Begin Tag:
This Invest Wisely minute is brought to you by the Lewiston City Library.
End Tag:
Invest Wisely is brought to you by the Lewiston City Library, SmartInvesting at Your Library program and the Iowa State University Extension. Find a full discussion about this and other resources on our website at CityOfLewiston Dot Org backslash library.
Invest Wisely Project
1 minute PSA for week of June 4
Your first step toward wise investing is to figure out what your investment goals are. Some folks spend more time planning a summer vacation than they do their investments. So take some time now to think about both short- and long-term investment goals.
Will you need a different car in two or three years? This is a short-term goal.
And does putting more money away for retirement sound good to you? This is a long-term investment goal.
Be as specific as you can… how much money by what date for what goal. And put it in writing.
Being realistic is important too. Look at your current resources. What can you reasonably invest in a given week or month?
##
Invest Wisely Project
1 minute PSA for week of June 11
When you’re setting your investment goals, make sure they are SMART goals – S for specific, M for measurable, A for attainable, R for reviewed, and T for time-related.
A specific investment goal is one with dollar amounts and dates established for an identified purpose.
Measurable means you will invest an amount of money weekly or monthly.
Be realistic and set attainable goals given your financial situation.
Review your goals regularly, for example annually, to see if you are on target or whether revisions need to be made.
And have a timeline for achieving your investment goals.
By establishing specific investment goals you have a road map for achieving financial success.
##
Invest Wisely Project
1 minute PSA for week of June 18
Many people think saving and investing are the same thing. However, they are separate, but equally important, financial tasks.
Savings provide money for emergencies and short-term goals. These back-up funds are there to cover unexpected life events. You want this money to be easily available and guaranteed to be there when you need it.
In contrast, investing is for those long-term financial goals you would like to accomplish. Investments offer the opportunity for higher returns, but you also have more risk. A lot of thought needs to go into an investment plan to reduce and control these risks.
##
Invest Wisely Project
1 minute PSA for week of June 25
Investing means you are increasing your net worth to achieve your long-term financial goals.
Investing offers the opportunity for a greater return that can have a big impact over time. Suppose you put $5,000 in a savings account earning an average annual return of 4 percent. In 20 years it will grow to approximately $11,000. But if you had invested the $5,000 and earned 10 percent you would have three times more money in the same amount of time.
Along with the potential for a higher return comes the trade-off of risk and the potential loss of principal. You can control risk by making wise investment decisions and selecting a variety of investments.
##
Invest Wisely Project
1 minute PSA #5 for week of July 2
Whether you are investing for short or long term goals, it is important to take advantage of compounding. This means you are earning interest on interest.
Consider this example – If you have the choice of taking a million dollars today or taking a penny that doubles in value every day for a month, you’ll have more money if you take the penny.
The key to making compounding work for you is to start saving and accumulating wealth today. As the doubling penny example shows… even small amounts can grow significantly over time.
By taking advantage of the power of compounding, you can better reach your long term goals.
##
Invest Wisely Project
1 minute PSA #6 – for week of July 9
Whether you are investing for short or long term goals, it is important to take advantage of compounding. This means you are earning interest on interest.
You can figure out how long it will take for your investment to double. It’s the rule of 72. Divide 72 by the annual rate of return. This will be approximately how many years it will take your investment to double.
For example, $5,000 invested at 10 percent will double in 7.2 years.
Take advantage of the power of compounding to reach your long term goals.
##
Invest Wisely Project
1 minute PSA #7 for week of July 16
All investments involve risk. It’s important for you to balance the rate of return you hope to receive with your comfort level with risk. The higher the rate of return, the higher the risk.
If you need the comfort of a lower level of risk… then you’ll need to start investing earlier to achieve your financial goals… or you’ll need to invest more per month.
Here’s an example.. $100 invested monthly at 10 percent will earn seventy six thousand, six hundred dollars in 20 years. To earn this same amount at six percent interest, you’ll need to invest $160 a month instead of only $100.
##
Invest Wisely Project
1 minute PSA #8 for week of July 23
Sometimes investors can get fooled by offers that seem too good to be true.
Keep In mind: The higher the reward, the higher the risk. In today’s market, there is no such thing as a guaranteed 10 or 15 percent return.
Con artists prey on people who rely on safe and predictable income. Watch out for frauds that involve safe or guaranteed returns from things like promissory notes. Investors are attracted to this type of investment because it has an aura of safety with a higher-than-market rate of return.
Just remember, if it sounds too good to be true, it probably is.
##
Invest Wisely Project
1 minute PSA #9 for week of July 30
All investments involve risk, but some investments are riskier than others.
The chief risk with safer cash investments such as CDs or Treasury bills is that they may not stay ahead of inflation. The riskier investments, such as stocks, may beat inflation in the long run, but you’ll have to think about market ups and downs.
To choose your personal level of risk, think about your goals, age, income, resources and current and future financial obligations. If you are a younger single person, you can afford to take more risk than if you are a couple approaching retirement.
##
Invest Wisely Project
1 minute PSA #10 for week of August 6
All investments involve risk. A pyramid is a good way to visualize how risk fits into your portfolio. The broad, financially secure base should be built on a home, emergency fund, and adequate insurance. On the next level you can include some mutual funds or individual stocks and bonds.
Investment real estate would be on the next level. And at the top are high risk investments that few people should try -- small company stocks or commodity futures contracts.
When your investment decisions take into account all types of risk, you can feel more comfortable that your portfolio will match your financial needs and your comfort level with risk.
##
Invest Wisely Project
1 minute PSA #11 for week of August 13
Diversification is key to wise investing. To adequately diversify, you need enough money to make a variety of choices. Mutual funds are a way for even the small investor to diversify.
A mutual fund pools dollars from many investors into a portfolio designed for a specific objective, for example, growth. But be careful. If you buy into two mutual funds but they each invest only in new, small companies, you are not diversified.
Put your eggs in several baskets -- all investors should diversify -- whatever their goals.
##
Invest Wisely Project
1 minute PSA #12 for week of August 20
Diversification is a cornerstone of wise investing. The goal is to spread your money among various investments so that if one loses money, the others will more than make up for those losses.
Remember to diversify both among different categories of investments, like stocks, bonds, or CDs…. and within categories…for example stock in small, medium, and large companies or companies in different sectors of the economy.
Time diversification is important too. Invest over different market cycles. To cut down on risk, invest gradually over time, rather than all at once.
##
Invest Wisely Project
1 minute PSA #13 for week of August 27
When you’re investing for retirement and deciding how much of your portfolio to put in stocks or mutual funds that invest in stocks – consider one suggested strategy.. subtracting your age from 100.
For example, if you are 55, you might have 45 percent in stocks, and 55 percent in bonds and cash.
Books, online resources and financial professionals can help you determine your mix of assets, but ultimately, it’s your decision. There is no one asset allocation strategy for everyone or for every investment goal.
You’ll want to pick a mix of assets that can meet your financial goals at a level of risk you are comfortable with.
##
Radio Transcript, 60 seconds, for use during week of September 3.
Remember to monitor your investment portfolio and rebalance it when necessary. Some of your investments will grow faster than others. For example, if you want 40 percent of your portfolio to be in stocks or mutual funds that invest in stocks, but your stocks are now 55 percent of your portfolio, you will want to make some changes.
You could sell some stock and buy investments in other categories. Or you might leave your stocks as they are but use additional money to buy bonds or certificates of deposit.
Keep your original allocation strategy in mind so you maintain a portfolio you are comfortable with.
Radio Transcript, 60 seconds, for use during week of September 10.
Here’s a way to eliminate the guesswork of deciding when to invest -- use dollar cost averaging. This provides you with some protection from fluctuating markets. Using this approach, you consistently invest small amounts over a long period of time, for example $100 a month for 5 to 10 years.
No load mutual funds that don’t charge sales fees can be a good choice for dollar cost averaging. This way you avoid the commissions involved in routinely purchasing individual stocks.
The key to dollar cost averaging is consistent investing, no matter what the market is doing.
Radio Transcript, 60 seconds, for use during week of September 17.
You may have heard about dollar cost averaging as an investment strategy. This is where you consistently invest small amounts over a long period of time, for example $100 a month for 5 to 10 years.
If you are investing a regular amount in a 401(k) or other employer retirement plan via payroll deduction, you are already using dollar cost averaging.
However, you still need to monitor your investments. Regularly, for example once a year, re-examine your portfolio to see if you still have wise investments.
Radio Transcript, 60 seconds, for use during week of September 24.
A basic understanding of stocks can help you increase your investment successes. There are several ways to categorize them – income stocks, growth stocks; or value, cyclical, or speculative stocks – to name a few.
But few investors can afford to buy individual stocks and be adequately diversified. Instead, consider mutual funds that pool money from many investors to purchase a basket of stocks. Mutual funds also could be a smart move if you don’t have the skill or time to select and monitor individual stocks.
Radio Transcript, 60 seconds, for use during week of October 1.
If you are investing for a financial goal many years in the future, you may want to consider a company that has a dividend reinvestment plan, also known as a DRIP. This means you receive no cash dividend income, because you will be reinvesting those dividends to purchase additional shares of stock. And you can buy more shares with extra cash you want to invest.
Drips are an easy and less expensive way to purchase additional shares of stock, because you aren’t paying any brokerage fees.
But remember, this will only work for you if you really don’t need the dividend incomein the near future.
Radio Transcript, 60 seconds, for use during week of October 8.
When you include stocks in your investment portfolio, it pays to do your homework. To find out about a stock’s basic value, check out its financial statements. These are free and contain a wealth of information.
Use these financial statements to calculate financial ratios, such as price-to-earnings, dividend yield, and return on equity. Or look these up on the Internet.
It’s all in the numbers. These ratios can tell you a lot about a company’s financial health and if buying its stock will fit your investment needs.
Radio Transcript, 60 seconds, for use during week of October 15.
As you consider your stock investments, don’t look just at one moment in time to determine a company’s health. Be sure to look at benchmarks to decide if its financial situation matches your investment needs.
One benchmark is to compare the financial ratios for the same company from past years. It also is helpful to compare a company’s ratios to those of other companies in the same industry.
These ratios can be calculated using a company’s financial statements. These statements are available free from either the company or the Securities and Exchange Commission Web site.