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Investing 101 Archive

  • For a brief period this month an electronic form of currency called bitcoins were all the rage. Promoted as an alternative to paper or "fiat" currency, bitcoin caught a popular wave with the public and became the it investment of the moment. With high profile investors like the Winklevoss twins, it seemed like nothing could stop the momentum.

    Then as quickly as it inflated, the bitcoin bubble burst. After rising from $20 in February to $266 on April 10th, bitcoin crashed on April 11th, dropping more than $100 before trading was halted. The crash took the price of a bitcoin down more than 75% from its highs to the lows. As usual, it's the latecomers who are getting hit with the biggest losses.

    Bitcoin will make a nice cautionary tale someday, but so do stories of the housing bubble, the Internet bubble, and every collapse since Dutch Tulips in the 17th century. Some even say the decline of Apple (AAPL) shares and gold's recent price slide are indicative of modern-day bubbles.

    If the masses could really learn anything from these disasters then bubbles would be a thing of the past, rather than regular occurrences. Most people just can't help themselves when tempted with the prospect of easy money.

    That doesn't mean you have to be the next victim of a bubble mania. In this edition of Investing 101, Robert Luna of SureVest walks us through 5 signs of an investment bubble.

    1) Valuations deviate significantly from a long-term historical average

    Read More »from The Bitcoin Implosion: 5 Signs of an Investing Bubble
  • Unlike the stock market, which is setting at record highs, the housing market has yet to recover from the depths of the last recession. While real estate sales and prices are trending higher and are clearly better off than they were a few years (or even months) ago, a full recovery is still far off.

    That's not necessarily a bad thing, since it gives more people more time to take advantage of still low prices and interest rates. Nor is it a good thing, since it means as much as one-third of current homeowners are still underwater with their mortgages (eg. they owe more than the property is worth).

    But with prices up, inquiries on the rise, and the spring selling season in full gear, it remains to be seen how this uptrend will play out.

    For this installment of Investing 101, Shari Olefson, noted real estate attorney and author of the new book Financial Fresh Start, walks us through the basics of renting versus buying when it comes to making the investment of a lifetime.

    1) Follow the "Rule of 15"

    Before you make the decision to rent or buy, Olefson offers this rule of thumb: "If you can buy a home in your area for less than 15-times what your annual rent is, than financially it makes much more sense to buy than to rent."

    For example, if you pay $2,000 a month in rent (or $24,000 a year), she says the basic buy-rent cutoff price would be $360,000.

    Read More »from Housing on the Rebound: Is it Better to Rent or Buy?
  • Unlike the stock market, which is setting at record highs, the housing market has yet to recover from the depths of the last recession. While real estate sales and prices are trending higher and are clearly better off than they were a few years (or even months) ago, a full recovery is still far off.

    That's not necessarily a bad thing, since it gives more people more time to take advantage of still low prices and interest rates. Nor is it a good thing, since it means as much as one-third of current homeowners are still underwater with their mortgages (eg. they owe more than the property is worth).

    But with prices up, inquiries on the rise, and the spring selling season in full gear, it remains to be seen how this uptrend will play out.

    For this installment of Investing 101, Shari Olefson, noted real estate attorney and author of the new book Financial Fresh Start, walks us through the basics of renting versus buying when it comes to making the investment of a lifetime.

    1) Follow the "Rule of 15"

    Before you make the decision to rent or buy, Olefson offers this rule of thumb: "If you can buy a home in your area for less than 15-times what your annual rent is, than financially it makes much more sense to buy than to rent."

    For example, if you pay $2,000 a month in rent (or $24,000 a year), she says the basic buy-rent cutoff price would be $360,000.

    However, she warns that if rental rates in your area are abnormally high or the home you are looking at will need repairs, you must factor that in. Of course, she says "this is only one of several factors to consider," but adds it is still "a great line in the sand" for narrowing down your initial search.

    2) Determine What You Can Afford

    Olefson says affordability is another key variable to consider. As a rough guideline, she suggests looking at properties that cost no more than 2.5 to 3 times your annual income on housing.

    Read More »from Housing on the Rebound: Is it Better to Rent or Buy?

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ABOUT INVESTING 101

Breakout’s Investing 101 helps you gain insight on money management and trading. Whether you’re managing your own retirement account, just beginning, or an advanced investor in need of a good refresher, Investing 101 will help you learn, grow, and keep you informed of the basic steps to effectively manage your money. Expect investing tips that focus on trading strategies, asset allocation, and portfolio management.





Investing 101

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