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The End Of QE2-Quantitative Easing

Today, marks the end of quantitative easing part two. Quantitative easing (QE) is an unconventional monetary policy tool used by the Federal Reserve to stimulate the national economy when conventional monetary policy has become ineffective. Of course that doesn’t mean the there won’t be a QE3 and QE4. The policies of the Obama Administration have damaged our economy and I’m not surprised at the Federal Reserve for having to step in to try to save it. We’re in dire straits with the current economic situation, it’s hard to believe that we can turn things around in the next few years.

Watching the stock market in this past week would have others believe that we’re out of the woods and on the road to recovery. Instead what we’ve seen in the last four trading days is the smart money getting back into buying equities since the recent healthy pull back on the DOW. I’ve spoken about this before in detail of how when the markets or even good solid stocks pull back 8% from their recent high, you must “back up the truck” and load up for a strong rally that will be happening soon. Eight percent is a benchmark that I use to make decisions on when to jump into a stock or the overall market. Time and time again it has been useful and profitable for traders to follow this method.

If you’re new to investing in the stock market or have been around awhile, this is something you need to keep in your trading playbook. something else to keep in mind is when stocks or the markets move up 8%-10% in a short period, it’s time to unload some of your shares to keep the gains you just made. So far in the last four trading days, the DOW has gain nearly 4% from it recent low. Remember, pigs get slaughtered, so don’t be a pig and try to ride out the wave a little longer. Be happy with the gains you’ve made. Since emotions are not welcomed when trading stocks, don’t be mad or angry if you miss out on some profits because you jumped out too early. Stocks will always have a pull back and with the gains you made, you’ll have capital to trade another day.

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Preventing Investment Fraud

If you are new to the investing world, there are people out there who will try and scam you. This is true with every aspect of life, and the world of investing is no exception. If there is money to be made or stolen you can rest assure there are crooks out there trying to find a way to steal yours.


There is no safer place than to keep your money in a savings account at the local bank. As long as the bank is FDIC insured your money will be protected by the government. A limit of $250,000 does apply to these types of accounts. So if you have over that amount you should not place all of it in the same account. A savings account is a type of investment because your money is earning interest as it sits there. The bank will use it to make loans and give you a specified percentage rate in return for letting them use it. At the moment rates are not that favorable and many are considering other investment options.


Placing your money with a stock broker is another alternative. There are many online brokers that will allow you to direct your funds into a variety of different asset classes. When looking at a broker make sure that they too offer insurance from SIPC. Brokers who will not insure your accounts can potentially be scams that will take your money and run. Using a broker based in your own country is also advised. If the broker asks for money to be transferred to an overseas account, red flags should go off in your head. There are many reputable brokers here in the U.S. that are available to the retail investor. Going online and researching the various brokers that are available is a good idea. Many will have both full service financial advisors, to help you out, or let you choose the stocks you would like to buy yourself. Your investment experience and knowledge will help you make the decision as to how much help you require form your stock broker.


Like stock brokers, currency brokers will offer you as an investor the opportunity to invest in the currency markets. There are many online foreign currency scams on the internet, mostly revolving around computer programs that will make you money. Please do not trust these money making systems, as they will not make you the money as promised. The same basic principles hold true when trying to find a good currency broker. Do your research online and read the many forex broker reviews that are available. These reviews will help you to see the pros and cons that other investors had with the brokers that are available to the retail investor. Make sure your broker, either stock or currency, has representative available for you to speak with by telephone. Making sure that there office has a building headquarters is one way of making sure that the broker is legitimate. As mentioned before many of the scams revolve around brokers that work from third world countries and offer no brokerage service at all.


Giving your money away to someone who claims to be an investment advisor can also lead you to lose money. Besides the various brokers that are available to the retail investor there are other types of investments, such as hedge funds. Hedge fund can promise to offer greater returns, however they do not always do this in reality. These funds are the riskiest types of investments when it comes to fraud. Make sure you know of other investors who have money with the fund before you invest any of your own. The fund manager can be gone the next day with your cash never to be seen again, it has happened before and will most likely happen again. If you take your time and do the appropriate research there should be no issue on how reputable your local bank, broker or fund manager is. If as an investor you do not feel confident or comfortable giving your money to a particular institution then do not do it. Ask as many questions as you need answered for them to earn your business

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Finding The Best-Suited Funds For Your IRA

Investing hard-earned money in Individual Retirement Funds can be risky, but there are IRA funds that have been performing very well and would definitely be wise to consider. Dodge and Cox Stock has proven to be a reliable fund since its start in 1965. Sometimes going with an older fund is a good idea. The strong performance of Dodge and Cox makes it a good choice for those who are interested in dividend-oriented portfolios and strong risk-adjusted returns.


Vanguard REIT Index Fund has proven to be another fund with good performance. Even though real estate has been risky of late, this fund has been doing very well, especially considering that REITs must distribute 90% of earnings to shareholders every year. Real estate allows for a more diversified portfolio and is a good choice for an IRA fund.


Roth IRAs have always been a good option for IRA investing. After age 59 and 1/2, withdrawals are not taxed, and the rules for withdrawal are more flexible to work with. And since contributions can be withdrawn without the risk of penalty or taxes, Roth IRAs are a good choice if money may be needed sooner rather than later.


Another good choice would be the Vanguard Total Bond Market Index Fund. Half of its portfolio deals in agency and Treasury bonds and the other half in corporate bonds. This fund is expected to perform well in years to come.


Third Avenue Value has been performing reasonably well in the last ten years. Considering the state of the economy, this fund is still doing better than others. It might be worth checking into as an IRA investment. The funds listed here are options to consider when looking for the best IRA funds. Retirement should be relaxing and worry-free, and good investing today can contribute towards a happier tomorrow.

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Fixed Indexed Annuity Combines Fixed And Variable ...

A feature of fixed annuity contracts that many investors felt was missing was market participation. Even though variable annuities allow the investor the ability to tie their accounts to individual stocks and other market based products, variable annuities are anything but appropriate for most. For one thing, variable annuities have the ability to completely lose their value during market downturns. Couple this with notorious commission rates and unscrupulous sales pitches, and the variable annuity quickly loses its appeal. In answer to this need from the investing community, the insurance companies created a product that takes the best of both the fixed annuity world and the variable world. This product is called a fixed indexed annuity.


Fixed indexed annuities are fixed annuity contracts that participate in the market indexes. Most contracts tie their rates to the S&P 500, although other market indexes are also used. Rather than subject the contract to risk of loss, they are often given a guaranteed minimum interest rate. In market downturns, your interest rate may be at 0%, but your principal is guaranteed to not fall. Do the math on what type of interest rate you would require to restore your principal if you lost 50% of your account during a downturn. You’ll quickly see the advantage of this protection of principal.


These indexed annuities function much more similar to a fixed annuity than a variable annuity. They participate by giving account bonuses or interest rate adjustments based on the performance of the market. Although your account is tied to a market index, you will not necessarily participate in the full growth of the index. The insurance companies have built in various crediting options to help them counter the risk they take on during market downswings. Your actual participation in index growth will be limited by caps, participation rates, and spreads. How your account is credited will depend on the structure of the individual annuity and can fluctuate greatly between companies and even products within each company. As with any other financial product on the market, be sure to do your research before purchasing. Know your crediting options, and understand how your annuity is supposed to work.

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ETF’s and Mutual Funds

ETF’s (Exchange Traded Fund)
Exchange traded funds, or ETFs as they are better known, combine some of the benefits of both common stocks and mutual funds. They trade like stocks and are listed on an exchange, yet they usually represent a major stock index, industry group, international country index, or commodity.
As defined on about.com
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Mutual Fund:
A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund.
As defined on about.com

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When you want to start out in the stock market and you don’t have a large amount of capitol (cash) ETF’s & Mutual Funds are the way to go. The reason behind that is, just like in a earlier post we stated, that being diversified is one way to weather the highs and lows of the stock market.
You also don’t have to know too much about any one stock or even knowing a handful of them. ETF’s basically follow indexes like the S&P 500, mutual funds are controlled by a fund manager who will make the decision for you and the other investors in the fund. It would be wise though to do your research on that manager to see how he’s handled other funds in the past.

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