Financial Cookie Jar » investment

Taking Financial Risks

FinanceCookies — Fri, 01 Oct 2010 22:39:24 +0000

It is important to take financial risks.The higher the level of risk you take, the higher your return will be if you succeed. The right investment for you depends on many things, but the two most important factors are 1) your realistic time horizon, and 2) your aversion to risk. However, that doesn’t mean you should risk what you cannot afford to lose. Regarding time horizon, if you have 40 years to retirement, you should invest your money in the highest risk, highest yielding sectors (maybe 70% stocks, 15% bonds and 15% money markets). But if you are close to retirement or can’t afford to risk your investments, the majority of your investments should be allocated toward the low-risk investments such as savings accounts, money market accounts, CDs and maybe even a bond fund.

Social Security and Inflation

FinanceCookies — Mon, 04 May 2009 17:11:30 +0000

So we all know that we are facing massive troubles with Social Security. We are paying into a system that we are not sure will still be around when we need it. This is because we are not simply paying into an account that we can tap into later on, but we are paying into someone else’s account. I wonder then if the government foresaw this when they instituted social security. I think the concept behind it is great because it helps out the older generations that have no income, but the problem is that our population has not been growing like it used to. In light of this I wonder what this means for us.

This could mean massive inflation. I’m not saying it will, but a lot of these struggles we’re facing could lead to massive inflation. With this in mind it is a good idea to get our wealth out of liquid cash and put it into something that will increase in value along with inflation. Real estate used to be the perfect answer and I believe it still is but really anything that is an investment, as long as it is not cash, is a good place to put your wealth.

How do we know when the recession is ending?

FinanceCookies — Thu, 12 Mar 2009 21:56:12 +0000

For the past 2 years Americans have been asking when we would know that we were in a recession. While everyone was denying that there was a recession or that one was coming, it just seemed to creeping up on us. Now few will claim that we are not in the thick of a recession.

I will write as though I am assuming that we are in a recession. We failed to recognize the signs that we were getting into a recession, so this post will examine how we can know when we are coming out of one.

We need to watch the indexes. The leading indexes will begin to raise as the economy begins to improve. Watch the leading index. Their research and information is great indication of where the recession stands.

Consider raw materials and how much they increase by over time. More raw materials will be used as consumers show confidence in the economy. Consumer mentality is one of the most important changes in the economy since the revenue transferred through common citizens and business provides the changes the economy needs.

Jewelry has historically followed the conditions of the economy. When jewelry sales begin rising it will be a sign that the economy is getting back on track. Only when people are feeling financially confident to they buy $10,000 wedding rings or other fancy items of luxury.

As restaurants begin to make money again it is another sign of the recession departing. When people feel safe and are making more money they are willing to eat out more. This goes for luxury items in general that are specialty products.

Many of these things are something that the consumer can see happening in front of their own eyes. Watch for more people in these places of business and then watch the stocks of these companies as well. This will give you some warning about when to invest and when to start spending again.

If were lucky we can make it through this recession and even make money as we come out of it.