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Apr 30

Investing Principles Made Simple

by Chris Billows in Business Beller 0 comments tags: How to Understand Money, Smart Money Management
You do not need to be an accountant or a financial wizard to handle your investments. There are some basic principles to follow, known as the KISS principle. KISS is generally know to stand for “Keep It Short & Simple” but I think the acronym can also apply to investing: K – Keep invested I – Invest in stocks S – Self-direct your investments S – Small investments possess an advantage K – Keep invested and don’t become discouraged There are lots of people who enter the stock market, get burned, drop out, and then hand their finances over to a broker or mutual fund seller. That is the wrong thing to do. Losing money in the stock market is all a part of learning how to invest. I have lost thousands on bad investments but I have also made more thousands on good investments. I still come out ahead because the good investments are that much better and I have invested wisely. The worst thing I could do is become discouraged and drop out of the market. Investing is like any skill. It takes practice and knowledge to master. You need to keep investing and learning. The trick is […]

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Feb 28

Lets Talk About Mediocrity (Ahem, I Mean Mutual) Funds

by Chris Billows in Business Beller 0 comments tags: Smart Money Management
My first investment was in mutual funds which is what most people invest in because the mutual fund industry is very effective at promoting its products. There is a certain sense of security knowing that everyone else is also buying mutual funds. Unfortunately for the most part we have been sold a product that does what it says but does not deliver what you need. Yes, mutual funds do invest in the stock market. Yes, mutual funds do diversify the risk over hundreds of stocks but no, most mutual funds do not give you the returns you need. Diversify and Die? Mutual Funds will give you built in diversification. Some of them invest in entire stock market indexes, others invest into a combination of stocks and bonds, and some invest into other company mutual funds (which are called Fund of Funds, yikes!). Diversification of your investment money is important. You should never put all of your money into one company. Because you have no control over how that company does or how other investors react to the company’s news, it is best to hedge your dollars by spreading the risk around. Yet it is possible to over-diversify. Because mutual funds […]

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Jan 29

How to Pick the Right Stock Picking System

by Chris Billows in Business Beller 0 comments tags: How to Understand Money, Smart Money Management
Just like there are thousands of stocks to pick, there are hundreds of stock picking systems. And more are being created all of the time. But just like most stocks, most of them are not worth your time. This article will tell you what is wrong with most stock picking systems and what to look for in a system that works. There are basically three fundamental mistakes that need to be avoided. They are: 1) Choosing a system that is too narrow. 2) Choosing a system that is too broad. 3) Choosing a system that is too inflexible. Mistake #1: Picking a System that is too narrow Some systems will base their entire strategy on just technical indicators, multi-day candlestick patterns, or some form of divergence. The problem is that all of these systems are only using two factors: price and volume. Imagine if you were about to invest in a horse that competed in racing. Would you be satisfied with only the weight and speed of the horse? No matter how you graphed those two variables, they are only two criteria. You should also be interested in the breed of the animal, the competition it was racing against, the […]

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Oct 30

Three Dragons That Steal Your Financial Wealth And How to Fight Them

by Chris Billows in Business Beller 0 comments tags: Smart Money Management
Do you believe in Dragons? No, I didn’t think so. While I do not believe in dragons as actual, living beings I do believe that they exist as three harmful things that can steal your financial wealth. Just like the King Arthur tales of old, these dragons will steal your wealth. Yet evolution has taught these dragons to be more subtle and sneaky and take from you without you even knowing it. Like a Knight of the Round Table you need to challenge these beasts to protect your financial kingdom. The purpose of this article is to tell you about these dragons and how you can fight them. Meeting the Dragons 1) The first is known as The Dragon of Taxes, 2) The second dragon is known as The Dragon of Inflation, and 3) The third and most important dragon is known as The Dragon of Poor Performance. Why is the third dragon the most important? Well, the first two dragons you cannot defeat. The Dragon of Taxes and the Dragon of Inflation are immortal! You see, the Dragon of Taxes represents the government’s ability to levy taxes on your earnings and wealth. Governments are always hungry for more revenue […]
May 11

Keeping What You Earn Tax Free

by Chris Billows in Business Beller 0 comments tags: Smart Money Management
I was discussing with a colleague about the benefits of retirement savings accounts. In Canada they are called RRSPs (Registered Retirement Saving Plan) while in the U.S. they are called IRAs (Individual Retirement Account). He did not think they were useful, his reasoning being that once you withdrew the money out you were going to be taxed. If he saved $10,000 then he knew he was going to have the $10,000 plus whatever else he gained, the money would not be subject to any taxes. He’s right, but only partly. The benefits of RRSPs are two fold: 1) The government allows you to reduce your taxes payable in the year you contribute. 2) The interest, dividends, or capital gains you earn on that invested money is not taxed. The 1st point is an immediate benefit. Its like instant gratification for saving for the future. The 2nd point is an even more powerful benefit. It allows your money to grow and compound without being taxed. Let me illustrate: Outside of an RRSP: If you invested $200 a month for 35 years, at a return of 8% and your tax rate was 35% then you would accumulate an amount of $237,715.29. You […]
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