In a well-diversified portfolio, you normally have three different type of earnings — appreciation, dividends or interest. “Appreciation” is the growth in the value of your investment based on the market going up. Income investors receive “dividends” or “interest” on their investments.
Interest
Interest is what you earn on money you lend out. … Read more
Corporate and Treasury bonds can help you turn your nest egg into an income stream. In fact, generating a steady income stream to supplement your pension may be one of the hardest parts of retirement.
Bonds have a set interest rate and they usually pay twice a year so you know exactly how much income you should receive and when you can expect to receive it…. Read more
Wouldn’t it be great if there was a fail-proof way to reduce risk in your retirement portfolio?
Any investment ad worth its weight in gold has a disclaimer, “All investments are subject to risk.” That is because risk is the operative term when it comes to investing. In theory,… Read more
A friend recently had a losing streak at the casino. Instead of walking away, he played more hands of blackjack. “I was determined to win,” he lamented. In fact, he was playing to recoup his losses.
He was a victim of investment biases subconsciously affecting his decision-making. Gambler’s Fallacy – the belief that after a streak of losses his luck would turn – duped him into doubling his losses…. Read more
Today, many “investment trend” websites are enticing online traders to join. Investors who follow the trend – also known as “momentum trading” – invest in stocks based on rising market prices rather than company fundamentals.
The strategy of following the investment trend performs best in a bull market. However, selling before the trend reverses is a skill that eludes most investors…. Read more
The risk-reward ratio is an attempt to quantify the amount of risk you need to take in order to get an anticipated return from any investment.
If you were to only consider past returns when deciding whether to invest in stocks or bonds, stocks would appear to be the clear winner…. Read more
To the dismay of yield-seeking investors, interest rates remain at historic lows. Although rates on long-term bonds may begin to inch up, analysts generally expect that we may remain in a low-interest-rate environment for a while longer. So, what are income investors to do? It is important to understand the risks of reaching for higher yields and realize there may be less risky ways to increase income…. Read more
Over the past several years, the market has climbed to historic highs, prompting analysts to sound the alarm over the next stock market crash. While I can’t say when the next crash will occur, I can say it’s reasonable to assume that there will be another stock market drop at some point…. Read more
Since one person’s good investment choice may be a huge mistake for someone else, what factors should you consider when deciding upon a potential investment?
In investing, the only hard and fast rule is that past performance never guarantees future returns. Though you should try to understand why a security acted in a specific way in the past,… Read more
Was Miguel Cervantes’ Don Quixote fighting imaginary windmills or market volatility when he said, “Don’t put all of your eggs in one basket?” Putting all of your assets in one basket doesn’t keep them as safe as you might think because there is always a risk that you might lose them all at once…. Read more
