Similar to investing in "Sin Stocks," i.e., alcohol, tobacco, casino, weapons companies, investing with the mindset of making money before or after a natural disaster, such as a hurricane like Harvey that hit Texas a few weeks ago is often a touchy subject.
But, if you are someone who is alright with investing in this 'morally gray' area, or just want to learn about how others pursue it, together we can take a look at how it is accomplished and a few things to be aware of before deploying capital.
First, while every natural disaster can be incredibly devastating, hurricanes typically seem to account for the bulk of the damage here in the US. In most cases, they are the only real disasters which you can invest around because of their predictability, which gives investors a chance to make investments both before and after the disaster occurs.
Since hurricanes occur along the coast, and more often in the gulf coast region, the one industry they seem to affect is the oil industry. This is because a significant amount of oil is drilled for in the Gulf of Mexico and because a large number of the US's oil refineries and oil shipping ports are found in this region. Continue reading "Investing Before Or After A Natural Disaster"
The vast majority of American investors do so through mutual funds, but that trend seems to be changing for the better because investing for the masses is getting a lot cheaper.
Data from 2016 indicated that over half of U.S. households invested in mutual funds and the industries total assets under management were $16.34 trillion at the end of the year. Over the past few years net cash inflows to mutual funds have been shrinking and even turned negative in 2015. In 2007 cash inflows to mutual funds hit an all-time high at $879 billion, which makes sense because this was the peak of the market before the crash caused by the housing crisis. In 2009, 2010, and 2011 cash inflows were negative, -$146 billion, -$282 billion and -$96 billion respectively.
In 2012 cash in-flows returned positive and hit $200 billion, but the industry has seen declining in-flow ever since; $177 billion in 2013, $104 billion in 2014, a negative $101 billion in 2015 and even worse a negative $229 billion in 2016.
It was easy to see and understand why mutual funds experienced cash flow decline in 2008, 2009, and 2010 as the market was falling and investors were scared. But the fact that less money is moving into mutual funds while the stock market in general has increased the past few year's means there is likely a larger force at play. Continue reading "Exchange Traded Funds Are Becoming More Popular Because of This One Undeniable Benefit"
So you are now just a decade or so from retirement and don’t want another 2008 market crash to wipe out our nest egg, forcing you to work for longer than you are planning. Finding safe investment options is a goal, but at the same time you don’t want to be too conservative because you do need to continue realizing capital appreciation so your nest egg can support you during your 'golden years'.
The balance between safety and growth is more difficult than one may think. If you get too safe, the growth will lag and you may not have a large enough retirement account. If you get too focused on growth, you may be taking on more risk than you should, which could leave you vulnerable to a big market crash.
While Exchange Traded Funds offer diversity, I personally don’t like very many of the mixed portfolio options available today (a fund that holds a combination of investment options such as stocks, bonds, RIETS, MLP's, currency, futures, etc.) and especially don’t like the 'age based target funds' offer through many 401(k) plans and other mutual fund companies. Now I want to make it clear I am always a proponent of a well-diversified portfolio and I believe that idea holds true more so for those in this age group than investors who are younger.
With that being said, investors in their 50's should be thinking more about buying a few different ETF's, as opposed to the one-stop shops. I have found that the one-stop shop ETF's typically tend to be either too conservative or too aggressive and this causes them dramatically trail the market returns or be way too exposed to a market pull-back. Continue reading "ETF's For Those In Their 50's"
We all know the story of the tortoise and the hare and the conclusion that slow and steady wins the race. But regardless of us knowing the story and how it turns out, we still get caught up in the idea, or dream if you will, that we can get rich quick though the means of chasing long-shot investment opportunities.
We have all seen and heard of new investment opportunities that will make you rich; penny stock ideas that will show 1,000% returns, "the next big Initial Public Offering" that you have to own, or perhaps a friend, family member or colleague tells you about a great idea. We all wonder whether or not we should go ahead and pull the trigger on these "once in a lifetime opportunities" and if we made a huge mistake when we don’t.
Well let's look at some numbers, which will hopefully help make your decisions on whether or your time and money are best served chasing these dreams. Continue reading "Are Long-Shot Investments Worth Your Time Or Money?"
Every investor, no matter age, investing experience or portfolio balance should consider putting a large amount of their investable assets in one of these exchange traded funds.
For the majority of investors, the time and energy required to pick individual stocks for their own portfolio's is too much, not to mention the fact that individual stock picking can just be downright overwhelming. The amount of available information and decoding what it all means is very time-consuming and confusing. Plus, the idea that all your hard earned money is tied up in just a few stocks, which at any moment could dramatically lose value, is very frightening.
The best way to avoid the majority of these problems is by simply buying one or more quality exchange traded funds. ETF's offer investors with a very low cost, diverse portfolio and they don't require investors to follow them on a daily, weekly, or even quarterly basis. The right ETF's are really the closest things an investor can find to a "buy and forget about" investment.
Today I would like to talk about three of my favorite ETF's that any investor, no matter their age, income level, size of investment portfolio or investing experience, should consider owning. So let's take a look at what they are. Continue reading "3 ETF's Every Investor Should Consider Owning"