Novel Investor

Compounding investing wisdom...

Using Everyday Purchases To Find Stock Investments

by Jon

Investing Based On Product UseThere are many reasons people choose to avoid stock investments.  With so many stocks to choose from finding the right ones to invest in can be overwhelming.  Even knowing where to begin can be difficult.  But it shouldn’t be.  Finding potential stock investments abound everywhere and can come from the most unconventional sources including your own mutual funds.

Who really wants to spend hours on end pouring over pages upon pages of financial statements and stock screeners.  It’s not even my idea of a good time.  So, instead of thinking big we need to minimize the entire process, cut out the fat, and get to the good stuff.

Invest In What You Know

I’m a big believer in the Peter Lynch philosophy of investing in what you know.  So what better place to start then by looking through your monthly budget, bills, shopping bags, grocery lists, favorite products and favorite stores.  You could even expand it to include things at work.  The one thing you’re an expert at is the products and services you use every day. Continue Reading…

Is It a Jobs or Regulation Problem?

by Jon

Jobs or RegulationThe jobs number came in last week way below expectations.  With a big drop in the government sector.  Mostly at the state and local level.  Mark it down as a continued side effect when the budget and debt become political fodder.  But trying to jump start a faltering economy with government layoffs is a bit backwards.

All this puts jobs and unemployment as the political talking point.  With everyone putting out a grand scheme to “fix the problem.”  So what are the chances that Washington will be able to push any type of job growth legislation through?  Will it actually be beneficial for long term job growth or just enough to tide us over till elections?  And lastly, is it really necessary? Continue Reading…

2011 Summer Tax Tips

by Jon

Back to School Tax TipsI’m a big believer in the idea that as tax payers, it is our civic duty to pay the lowest taxes possible.  I’m not suggesting tax evasion, jail time shouldn’t be a possible side effect here.  But if the tax system offers a possibility to lower your taxes, take advantage of it.

If you disagree, you’re more than welcome to donate as much as you like.  I use Turbotax to keep mine as low as possible.  That’s because the over complexity of the current tax system it’s nearly impossible to keep up with all the yearly changes.

So with that in mind, here are two potential tax savings opportunities to keep in mind come tax time.  The first, if you’ve had to move due to work, you may be able to deduct some of those moving expenses.  The second, with the annual back-to-school exodus, there are several credits and deductions available that may help offset those yearly costs. Continue Reading…

Mutual Funds: Another Resource For Finding Great Stocks

by Jon

There are many ways you can go about finding great quality stocks.  You could use newsletters, newspapers, business channels, or screen for stocks.  Some of those can become a bit overwhelming, which is why research sites come in handy so often.  You go through their recommendations, read the how’s and why’s, and decide if you want to invest or not.

The goal, here, is to find unconventional sources that offer a glimpse of stocks that could make you money.  One of those options is to use mutual funds to find great stock recommendations.

Most mutual funds are actively managed.  Each is set up to specifically fit into a unique category (i.e. Dividend Income, Small-Cap Equity, Equity Income) or sector (i.e. Energy, Health Care, REIT).  The fund managers and staff behind them are paid to research and invest in the best stocks that fit those categories.  Finally, a mutual fund is required to report it’s holdings and finding that information is as easy as heading to the fund company website.

The “Top 10 Holdings”

A good place to start is at a mutual fund company’s website, which should contain all the information you need and more.  You can go through each mutual fund individually to find stock ideas or head directly to a specific fund if you already know the type of stock you’d like.

Read through the description of the fund, to make sure it fits your investment strategy and then head to the “Top Ten Holdings” section which can be found in the summary.  This is exactly what it sounds like, the ten largest holdings in that fund.  But it should also have a “% of total assets” and “as of date” listed as well.  Both are very important. Continue Reading…

Breaking News! Market Trends Higher Long Term

by Jon

After decades of study, our research shows that the stock market actually does go up from time to time.  In fact it has been happening since at least the 1930s, possibly earlier.  We have yet to find an infinitely downward moving market, but we’re still looking.

 

Don’t Minimize The Long Term

Watching the news, there’s a tendency to lose sight of the big picture on your investments.  For most of us, our investing strategy doesn’t have a time span of minutes, hours, days, or even weeks.  It’s usually a much longer time horizon of years or decades for some.  Which is easily overlooked when the market drops 500 or 1000 points in a day or two. Continue Reading…

Investing After The Debt Debacle

by Jon

Anytime government issues overwhelm business news for as long as the debt ceiling crisis has, protecting your money should be a concern.  Washington says that they have the votes to push the debt deal through.  The deal would take the worst case scenario, debt default off the table.  But until it happens everything is in limbo (at the time of this writing the debt ceiling vote hadn’t happened).

Throughout this debt debacle, several economic indicators have been released showing signs of a slowing economy.  The current debt deal will only limit the governments ability to further additional economic growth.  Which leaves the economy’s savior to jobs.  If only the powers that be in Washington can find a way to agree on spurring job growth.  Which is highly doubtful after watching their total lack of cooperation with the debt deal.

Until job hiring improves, and we shouldn’t expect significant changes for at least a year or more, we can expect slow economic growth through the November 2012 elections.  So the big question is where should you be investing your money?  With a timeline of 12-18 months,  safety is the quick answer.

The 3% Plus Dividend Yield

The goal here is getting a better return on your money than you would in treasury bonds.  The 10-year treasury bond is sitting at less than a 3% yield.  You’re not risking much by investing in a stock, mutual fund, or ETF that has a dividend yield of 3% or more.  Reinvest those dividends and compounding returns will only help the cause. Continue Reading…

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