Connect with us

Personal Finance

How To Score Big Gains During The Current Market Sell-Off

Published

on

With the current market sell-off many investors intuitively feel that there are opportunities in the market. But they are often confused and don’t know what to do and where to begin.

Instead of rolling up their sleeves and start working with the “material” – as Anni Albers did, they find themselves “buried” in meaningless debates about market in general, or Apple or Brexit or currencies or the influence of politics on the market.

 

Over the past decade since the 2008 credit crisis, we have witnessed tremendous growth of shareholder activism. US is a leader in this field. Not a day has passed without reports in financial media about new activist investor campaigns or updates on companies in which activists already invested.

This trend, combined with the urgent need to be “accountable” to investors as a result of the crisis, played into the hands of investors well. But this wave seems to be fading somehow recently.

This presents investors with a challenge to get back to the basics, do their homework, start thinking for themselves and making investment decisions independently without any “external help”.

I believe that the focus on event-driven situations combined with general market decline provides an excellent lens through which investors can look at the “material”. Events provide a natural process of generating ideas with multiple and differentiated sources of risk. Specific corporate transactions, such as share buybacks, spin-offs, mergers or asset sales “create” a more exact risk/return profiles.

As an example, one can look at shares of Whitbread PLC which recently announced the sale of coffee business to Coca-Cola, the spin-off (carve-out) by FMC Corp of the Livent Corp (producer of performance lithium compounds), Wyndham Hotels & Resorts spin-off (declined ~30% since the start of trading) and many other companies.

Obviously, investors are not required to limit themselves to event-driven situations.

What is required is to roll-up the sleeves, identify opportunity set and not be paralyzed in the face of risk and volatility.

Personal Finance

6 Money Saving Tips For Millennials

Published

on

Prev1 of 7
Use your ← → (arrow) keys to browse

Millennials make up approximately 25% of the total population in the United States and they are now larger than the Baby Boomer generation.

This has welcomed a new trendincreased spending. The spending power of Millennials is estimated to reach a whopping $3.39 trillion by the end of 2018. A higher education level and more spending power haven’t yet translated into financial literacy.

As financial literacy is not taught in schools, most individuals grow up having no idea of investing and saving options. Most millennials will soon have to start making life decisionswhether it is to buy a home or start a family.

They need to find a way to overcome mounting student debt, skyrocketing rents, a saturated job market, and stagnant wages, while saving enough for retirement.

Sounds tough? Sure. But you need not worry. Here are six financial tips that will help millennials save a few bucks—all the while maintaining financial discipline.

Prev1 of 7
Use your ← → (arrow) keys to browse

Continue Reading

Personal Finance

Getting Plenty Of Financial Advice? 5 Money Rules You Can Ignore

Published

on

Today’s millennials aren’t big fans of debt. Unlike the baby boomers, young adults today are straddling massive financial pressure – be it heavy student loans or home prices reaching unaffordable highs. While all of this welcomes plenty of financial advice, most of them are wrong. Here are five pieces of money rules you can afford to ignore.

1. Buy A House ASAP (And Not Rent)

With home prices almost doubling and trumping inflation and pay, buying a house could lead to a nightmare if you’re taking out a mortgage before your income allows you to afford one. A better option would be to rent until you have enough funding to put down 20%, while taking care to not make payments that are more than 30% of your total income.

2. Ditch Your Credit Card

While this might be popular financial advice from the older folks, getting a credit card that comes with a low annual fee can help you immensely – if used right. What’s more, it comes packed with perks like reward points, cashback, mileage for travel, and can help you meet a large unexpected cost.

3. Pay Down Debts With The Highest Rates

It might be tempting to tackle the biggest debt of the lot and let the smaller ones slip down your priority list. The trick here is to focus instead on paying off your smallest of debts with every dollar you can afford – once it’s paid off, roll over to paying off the next one, until you’re debt-free.

4. Start Saving For Your Retirement (Right Now)

Despite the upside to saving for your retirement now, millennials might often find money too tight. For folks who are just out of university, a wiser option would be to aggressively pay off your debts instead. Although, here’s a caveat – IF your employer offers a retirement contribution match, invest just enough to get that perk (It’s free money!).

5. Buy Yourself A Car

With the shared economy on overdrive, there are plenty of options ranging from car rentals to ride-hailing services. Pumping your money into buying your car could also demand more of your savings for repairs and maintenance – funds you can use to pay off other expenses with. The opportunity cost isn’t worth it if you haven’t got enough financial cushion to meet your important expenses.

Continue Reading

Personal Finance

Why You Need To Bag Muni Bonds For High-Yield Tax-Free Returns

Published

on

With many investors taking to the stock market or making do with scraping a meagre 2% yield off their 10-year Treasury bills, most miss out on including a far better option to their investment portfolio – municipal bonds. What’s exciting about this asset class? They come packed with significant tax advantages, and yield returns that are over 6% to the investor. Here’s a short, somewhat helpful video on how municipal bonds work:

Muni bonds have been the safest bet when investing in bonds – their default rates at 0.2% for years are almost miniscule when compared to the volatility that the equity market flirts with. Earlier this year, a new federal tax law enabled improved tax deductions on federal returns. This drew many to bank on municipal bonds since it fit the tax-free bill. The interest income you receive on muni bonds is not subject to federal taxes, plus it is exempt from local taxes if it was issued within your state. The cascading gains you make can be dramatic.

The best way to tap into muni bonds are through a bond fund. Within a regular bond fund, you get to pick amongst mutual funds, closed-end funds and exchange-traded funds (ETFs). Beyond these classes, you would also have to consider factors such as your investment horizon and cash flow requirements. Here’s a post that explains the calculations that go into muni bonds and other considerations to look at when making the investment. Better yet are the projections – nearly $51 billion in reinvestment demand is expected this month, which would sweeten the deal for municipal bond holders.

 

Continue Reading

Trending