Dividend Investing - Pros and Cons of Dividend Investing

Investing for dividends is an excellent way to participate in the stock market. Dividends represent the sharing of a company's profits with those who hold stock.

There are two kinds of stock: common and preferred. Common stock pays no or low dividends; preferred stock customarily pays a dividend on a regular basis. The investment return on common stock is from a hoped-for increase in the company's share price over time. The investment return on preferred stock is a combination of current payment of dividends as well possible long-term increase in share price.

An investor may purchase individually owned shares of companies which pay dividends. Or, an investor may purchase shares of a mutual fund which has the objective of owning dividend-paying stocks. The latter is generally considered a more conservative approach since your investment risk is spread out among the larger number of companies in the portfolio.

Pros of Dividend Investing:

1. Dividends create a source of cash for re-investment. There is a continuing stream of cash created by dividends. Re-investment of the cash in the purchase of additional shares is a great way to grow your portfolio.

2. Dividends create a source of cash for monthly income needs. At some point in your life, you will need income from something other than work. Having a flow of dividend income is a wonderful way of planning for your economic freedom.

3 Dividend investing benefits from dollar-cost-averaging. Constant re-investment of dividends over time creates an average cost basis. The theory is, that through continuous purchasing of shares, the average cost will be lower than the current price.

4. Dividends offer a source of earnings in a down market. Investor frustration and fears rise during a market decline. Dividend investors can take solace from the fact that there will be profits from their portfolio during the downturns.

5. Dividends pay you profit now. For many people, receiving money right now as profit on their investment is more comforting than waiting for the share price to rise. "A bird in the hand is worth two in the bush," is an adage you can apply to dividend investing.

Cons of Dividend Investing:

1. Dividend income is subject to ordinary income tax. Every year investors must pay income tax on dividends from stocks held less than one year. For stocks held longer than one year, the capital gains rate applies, fifteen percent for those people in the upper tax brackets.

2. Dividends are not a guaranteed payment. Dividend payments are subject to change. If the business of a company is not as profitable as it once was, the company may choose to lower or suspend dividend payments. The risk that any one company may have poor results may be lessened by diversification.

3. Dividend investors may not make as much profit on share price increases as common stock investors. Since dividends are a recognition and payment of profits, dividends are part of the company share value. With a common stock, most--if not all--of the share value comes from a rise in market price. Some investors believe that there is a greater potential return from common stocks. However, there may also be a greater market risk.

4. Dividend-paying stock prices may go down when yields rise in the market place. Companies that pay dividends compete with other investment choices. The dividend yield can be an attraction. However, when yields generally rise and investors can get higher yields elsewhere, the yield of a lower-than-market dividend may be offset by a lowering of share price to make up the difference.

As with any investment, you would do well to remain vigilant in assessing factors which affect the value of your portfolio. Take an interest in how your investments work. You will be more at ease in knowing what to expect.

Howard Feigenbaum is Registered Principal and Owner of Sharemaster, a Broker-Dealer firm that specializes in monthly dividend income funds.

"Do you know the only thing that gives me pleasure? It's to see my dividends coming in." - John D. Rockefeller

This article is a general discussion of the subject and is not intended as a solicitation or specific investment advice.

Copyright 2011

http://www.monthlydividendcheck.com/

Article Source: http://EzineArticles.com/?expert=Howard_Feigenbaum

Article Source: http://EzineArticles.com/6493759

We Need an ETF for Private Space Flight to Promote Capitalization and Investment in Future

It's not that often that someone can get in on a new company, buy exactly the right stock, and perhaps foresee the future of a great new company rising. Wouldn't it be great if you would have bought original shares of Microsoft, Starbucks, Apple, Google, or some other major Fortune 500 company? You know, in the very beginning before the company stock doubled and split, doubled and split again, and then tripled and split, and then four more times did the same.

Interestingly enough, I know people who have bought shares in one of all of those companies in the very beginning, now they are all millionaires, if they had held on long enough, perhaps that's how they got rich. Of course, you could also invest in a startup company that went bust, went bankrupt, or just ran out of cash flow and disbanded itself. Not long ago, I was having a conversation about this at the local Starbucks, and I ended up in an ad hoc brainstorming session with the gentleman. We were trying to consider what new industries in the future that we should be targeting to get in on the ground floor.

We talked about new carbon nanotube and Graphene materials, we talked a little bit about various alternative energy strategies, we talked about flying cars, we discussed Rare Earth Elements (REEs) and mining, and we even talked about private space travel. Now then, let's say you wanted to get in on a new private space venture, one that you thought had a decent future, and was on the leading edge of private space technologies. Which one would you choose?

Remember, even though the industry may do incredibly well, there will be winners and losers in the free market. You could have easily invested in Silicon Valley dotcom stocks and lost all your money, or you might have invested in the correct ones, and retired a multimillionaire. Here are a few of the names of some of the up-and-coming private industry space companies;

XCOR
Space X
Virgin Galactic
US Aerospace Inc
Space Adventures
Bigelow Aerospace
Armadillo Aerospace
Whittinghill Aerospace
Masten Space Systems
Space Exploration Technologies

Now then, rather than trying to choose which one of these will be the grand winner of the game, and which ones won't be around in 10 years, wouldn't it be nice to have an ETF which diversified the risk? One fund so to speak, or some way to track this industry into the future, and make money investing in it - yes, that makes sense doesn't it?

If you think that this industry is in going places, and space is a place, then I suggest you read a very interesting article which was in the Wall Street Journal on August 17, 2001 titled; "Private Space Taxis Race to the Launchpad," by Andy Pasztor. You see, NASA has already awarded contracts to private space companies to take people back and forth to the international space station. As they become better adapted, these entrepreneurs will take people to move colonies, space hotels, and offer trips in orbit.

What we need is a good ETF to invest in and Americans will capitalize our private space flight future, and they will enjoy investing in that future in hopes of a good return. Indeed I hope you will please consider all this and think on it.

Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes writing 24,500 articles by August 24th or 25th will be difficult because all the letters on his keyboard are now worn off now..

Article Source: http://EzineArticles.com/?expert=Lance_Winslow

Article Source: http://EzineArticles.com/6503646

Cutting Back

The Hotline of Wednesday, October 12th recommended a change to the allocations for Venturesome and Conservative investors. The allocation for Moderate investors was left unchanged. The new allocations were prompted mainly by our view of the outlook for the domestic economy looking out over the next six months or so. The timing of our recommendation was influenced by the tremendous rally the U.S. market has undergone since October 3. We had already been contemplating cutting back; we felt the rally offered a unique opportunity to do so.

Specifically, here are the exact changes we recommend. For Venturesome investors we recommend a cut in the domestic stock fund allocation from 55% to 45%. We also recommend a cut in the international stock fund allocation from 35% to 25%. For Conservative investors, we are reducing the domestic stock fund allocation from 35% to 25%. A further recommendation is that the funds being raised by the sales be invested in money funds at the moment. This applies to both types of investors.

Why are we cutting back at the very time when the domestic economic news has improved and the Europeans are apparently serious about tackling the festering sovereign debt issue? We are cutting back because we are wary about the outlook for the U.S. economy over the next half-year. As we read the economic outlook, after absorbing the views of economists we respect, we have concluded that the economy will be facing extremely strong headwinds as we end this year and move onto 2012.

We are not looking for a recession, though the risk of one has risen, but for very slow growth. We expect growth to be slow enough that we might well say the economy is approaching stall speed. That is the danger as we see it as we move forward into next year.

The basic cause of the stall outlook is federal policy as set by the debt-ceiling agreement. We are already facing a substantial cut-back in Federal spending coming by the end of this year. There is another cut-back coming later, either from the recommendations of the Congressional "supercommittee" charged with cutting spending or, failing that, by automatic spending cuts extending throughout the Budget. Estimates of the impact of the budget cuts on the economy run from 1.5-2.0%. When this is subtracted from the economy's expected growth without the spending cuts, there is not much growth left.

Considering our outlook for the economy, it is legitimate to ask why we are sticking with equities at all. The answer is twofold. First-and very important-we are not looking for anything we can call a recession. A recession is not just two quarters of negative growth. It is something deeper happening to the economy, and that is not our outlook. We see no reason why profits cannot continue to grow under our outlook, though at lower rates than recently.

Second, the vast pool of investment money has to go somewhere. So long as there is some growth, cash, yielding zero, is unacceptable. At the same time, stocks remain cheap, though not quite as cheap as they were. This is a recipe for further flow of funds into equities. It is why we continue to favor stocks for risk-taking investors.

At the same time we recognize that risks have increased. Our new allocations are our recognition of that development.

Walter S. Frank has been the Chief Economist and Chief Investment Officer for Moneyletter for the past 25 years. He has had a long and distinguished career as an economist, financial advisor, and money manager. Mr. Frank is a regular contributor to Barron's and The Economist magazine.

For more information on the Moneyletter, visit our website http://www.moneyletter.com

Article Source: http://EzineArticles.com/?expert=Walter_Frank

Article Source: http://EzineArticles.com/6654117

Gold Funds - The Smart Way to Ride Through Turbulent Times

The financial markets are having a tough time, inflation is on an all-time high, the credit crunch is hurting the business prospects, the stimulus has failed to put the economy on track, the job scenario of the is bleak, and the economy is shedding jobs every quarter- in all this conundrum and doldrums the only thing that has risen like a phoenix is Gold.

After the economies are hit by each wave of recession, the world has witnessed an era of super-inflation or hyper-inflation. Gold which has earned a reputation of acting as a hedge against inflation has been a solace for those who were wise enough to invest a part of their fortune in this precious metal during the heydays.

It is prudent to have 5% to 10% of the total investment in the form of gold. This will not only diversify the investment portfolio of an investor but also act as a hedge against inflation in the long term.

During times of inflation, the money/ cash that an individual hold become less valuable and thus reduces the purchasing power of the individual. But, at the same time if an individual has invested in gold or gold funds, he/she can be sure of the fact that the value they have invested will not come down in the long-term.

Even before the advent of the fiat currency, gold standard was dominant across the economies of the world. Hence, one can safely assert that gold is an international currency. Thus, any investor investing in gold funds or funds that invest in precious metals would be well-off than an investor who invests in the new-age financial instruments. In the face of terrorism and perpetual war, people are inclined towards buying gold as a safety reason.

Consider a scenario, if the currency of country an individual lives in falls drastically, gold will still be linked to international market prices. The demand for gold would always be there even if there are no takers for a particular currency in the international market.

There are three ways in which an individual can invest in gold.

1.By investing in a gold fund

2.By buying gold coins or bars

3.By buying the equity in mining companies.

The third option is actually very far-fetched as rarely a mining company goes public with stock offers.

The other two options are practical and hence can be undertaken. The only difference between buying physical gold and investing in a gold fund (mutual fund) is the convenience. Gold bars and coins in their physical form need to be safeguarded while the units of a gold fund are relatively easier to manage. It is similar to holding units of mutual funds such as DSP BlackRock India T.I.G.E.R. Fund.

As rising prices of gold has boomed the world, investing in Gold Funds was & is always a best deal. Be a part of award winning mutual fund company in India - DSP BlackRock.It offers you variety of mutual funds where you get the opportunity to explore & choose the best one.

Article Source: http://EzineArticles.com/?expert=Nisha_M_Dixit

Article Source: http://EzineArticles.com/6655514

Invest in Fixed Income Fund for Long Term

Fixed income connotes a type of investment that does not deal with equity. Investments that are classified as such income, obligates the issuer/borrower to make regular payments at a pre-determined schedule.

Another meaning that can be derived from the term 'fixed income' is that it relates to a person's incoming cash flow that does not change with each given period. This may include incomes that are derived from investment instruments such as preferred stocks, bonds or even pensions that assure a fixed income. When retirees and pensioners are dependent on their post-retirement benefits as their only source of income, the term also carry a connotation that these retired people have limited discretionary income.

They are a good way by which one can diversify their investment portfolio. But, much clarity is required to understand what fixed income funds are?

Fixed income funds are a type of mutual funds that invest in municipal bonds, corporate bonds, treasury bills, etc. Fixed income funds come in many styles and shapes. In India, these funds are also referred to as income funds and debt funds.

Funds that are classified as fixed income typically make investments in debt securities which are issued by companies, banks, government or financial institutions. The various types of debt-securities in which a mutual fund invest are known as treasury bills and commercial papers of deposit. The instrument is categorized based on its maturity period. For instance, the debt securities are known as debentures and bonds, if their maturity period is more than one year; subsequently, if the maturity period is less than a year than they are referred to as commercial papers or treasury bills.

The borrower/issuer of these debt securities is obliged to pay the principal along with interest at the time period agreed upon.

These funds have a face value on which the rate of interest is calculated. Usually an investor who wants to invest in this fund is chiefly concerned with the face value, rate of interest, rate of interest payment, maturity value and time period. On an average, these funds are held till maturity unlike other mutual funds that see a lot of attrition.

In order to have long-term financial stability investing in gold funds is also the right thing to do. It is always advisable to have some amount of your liquidity to be invested in this precious metal. Gold has gained a reputation of acting as a hedge against inflation. As the rate of inflation rises, the money that you have will be less valuable. But on the other hand, gold being a rare and precious metal, its value will continue to ascend. That means the investment done in gold funds will never lose its value.

Nisha is an expert writer of finance sector, provides information about various kinds of mutual funds in India. She writes this article for Fixed Income Fund & Gold Fund investors. Explaining its advantages/disadvantages & attributes.

Article Source: http://EzineArticles.com/?expert=Nisha_M_Dixit

Article Source: http://EzineArticles.com/6575795

Invest in Fixed Income Fund for Long Term

Fixed income connotes a type of investment that does not deal with equity. Investments that are classified as such income, obligates the issuer/borrower to make regular payments at a pre-determined schedule.

Another meaning that can be derived from the term 'fixed income' is that it relates to a person's incoming cash flow that does not change with each given period. This may include incomes that are derived from investment instruments such as preferred stocks, bonds or even pensions that assure a fixed income. When retirees and pensioners are dependent on their post-retirement benefits as their only source of income, the term also carry a connotation that these retired people have limited discretionary income.

They are a good way by which one can diversify their investment portfolio. But, much clarity is required to understand what fixed income funds are?

Fixed income funds are a type of mutual funds that invest in municipal bonds, corporate bonds, treasury bills, etc. Fixed income funds come in many styles and shapes. In India, these funds are also referred to as income funds and debt funds.

Funds that are classified as fixed income typically make investments in debt securities which are issued by companies, banks, government or financial institutions. The various types of debt-securities in which a mutual fund invest are known as treasury bills and commercial papers of deposit. The instrument is categorized based on its maturity period. For instance, the debt securities are known as debentures and bonds, if their maturity period is more than one year; subsequently, if the maturity period is less than a year than they are referred to as commercial papers or treasury bills.

The borrower/issuer of these debt securities is obliged to pay the principal along with interest at the time period agreed upon.

These funds have a face value on which the rate of interest is calculated. Usually an investor who wants to invest in this fund is chiefly concerned with the face value, rate of interest, rate of interest payment, maturity value and time period. On an average, these funds are held till maturity unlike other mutual funds that see a lot of attrition.

In order to have long-term financial stability investing in gold funds is also the right thing to do. It is always advisable to have some amount of your liquidity to be invested in this precious metal. Gold has gained a reputation of acting as a hedge against inflation. As the rate of inflation rises, the money that you have will be less valuable. But on the other hand, gold being a rare and precious metal, its value will continue to ascend. That means the investment done in gold funds will never lose its value.

Nisha is an expert writer of finance sector, provides information about various kinds of mutual funds in India. She writes this article for Fixed Income Fund & Gold Fund investors. Explaining its advantages/disadvantages & attributes.

Article Source: http://EzineArticles.com/?expert=Nisha_M_Dixit

Article Source: http://EzineArticles.com/6575795

When To Sell Mutual Funds

Mutual funds can be an excellent investment for average people because they offer professional management and fewer risks. Unfortunately these vehicles have risks and can lose money. Many people have seen a large portion of their retirement savings disappear because they did not know when to sell their mutual funds.

Unfortunately there is no easy answer to the question of when to sell shares in a fund. Every fund and every investor is different but there are certain situations in which it will be advantageous to sell funds. Any investor should have no problem learning when to spot such situation and take advantage of them.

When the Fund is No Longer Making Money
The first and most obvious time to sell your shares is when the fund is no longer making money for you. An investor should be able to tell this by monitoring the fund's performance and by comparing that performance with the fees.

It is fairly easy to track the performance of most funds through free internet portals such as Google Finance and Yahoo Finance. You can also track funds through financial newspapers such as The Wall Street Journal and their websites. Simply look to see if the fund is performing to your expectations and track returns over monthly and yearly timeframes. You do not need to monitor your funds everyday but you should check them about once a month.

You can tell if the fund is making money by figuring out its costs and fees which will be listed in the fund prospectus. Simply write down all the costs and fees and add them up and subtract them from the return you are getting on the fund. If the fees and costs exceed the return then you are not making money and you should sell the fund.

When it is not Achieving Your Investment Objectives
Before you invest money you should sit down and figure out what your investment objectives are. An example of such an objective could be to generate a rate of return that exceeds inflation or to increase my retirement savings by 5% a year.

You should take a look at those objectives every year then revisit your investments. You should sit down examine the investments and see if they are helping you meet your objectives. Look at mutual funds to see if their returns are meeting your goals. If they are not you should sell them and look for others that are. If a fund is not generating enough additional income to meet your objectives you should definitely think of selling it.

When a Fund's Return can not Beat the Rate of Inflation
The standard rate of inflation is around 5% therefore any investment needs a return of at least 6% to beat it. A vehicle like a mutual fund should have a rate of return around 10% in order to make money in spite of inflation. Always check funds to see if they are making such a return. If they are not you should sell them and look elsewhere.

Something to remember is that mutual funds are a fairly high risk investment. The gain you are taking you should justify the risk you are taking. If the return is not around 10%, the risks you are taking and the fees you are paying are probably not worth it.

Steven Hart is a freelance writer and a Financial Advisor from Cary, IL. He writes about Annuity topics like Annuity Definition, Annuity Rate, and Best Annuity Rates.

Article Source: http://EzineArticles.com/?expert=Steven_Hart

Article Source: http://EzineArticles.com/6675703

Online Mutual Fund Investment

Investing in mutual funds has been extremely profitable for the corporate professionals and business entrepreneurs who get to reap numerous benefits. It has been their preferred choice since time immemorial. This is one form of investment that promises to give huge profits on even small value assets. The increased benefits that can be reaped and the surplus amount of money that can be made makes investing in online mutual funds even more popular. Though involving complex paper work and intense detailing when was done traditionally, with the advent of the advanced IT technology, online dealings in mutual funds have become extremely common.

From the point of view of business and commercial value, mutual funds are given extreme significance. The importance of investing in online funds is known to everyone. Online investment is most convenient way of investing. This is the reason for the increasing demand for online fund investment in India. Firstly, it saves one from the long procedures for applying offline. The application processes on the net are hassle-free. One simply requires filling in a form that can be filled easily without any guidance. Adding to the convenience, the form can be immediately submitted without waiting in long lines outside the submission office. Dealing in mutual fund involves massive money transaction and doing it online simplifies the entire process. Money transfer online can be easily followed even by an amateur investor in the market. There is also no requirement of cash for transferring money.

One can get all the required information about the new schemes and investment plans on the net. Online investments facilitate easy and simple transactions without any complex procedures involved. Thus, the investor can handle his investment account all by himself by understanding the procedures, comparing schemes and making money transactions all online! However, one can come across numerous stock brokers in India who can provide complete guidance for both online and offline investments. Besides, mutual funds, online stock trading is also very popular amongst the ambitious individuals. The investing person has 24X7 access to the trading account thus can make changes according to his requirements. Stock brokers on the other assist them with necessary information about the investments procedures and also guide them in choosing the right plans suiting their needs and requirements. By sharing their experience and expertise, the stock brokers provide great help to the investors in reaping maximum benefits out of their investments. Be it online share trading or investing in mutual funds, rationality and intelligence work best in making massive money in the dynamic market of online investments!

Shomik Gupta is an expert content writer, who provide articles for online mutual fund investment. To know more about the Online trading in India Visit Naviamarkets

Article Source: http://EzineArticles.com/?expert=Shomik_Gupta

Article Source: http://EzineArticles.com/6709415