Archive for May, 2013

Tips and Advice for Investing in Gold

Recently we brought you a blog  filled with tips and advice for investing in silver.  Today’s blog is going to be similar and yet quite different as it focuses on  the precious metal gold, including gold coins and gold bullion. If you’re looking to diversify your portfolio and invest in a bit of one of the world’s most famous and popular metals then you’ve come to the right place. So sit back, relax and as usual,  enjoy.

Investors who  love gold will tell you that, if you want to protect your investment against inflation, weakness at the stock market, currency fluctuations and many other financial uncertainties, there is one item that you must have in your portfolio and that is gold bullion and/or gold coins. Most experts will say that, if you’re going to invest in gold, you should do it  as a long-term investment and be prepared to hold onto it as long as possible.

The type of gold that you should invest in depends on the reason that you’re interested in investing in it in the first place. If you want to hedge financial uncertainty or take advantage of a price movement then you would do well to invest in contemporary gold bullion coins. Most experts agree that both this type of gold coin and historic gold coins normally trade at modest premiums over their melt value and enjoy internationally strong  liquidity, so interestingly neither one is probably an equal bet.

Some investment experts will tell you that gold is ‘ wealth insurance’  and that the best time to buy it is when you can. They will also tell you that you can’t approach gold the same way that you would stocks or investing in real estate. Even further, some will say that the best reason to buy gold is to make sure that, when economic catastrophe looms like the kind were seeing in Europe and Japan right now, gold will suddenly appear like a very intelligent investment.

As far as who is investing in gold you might be surprised to know that it’s not the super-rich by any means. In fact, teachers, dentists, carpenters, attorneys, small business owners and university professors own gold, usually in the form of bullion or coins as we mentioned,  which has made gold a  very popular part of many portfolios. Recently a Gallup poll showed that gold was rated the best investment by 34% of American investors, higher than stocks, bonds, bank savings and real estate.

One of the biggest differences between gold and the vast majority of capital assets is that gold is the only one that does not rely on someone else’s ability to pay in order to get its value. Unlike bonds, stocks and other investments, gold is always an asset for you but never a liability for someone else. Even more, no matter what happens with the dollar, the stock market or the economy, gold is tangible and has an intrinsic value that cannot be overstated.

As far as how much of your portfolio should be made up with gold investments the general rule is between 10% and 30%. A recent analyst on CNBC advocated investing 20% of your portfolio in gold if you’re keen on protecting your investments from the current economic, financial and political situation happening all over the world.

There are also in gold stocks that you can invest in but most people make the mistake of thinking that they are an exact replacement for physical gold in coins or bullion. If you ask some mine owners about their recent experience with gold stocks they will more than likely express their dismay that, even as the price of gold rose, their stocks failed to do the same. Keep that in mind if you’re keen on purchasing gold stocks.

Well, we sure hope this information has been golden (excuse the pun) for you. Good luck with your adventures in gold investing and always remember to invest intelligently. See you back here soon

Top Tips for Investing in Silver

It is a well-known fact that when  our nation’s economy weakens many start to lose trust in what would be called conventional forms of investing. During these times there is usually an accompanying spike in precious metal investing, particularly silver. Prized for millennia silver is beloved for its sheer beauty and also its physical properties that allow it to be made into a wide variety of different items. While we’re not espousing that investing in silver is the best it does offer an investor looking to diversify their portfolio the opportunity to do so at moderately low risk. With that in mind we put together a blog about the top silver investing tips. If you’re keen on putting silver’s precious patina into your portfolio then read on! Enjoy.

While not particularly complicated, any silver investment will certainly require a bit of research. When it comes to investing in silver there are several different ways to do so and one of the  tasks that your research should accomplish  is to show you what the best way is for your type of investing habits and portfolio.  That being said, make sure to take your time and compare investment methods so that your needs will be met.

One of the most popular ways to invest in silver is with silver bullion and it’s also one of the most convenient. Most bullion is almost 100% pure silver that has been formed into consistently sized, identical bars that are convenient to ship and/or store. As they are easily stackable taking inventory is also quite simple.

Silver bullion  bars also have an advantage in that they are not exclusive to a single demographic but rather are popular worldwide which means that trading in silver in this form is much easier  to do. Not only that but silver bullion  are normally marked with specific information about their origin and their purity, making bank deposits  efficient. For those reasons and several others investing in silver bullion  is a great choice.

Another popular silver investing choice is silver coins. Although the process involved here is a bit different, silver coins are nearly as profitable as bullion.  The distinct differences in the process however need to be considered before deciding on any silver coin investment.

Ironically, the type of silver coins that investors favor most are referred to as ‘ junk coins’  because, as collectibles, they have very little value. Because silver coins tend to lose content if they have been handled a lot and are worn down, their true value depends on their overall condition.

One of the best reasons for investing in silver coins is that they can be purchased in relatively small amounts, opening the door for new investors or investors with limited investment capital. Not only that but, since their  prices fluctuate regularly, they can sometimes be sold at a substantial profit.

We’ve taken a look at two of the most popular ways to invest in silver. As far as the advantages and disadvantages of investing in this precious metal there are several of both.

Advantages;

  • The demand for silver is rising in a large percentage of markets.
  • Silver is heavily used in the manufacture of automobiles, photovoltaic cells and several applications in the healthcare field.
  • Silver generally increases at a better rate than gold.

Disadvantages;

  • Unfortunately, the cost of silver is prohibitive for many new investors. This  makes it difficult to actually purchase enough to see a substantial future profit.
  • Silver  can be extremely volatile.
  • Drastic fluctuations in the price of silver are normal and quite frequent.

As we mentioned earlier we’re not saying that silver is one of the best investment opportunities only that it is one that  can be interesting and sometimes profitable. For someone with a nicely diversified portfolio it definitely should be taken into consideration.  As with any investment, do your research and purchase with caution. Good luck and we’ll see you back here soon.

Hello and welcome back to the 4th and final part of our 4-part blog series on investing tips for the new investor. If you’re just joining us you are about to get some of the best advice that a new investor could want before beginning their stock investing career. If you’ve been with us since Part 1 then you know that the advice and tips that you are about to get today are going to be more of the same excellence that you’ve seen in parts 1 through 3. So, if you’re ready, let’s get started. Enjoy.

  • Safety nets, anyone? If you have a time machine then it’s going to be easy for you to make excellent, sound stock purchases. (And please contact us because we’d like to go back into the past and fix a few things.) Of course, since time travel hasn’t been invented yet the best way to make sure that you don’t get burned on your stock investments is to always have a wide margin of safety so that, if the future holds problems for some of your stocks, you’ll be protected.

If you’ve been keeping up with recent stock news you’ve probably seen that a safety margin is something that most excellent investors have, and this is not by accident or because they have a time travel machine, it’s because it was planned.

  • If you see lemmings, go in the opposite direction. There is a lot to be said for following the crowd but, in our humble opinion, the best investors are the ones that aren’t afraid to go in another direction. The reason being is simple; sometimes the crowd happens to be wrong.
  • Temper, temper. Another trait that excellent investors have is that they have not only a high degree of intelligence but also a stable temperament that allows that intelligence to overcome any problems that their emotions may cause. This allows them to buy stocks at the bottom and sell them at the top on a regular basis. (That’s a good thing, btw.)
  • Discipline is vital. It can be very easy to lose your cool when one or several of your stocks are wildly swinging up or down. It is at these times that the best investors show the most discipline and lose the least amount of money. An excellent example of this would be financial guru Jim Cramer. During 2008 he advised all of his investors to take any money that they might need for the next five years out of the stock market immediately because, in his expert opinion, things were headed south and weren’t going to be coming back anytime soon. If he would have shown a little bit more discipline (and we’re sure that today he would) he would have seen that the exact opposite was true and that 2008 was one of the best times to get into the market because practically everything started going back up that year.

If we can be frank for just a moment we would like to say this; investing in the stock market is not for the weak of heart or the weak of mind. Just like with anything else in life if you want to become a stock investing expert you will need to educate yourself, practice investing, have enough financial strength to survive if things don’t always go your way and have the wherewithal to be able to look at any business and any stock with unbiased clarity.

If you can do this you will certainly be ahead of most investors, many of whom play the stock market like a child plays with her toys, meaning that they are completely interested and fascinated at one moment and then completely uninterested the next. Investing in the stock market is a serious endeavor and should be treated as such. Unless you have a lot of money to waste you will definitely want to do your homework and your due diligence before jumping in with both feet.

We hope you enjoyed this four-part blog series and that it was the beginning and not the end of your stock investing education. Best of luck with your investing and please be sure to come back and visit us often as we will be presenting more information in the future about all sorts of financial endeavors. Take care until next we meet.

Hello and welcome back for Part 3 of our 4-part blog series on investing tips for the new investor. If you are just joining us you may want to go back and take a look at the first 2 parts of this 4-part blog series before continuing. That being said, the information that you will find in this blog should be useful no matter what you’ve already read before either here on our website or on another blog. Part 3 is chock-full of more great tips, advice and excellent info that any investor can use although it’s geared towards the new investor who is just getting started. So sit back, take mental notes if you wish and let’s get started. Enjoy.

  • There’s a fine line between patience and stubbornness.  Patience is certainly a virtue when it comes to investing in stocks. If you keep an eye on the businesses that you have invested in rather than their stock prices and have patience with them if their stock has recently fallen (but little else about the company has changed) you will probably do just fine.  However, when a business is deteriorating and you are constantly hearing bad news about them while continuing to hold on to their stocks you may have crossed the line from patients into stubbornness and, in many cases, being  a stubborn investor can cost you money. If you’re worried that you may have crossed the line ask yourself this question; “Would I buy this stock today if I didn’t already own it?”. If you don’t say “yes” then it’s time to sell.
  • Use sound valuation models. When trying to determine what value a stock will have in the future you will use valuation models to determine those numbers. Always make sure to double check any projections or calculations that you make and, rather than using oracles as your guide, use DCF valuation models or similar models to get the best idea of future earnings.
  • Know the facts. Before buying any stock you should thoroughly research the business that’s issuing it so that you can make your decision based on more than just price. For example, does the business have a meaningful ownership stake? Are there company insiders who have been buying or selling? If a mutual fund owns the company, what is the record of the managers of that fund? All of these bits of information will help you to make a determination as to whether or not to buy a specific company’s stock.
  • Know when the tide is about to turn. We’ve all seen opportunities that exploded onto the scene, the kind that make headline news and have investors frothing at the mouth. If you can get in on these opportunities at the very beginning and ride the wave upward then of course go for it.  It would be better however, to know when these opportunities are about to hit their ceiling and thus avoid getting in too late. For example, if the opportunity that you are looking at brags about the fact that they have successful medical doctors that have given up their practice to start ‘flipping’ real estate it’s probably a good sign that you  shouldn’t get involved.
  • Look for wide moats. Focusing your attention on businesses that have wide economic moats will usually help you to find the ones that will have higher earnings in 5 to 10 years. Companies that are constantly increasing the intrinsic value of their shares are the best to focus on as these will afford you the luxury of being able to hold onto them for a longer period of time.
  •  By based on price and value. Simply put, the main difference between an excellent investment and an excellent company is the price you pay for their stock. Certainly you should search for excellent companies but, if their stock price is out of line, you’ll still want to skip them. Purchasing stocks at an appropriate price for their value is a key aspect of successful investing.

As we mentioned earlier this is the 3rd part of our 4-part blog series. If you’ve been with us for all 3 parts so far then you have already gotten quite a bit of excellent stock investing information. We’ll be back with part 4 very soon and, if you haven’t had a chance to read parts 1 and 2 yet we strongly urge you to do so. All 4 parts of this blog series, when finished, will give the new investor a solid base for beginning their investing career. We hope you enjoyed today’s blog and that you’ll be back to join us soon for Part 4. See you then!

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