Category: Investment

Investing money in fluctuating products like stocks and currency today is quite risky. Hence, most investors have switched to high-interest savings accounts, checking accounts, and Certificate of Deposits, which are comparatively safer. The returns, however, are not so high. They are low, in fact (below 2%). Interest rates are low, and they aren't expected to rise until the economy improves. And the banks are not at fault. ING is not trying to rip you off. Ally Bank doesn't detest you. So, Why Are The Rates Low? The rates are low because the government doesn't want you to save money into the bank. They want you to put money into the stock market, and boost it a bit, which will eventually help the economy. Where Do I Put My Money? Where Can I Get High-Interest Rates? That's a good question. Let's have a look at some of the options we have. High Interest Checking Accounts Although  [...]

I have written enough about gold investment. 'Gold is good', 'Gold can bean inflation', 'It's a good investment to diversify your investment'. So, why do I write it over and over again? Because the value of gold changes over time, with change in related factors, and the effect should be visible in your portfolio. The current situation, however, is quite different. People who had invested in gold few years ago are receiving great returns. However, due to elevated prices, it's very expensive to own gold now. For instance, current price of gold per ounce is 300% more than it was 10 years ago, and it was all time high in December at 1,226.56. In recent years, billions of dollars have flowed into this investment product, as every investor wanted to be a part of this rally. And, as ever, gold is considered to be a an investment that hedges you against inflation. Since gold prices are at  [...]

Stock market is certainly unpredictable, and with market conditions like todays, it’s dangerous. Due to the instability in European countries, and its effects on China, we have seen unexpected changes in global cues recently. For beginner’s, it’s probably a bad time to invest in stock market. Mutual funds, however, are comparatively safer. But with so many to choose from, this too becomes a complicated task. There are thousands of funds available in the market today, how would you pick best mutual funds for your portfolio? That’s exactly what we discuss in this article. In order to pick the best ones among all, you will, as an investor, have to follow few basic rules. Rule #1: Diversification It’s quite risky to invest in a particular sector, especially when the market is unstable. Diversification, however, reduces your risk, if not eliminates it completely. Select a fund  [...]

We all know how money is earned through hard work, and during childhood, we all have heard stories of burglars who keep chasing free money their entire life and end up spending rest of their life in jail. Yet, we believe there is free money somewhere out there. Since most of our work today is done online, we try to find money there as well. And guess what, we lost money through some internet scam. In spite of falling straight on our faces, we still ask this question ‘Does free money exist?’, simply because we learnt another thing in childhood, ‘never lose hope’. And those you never lose hope, gets its reward. There is absolutely free government money available, and the best part is, there isn’t any scam. It’s real. Around $25 bn is given away by our government as free money. This amount, however, is distributed in form of government grants. So, what should be your next step?  [...]

Every individual is talking about the new buzzword, ‘Cloud Computing’, but I wonder if anyone understands it. If you are one of them, fret not, because you will be uttering these words by the end of this post. Let’s have a look at it from the investor’s point of view. Usually, maintenance cost or overheads are quite huge in IT companies, or that’s what every manager says. However, many harsh measures are taken to keep this cost under control. Some companies prefer rightsizing the number of employees, some buy the software instead of developing them, and few outsource the whole spectrum of operations. Due to these measures, or may be some other reasons, these companies have continued to grow, mainly for two reasons: More work is done by them every year; and managers increase the cost, a counterproductive result. However, this cloud computing, although saves lots of money and  [...]

Master Limited Partnerships (MLPs) Another financial instrument which is getting popular when it comes to saving taxes in the current low interest rate regime is master limited partnerships (MLPs). These instruments have also become popular because of the higher yield in comparison to other instruments like treasury bonds, bank CDs, or money-market accounts. MLP’s can operate at a loss particularly in the first few years particularly in industries like developing oil and gas pipelines due to high depreciation and hence reduced net earnings.  However after the initial phase MLP’s will in probability generate free cash flow in excess of earnings on which taxes are not levied until the owner sells the unit as it is treated as a return on capital. Approximately 80% of MLP distributions are labelled as return on capital. High yields on MLP’s is another factor that makes this an important  [...]

The times are definitely hard and in these hard times taxes can be a big drain on one’s pocket. One easy and very effective way to save on taxes is by investing in tax saving instruments. But is it so simple. Not all investments will get you the same tax benefit. In fact I would like to modify my earlier statement and say that the best way to save on taxes is to invest judiciously.  For instance one way of reducing tax liability is to hold on to investments for longer period of time. You will in all probability be taxed higher if you sell off your investments earlier than its total life. However holding all investment assets for a long time will not help in saving taxes. It is important to understand which assets should be held for a longer period to get maximum tax benefits. In short investors need to understand the methods of financial planning that will help them reduce their tax  [...]