Category Archives: Investing Advice

Best Investments for Young People 2014

Most of us including myself are guilty of not investing at a proper time and then ruing the fact that you have missed the bus. Hopefully most of you reading this are young enough i.e. younger than me to invest in some sensible instruments and make huge amounts of money when you retire.

When I was young and started earning at the 24 ( now 35) all I could think of doing with the money was spend on new tech gizmos and games. I am a huge tech freak and at that time gaming was something that I was so addicted to.

So to give you an idea as to how much I have lost by not investing initially I have done some comparisons.

I am using a simple calculator to do my math. This is available to everyone to use and see for yourself as to what you can do with your money in the long term.

I am using the compound interest calculator to calculate what will the money at the end of 41 years when I am ready to retire at 65. Here is the calculator on Monychimp.com that you can use.

I am assuming that I will get a return of 8% using simple index funds and ETF’s.

If I start investing $1200 annually for 41 years then my retirement corpus would be – $ 363,892.23

So here is the calculation in detail:

Total money invested is $1200 x 41 = $49200

Money at the end of the 41 years = $363, 892.23

Unfortunately I started investing only a year ago i.e at the age of 34 which means I have only 34 years to see my money grow.

So the total invested is $1200 x 31 = $37,200

Money at the end of 31 years = $159,856.24

This is less than half the money that I will be making had I invested at age 24. Sad but true that it happens to many of us. Also the fact is that we tend to lose a hell lot of focus and patience even when we start early.

Also, the assumption is that you will not increase the investments each year. If you were to increase the investments each year, I am sure the corpus would be even bigger.

Yes you would argue what investment will give 8% returns and the answer lies in the index. The S&P 500 has given a return of 10% on an average on a longer term basis.

Read on as I am going to suggest some investment vehicles which I know for a fact will do great 40 years from now also. Ignore them at your own peril.

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Investment number one is – SPY – SPY is symbol for State Street S&P 500 ETF. This is one of the best ETF’s out there with an expense ratio is .06%. That is very low as others charge about 1, 1.5 and in some cases 2 %. In a longer term that can mean a lot of money. This is the best ETF and essentially investing in this one means that you are invested in all the 500 stocks without the issues with investing in all the stocks. Also you need that much money to invest in each of these stocks. There are other S&P 500 ETF’s that you can buy. Vanguard has one which is by the symbol VOO.

Investment number two is – Open an IRA

Now IRA is a good way to accumulate wealth till retirement with fewer amounts of taxes paid on the investments. You should max out your IRA’s every year. Even though you are using your 401(K), I would suggest that you should open up a Roth IRA.

Investment number three is – Real Estate

This is risky however worth the risk. Invest in a property that will give you rental income. Do not buy a property for staying. Start looking out for a small property that will give you a rental income. It will generate you good returns if you start investing that rental income.

The challenge that you will face is getting a mortgage, so make you sure that you have a good credit score.

Investment number four is – Emergency savings in an online high interest savings account. This is a must and most young adults will never do that. I have done the mistake. This is your savior my friend. It will help in bad times. I was fired at my last job and this helped me tide over three bad months of no earnings. The question is that how much should be your nest egg. I have about eight months worth of salary as my emergency fund. Yes, it took a lot of effort and time to build this emergency fund. However the fact is that it now gives me a peace of mind that I have that much amount easily available for any emergency.

And do not keep this money idle invest this in a online savings account and that will make some money for you.

Investment number Five is – Dividend Investing

There are some good stocks out there which can definitely help you make good money on dividends. There is an investment strategy called DRIP investing that will help you do that. S&P publishes a list of Dividend aristocrats in which you can invest. These aristocrats are companies who have a history of paying dividends and have good governance.

Invest direct in the dividend plans of these companies and you can build a good retirement income just by way of dividends.

If you wish to know more about the Dividend Investing then this book here is a good read. For $2.99 it is totally worth it.

P2P lending  – This is one thing that I have not tried however have heard really good things about it. You can make good money from it however not sure what are the risks involved here. Try it for yourself and get on with it.

Before I end I think the main thing for the young adults would be to have patience abd perseverance. Do not lose focus if the stock market is down one year. You are in it for long term, so expect some bumps on the road to wealth.

How and Where to Buy Gold in 2013

Yellow metal as it is called has still not lost its sheen as an investment vehicle given the huge upside demand that is coming from India. In fact the sole reason why gold prices are now higher is because of the rise in the demand of gold. I have lived in India for couple of years and I can tell you that gold buying in India is definitely there. It is similar to the way you will buy diamond jewelry here.

In some cities there are entire five floor shops which sell gold e.g. take a look at the pics below as to see how the gold jewelry is sold in India. Out of the five floors of the jewelry shop only one sells diamond rest all of the four floors sell gold jewelry which is made typically of 22 carat gold.

So in nutshell Indians buy gold jewelry instead of buying the coins and bullion. It is the ultimate investments and also it keeps the women in the household happy 😉

jewelry shop

So if you are thinking of investing in gold then go for it and we have variety of ways to invest in gold.

Buy physical gold

This is a simple enough option where you can buy gold in the form of gold coins or gold bars. There are a large number of firms that sell gold coins and bars. There are a lot of online firms that sell coins and bars. Some of the known ones are Monex.com and Apmex.com. Another good one is kitco.com

Now you will have to see for yourself whether you want a gold coin or a gold bullion bar.

gold coin australia

Typically the challenge will be storage for these coins and bars. Also, you will have to think about how you will sell these gold items.

Buy Gold ETF

Gold ETF will provide you the benefits of gold without the attendant issues that go with holding the physical gold. For buying gold ETF you will need to open an account with any of the online brokers which are available for stock trading. Some of the examples are etrade.com, Fidelity, Zecco etc.

Once you have opened the acoount, and funded the account then all you need to is place a buy order for the gold ETF. These gold ETF either track the price of physical gold or they track the price of the gold mining companies. I would suggest that if you want pure benefit from the, movement of the gold price then go for either of these two below.

SPDR Gold Trust (GLD)

iShares Gold Trust (IAU)

The ETF’s which track the gold stocks price are

Market Vectors gold mining ETFs, GDX and GDXJ.

Buy gold stocks

Now if you want to invest in gold then there is a proxy way to do that. As I mentioned earlier that there is huge demand of gold fromIndia, which definitely means good times for companies that mine the gold from the gold mines. The benefit that these companies have is that if the price of gold rises, these companies make a good amount of profit. The simple reason being that the cost of production of gold remains more or less fixed. So, any increase in price of gold means that the gold mining companies will make more money for selling gold.

Here are the gold stocks that you can look at buying

Barrick Gold Corporation (ABX)

Yamana Gold, Inc. (AUY)

Newmont Mining (NEM)

Eldorado Gold(EGO)

AnglogoldAshanti(AU)

Kinross Gold(KGC)

Buy gold futures

If you are just a beginner in investing in general and have no idea as to how to play in options and futures then I would advise that it is best to stay away from the gold futures. It is risky for a novice and you could end losing all your money. I would suggest that you stick to the easy ways of buying gold which is either physical gold or the gold ETF’s.

How to check the gold price

Now before you buy gold it is better to check the gold price and the best way to check the spot price of gold is to check the price online of per ounce of gold. Goldprice.org is the best resource available to do that. It tells you what the spot price is and also give you a lot of charts that can help you make a better decision.

It has performance charts for  1 week, 1 month, 6 months, I year and 5 years. A very good resource and those charts really tell you the whole story of the growth of gold prices in the last 5 years. So happy investing in gold.

My Views on is it good to buy gold coins for investment in 2013

Gold – An Investment Bedrock

With the price of gold reaching incredible highs since the beginning of 2012 and holding steady, I, like many people, have been considering a return to purchasing gold as an investment to strengthen my portfolio. It is suggested that 5% of portfolio assets should be in precious metals. Since gold is noted for being an investment bedrock, I decided to research an explore my options in purchasing gold, more specifically, gold coins. I wanted to find out if gold coins were a good investment, and if so, why invest in them? If I do invest, which gold coins are the best to purchase? Below is a little gold dust I discovered during my ‘investment gold’ prospecting.

Is it good to buy gold coins for investment? Yes, it is. It also depends on what your goals are when investing in gold. If it is to hedge financial uncertainty, or to capitalize on a price point or movement, than contemporary bullion coins can serve these purposes well. However, if anyone is concerned with capital controls, call-ins, or gold seizures, than gold coins should be included in their financial planning. Gold, wether in bullion coins or gold coins should be thought of as an investment protector. Bullion coins and gold coins trade at acceptable premiums over the gold melt value. Just track gold prices currently on the market, an easily liquidate.

Why is it good to invest in gold? Gold is wealth insurance. Gold is the one asset that is the bedrock of your investment wealth. Gold is a primary asset that is not subject to someone else’s liability. Gold is separated from other capital assets which rely on another’s ability to pay like, bank savings or bonds, performance of money managers, or stocks. When the dollar is down, the stock market shifts or worse if it crashes, gold is the only solid consistent investment that insures wealth.

Which gold coins are the best to purchase? One of the best gold coins that you can buy is the United States Gold Eagle. It is recognized as the best gold bullion investment, because it is backed by the United States government for purity and gold content. It’s actual gold weight in troy ounces is guaranteed by the United States government.

I also discovered purchasing gold coins that were minted in 1933, or earlier are an excellent choice. Pre-1933 gold coins, with respectable levels of gold content, circulated throughout the United States economy easily until President Roosevelt recalled the coins. However, people didn’t return the coins making them available for us today. They give a great little return on investment due to their troy ounce gold content. At face value they may appear to be worth minimal money, but their intrinsic value of troy ounce gold is worth plenty. 

Gold bullion bars are what corporations and people looking to make larger gold investments purchase. Gold bullion bars are sold by a common troy ounce. Sizes and shape of bars can vary. Bullion bars are sold by one troy ounce, 10 ounces, 100 ounces, or in larger beautiful golden bars.

Like any other investment, gold is subject to prices going up and down in the market, but in the end it is still a solid investment. It will always tangibly be there and hold value on some level, over having nothing at all. So, go ahead and put a little gold in the bedrock of your financial foundation.