Have you ever watched an infomercial or seen an item in a department store and thought “I could have thought of that!” Have you wished you had invested money early in a blockbuster invention? Learn the stories behind some (seemingly) ridiculous ideas that have made inventors and investors very wealthy, and find out what you, as a potential investor, should look for and consider before putting up capital for a potential funding opportunity.
The Koosh Ball
You’ve may have never heard of Scott Stillinger but somewhere in your home or office you probably have one of his inventions – the Koosh ball, which made millions of dollars. Stillinger came up with the idea for the Koosh ball when he tied rubber bands together to create a smaller, easier-to-catch ball for his young children in 1987. He founded OddzOn Products Inc. to distribute the small, simple toy, and within just 12 months it was flying off of store shelves as that year’s hottest Christmas gift.
The company expanded, and in 1994 Stillinger sold OddzOn to toy manufacturer Russ Berrie and Company Inc., which in turn was bought by toy behemoth Hasbro in 1997 for more $100 million. And it all happened a mere 10 years after the first ball was created.
Santa Mail
Every year, millions of children around the globe pen letters to Santa and hope for a response. Byron Reese realized the potential in this market. In 2002, he launched “Santa Mail,” a service that allows kids to send letters to the North Pole. Parents enclose a small fee of just $9.95, and little Johnny or Jane receives a personalized letter back from the “big man” himself. By 2009, Santa Mail had responded to nearly 300,000 children. At close to $10 a letter, well, you can do the math - needless to say, it was a little idea that has earned Reese a big return
The Rest of The Ideas When You Read More…
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Being that 90+% of all wealthy individuals invest in the stock market, I think that its very important for those who aspire to be wealthy grasp a basic understanding of stocks and reading a stock table/quote.
The Basic Stocks are Common Stocks and Preferred Stocks:
What Does Common Stock Mean?
A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are on the bottom of the priority ladder for ownership structure. In the event of liquidation (the selling of the company), common shareholders have rights to a company’s assets only after bondholders, preferred shareholders and other debt-holders have been paid in full.
Explaining Common Stock:
If the company goes bankrupt, the common stockholders will not receive their money until the creditors (those who the company owe) and preferred shareholders have received their respective share of the leftover assets. This makes common stock riskier than debt or preferred shares. The upside to common shares is that they usually outperform bonds and preferred shares in the long run.
What Does Preferred Stock Mean?
A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights.
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Now that we have covered the different types of stocks, we will now define a few key stock related terms provided by Investopedia that will help you get a better overall understanding of stocks, trading on the stock market and reading stock tables/quotes, check it out:
First up is Ticker Tape, unless you’ve been living in a cave for the last 30yrs I know you have seen a ticker tape before; you might not have understood what you were looking at as it was flashing across the screen, but I know you have came across one before.
Ticker Tape:
What Does Ticker Tape Mean?
A ticker tape is computerized device that relays financial information to investors around the world, including the stock symbol, the latest price and the volume on securities as they are trade.
Explaining Ticker Tape: Often times when you are watching certain news channels or channels that have financial related content, at the bottom of the screen you will see a ticker tape scrolling information on different companies stock.
Dividend:
What Does Dividend Mean?
1. A distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield.
Also referred to as “Dividend Per Share (DPS).”
2. Mandatory distributions of income and realized capital gains made to mutual fund investors.
Explaining Dividend:
Dividends may be in the form of cash, stock or property. Most secure and stable companies offer dividends to their stockholders. Their share prices might not move much, but the dividend attempts to make up for this. High-growth companies rarely offer dividends because all of their profits are reinvested to help sustain higher-than-average growth.
Dividend Yield:
What Does Dividend Yield Mean?
A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Dividend yield is calculated as follows:
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To rap up our Stepping Up Your Financial Swag: Understanding Stocks Tutorial, we will look at how to actually read a stock table/Quote, check it out:
Any financial paper has stock quotes that will look something like this:
Columns 1 & 2: 52-Week High and Low – These are the highest and lowest prices at which a stock has traded over the previous 52 weeks (one year). This typically does not include the previous day’s trading.
Column 3: Company Name & Type of Stock – This column lists the name of the company. If there are no special symbols or letters following the name, it is common stock. Different symbols imply different classes of shares. For example, “pf” means the shares are preferred stock.
Column 4: Ticker Symbol - This is the unique alphabetic name which identifies the stock. If you watch financial TV, you have seen the ticker tape move across the screen, quoting the latest prices alongside this symbol. If you are looking for stock quotes online, you always search for a company by the ticker symbol. If you don’t know what a particular company’s ticker is you can search for it at: http://finance.yahoo.com/l.
Column 5: Dividend Per Share – This indicates the annual dividend payment per share. If this space is blank, the company does not currently pay out dividends.
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This is for all of my working class people who have the 401(k) as a piece of their investment portfolio. The info was contributed by Investopedia, check it out:
Legislation in 2009 made it easier for employers with 401(k) plans to begin automatically enrolling their employees in the plans, thus dramatically raising the level of participation in said plans, nationwide. But while the level of participation may have increased, the level of service and advice available for many employees often remains woefully inadequate.
Many employers take little or no initiative to make their workers understand what they are investing in, or the long-term benefits of participation in the plan. Indeed, many office managers and human resources personnel who handle 401(k) plan administration have virtually no formal training of any kind in retirement planning. This article explores the common shortcomings of employer plan administration and how they can be remedied.
In-House Personnel
Although most business owners and human resources personnel are experienced in dealing with such matters as conflict resolution, hiring, disciplinary and termination policies, as well as payroll and record keeping, few of them have had thorough (or even adequate) training in employee retirement planning. This shortcoming can perhaps be the most damaging during the plan selection process, when critical issues such as costs and fees, investment choices and risk tolerance must be considered.
Although virtually all 401(k) providers will send a representative to make a formal presentation to the company explaining the plan, there is often little or no ongoing support for employees beyond a website or toll-free number that they can call with questions after the plan has been implemented. This tends to be truer of smaller employers with fewer resources from which to draw, such as those with 50 employees or less. In some cases, a small business has no human resources department of any kind, and the owner or office manager is the only one who can answer questions about the plan for employees. Unfortunately, this person usually has no idea about the paperwork that must be filed, no concept of ERISA regulations and requirements and no training of any kind in plan administration.
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Damn only if I would have known…
As the old saying goes, “hindsight is 20/20.” So, although there was no sure-fire way of knowing what would have had the highest yields in 2009, let’s take a look at the investments that would have given your pockets some padding.
Stocks: From coffee makers to commercial vehicle manufacturers, the stock market provided investors with some of the largest returns of the year.
* Diedrich Coffee –YTD Return: 9,700%
Who would have thought a coffee company could deliver such astronomical returns? Since going public in 1996, shares of Diedrich Coffee has spent most of their time trading under $5 per share. Shares reached an all-time low of 21 cents per share in March of this year before skyrocketing to over $35.
* Yongye International–YTD Return: 399%
Yongye International manufactures nutrient compounds for plant and animal feed used in China’s agricultural industry. Shares on Yongye began the year trading under $2 each and reached a high of $12 in October. Although off their high, shares began December around $8 each.
* Auto China Limited–YTD Return: 300%
This four year old automobile firm saw the bulk of its gains arrive over the course of one week in October. From September to October, the price of shares more than tripled. Shares have since reverted, but the year-to-date return still sits above 300%.
Funds
Fund investing can be used to reduce risk, which often comes with reduced returns. These funds held on to the returns, and then some.
* ProFunds UltraLatin America–YTD Return:244%
This young Latin American fund recently celebrated its second anniversary. The past year has been extremely kind to UBPIX shareholders; the fund returned over 200 percent. Nine of the fund’s top 10 holdings hail from Brazil. The largest investments are in Petroleo Brasileiro and Vale (ADR). (Learn more in Go International With Foreign Index Funds.)
* Direxion Monthly Latin America Bull 2X–YTD Return:190%
Our second Latin American fund keeps its assets allocated around an 80/20 mix of stocks and cash. DXZLX is over three years old, and while the fund’s initial investors remain in the red, anyone who invested in late 2008 or early 2009 is enjoying a hefty return on their investment.
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It is awfully nice of lenders to be offering free loans. At least, that’s what it sounds like they’re doing. Think of all of the radio and television ads you have heard where the lender claims to be offering loans with no out-of-pocket costs. Have you ever wondered how they can do this? If they are not charging you, the money has to come from somewhere. It helps to clear things up when you understand how a loan officer makes their money.
Pay Now or Pay Later
Loan officers get paid in a way that they call “on the front” and/or “on the back.” If a loan officer makes money on the front, that means they are charging for things that you can see. This money is either out-of-pocket or is incorporated into the loan when you sign the papers. These are things like processing fees and other miscellaneous charges that are charged for processing your loan. If a loan officer makes money on the back, that means money is being received from the bank as a sort of commission for filing the loan. This is the money you do not see.
When lenders claim to be giving you a “no out-of-pocket” or “no-fee” loan, they are still making money, but they are charging it on “the back.” Although the bank is paying the loan officer this money now, it is really coming from you the borrower in the form of a higher interest rate. Lenders that are not charging fees on the front can be charging a higher rate to make up for lost fees. In fact, the bank could be making a lot more money this way as they are getting a higher rate of interest for possibly 30 years or more.
Comparing Loans
How do you compare loans to be sure which deal is the best for you? Read More…
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Obama’s Small Business Tax Cuts May Hurt Economic Growth:
In a speech last month at the venerable Brookings Institution, President Barack Obama laid out a series of objectives meant to stimulate economic activity. As he put it, “Our work is far from done.”
Obama’s proposed economic package includes an elimination of capital gains taxes on small-business investment as well as an extension of business equipment write-offs. Small businesses would be allowed to write off 100% of their capital equipment purchases, while large businesses could deduct 50% of those expenses in the first year.
Somewhat surprisingly, noted tax experts and supply-side thinkers Ernest Christian and Gary Robbins endorsed Obama’s tax pledge in a Wall Street Journal op-ed. They argue that the tax proposals were “the one right thing” in Obama’s address, the cuts being “a proven job-creating machine in the private sector.” Discounting that businesses are decidedly not in business to create jobs– the proposed cuts are at best geared toward a business climate that no longer exists; at worst they are merely subsidies masked as tax cuts.
First, supply-side tax policy is, at its core, all about incentives. But judging by his plan, Obama is creating incentives for businesses to remain small. As evidenced by the less favorable tax treatment proposed for large businesses, those that start small but grow into something larger will be penalized for doing so. Full Story Here
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Looking to snag shares of Facebook before it goes public? Felix Investments, a New York City investment manager, is giving rich clients a chance to do just that. The firm touts in a letter to potential investors: “Opportunities like this do not come along every day and we have not seen an opportunity like this since Google in 2004!”
Maybe for good reason. Felix is among a handful of firms vying to get an early jump on Facebook’s initial public offering (though the company says it has no plans of doing one). These firms have been pooling clients’ money to buy blocks of employee-held shares of the social network company before any IPO.
Felix Investments wouldn’t comment, but sources say the firm is looking to pay around $25 per share of Facebook, which values the company at close to $11 billion, according to private share marketplace SharesPost. Full Story Here
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Do you have trouble keeping New Year’s resolutions that involve losing weight or reading more? Maybe it’s time to put your time instead into resolutions that will pay real dividends down the road. Invest a few hours in making some simple money moves that will bulk up your portfolio and give you a solid chance of exiting 2010 more prosperous than you enter it.
Tough as the past year has been financially, the economy has provided a good opportunity to take a fresh, objective look at your financial future, says Roger Wohlner, financial planner in Arlington Heights, Ill.
“Periods of ups and downs in the market are very common, but rarely have we seen anything as extreme as we’ve seen over the last 15 months,” he says. “This is an especially opportune time for somebody to reassess his or her portfolio, retirement strategy and whole financial plan.”
Often the smartest moves you can make are tried-and-true ones–not the sort of stuff that’s been spawned as newfangled ways to protect yourself. In Depth: 10 Smart Money Moves For 2010
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Dollar-cost averaging (DCA) is a wealth-building strategy that involves investing a fixed amount of money at regular intervals over a long period. This type of systematic investment program is familiar to many investors, as they practice it with their 401(k) and 403(b) retirement plans. When it comes to implementing investment strategies based on dollar-cost averaging, there may be no better investment vehicle than the no-load mutual fund – the structure of these mutual funds almost seems to have been designed with dollar-cost averaging in mind. Here we look at why, helping you use dollar-cost averaging when investing in mutual funds.
Review of Dollar-Cost Averaging
Dollar-cost averaging is carried out simply by investing a fixed dollar amount into your mutual fund (or other investment instrument) at pre-determined intervals. The amount of money invested at each interval remains the same over time, but the number of shares purchased varies based on the market value of the shares at the time of a purchase. When the markets are up, you buy fewer shares per dollar invested due to the higher cost per share. When the markets are down, the situation is reversed and you purchase a greater of number of shares per dollar invested. It’s a strategic way to invest because you buy more shares when the cost is low, so you get an average cost per share over time, meaning you don’t have to invest the time and effort to monitor market movements and strategically time your investments. (For more on how dollar-cost averaging works, see DCA: It Gets You In At The Bottom.)
Why Dollar-Cost Averaging Works Well With Mutual Funds
The expense ratio that mutual fund investors pay to invest in a fund is a fixed percentage of your contribution. That percentage takes the same relative bite out of a $25 investment or regular installment amount as it would out of a $250 or $2,500 lump-sum investment. Compared to stock trades, for example, where a flat commission is charged on each transaction, the value of the fixed-percentage expense ratio is startlingly clear. Consider the following:
Example A Read More…
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It’s natural that if you have some money saved or invested, you want to see it grow. There are many factors that can prevent this from happening, but for many people, one of the biggest obstacles is debt. If you have debt to deal with – be it a mortgage, line of credit, student loan or credit card – fear not, you can still learn how to balance your debt with saving and investing.
Types of Debt
Generally speaking, having debt can make it very difficult for investors to make money. In some cases, investing while in debt is like trying to bail out a sinking ship with a coffee cup. In other words, if you have a debt on your line of credit at 7% interest, the money you are investing will have to make more than 7% to make it more profitable than simply paying down the debt. There are investments that deliver such high returns, but you have to be able to find them knowing you are under the burden of debt.
It is important to briefly distinguish the different kinds of debt here:
- High-Interest Debt – This is your credit card. High interest is relative, but anything above 10% is a good candidate for this category. Carrying any kind of balance on your credit card or similar high-interest vehicle makes paying it down a priority before starting to invest.
- Low-Interest Debt – This can be a car loan, a line of credit, or a personal loan from a bank. The interest rates are usually described as prime plus or minus a certain percentage, so there is still some performance pressure from investing with this type of debt. It is, however, much less daunting to make a portfolio that returns 12% than one that has to return 25%.
- Tax-Deductible Debt – If there is such a thing as good debt, this is it. Tax-deductible debts include mortgages, student loans, business loans, investing loans and all the other loans in which interest paid is returned to you in the form of tax deductions. Because this debt is generally low interest as well, you can easily build a portfolio while paying it down.
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