Is Your Advisor Giving You The Information Needed To Succeed? - Investment Options
How soon would you want to know if your investment advisor wasn't telling you about the three major investment types? If you've only heard of two - Variable and Fixed, then you may have a problem. Unfortunately, many investment advisors routinely fail to present all three types: Variable, Fixed, and Indexed as valid investment choices to their clients. This is normally because they are unable to offer all three options or they have a personal dislike for one or more of these investment types. So what is the difference in these investment types and what do the terms mean? The simplest answer is that these terms define how interest is earned on your investment. More specifically, it tells you how your money is invested and if your money is protected from market fluctuations. Let's take a look at these various investment options.
A Variable investment is one where your money is typically invested in stocks or mutual funds. The performance of these stocks or funds varies and is not guaranteed - hence the term "variable investment." Variable investments have many key benefits. They allow you to earn interest by investing in a single company (individual stock), multiple companies, or a specific segment of the market (mutual funds). You can even invest in an entire Index like the Dow Jones or S&P 500. Also, variable investments allow for the greatest return and historically have outpaced all other investment options. Sounds pretty good, right? It is, as long as you have the tolerance to lose money as well. The volatility of variable investments is a major concern for many investors. The "upside" or growth potential is nearly unlimited, unfortunately so is the "downside" or risk of losing money. One other adverse factor that Variable investments face is the cost. Most have either fees or loads associated with the underlying investments. These fees or loads can reduce the performance by as much as 3.5%, although 1-2% is more common. These fees or loads are applied even in down years so it is definitely something to consider.
Investors needn't worry about the fact that some high yield investment programs fall apart, because it's like any business, some succeed, and some fail. It's up to the investor to do his or her research about any one program and decide if it meets all the safe investing criteria. The thing about an HYIP program is that it can be here today and gone tomorrow if people stop investing, which is where a lot of the risk comes from when you invest in this type of program. But, if you get in on the ground level and pull out when things don't seem to be going quite as well, you can still make an extraordinary amount of money in a rather small amount of time.
High yield investment programs really took off with the introduction of electronic currencies such as e-gold. The reason for this is that investors can buy their electronic funds immediately and start investing right away. Often, these e-currencies can be purchased at a great rate as well, making them doubly attractive to investors. Once an investor begins to earn, he or she can cash out any time and will be paid in e-currency, which is then traded in for a cash value. Electronic currencies really brought the HYIP world to the investment forefront because it made the programs even easier to follow and interact with.
The maximum interest earned provides "upside" potential while at the same time eliminating "downside" risk. In essence, it is like having the growth potential of a Variable investment with the "downside" protection of a Fixed investment. There is however a trade-off. An option, sometimes referred to as a call or put option, provides investment returns (interest earned) based on the growth of a specific market Index like the S&P 500 or Dow Jones. The option allows for lower initial costs, a pre-determined strategy for establishing current and future interest crediting, and ensures that money can't be lost due to market fluctuations. The option also caps (limits) upside potential or growth.
Here's the best investment strategy in 2014 and beyond for beginners who want to start investing money for retirement and keep it simple. In a 401k and/or Roth IRA account invest (monthly or each payday) equal amounts into a stock fund, bond fund, and money market fund. If your 401k has a stable account option use this instead of the money market fund if it pays more interest. Mutual funds are always one of the best investment ideas for most investors - if you invest money in low-cost no-load funds. (Your 401k plan should have no loads, sales charges). When investing money for retirement in 2014 and 2015 keep three factors in mind. Two of these always apply: keep costs low and invest money across the board in all three fund types listed above. Your third factor is to give money market funds equal weight in 2014 and beyond for added safety. Normally, you would give them less weighting.
A Variable investment is one where your money is typically invested in stocks or mutual funds. The performance of these stocks or funds varies and is not guaranteed - hence the term "variable investment." Variable investments have many key benefits. They allow you to earn interest by investing in a single company (individual stock), multiple companies, or a specific segment of the market (mutual funds). You can even invest in an entire Index like the Dow Jones or S&P 500. Also, variable investments allow for the greatest return and historically have outpaced all other investment options. Sounds pretty good, right? It is, as long as you have the tolerance to lose money as well. The volatility of variable investments is a major concern for many investors. The "upside" or growth potential is nearly unlimited, unfortunately so is the "downside" or risk of losing money. One other adverse factor that Variable investments face is the cost. Most have either fees or loads associated with the underlying investments. These fees or loads can reduce the performance by as much as 3.5%, although 1-2% is more common. These fees or loads are applied even in down years so it is definitely something to consider.
Investors needn't worry about the fact that some high yield investment programs fall apart, because it's like any business, some succeed, and some fail. It's up to the investor to do his or her research about any one program and decide if it meets all the safe investing criteria. The thing about an HYIP program is that it can be here today and gone tomorrow if people stop investing, which is where a lot of the risk comes from when you invest in this type of program. But, if you get in on the ground level and pull out when things don't seem to be going quite as well, you can still make an extraordinary amount of money in a rather small amount of time.
High yield investment programs really took off with the introduction of electronic currencies such as e-gold. The reason for this is that investors can buy their electronic funds immediately and start investing right away. Often, these e-currencies can be purchased at a great rate as well, making them doubly attractive to investors. Once an investor begins to earn, he or she can cash out any time and will be paid in e-currency, which is then traded in for a cash value. Electronic currencies really brought the HYIP world to the investment forefront because it made the programs even easier to follow and interact with.
The maximum interest earned provides "upside" potential while at the same time eliminating "downside" risk. In essence, it is like having the growth potential of a Variable investment with the "downside" protection of a Fixed investment. There is however a trade-off. An option, sometimes referred to as a call or put option, provides investment returns (interest earned) based on the growth of a specific market Index like the S&P 500 or Dow Jones. The option allows for lower initial costs, a pre-determined strategy for establishing current and future interest crediting, and ensures that money can't be lost due to market fluctuations. The option also caps (limits) upside potential or growth.
Here's the best investment strategy in 2014 and beyond for beginners who want to start investing money for retirement and keep it simple. In a 401k and/or Roth IRA account invest (monthly or each payday) equal amounts into a stock fund, bond fund, and money market fund. If your 401k has a stable account option use this instead of the money market fund if it pays more interest. Mutual funds are always one of the best investment ideas for most investors - if you invest money in low-cost no-load funds. (Your 401k plan should have no loads, sales charges). When investing money for retirement in 2014 and 2015 keep three factors in mind. Two of these always apply: keep costs low and invest money across the board in all three fund types listed above. Your third factor is to give money market funds equal weight in 2014 and beyond for added safety. Normally, you would give them less weighting.
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Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Trading Strategies You have full permission to reprint this article provided this box is kept unchanged.
posted by Vittoria @ December 22, 2013
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