American Consolidebt, Capital Management Advice

Author: Seth Miller
Posted by Consolidebt.Us
Money investments can be made in the foreign exchange market, stock market, or futures trading market. The foreign exchange or “Forex” market was not accessible to the average investor in the past, but of late, it has become a popular option for investment. Stock market deals with a combination of government and company bonds as well as preferred and common stocks from various business establishments and other forms of securities and assets. Futures trading market comprises of financial arrangements where an undertaking is signed by a seller to provide a commodity or any other pre-decided asset on a pre-determined date to the buyer.

With the help of technology, everyone can derive the benefit of the low risk, high return foreign currency exchange market. For beginners, many online websites of Forex brokers offer demo or trial accounts that help the investors practice their trading skills. These accounts also help increase the understanding of working of the real time Forex market.

For investment in the stock market, investors have to create their portfolios that are a collection of investment securities owned by an institution or an individual. This practice of creating or holding a portfolio is a part of an investment and risk-limiting strategy, which is known as diversification. It means that by acquiring varied types of assets, certain risks can be reduced. A portfolio can comprise of stocks, bonds, options, warrants, gold certificates, real estate, futures contracts, production facilities, or any other item that is likely to maintain its worth.

Futures trading involves a buyer and a seller, in which the seller is required to provide the agreed upon commodity at a fixed price to the buyer at the time specified on the futures contract. The profits or losses incurred are determined by the contract’s price changes that are in relation to the price that are fixed at the beginning of the contract.

Author: Dobromir Stoyanov

At the start of the new millennium, about 12% of the U.S. population was over 65  years old. According to the U.S. Census Bureau, the baby boom segment of the  population is expected to rise over the next two decades and approach 42% by  2030.

Investors who are approaching retirement are typically sold a wide array of fixed  income investments like bonds, bond funds, annuities and many other fixed  income instruments. Those solutions do provide dependable income but with one  significant drawback though- they don’t account for the eroding value of inflation.  Even a modest 3% annual inflation rate corresponds to a 24% decline in  purchasing power after 9 years.

As the first wave of baby boomers reaches the age of retirement, they are likely to  shift their investment focus to unearned, investment income. While this will not  happen overnight, the demographic trends are notable and could drive a major  demand shift towards dividend-paying stocks - and consequently, the potential for  price appreciation. Dividends have historically accounted to 40% of the total stock  returns over the past 80 years.

Dividend Contribution

Decade    Price Return   Dividend Return      Total Return    To Total Returns

1900s    6.92%        4.56%        11.48%        40%

1910s    -0.43%        5.88%        5.45%        108%

1920s    10.96%        5.70%        16.66%        34%

1930s    -0.29%        5.05%        4.76%        106%

1940s    4.36%        5.83%        10.19%        57%

1950s    14.20%        5.28%        19.48%        27%

1960s    5.02%        3.26%        8.28%        39%

1970s    3.46%        4.14%        7.60%        55%

1980s    12.57%        4.55%        17.12%        27%

1990s    16.15%        2.64%        18.79%        14%

2000s    1.29%        1.66%        2.95%        56%

Stocks that pay dividends provide a nice inflation hedge since their revenues and  net income would be affected by an increase in overall prices paid by consumers.  Dividends soften losses during bear markets, and they provide the only sources  for investment gains in troublesome times. In addition, dividend income takes  away the need to sell large chunks of your portfolio in a declining market.  Retirement income could be solely derived from dividends and their growth would  compensate the dividend investor for the erosion in the purchasing power of the  dollar.