer, but you can submit noncompetitive bids directly.</li>
<li><strong>You may also purchase bond funds that match the performance of TIPS.</strong> This allows for professional management and makes things easier if you decide to sell.</li>
<li><strong>Interest payments and inflation adjustments are considered taxable income for federal income tax purposes.</strong> For this reason, it is recommended that you keep TIPS in a tax-deferred or tax-free account.</li>
<p>TIPS are a generally sound investment. But it’s best to purchase them at a time when inflation is expected to rise in order to get the most out of them. Since the idea with tips is to simply stay ahead of inflation, they make a good low-risk investment to add to your portfolio. They won’t make you a millionaire, but they will keep a portion of your money nice and safe and ensure that it doesn’t shrink due to inflation.</p>
<div id="crp_related"><ul><li><a href="http://investingadvice.com/what-are-tips/" rel="bookmark" class="crp_title">What are TIPS?</a></li><li><a href="http://investingadvice.com/tweak-your-portfolio-in-case-of-inflation/" rel="bookmark" class="crp_title">Tweak Your Portfolio in Case of Inflation</a></li><li><a href="http://investingadvice.com/measuring-the-risk-of-investment/" rel="bookmark" class="crp_title">Measuring the Risk of Investment</a></li><li><a href="http://investingadvice.com/is-a-series-ee-bond-a-good-investment/" rel="bookmark" class="crp_title">Is a Series EE Bond a Good Investment?</a></li><li><a href="http://investingadvice.com/5-investing-rules-of-thumb-to-live-by/" rel="bookmark" class="crp_title">5 Investing Rules of Thumb to Live By</a></li></ul></div>]]></content:encoded>
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		<title>Are ETFs Right for You?</title>
		<link>http://investingadvice.com/are-etfs-right-for-you/</link>
		<comments>http://investingadvice.com/are-etfs-right-for-you/#comments</comments>
		<pubDate>Tue, 28 Jun 2011 13:56:46 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Mutual Funds]]></category>
		<category><![CDATA[etf]]></category>
		<category><![CDATA[investing]]></category>
		<category><![CDATA[investing advice]]></category>
		<category><![CDATA[saving money]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=343</guid>
		<description><![CDATA[<a href="http://investingadvice.com/are-etfs-right-for-you/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2011/06/Are-ETFs-Right-for-You-150x150.jpg" class="alignleft wp-post-image tfe" alt="Are ETFs Right for You" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2011/06/Are-ETFs-Right-for-You.jpg"><img src="http://investingadvice.com/wp-content/uploads/2011/06/Are-ETFs-Right-for-You-150x150.jpg" alt="Are ETFs Right for You" width="150" height="150" class="alignleft size-thumbnail wp-image-344" /></a>The ETF, or exchange traded fund, is a fairly new type of investment product. It holds stocks, bonds, commodities or other types of assets and sometimes tracks an index like the S&amp;P 500. It is similar in structure to a mutual fund, yet is traded on a stock exchange.</p>
<p>ETFs usually include investments that are grouped under some sort of common theme. It could be top performers in a given industry, those listed on various indexes, or up and coming stocks from a certain market sector. These investments often look quite attractive at first glance, but they’re not right for every investor. </p>
<p>Here is some advice to consider about ETFs before you part with your money.</p>
<li><strong>ETFs are actively traded.</strong> This simply means that they are traded throughout the day, unlike mutual funds, which are only priced and traded at the end of the trading day. For active investors, this is a good thing.</li>
<li><strong>ETFs are sold to the public in single shares, whereas mutual funds and index funds require a higher initial investment.</strong> This makes them accessible to those who do not have a large amount of money to invest.</li>
<li><strong>When you trade ETFs, you have to pay your broker a commission</strong> just like you would if you were trading a stock or a bond. However, those who are familiar with stock trading can trade through a discount brokerage, which charges much lower fees than a full-service brokerage.</li>
<li><strong>Due to the trading costs, ETFs are best suited to investors who have at least $10,000</strong> to put into them. But for those who plan to make their purchases and refrain from trading for several years, they can work out nicely.</li>
<li><strong>The risk of an ETF is dependent upon what it is made up of.</strong> Stock and real estate ETFs can be rather risky, while bond ETFs are more stable. United States ETFs tend to be more stable than international ones. As with any type of investment, it’s important to diversify when dealing with ETFs.</li>
<li><strong>ETFs haven’t been around very long.</strong> That means that there’s no data on their long-term performance. For investors with a low tolerance for risk, the thought of investing in a product with such a short track record may not sit very well.</li>
<li><strong>ETFs are not insured by the FDIC.</strong> Many other investments are. For investors that don’t want to risk losing their money, a secured investment would be a safer bet.</li>
<p>ETFs work out very well for some investors. For others, they’re just not a good match for their goals and trading styles. Before you purchase shares in an ETF, ask yourself if you’re prepared to handle the inherent risk, and if you plan to trade actively or hang onto it for a while. </p>
<div id="crp_related"><ul><li><a href="http://investingadvice.com/what-are-etfs/" rel="bookmark" class="crp_title">What Are ETFs?</a></li><li><a href="http://investingadvice.com/actively-managed-etfs/" rel="bookmark" class="crp_title">Actively Managed ETFs</a></li><li><a href="http://investingadvice.com/tweak-your-portfolio-in-case-of-inflation/" rel="bookmark" class="crp_title">Tweak Your Portfolio in Case of Inflation</a></li><li><a href="http://investingadvice.com/investing-advice-on-how-to-choose-a-mutual-fund/" rel="bookmark" class="crp_title">Investing Advice on How to Choose a Mutual Fund</a></li><li><a href="http://investingadvice.com/how-to-choose-a-discount-broker/" rel="bookmark" class="crp_title">How to Choose a Discount Broker?</a></li></ul></div>]]></content:encoded>
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		<title>Tweak Your Portfolio in Case of Inflation</title>
		<link>http://investingadvice.com/tweak-your-portfolio-in-case-of-inflation/</link>
		<comments>http://investingadvice.com/tweak-your-portfolio-in-case-of-inflation/#comments</comments>
		<pubDate>Mon, 13 Jun 2011 14:31:37 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Basics]]></category>
		<category><![CDATA[inflation]]></category>
		<category><![CDATA[inflationary period]]></category>
		<category><![CDATA[investing advice]]></category>
		<category><![CDATA[rising inflation]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=337</guid>
		<description><![CDATA[<a href="http://investingadvice.com/tweak-your-portfolio-in-case-of-inflation/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2011/06/Tweak-Your-Portfolio-in-Case-of-Inflation-150x150.jpg" class="alignleft wp-post-image tfe" alt="Tweak Your Portfolio in Case of Inflation" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2011/06/Tweak-Your-Portfolio-in-Case-of-Inflation.jpg"><img src="http://investingadvice.com/wp-content/uploads/2011/06/Tweak-Your-Portfolio-in-Case-of-Inflation-150x150.jpg" alt="Tweak Your Portfolio in Case of Inflation" width="150" height="150" class="alignleft size-thumbnail wp-image-338" /></a>One of the golden rules of investing is to stay ahead of inflation. Most investments are designed to offer returns that will not be eradicated by the average amount of inflation. But there are times when inflation is anything but average. When it is higher than usual, it can eat up the returns on low-interest investments.</p>
<p>The variability of inflation is one of the biggest reasons why investors are advised to diversify their portfolios. But in times of high inflation, there are other measures you can take for added protection. </p>
<p>Here are some ideas and advice to consider when inflation is forecasted to rise.</p>
<li><strong>Don’t rule out bonds.</strong> While bonds overall tend to perform poorly during increases in inflation, there are some exceptions. Short-term bond funds are good for maintaining liquidity and fare better against inflation than cash investments like money market funds. And Treasury Inflation-Protected Securities, or <a href="http://investingadvice.com/what-are-tips/">TIPS</a>, offer the stability of government bonds with built-in inflation protection.</li>
<li><strong>Bank loan funds tend to do well in the face of inflation.</strong> That’s because the bank loans to which they’re tied command higher interest rates, and that in turn offers better interest rates to investors. While these funds are a bit risky to invest in heavily, dabbling in them could strengthen your portfolio during periods of high inflation.</li>
<li><strong>Commodities are favorites of many investors looking to beat inflation.</strong> Since these investments track changes in the prices of food, energy and raw materials, they naturally perform better when inflation rises. Some investors take advantage of this principle by investing in stocks of commodity companies, but a more direct (and generally more lucrative) approach is to invest in a commodity futures fund.</li>
<li><strong>Do some research on stocks.</strong> The variable returns offer the potential to outperform inflation, but there’s also a chance that you could lose money. Consider <a href="http://investingadvice.com/category/stocks/">stocks</a> from companies with low debt to equity ratios for best results.</li>
<li><strong>Take a look at exchange-traded funds.</strong> These funds are much like mutual funds, yet they are traded on the stock market. They track indexes such as the S&amp;P 500 and offer plenty of diversification. The best <a href="http://investingadvice.com/actively-managed-etfs/">ETFs</a> to invest in during a period of high inflation include those based on energy and metals.</li>
<li><strong>Go international.</strong> Other countries may not be experiencing inflation as high as our own, so stocks and bonds based in such countries could perform better. Emerging markets might also benefit from our inflation through commodities exports, so consider investing in those commodities.</li>
<p>Inflation can wreak havoc on our investments. But if you’re proactive, you can greatly reduce your portfolio’s inflation risk. While there’s no point in converting all of your investments into inflation hedges, taking some precautions could certainly pay off.   </p>
<div id="crp_related"><ul><li><a href="http://investingadvice.com/what-are-tips/" rel="bookmark" class="crp_title">What are TIPS?</a></li><li><a href="http://investingadvice.com/should-you-be-buying-tips-now/" rel="bookmark" class="crp_title">Should You Be Buying TIPS Now?</a></li><li><a href="http://investingadvice.com/why-should-you-invest/" rel="bookmark" class="crp_title">Why Should You Invest?</a></li><li><a href="http://investingadvice.com/5-investing-rules-of-thumb-to-live-by/" rel="bookmark" class="crp_title">5 Investing Rules of Thumb to Live By</a></li><li><a href="http://investingadvice.com/diversify-your-portfolio-to-manage-risk/" rel="bookmark" class="crp_title">Diversify Your Portfolio to Manage Risk</a></li></ul></div>]]></content:encoded>
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		<title>5 Investing Rules of Thumb to Live By</title>
		<link>http://investingadvice.com/5-investing-rules-of-thumb-to-live-by/</link>
		<comments>http://investingadvice.com/5-investing-rules-of-thumb-to-live-by/#comments</comments>
		<pubDate>Mon, 09 May 2011 14:49:25 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Basics]]></category>
		<category><![CDATA[investing advice]]></category>
		<category><![CDATA[rule of thumb]]></category>
		<category><![CDATA[saving money]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=326</guid>
		<description><![CDATA[<a href="http://investingadvice.com/5-investing-rules-of-thumb-to-live-by/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2011/05/5-Investing-Rules-of-Thumb-to-Live-By-150x150.jpg" class="alignleft wp-post-image tfe" alt="5 Investing Rules of Thumb to Live By" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2011/05/5-Investing-Rules-of-Thumb-to-Live-By.jpg"><img src="http://investingadvice.com/wp-content/uploads/2011/05/5-Investing-Rules-of-Thumb-to-Live-By-150x150.jpg" alt="5 Investing Rules of Thumb to Live By" width="150" height="150" class="alignleft size-thumbnail wp-image-331" /></a>If you’re reading this, it’s a safe bet that you know the importance of investing a portion of your earnings. Everyone should be putting money away for emergencies and retirement. But while most people realize that, relatively few understand how to do so effectively.</p>
<p>The truth is you don’t have to be a rocket scientist to make sense out of investing. You just need to be willing to learn. Some aspects of investing are best learned through experience. </p>
<p>Here are five rules of thumb for those who are just getting started.</p>
<li><strong>1.	You’re never too young to start saving for retirement.</strong> The average life expectancy these days is around twenty years past retirement age. You could live much longer than that. Saving up enough money to sustain yourself for that length of time is no small task. If possible, you should start saving for retirement when you get your first job. And no matter how old you are, if you haven’t started yet, right now is the time to do so.</li>
<li><strong>2.	Invest at least 10% of your income (before taxes).</strong> If you put it aside out of each paycheck before you pay bills or do any other spending, you’ll never miss it. For those who are not disciplined enough to put that much aside, automation is your friend. Have the money deducted from your pay and put directly into your retirement account, or have it direct deposited into a savings account while the rest goes into checking. And if you can manage to save more than 10%, go for it.</li>
<li>
<strong>3. Remember the rule of 72.</strong> Divide 72 by your investment’s yield percentage, and you’ll get the number of years that it will take you to double your investment. For example, if you’re getting a 6% return, it will take twelve years for your investment to double in value.</li>
<li><strong>4. Diversification is always important, but the amount of risk you should take varies with age.</strong> As a general rule, financial advisers say that you should subtract your age from 100 to see how much of your portfolio should be allocated to stocks. That means that if you’re 30, 70% of your portfolio should consist of stocks and 30% should consist of less risky investments.</li>
<li><strong>5. Don’t forget about transaction costs, inflation and taxes.</strong> All of these things take a bite out of the returns on your investments. So when you’re considering a new investment, subtract the inflation rate, transaction charges and any applicable taxes from the return rate. If you end up breaking even or in the red, look for another investment or find a way to cut your costs.</li>
<p>These basic rules should help you get your investments off on the right foot. You can learn the finer points as you go. All investment comes with some amount of risk, but by educating yourself you can lower that risk substantially.</p>
<div id="crp_related"><ul><li><a href="http://investingadvice.com/measuring-the-risk-of-investment/" rel="bookmark" class="crp_title">Measuring the Risk of Investment</a></li><li><a href="http://investingadvice.com/why-should-you-invest/" rel="bookmark" class="crp_title">Why Should You Invest?</a></li><li><a href="http://investingadvice.com/monitoring-your-investment-portfolio/" rel="bookmark" class="crp_title">Monitoring Your Investment Portfolio</a></li><li><a href="http://investingadvice.com/should-you-be-buying-tips-now/" rel="bookmark" class="crp_title">Should You Be Buying TIPS Now?</a></li><li><a href="http://investingadvice.com/tweak-your-portfolio-in-case-of-inflation/" rel="bookmark" class="crp_title">Tweak Your Portfolio in Case of Inflation</a></li></ul></div>]]></content:encoded>
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		<title>What Are ETFs?</title>
		<link>http://investingadvice.com/what-are-etfs/</link>
		<comments>http://investingadvice.com/what-are-etfs/#comments</comments>
		<pubDate>Tue, 05 Apr 2011 14:51:55 +0000</pubDate>
		<dc:creator>walter</dc:creator>
				<category><![CDATA[Basics]]></category>
		<category><![CDATA[etf]]></category>
		<category><![CDATA[ETF investing]]></category>
		<category><![CDATA[ETFs]]></category>
		<category><![CDATA[investing advice]]></category>
		<category><![CDATA[investing in ETFs]]></category>

		<guid isPermaLink="false">http://investingadvice.com/?p=320</guid>
		<description><![CDATA[<a href="http://investingadvice.com/what-are-etfs/"><img align="left" hspace="5" width="65" src="http://investingadvice.com/wp-content/uploads/2011/04/What-are-ETFs-150x150.jpg" class="alignleft wp-post-image tfe" alt="What are ETFs" title="" /></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://investingadvice.com/wp-content/uploads/2011/04/What-are-ETFs.jpg"><img src="http://investingadvice.com/wp-content/uploads/2011/04/What-are-ETFs-150x150.jpg" alt="What are ETFs" width="150" height="150" class="alignleft size-thumbnail wp-image-321" /></a>What Are ETFs?</p>
<p>If you’ve spent any time over the past few years researching investment options you may have heard about ETFs. ETF stands for Exchange Traded Fund. They’ve gained enormous popularity and have become quite trendy. </p>
<p>As with any trend, it’s important to be cautious before jumping in – particularly when your money is potentially at risk. So let’s first look at what an exchange traded fund is. “Exchange Traded” means that it is traded just like a traditional stock. “Fund” means that it is a collection or group of investments, which can include stocks and bonds.</p>
<p>Generally the investments are grouped by industry or theme. For example, you might find an ETF with various pharmaceutical companies. Like other funds, an ETF is then managed by a financial institution. When you buy an ETF you’re buying an investment, managed by someone else, that may have stock in hundreds or thousands of companies. </p>
<p>What are The Advantages and Disadvantages of ETFs?</p>
<li><strong>Active Trading.</strong> They’re actively traded throughout the day. Unlike a standard mutual fund, an ETF is traded throughout the day. This means you can buy or sell your ETF whenever the market is open. You don’t have to wait until the end of a trading day like you would with a mutual fund.</li>
<li><strong>Low Initial Investment.</strong> One of the advantages to an Exchange Traded Fund is that they often have a low initial investment. Where you may need several thousand dollars for a mutual fund or an index fund, you only need to buy a single share of an ETF.</li>
<li>
<p><strong>Not FDIC Insured.</strong> This can be too big of a risk for some investors. If you don’t want to risk losing your money then consider a secured investment.</li>
<li><strong>Commissions.</strong> When you buy or sell an ETF you will pay a fee to your broker just as if you’d bought or sold a stock.</li>
<li><strong>Low Expenses.</strong> One of the primary draws for ETFs, besides the low investment, is that they generally have a low expense ratio. The expense ratio is the amount of money taken out of the fund at the end of the year to cover the expense of the fund.</li>
<li><strong>Trading Knowledge.</strong> Because an ETF is traded, in order to successfully invest, you’ll want to know a bit about trading and how to track your investment on the market. However, if you’re familiar with trading stocks then trading ETFs follows a similar process.</li>
<li>
<strong>Diversification.</strong> ETFs can fill a gap in your portfolio. In fact, they’re often used specifically for this purpose. For example, you can invest in a broad market ETF which may have thousands of companies represented in the fund.</li>
<p>If you’re interested in pursuing ETFs as an investment option, spend some time reviewing the fund’s information. What’s the past performance of the fund? Who manages it and what is their track record? What are the fees, expense ratio and what is the commission rate for your broker? What securities are represented by the fund and what is the performance of those various companies? Finally, how will an ETF help you diversify your portfolio?</p>
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