Investment Facts - Interesting Tips and Trivia
A little bit of trivia
*In the history of bond yields, there is an interesting observation that can be made. Each world war happened right before there was a major turning point in bond yields. During the years of WW1, you could find that yields were high and rising. This is true of other wars as well before then. During WW2 however, the opposite occurred. You could expect to find low and declining bond yields then. It was just one year before that war ended, that the bonds reached their lowest point of that whole century.
* When speaking of "economic reality", the fair value method doesn't really score well. General Electric experienced this first hand in 2004. They had purchased 4 percent in Coke's common stock. That year, Coca-Cola reported an income that was reaching near 4.85 billion. Well, technically GE should have had 194 million coming in. The reality was that they only were able to report getting 96 million though because Coca Cola only paid out 2.4 billion in dividends. Their income statement looked a lot different than they would have liked.
Tips
* A great way to prevent financial disaster is to have a portfolio that is custom designed to your needs and objectives.
* If you have time to ride out the ups and downs, you can feel a bit more comfortable with the riskier investments (like stocks) and possibly make a lot of money.
* Generally speaking, the earlier you begin to invest, the more risk you can take. If you wait to long, you don't want to risk to much as you may not be able to afford it.
*As with many things in life, discipline and patience are are virtue and investing is no different. They can even help a person do better than a high IQ can, on occasion.
* Spending a dollar today is like spending all of that possible income it could have generated from this point on.
* What has the highest liquidity of all asset classes? Money market Instruments, as they can be converted fairly easily into cash.
* Thinking ahead, if you may need your money in the next 1-3 years, your best bet may be capital preservation, as an objective. Basically, your risk decreases the more time goes by. Sometimes even putting your money into a diversified group of stocks can leave you with great losses. That is the last thing you need when you go to take your cash out.
* Make sure to be make specific financial goals, so that you can create the best plan of action to meet those goals.
* This may go without saying, but avoiding huge mistakes is just as important as making wise decisions. Depending on one's experience, each will have their own unique perspective on that and the degree to which they think or know it to be true.
* Always take advantage of your employer's 401k contributions. This is basically free money! Even if you are in debt, this is one great thing you don't want to pass on.
* Its not a bad idea to check on your credit history. Some recommend checking it every year, to make sure there are no errors in it. A poor credit report an really throw a wrench in the best laid financial plans.
