All the Wrong Reasons to Invest in the Stock Market

By Lewis Schiff

All the Wrong Reasons to Invest in the Stock Market

• I invest in stocks to get rich. Simply investing in stocks won't make you rich. However, you can grow your wealth over time by investing on a regular basis, re-investing your returns to capture the benefit of compounding, and choosing low-cost, common sense investments. For many people, these investments are found in the stock market.
• I invest in stocks to make my money grow as much as possible. It is true that, over time, the stock market as a whole has produced returns that are superior to bonds, CDs or money market funds. However, that's still not the most compelling reason to invest in the stock market. Instead, the real benefit of stock market investments is that they give you an excellent hedge against inflation. So while inflation will eat away at your portfolio at the rate of 3 percent or so a year, stocks will outpace inflation to provide you with a positive net return over time.
• I invest in stocks because the stock market is now open to everyone. Mutual funds and inexpensive online trading have made the stock market accessible to almost everyone, but it is still not necessarily right for everyone. Investing in stocks carries substantial risks, which you should understand and be able to manage. For many people, these risks mean that they should not put all or even most of their savings into the market. Other types of investments may be far more suitable for helping them to attain their financial goals.
• I invest in stocks because I like the thrill of gambling. Shares of stocks rise and fall--sometimes dramatically--but that does not mean that investing in stocks is gambling. There are no guarantees in gambling, but stock investing does give you one guarantee: By buying shares of a company's stock, you will get a share of that company's future earnings and growth. So on a very small scale, when you invest in the stock market, you get in on the growth of capital markets. And there is one thing that has been proven over time: Capital markets work.

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An Office Club for Savings

Workplace investment clubs can be a great way to tap co-workers' expertise, share knowledge, and boost your nest egg.

As the 401(k) and similar retirement-savings vehicles have largely replaced traditional pensions, the burden of making profitable decisions on investments has increasingly fallen on the employee, not the employer.

Many employers spend large amounts to offer their employees financial education and retirement planning, ranging from brochures and online information to one-on-one conversations with financial planners. And to get around relatively low participation and contribution rates, employers are increasingly putting enrollment and other aspects of their retirement plans on "automatic pilot" (see BW Online, 10/8/05,

"Putting Your 401(k) on Autopilot"). Yet I receive a continuous stream of research documenting the failure of many Americans to save enough for retirement or pay attention to their retirement accounts. Reasons include lack of interest, the amount of time needed, and a lack of confidence in the ability to make sound decisions.

TWO EXAMPLES. There's not much to be done about someone who's not interested or won't make the time. But for those who are concerned enough, let me suggest a workplace investment clubs. Investment clubs aren't a new idea. They have been around at least since the 1950s, when the National Association for Investors Corporation (NAIC) started developing tools for any group interested in learning more about how make investment decisions. NAIC counts nearly 18,000 clubs in its network, but when asked about workplace investment clubs, it said it doesn't keep separate statistics on what types of clubs are in its network and could only come up with contacts for two. Here's how those two work-based groups operate. The Summit Investment Club is made up of about 25 -- around 10% of the total -- employees of Precision Computer Systems, a banking-software company based in Sioux Falls, S.D. Founding member Mary Enright, a quality-assurance representative, says the club has been in existence since 1993. It's affiliated with NAIC and uses the organization's materials for analyzing stocks and mutual funds.

COMPANY HELP. Each member contributes a minimum of $25 and a maximum of $100 per month to invest in a club portfolio. Before the members vote -- a majority decision is needed before a stock can be bought or sold -- at least one member analyzes the equity's performance and prospects, and the group discusses them. Enright says that at a recent meeting, club members discussed issues of immediate interest, including whether to buy their employer's stock through the company purchase plan, and "if our 401(k) mutual-fund options are better now than in past years." Although the group discusses the options in their company plan, they make these purchases individually. So far, the modus operandi could apply to any investment club. But here's what's different: The company offers its blessing to the Summit club in the form of meeting space and a payroll deduction for members' monthly contributions. The contributions -- which are separate from 401(k) contributions -- go into a brokerage account, where they're available when the club is ready to purchase a stock.

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Know Your Annuities

NEW YORK (CNN/Money) - I'm retired and in my 70s and considering buying an annuity. I don't need it for myself, but I want my wife to have it in case I die before her. Do you think I should buy one?
-- Lou, Marietta, Georgia

Before I answer your question, let me explain for those uninitiated into the mysteries of annuities -- and that includes almost everyone -- what type of annuity you're talking about.
Annuities come in two basic flavors: deferred annuities and income annuities (also known as payout or immediate annuities).

With a deferred annuity, you invest your money (or pay your premium, in annuity-speak) and whatever gains you earn escape taxes until you withdraw them. So your earnings are tax-deferred, hence the name deferred annuity. Some people use deferred annuities to save for retirement, though I question that given their generally high fees.

Income or payout annuities, work like this: You give an insurance company a lump sum and the insurer agrees to pay a certain income, usually monthly, for certain period of time.

There are plenty of ways to set it up: You could, for example, hand over your retirement nest egg and arrange for monthly payments for the rest of your life or for 10 years, whichever is longer. That way if you die, say, two years after buying the annuity, your beneficiary will receive payments for eight years.

People turn to this type of annuity to provide a guaranteed income in retirement. I think an income annuity can be a good choice for this purpose.

One last wrinkle. Both deferred and income annuities also come in two versions:
There are fixed-annuities -- that is, annuities with a fixed return much the way the return of a bank CD is fixed.

And there are variable annuities, or annuities that allow you to invest in mutual fund-like investments known as "subaccounts" whose returns can go up and down with the financial markets.

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Tip for Smart Investing — Dollar-Cost Averaging

When I read this I say Hell Yeah! You're Right! For one I'm a very lazy person. I'd rather read and do my research once and make the rest Automatic. Dollar Cost Averaging as it says below from Sound Money Tips, is a much smarter approach. Let me add to it (3) less headache reading the headlines every single day (4) less emotional attachment - i.e go crazy if market goes up and down and (5) Save you time and energy - which you can use to do other things like spend time with family or just be a couch potato in front of the TV.

Sound Money Tips

Many folks come up with smart, diversified investment plans (here’s a good place to start on that), but find they only put new money into those accounts when end-of-year bonuses, gifts, or windfall events occur.
Transfering a set amount every month to your investment accounts is a much smarter approach, for two reasons:

(1) You’ll automatically buy more when your investment market (whatever the asset class) is low, and buy less when it’s high. This is called dollar-cost averaging; and

(2) bonuses and windfalls (gasp) sometimes don’t come. The end of the month is a far more reliable trigger.

But this takes real discipline. Consider setting up an automatic deposit plan from your paycheck to make it happen.

How Much Is Your Blog Worth?

Add this to your blog!

My blog is worth $9,386,606.58.
How much is your blog worth?

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Trump Paid $1.5M at Learning Annex

For Trump, Talk Not Cheap

NEW YORK, Oct. 24, 2005

At $25,000 per minute, advice from Donald Trump doesn't come cheap. That didn't stop thousands of fans from flocking to a Sunday lecture by the real estate mogul, who received $1.5 million for the hour-long speech. The star of "The Apprentice" urged listeners to be aggressive and remain suspicious of advisers. "When somebody challenges you, fight back," Trump said, according to published reports. "Be brutal, be tough, Just go get them." Aspiring dealmakers should work with others while maintaining a competitive edge, he told the crowd at the Learning Annex event, which cost between $100 and $500 per ticket. "Get the best people and don't trust them," he said. "Work with them, but they have to have respect for you."

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Earn And Save with The Automatic Millionaire

Making enough to get your bling bling does not necessarily mean you have to earn more..
It just means you have to save more…

Or at least have a proper job for you to be able to earn, to save…

Ok if you don’t have a job… use you common sense people! Do something!

- Sell some of your old junk or stuff on ebay .. to say the least…

- Provide your service. Since you’re doing anything.. find something you like to do and earn money off it.. maybe walk around the neighbourhood and send some newspapers..

- You could walk the dogs in the park

- Babysit while watching some movie flick in the comfort of someone else’s home and get food too

- You could do those silly surveys online and earn something..

Trust me.. something is better than nothing. People say it's hard to earn a living… but rest assured.. it's harder when you’re not earning…

Once you've done the above or something else bigger than the above start putting aside at least 10% of whatever you're making. What you don't see, you don't spend!

Savings sound boring but rather have something than nothing. Now that's scary.

The Automatic Millionaire is a good starting read to afford your Bling! Bling! Hey I'm a very lazy person. Once you know the tricks in this book. You can rest and let it do all the work.

Invest Early Invest Often

TIPS

Edited by Warren Berry

October 23, 2005

Young and restless and not saving.

Since they were teenagers, they've been making their own money decisions on clothes, cars, credit cards and culture (pop), but sometimes you wonder how money-savvy today's young people really are.

Read on...

J.Lo Bling Babe

Just for fun... Checked out some bling bling!!

Jennifer Lopez has been voted the world's number one "Bling Babe" in July 2003. J.Lo sporting bling bling earrings.

*The Bling Babe and Bling Bloke List seems to be very outdated! Been looking for new list but cant find any.

Check out some other blings! Rings and Belt Buckle

The term "bling bling" now appears in the Oxford English Dictionary with the explanation ''the wearing of expensive designer clothing and flashy jewellery.''

Keep The Change

“Keep the Change is a simple way to help you save every day, plus you get a contribution from the bank. This is a great plan to make your savings grow,” says financial expert David Bach, #1 best-selling author of The Automatic Millionaire. “ People should take every opportunity they can to save money, because it really adds up – and the best way I know to do that is to make your savings automatic!”

Bach offers the following tips to help consumers save:

• Find your Latte Factor ® -- the small ways you spend money on little things like coffee, bottled water, etc. -- and re-evaluate daily purchases.
  
• Assess how you can redirect spending to personal savings.
  
• Use a debit card for most purchases. The money comes right out of your checking account.
  Make your savings AUTOMATIC by participating in a program like Keep the Change that helps you save while you spend.
  
• Decide today to pay yourself first!
  
  Learn More

Best financial blogs - Ultimate Blog Bling Bling

Check what else I found... definite blog bling bling!! Take a look at some of the top financial blogs below.

There are thousands of sites devoted to finance...These 10 may just help you make some money.
October 7, 2005: 10:15 AM EDT
By Carrie Lee, CNN/Money contributing writer

The best blogs
1. Seeking Alpha -- This is a good place to start blogging, because it's essentially a collection of different blogs. The site provides links to everything from analysis of media and Internet stocks to investing in China. The "Sound Money Tips" link offers simple financial strategies for every day life, from buying versus leasing a car, to selling a home without a realtor.

2. The Asset Allocator! – This site's "SmorgasBoard" section provides a handful of links, each day, to articles on top business stories, and that's just the beginning. Hundreds of links are posted for various categories. They include everything from corporate blogs, top business news sites, U.S. Government office sites, and investment resources. This site is not about original content, but rather one-stop shopping for financial information.

3. CANSLIM Investing - Yes it's a long web address, but also worth bookmarking. This site contains many easy to read pieces on stock suggestions, chart analysis, and market commentary using the CANSLIM approach to investing. (The seven letters each stand for an investing criteria, for example, "L" represents choosing an industry leader over a laggard.)

4. The Kirk Report – The site is written by an individual investor, Charles E. Kirk, who promises more food for thought than blind recommendations, and delivers on that promise. Viewers can sign up for a free, weekly e-mail newsletter. And unlike many financial blogs, the site is ad free!!

5. Big Ben's Investing Blog - This site, although anonymous, is called Big Ben's Finance and
Investing Blog. There's good, specific information on certain stocks here, including profit expectations and results. Other recent standout posts include advice on finding an online stock broker, and specs and photo of a new Motorola device reportedly in the works.

6. The Thinking Bull - This anonymous site offers a compilation of online financial articles. The screen is split between articles on trading and investing, and it's a useful stop for articles on various investing strategies.

7. Random Roger's Big Picture – This is a good site for investors looking for investing ideas beyond U.S. stocks. Author Roger Nusbaum is an investment advisor representative for Your Source Financial. His posts include insightful commentary on recent print articles and televised financial segments, and so give readers more than one view point on a topic. His writing style is very down to earth, it feels like you're reading personal letters from your neighbor.

8. Footnoted.org – Author Michelle Leder is a veteran financial journalist who has published a book on spotting red flags in corporate documents ("Financial Fine Print: Uncovering a Company's True Value.") The site's subject matter is in the same, investigative vein, setting the site apart from other blogs. Visitors can search for information by company name, and thus make a quick and easy stop here to find corporate dirt and other tidbits.

9. Stock and commodity trading – This anonymous site is technically oriented, covering day to day stock market activity, gold and currency markets. Interesting links like 'coin stories' (includes posts about coins during the era of Alexander the Great, a 17th century coin with a UFO like design) are fun to read.

10. Thinkblog - This is from ThinkEquity Partners, a research and investment banking company. It's of the more straight and sophisticated blogs around, with high quality commentary from CEO Michael Moe and other luminaries. There are also dozens of links to the brightest minds in business, from economist Larry Kudlow of CNBC fame, to tech writer Walter Mossberg at the Wall Street Journal.

-- Carrie Lee is a business news correspondent for CNN Headline News in New York

More From CNN

Dollar spent, penny earned

Talk about a penny saved is a penny saved, look what I found in the news....

Dollar spent, penny earned
Banks launch cards that promote saving and spending but is this too little, too late for consumers?
October 20, 2005: 2:10 PM EDT By Shaheen Pasha,
CNN/Money staff writer

NEW YORK (CNN/Money) - It's a lesson most children learn from their parents: a penny saved is a penny earned. Now banks are shaking up that notion by telling consumers that a dollar spent could lead to a penny saved.

More from CNN

A Penny Saved is a Penny Saved!

Hell Yeah! Got comments to add money tips from The Apprentice. Not all seems to be money tips more like business tips but it's okay I'll check some out later.

I remember living in boarding school all those pennies gone to waste! Most of my friends including me self we're just too lazy to use pennies. Plus it's heavy to carry around in the purse.

When I remember back all those pennies on the beside tables all most of my friends. I should've asked for them and put it in my piggy bank. Though I didnt have one that time!

Imagine a penny saved every single day after many years will grow to hundreds or even thousands. Could help to pay student loans by time I graduate!

Just dont make the same mistake I did! Hell it came from Trump as well!

Employee vs. Entrepreneur - What's the Difference? PART 1

An article written by Robert Kiyosaki for Amazon.comas one of its 1st ever Hall of Fame inductees

The first difference between entrepreneurs and employees is:
Employees are resource-oriented. Entrepreneurs are opportunity-oriented.

The second difference between entrepreneurs and employees is:
Employees prefer to manage via hierarchical structures.Entrepreneurs manage via networks, utilizing the resources of other people and organizations.

Learn More

Being Poor in Malcolm in The Middle

I'm watching Malcolm in the Middle the rerun. They're all still so small so cute. Just so happens that the episode about Mom lost her job because Dewy stole a $150 Cognac.

As weird and abnormal and hectic this program is I find so many things to learn from them ahahaha They just make life more interesting. Mom lost job, now they're poor and Malcolm is sick and tired of being poor! His classmates giving hand outs.

Being poor is not a sin! but rather have the money to be able to buy basic necessities or even more! hahaha like some bling bling!

I love it when the mom said, I dont deserve this! I am so much better than you! Hell Yeah you go gurl! That's how we should all be.. We should stand up for ourselves and earn our rights to live a life of not poor but fulfilled and more!

Like Malcolm said at the end of this show! Money Rulz!