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Investing 101 Archive

  • Investing 101: A New Way to Envision Your Retirement

    By Zelkadis Elvi

    A recent Stanford University study found that many Americans fail to save enough for retirement. That’s because they don’t “identify with their future selves,” the report says. In order to get more people to think ahead about retirement, Merrill Edge came up with a web-based tool called Face Retirement. This tool ages a digital picture of yourself – giving you an idea of what you’ll look like during your retirement years.

    “We wanted to come up with a unique and a creative way, and a fun way, for people to engage in a difficult topic,” said Alok Prasad, head of Merrill Edge, in the attached video. “Our research found that over 75% of Americans are worried about retirement.”

    The Stanford study found that people contributed more money to their retirement savings plans after seeing their future face. Tests showed “a 30% increase,” said Prasad.

    The process is simple. Using a webcam, users can take a photo of themselves and watch as the site digitally ages their face. “Right after someone tries it, they can see themselves at these different age levels,” said Paul Vienick, managing director at Merrill Edge.

    But the tool goes beyond just snapping a picture and aging your face. It estimates your future cost of living.

    “So when someone is going to be 77 or 87 [years old], whatever year that may be, we’ll tell them what something will cost at that point in time," said Vienick. "Whether it be a gallon of milk, a gallon of gas, the cost of a wedding, the cost of an airline ticket. It’s quite an interesting way to correlate it back to today’s time and what things cost.”

    Read More »from Investing 101: A New Way to Envision Your Retirement
  • You hear it on financial television or read it in the paper all the time: Company XYZ issues a huge stock buyback program. Conventional wisdom says buybacks are sign that the company itself thinks its stock is cheap. In theory, this would be the ultimate "inside information." The reality is quite different.

    In this edition of Investing 101, Greg Milano, co-founder & CEO of Fortuna Advisors, a company specializing in shareholder value consulting, walks us through some of the basics on stock buybacks and sheds light on whether or not they're a reliable signal to buy shares alongside the company itself.

    What's a Buyback?

    Simply enough, Milano says a buyback is just the "act of a company taking some of its cash or some money it might borrow, and buying some of its own shares."

    Significantly, an actual buyback versus one that's just announced, are different things. Often times a company will set a buyback policy of bidding for a stock under the current prices. It's a way for the board of directors to start buying its own shares when the stock price dips.

    Why Would a Public Company Buy Its Own Shares?

    It's not as silly a question as it may seem. Being public means selling a portion of the company to raise cash; usually for the purposes of cashing out insiders and investing in corporate opportunities. Selling shares to the public then buying them back sounds dangerously close to trading your own shares.

    Read More »from Stock Buybacks: Separating Fact From Fiction
  • With dividend tax hikes looming, special dividends being announced, and government security yields at all time lows, it's easy to forget the basics. Specifically, how can you create a portfolio of dividend paying stocks that separates Blue Chip yield from the value traps.

    In this edition of Investing 101, Barbara Marcin, portfolio manager of the four-star rated Gabelli Dividend Growth Fund (GABBX) walks us through the basics of building a portfolio of stocks that spins off some income to patient investors.

    Tip #1: Be Patient and "Layer" into Positions

    Dividend stocks aren't about catching every rally. The idea is to take the long-view and create a portfolio built to last. Marcin suggests investors with a 3-year horizon slowly build positions rather than dive in all at once. "Put in a third now, a third in three months, and a third after that," she suggests in the attached video.

    In a volatile environment, having a set schedule like this keeps investors from getting unnerved and making impulsive decisions.

    Tip #2: Look at the Company Then the Dividend

    Marcin says investors should buy stocks of companies they believe in first and foremost, with the yield coming second. Paradoxically, stocks with high yields can be the least safe on the market. When you see a name kicking off 5 or 6% while the rest of the blue chips are yielding half that, it's a sign that institutional investors are skeptical of both the company and its ability to pay the listed dividend.

    If 2 or 3% seems low to you, Marcin begs to differ. Dividends are "the highest current return available compared to anything 'safe'... Treasuires, CDs, anything."

    Read More »from 3 Tips to Build a Strong Dividend Portfolio

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(57 Stories)

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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