Investing Ideas

Here are some ideas to consider as you invest your money. There are both short term and long term strategies. Always check with an investment professional for advice.

Do you have a United States Savings Bond? Chances are you have many savings bonds that you accumulated over the years-- perhaps you got savings bonds when you or your children were born, or you got savings bonds for birthday presents or graduation gifts, or you got savings bonds for Bar Mitzvah or Bas Mitzvah gifts. So, how much are your savings bonds worth now? Remember, savings bonds stop earning interest at some point and you don't want to keep savings bonds that have stopped earning interest. Do you need extra cash? Then check your bonds with the calculator below to figure what they are worth now.

If you understand sports, and what makes a team win, you also can understand what it takes to win in the world of investing. Take a look at the video below for what certified financial planner Brian Gilder says about winning at sports and winning when you invest. Do you want to hit a home run in baseball and when you invest? Sure you do-- but it's the base hits and the consistency of your play and investing that will make you a winner.

Should You KILL or KISS your money?

Kill or Kiss your money? What the heck is Alan talking about? Well, when I say KILL your money, I mean keep it locked in long term accounts, such as certificates of deposit. When I say KISS your money, I mean to keep it in short and safe investments such as money market funds.

You KILL your money -- you keep it locked in long term certificates -- when interest rates on savings are going down. And that is exactly what is happening now with the various interest rate cuts by the Federal Reserve.

But you KISS your money when interest rates are moving up, and you have a chance to get a higher interest rate weeks or even days in the future.

The Federal Reserve is now aggressibely cutting interest rates in an attempt to prevent a recession in this country, and the Fed has signaled that more interest rate cuts may be coming. This is a clear sign that you should KILL your money-- put your savings into long term certificates of deposit. Keeping your money now in short term CDs or even money market funds will mean that you are likely to get even lower interest rates a couple of months from now.

But if you have a lot of savings, you can always use the method that professional money managers use-- they ladder their money. What's a ladder? Well, think of various types of savings accounts as having various interest rate steps. Short term accounts with the lowest rates are at the bottom of the ladder, and very long term accounts with the highest rates are at the top of the ladder. When you "ladder" your money, you are putting various amounts on each step with increasing maturities and increasing rates.

Laddering your money makes sense because as each "step" matures or comes due, you can roll over that amount to the itnerest rate on the new ladder.
Laddering follows that old wise advice-- do not put all your eggs in one basket. In other words, don't tie up all your money into one CD and instead spread it out among various CDs with various interest rates, that mature at various times.

One more note about your money in CDs: It also makes sense to keep your money in several Certificates of Deposit instead of one larger CD just in case you need to get at your money. It is better to "break" one smaller CD than to break a larger CD and suffer the penalty of breaking the larger CD. Also, when you have multiple CDs at one bank, you might find there is an interest rate bonus for the additional CDs.

Dollar Cost Averaging and its pitfalls

There are lots of theories, which have become plans, for how to invest your money into the stock markets. One of the most popular is the plan of "dollar cost averaging."

Dollar Cost Averaging tells you to keep buying shares over time, and over time the average price of your shares will be lower than the selling price in the future. Yes, this works very well if your stock price is higher in the future than the average of all your purchase prices. For example, you buy ten shares a month at $10 each for the first year, and then the second year you buy another ten shares a month at $11 a share. And then in the third year you sell all of your stock for $12 a share. This is the ideal situation for "dollar cost averaging" -- when prices rise over time.

But what do you do when stock prices are not moving up consistently, or they are stalled or are even moving lower? Then, do you still want to risk "dollar cost averaging?"

This is when another theory or plan comes into focus, and this one also has slogan you can follow: do not throw good money after bad. This is not too difficult to undertand or to follow. If you have a winning stock, you can keep buying shares of that stock as it rises, and hopefully down the road the selling price will be higher than the average of your buying prices. This is dollar cost averaging at work, again.

But what if the stock you are buying is going down in value each time you go to buy more shares? Then you are "dollar cost averaging," but you are "dollar cost averaging down" instead of dollar cost averaging up.

The problem with dollar cost averaging down is that no one knows when a stock price has hit bottom. You could be buying shares as they go from twenty dollars to fifteen dollars to ten dollars and never know when the stock has reached bottom.

Dollar cost averaging up is an easier and simpler strategy. Only buy more shares in a rising stock.

Buying more shares of a stock that is tumbling in price could simply be throwing good money after bad-- putting more money into an investment that is losing.

If you are going to dollar cost average, do it in a stock that is going up in price--not in a stock that is falling. That doesn't mean you have to sell the shares you already own, but it does mean you should hold off on buying additional shares until the tide has turned, and the stock price is moving up again.

The same holds true for mutual funds-- buy them as they rise in price, not when they are falling.

Yes, use dollar cost averaging, but dollar cost average into a rising stock market, and not into a falling market. That's how I see it.

Here on our new media website "Moneyman" Alan Mendelson who is the original Best Deals TV show reporter and consumer advocate shows you the best deals on TV, and the best buys, bargains and where savvy shoppers go to save, and how to get the most for "your money" with the best of Los Angeles, Orange County, Ventura County, Riverside County and San Bernardino County. Our Best Buys TV Show is the only regularly scheduled weekly best deals TV show in Southern California. We show you the best deals on TV and more deals on www.alanbestbuys.com and www.vegasbestbuys.com and www.moredeals.com the original buy and sell, show and tell, video website.