Monday, May 25, 2015

Should You Still Keep Your Bond Funds If Bond Prices Drop?

Hype about bond investors losing their shirts when long-term bond fund prices drop because of the Fed Janet Yellen's whimsies may be just that: Hype. If the share prices in a mutual bond fund go down, the dividend yields go up. If the price goes down dramatically, the dividend yield also increases, even if not in quite so dramatic a fashion.

Bonds are for Investors who are Interested in Investing

Bonds and bond funds are not for investors who view investing as another way to gamble. Unlike investors in stocks and stock funds, people who own bonds do not cherish them simply because the prices my go up. Investors own bond funds because they receive dividends every month, and they can do whatever they wish with the extra shares or money.

Reinvest Dividends or Keep the Cash

People who invest in mutual funds may not realize that they have options as to what to do with their monthly dividends. Typically, investors can reinvest the dividends back into the same bond funds, they can redirect the dividends to invest in other mutual funds or they can make arrangements to have the dividends automatically exchanged into cash via their money market accounts.

How to Handle Taxes on Dividends

Bond fund dividends held in a traditional IRA or Roth IRA are not taxable income as long as the dividends stay in the IRA account. Dividends received in a non-retirement account are fully taxable. One financial strategy is to reinvest IRA bond dividends back into the same IRA bond fund and automatically exchange non-retirement account bond dividends into cash within a non-retirement account money market fund.

In this manner, the dividends continue to grow tax-free within the investor's IRA, while the investor gains extra cash every month in the non-retirement money market fund. If a person has substantial investments, the investor will have additional money to invest in the following year's traditional IRA or Roth IRA without having to spend any extra cash for Individual Retirement Account contributions.

Friday, May 24, 2013

Buy Stocks at the Bottom of the Spread

If you are interested in buying a stock, you need to check the stock's 52-week high and low before you risk your principal investment. You may think that this data is insignificant, but the spread between a stock's 52-week high and low does have meaning. If a stock's 52-week high price is $100, and the stock's 52-week low price is $99, this means that you are going to pay only $1 less per share than the highest price the stock has reached during the past year. 

When you shop for items in your local grocery store, you try to buy food, toilet paper, paper towels, soap, laundry detergent, Earl Grey tea, coffee, orange juice, milk, cheese, yogurt and soup at sale prices. The same basic rule applies to investing. If you pay too much money for a stock, you run the risk of losing a larger percentage of your initial investment. Some people may argue that the stock might continue to rise while you sit in the wings refusing to participate in the stock market. While this philosophy may hold some truth, the majority of  financial experts believe that buying low and selling high is the safest strategy.

Thursday, October 4, 2012

Romney Wins Debate with Style, Grace and Wit

The outcome of the first 2012 Presidential Debate met with similar reactions from numerous liberals and conservatives. Did I say liberals? You bet! Liberal Michael Moore stated that Obama's performance was lack-luster. In fact, progressive liberal Michael Moore literally exploded on Twitter last night when he admitted that Obama clearly lost the debate to Romney. Moore posted approximately 30 Tweets on Twitter, including the following remarks:

“Obama please be Obama! You sound like a Democrat (wimpy)." 1
“Romney looks like he's been lit different - brighter, sharper. You can see the difference by comparing their shirts." 2

Other commentators, including liberal Democrats and conservative Republicans, were quick to make positive comments about Mitt Romney's strength during the first 2012 Presidential Debate that aired on numerous televisions stations nationwide on Wednesday night. Various major news reports indicate that Mitt Romney won the debate in a grand style, convincing at least two thirds of American voters that he is the man who can get the economy rolling in positive territory.

Anyone who watched the debate knows that Mitt Romney appeared as a positive and knowledgeable candidate with a passion to restore jobs back to the many unemployed American workers. The other truth is that Obama appeared weak, confused, nervous and robotic. Mitt Romney displayed warmth, humor, wit and confidence, whereas Obama may as well have been a clone or an automaton. Romney even managed to squeeze in a humorous comment about Big Bird. Romney stated that he loves Big Bird, one of the animated stars of Sesame Street, but added that he does not intend to dole out money to support these types of PBS shows.

The first 2012 Presidential Debate is a clear indicator that Americans are fed up with four monotonous and unproductive years of Obama's mockery of leadership skills, Obamacare (Obama's Healthcare Bill) and all of  Obama's other socialist agendas for America. Mitt Romney has an excellent chance of winning the 2012 Presidential Election. If so, this means that Americans will once again have the freedom to choose their own insurance companies, or even decide they do not want to pay for insurance coverage. Americans will have opportunities to turn their hopes for employment into tangible jobs that pay them real wages. Mitt Romney won the first 2012 Presidential debate with style and grace as he managed to conquer the dull and witless tactics displayed by Obama.

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