Texting and stock investing don’t mix

By Chuck Jaffe, MarketWatch

BOSTON (MarketWatch) — Touting stocks must work, or the people behind them would try something else.

So when I got a text message announcing that “VIPStockPicks is opening its doors to the public!” and offering a chance to sign up for real-time penny-stock alerts for free on my cell phone, I decided to see what anyone who falls for this stuff gets.

Just over a week later — less than 20 minutes before the market opened on March 12 -— came the first tip, for Toron Inc. (OBB:TRON) . It was just one line, with more information promised on the website vipstockpicks.mobi. Another text came two hours later, saying TRON “is already up 20%+ today. Get in now before the BIG news comes this week!”

With about 20 minutes left in the day’s trading, a third message arrived: The stock was up 41%, and again urged me to get in before big news came this week. About 48 hours later, there was another text, suggesting that it was not too late to act on Toron.

The truth, however, is that anyone buying stock on the basis of a text message from a service about which they know virtually nothing is making a mistake, which is why Toron is the Stupid Investment of the Week.

Stupid Investment of the Week highlights the concerns and conditions that make a security less than ideal for the average investor and is written in the hope that spotlighting danger in one case will make it easier to avoid trouble elsewhere.
Pump and dump

In fact, Toron’s pick is less about the company than the way investors found out about it; it’s hard to believe any stock being pumped via text message would be a good idea for average investors.

The interesting thing, of course, is that somebody would actually trade on advice from an anonymous text, from an anonymous website, where the information amounts to “Buy now!’ without any real knowledge of the company.

Michael Whitehead, Toron’s president, said the company was unaware it was the subject of the text messages and has no idea who is behind the push. It’s not the first time in the company’s short history, however, that it was used this way; Whitehead’s wife once received a spam email touting the stock.

“We want to attract investors, but not this way,” Whitehead said in a telephone interview late last week. “I believe we can attract investors by moving the company forward and having some success, which would attract investors who want to be part of this for the long-term, and not somebody who is going to buy today and sell tomorrow.”

Anyone who followed up on the text by going to the VIPStockPicks website didn’t exactly get any real information. The reason to invest in Toron was summed up by the site: “We all know it’s the big announcements that make these small gems move.”

But it would be news to Toron’s president if the company had a big announcement to make.

“Whoever is behind [the texts] is making that up,” Whitehead said. “There is no big announcement coming right now.”

Toron was organized in 2008 and according to its own filings with the Securities and Exchange Commission was “engaged in the, marketing, sales and re-sales via the Internet of web domain names.”

Last summer, however, the company made the completely logical decision to move from that business into “identifying and pursuing options regarding the acquisition of mineral exploration properties.” At that point, it effectively went from a shell company to an operating company, although you can’t tell it by the company’s revenues because there have never been any, through its latest quarterly report, dated Oct. 31, 2011.

When it made the change, the company acquired “an undivided 100% interest” in 62 mineral claims in Canada. The company then underwent a 32-for-one stock split, increasing its float to 185 million shares.

That’s a common penny stock strategy, as is the basic pump-and-dump of “here’s a tip, go buy it” from the text messages. It’s just that the text messages reach a different audience than, say, spam emails, touts left on message boards and most of the traditional tools.

What’s worse is that in those classic stock promotions, the investor can find a disclosure as to who is behind the tip, what they have been paid to make it, what their ownership position is and more.

There are no disclosures from VipStockPicks that identify who is behind it. Its website is registered to someone in New Zealand. If the disclaimers and fine print typically show you the worst about a stock tout, consider the volumes spoken by silence when a recommendation comes without the slightest easy-to-find clue about who is responsible for it.

Whitehead made it clear that Toron itself is not behind the reports. “If I could find who is doing this and make them stop using our company this way, I would,” he said.

Dig in to the company and there’s nothing to bank on for an investor, even one who likes junior mining stocks. While there are the property rights, the company is so new that there is nothing for an investor to go on, unless they understand the area of Quebec where the company’s mineral claims are and have insight into how that property might pay off compared to start-up mining companies around the globe.

With no profits and revenues to look at -— but expenses that could run from $250,000 to more than $800,000 in the next year — there’s nothing beyond the texts and other touts that would ever put Toron on the average investor’s radar screen.

Even the promises of the text haven’t really materialized. While the texts accurately described the action in the stock, the truth is that after the initial move, Toron basically stabilized. Someone who ignored the first texts but bought in later didn’t really get another pop; moreover, the push just put the stock back into the middle of a range it has been in for weeks now. Trading volume is up; the penny-stock sharpies probably are making money on the volatility, but they’ll quickly tire of Toron and move to something else.

The average investor, however, should treat free stock-picking texts the same way they treat spam emails, cold calls and other unwanted advances that claim special insight: Ignore them completely. The people making money on these touts aren’t the ones receiving the texts.

5 Biggest Challenges Facing Your Small Business

Starting a business is a big achievement for many entrepreneurs, but maintaining one is the larger challenge. There are many standard challenges that face every business whether they are large or small. These include things like hiring the right people, building a brand and so on. However, there are some that are unique to small businesses - ones most large companies have grown out of long ago. We'll look at the 5 biggest challenges in this article.

Client Dependence - If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. Diversifying the client base is vital to growing a business, but it can be difficult – especially when the client in question pays well and on time. For many small businesses, having a client willing to pay on time for a product or service is a godsend.

Unfortunately, this can result in a longer term handicap because, even if you have employees and so on, you may be still acting as a sub-contractor for a larger business. This arrangement allows the client to avoid the risks of adding payroll in an area where the work may dry up at any time. All of that risk is transferred from the company to you and your employees. This can work out fine provided that your main clients have a consistent need for your product or service. However, it is generally better for a business to have a diversified client base to pick up the slack when any single client quits paying.

Money Management - Having enough cash to cover the bills is a must for any business, but it is also a must for every individual. Whether it is your business or your life, one will likely emerge as a capital drain that puts pressure on the other. In order to head off this problem, small businesses owners must either be heavily capitalized or be able to pick up extra income to shore up cash reserves when needed. This is why many small businesses start out with the founders working a job and building a business simultaneously. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible.

Money management becomes even more important when cash is flowing into the business and to the owner. Although handling business accounting and taxes may be within the capabilities of most business owners, professional help is usually a good idea. The complexity of a business' books go up with each client and employee, so getting an assist on the book keeping can prevent it from becoming a reason not to expand.

Fatigue - The hours, the work and the constant pressure to perform wears on even the most passionate individuals. Many business owners, even successful ones, get stuck working much longer hours than their employees. Moreover, they fear that their business will stall in their absence, so they avoid taking any long breaks away from work to recharge. When fatigue sets in, the weariness with the hours and the results can lead to rash decisions about the business, including the desire to abandon it completely. Finding a pace that keeps the business humming without grinding down the owner is a challenge that comes early (and often) in the evolution of a small business.

Founder Dependence - If you get hit by a car, is your business still producing income the next day? A business that can't operate without its founder is a business with a deadline. Many businesses suffer from founder dependence, and this dependence is often caused by the founder being unable to let go of certain decisions and responsibilities as the business grows. Meeting this challenge is easy in theory – a business owner merely has to give over more control to their employees or partners. In practice, however, this is a big stumbling block for founders because it usually involves compromising (at least initially) on the quality of work being done until the person doing the work learns the ropes.

Balancing Quality and Growth - Even when a business is not founder dependent, there comes a time when the issues from growth seems to match or even outweigh the benefits. Whether a service or a product, at some point a business must sacrifice in order to scale – this may mean not being able to personally manage every client relationship or not inspecting every widget.

Unfortunately, it is usually that level of personal engagement and that attention to detail that makes a business semi-successful. Therefore, many small business owners often find themselves tied to these habits to the detriment of the company's growth. There is a large middle ground between shoddy work and an unhealthy obsession with quality, so it is up to the business owner to navigate the company's processes towards a compromise that allows scale without hurting the brand.

The Bottom Line - These are challenges, but not death sentences. One of the worst things a would-be-business owner can do is to go into a small business without considering the challenges ahead. We've looked at some things that can help make these challenges easier, but there is no avoiding them. An important step in overcoming a challenge is knowing the size of that challenge. Besides, a competitive drive is often one of the reasons people start their own business and every challenge represents another opportunity to compete.

Read more: http://www.investopedia.com/articles/pf/12/small-business-challenges.asp#ixzz1pwl0vFrG

What Makes Gasoline Prices Rise?

By Associated Press on CNBC

Watching the numbers on the gas pump tick ever higher can boil the blood and lead the mind to wonder: Why are gasoline prices so high?

Many stand accused, including oil companies, the president, Congress, and speculators on Wall Street. Others assume that the earth is just running out of oil.

The reality, economists say, is fairly simple, but it isn't very satisfying for a driver looking for someone to blame for his $75 fill-up. Last year, the average price of gasoline was higher than ever, and it hasn't gotten any better this year.

The average price nationwide is $3.88 per gallon, the highest ever for March. Ten states and the District of Columbia are paying more than $4.

Q: What determines the price of gasoline?

A: Mainly, it's the price of crude oil, which is used to make gasoline.

Oil is a global commodity, traded on exchanges around the world. The main U.S. oil benchmark has averaged $103 per barrel this year. The oil used to make gasoline at many U.S. coastal refineries has averaged $117 per barrel.

Oil prices have been high in recent months because global oil demand is expected to reach a record this year as the developing nations of Asia, Latin America and the Middle East increase their need for oil. There have also been minor supply disruptions in South Sudan, Syria and Nigeria. And oil prices have been pushed higher by traders worried that nuclear tensions with Iran could lead to more dramatic supply disruptions. Iran is the world's third largest exporter.

Q: How are gasoline prices set?

A: When an oil producer sells to a refiner, they generally agree to a price set on an exchange such as the New York Mercantile Exchange. After the oil is refined into gasoline, it is sold by the refiner to a distributor, again pegged to the price of wholesale gasoline on an exchange.

Finally, gas station owners set their own prices based on how much they paid for their last shipment, how much they will have to pay for their next shipment, and, perhaps most importantly, how much their competitor is charging. Gas stations make very little profit on the sale of gasoline. They want to lure drivers into their convenience stores to buy coffee and soda.

Oil companies and refiners have to accept whatever price the market settles on; it has no relation to their cost of doing business. When oil prices are high, oil companies make a lot of money, but they can't force the price of oil up.

Q: Are oil prices manipulated by speculators on Wall Street?

A: Investment in oil futures contracts by pension funds, mutual funds, hedge funds [cnbc explains] , exchange traded funds [cnbc explains] and other investors who aren't going to actually use oil has risen dramatically in the last decade. Much of this money is betting that oil prices will rise. It is possible that this has inflated the price of oil — and therefore gasoline — somewhat.

But investors can also bet that prices will go down, and they do. Studies of the effects of speculation on oil markets suggest that it probably increases volatility, but that it doesn't have a major effect on average prices.

Q: Are politicians to blame for high prices?

A: Politicians can't do much to affect gasoline prices because the market for oil is global. Allowing increased drilling in the U.S. would contribute only small amounts of oil to world supply, not nearly enough to affect prices. The Associated Press conducted a statistical analysis of 36 years of monthly inflation-adjusted gasoline prices and U.S. domestic oil production and found no statistical correlation between oil that comes out of U.S. wells and the price at the pump.

Over the last three years, domestic oil production has risen and gasoline prices rose sharply. In the 1980s and 1990s, U.S. production fell dramatically, and prices did too. Releasing oil from emergency supplies held in the Strategic Petroleum Reserve could lead to a temporary dip in prices, but the market might instead take it as a signal that there is even less oil supply in the world than thought, and bid prices higher. Any price relief from a release of reserves would be temporary.

Politicians can, however, help reduce the total amount drivers pay at the pump. They could lower gasoline taxes and they can help get more fuel efficient cars into showrooms by mandating fuel economy improvements or subsidizing the cost of alternative-fueled vehicles.

The first new fuel economy standards since 1990 are just now going into effect. Last summer the Obama Administration and automakers agreed to toughen standards further in 2016.

The U.S. fleet is now more fuel efficient than ever, and gasoline demand in the U.S. has fallen for 52 straight weeks. The U.S. is never again expected to consume as much gasoline as it did in 2006. That means that while drivers are paying more than they used to, they would have been paying much more if they consumed as much gasoline as they did in the middle of the last decade.

Q: Are prices high because the world is running out of oil?

A: Not yet. Prices are high because there's not a lot of oil that can be quickly and easily brought to market to meet demand or potential supply disruptions from natural disasters or political turmoil. Like most commodities, the need for oil is so great that people will pay almost anything, in the short term, to get their hands on what might be the last available barrel at any given moment.

But substantial new reserves of oil have been found in shale formations in the United States, in the Atlantic deep waters off of Africa and South America, and on the east coast of Africa. Canada has enormous reserves, and production is growing fast there. The Arctic, which is largely unexplored, is thought to have 25 percent of the world's known reserves.

All of this oil, however is hard to get and expensive to produce. That leads analysts to believe that oil will never stay much below $60 a barrel for an extended period again. As soon as oil prices fall, producers will stop developing this expensive oil until demand, and high prices, return.

Current high prices have fueled a boom in oil exploration that is sure to bring more crude to the market in coming years. But it is not here yet, so for now, pump prices — and frustration — are expected to remain high.

Why everyone needs an emergency fund

By Fidelity Viewpoints

On the excitement meter, a “rainy day” fund might barely move the needle, particularly when compared with other financial goals such as saving for college, a retirement account, or a down payment on a new home. Yet investors who fail to include an emergency fund in their planning do so at their peril.

“Being unprepared for an emergency—anything from a flood to losing your job—can force you into a financial hole,” says Beth McHugh, vice president of market insights at Fidelity. “The unexpected can happen to anyone, regardless of age or income level, and it can take years to recover if you are not financially prepared.”

A recent study published by the National Bureau of Economic Research and the Brookings Institution found that 50% of Americans—and nearly 15% of households earning $150,000 or more a year—couldn’t come up with $2,000 in cash to cover an unexpected auto emergency, medical bill, or home repair.

This is why creating an emergency fund should be considered a priority. Maybe you’re just starting a career and are inclined to take your chances. Or maybe you think your net worth has grown enough to make an emergency fund unnecessary. The problem is, you may be wrong. Having a cash reserve can help protect you against unexpected financial difficulties that can have lasting consequences, even if you feel you are in good shape today.

How much do you need? - Fidelity believes a good rule of thumb to follow is to have three to six months of living expenses tucked away in an emergency fund. One size, however, does not fit all. You will need to take into account your expenses, liabilities, and other individual circumstances in order to get a dollar figure that suits your needs.

If you’re single and on your own but have family backup, you might be comfortable with three months of savings. However, if you have a spouse, kids, and a mortgage to support, you might sleep better with six months or even 12 months of funding in reserve.

Remember to consider the full list of potential emergencies you could encounter, which might range from a disability or illness to a major housing repair or loss of employment. Make sure you check your disability insurance—either at work or as an individual—so that you know both how long your policy requires you to be disabled before benefits begin and how long they’ll last.

And when you are calculating your living expenses, keep in mind that if you lose your job, you’ll also lose your health insurance coverage. This means you’ll need additional emergency fund money to cover the cost of your health care coverage through COBRA.

Coming up with the cash - Once you’ve decided how much in emergency savings you’ll need, you’ll have to find the dollars to fund your cash reserve. A windfall such as an inheritance or a gift from a parent or grandparent is a great source of cash for starting a rainy day fund. Most people, however, will likely find that the process of building an emergency fund takes place while juggling other savings priorities, such as retirement, college, or a home purchase.

“Make a monthly budget and include an emergency fund contribution as part of it, along with contributions to your retirement plan, even if the contributions aren’t as large as you’d like them to be initially,” says McHugh. “When you reach the target number for your emergency fund, you can start working toward maxing out your contributions to a 401(k) or 403(b) plan, IRA, or other tax-advantaged plan.”

This initial budget can also include small contributions toward other goals such as college funding or a home purchase, just to get in the habit of doing so, she says. Then you can increase the contributions as your income grows and you feel you have enough to fund both your emergency fund and your retirement accounts.

Decide if you need one account or several - These days, it’s tough to think about tucking tens of thousands of dollars into a traditional savings account earning a paltry 0.5% or less. So it may make sense to be creative, and consider putting your money into a couple of different kinds of accounts that can serve multiple purposes. Taking a mix-and-match approach may also be a way to potentially increase the return you get on your money.

Money market funds, for example, may offer somewhat higher earnings than a savings account. You can shop around at Internet-based banks, which often offer better rates than brick-and-mortar banks. It’s important, however, not to confuse a money market mutual fund with an FDIC-insured money market deposit account, which earns interest in an amount determined by, and paid by, the financial institution where your funds are deposited.

Another possibility is purchasing certificates of deposit (CDs), whose rates may be higher still. Of course, there can be stiff penalties for taking money out of a CD before it matures, so that means you need to think about timing. One possible scenario would be to “ladder” a series of CDs with different maturity dates. For example, if you bought a 12-month CD on the first day of each month for a full year, you would always be within a few weeks of having a CD ready to mature should an emergency arise.

Possible pitfalls - Some people view their 401(k) plan as a source of emergency cash, because you can borrow money from a 401(k) if your plan allows. This approach, however, comes with some real perils, says McHugh. If you leave your employer for any reason, you will likely have to pay the loan back immediately. Moreover, if you fail to pay the loan back, you’ll be subject to both income tax and a 10% penalty.

Keep your rainy day fund up to date - Once you have established your rainy day fund, try to resist the temptation to dip into it for nonemergencies. If you start to treat it as a backup when you’re running short, it’ll disappear before you know it. As your expenses grow, so should your cash reserve.

Likewise, if your expenses decrease—as children leave the nest, for example—you might be able to trim your emergency fund. To keep it current with your changing circumstances, consider making it part of your list of items to revisit during your annual financial checkup.

Whatever your age or income level, an emergency fund is an important part of a well-rounded plan for your financial security. Life is full of competing demands for your money, and a cash reserve can play a crucial role in keeping you on track with your other financial objectives.

How To Invest If You're Broke

What's the biggest problem that people with lower incomes have with investing? The old saying that it takes money to make money is true, and for those living paycheck to paycheck, there often isn't enough money left over to put towards investing. When you need the money now, thinking about IRAs and the stock market might be so far down your priority list, that you find all of these financial experts a little bit out of touch.

However, the fact remains that if you don't put money away for later years, you will face a catastrophic situation. Someday, you won't be able to work and social security won't be enough to live on, assuming the fund is around in 20 or 30 years. So what can you do? We've put together a few ideas for those people who don't see any available funds for investing.

You Need Money - First, we have to solve this problem of limited funds and the advice isn't new or revolutionary. Something in your life has to go, but it doesn't have to be a big life change. How often do you go to Starbucks for your morning coffee? How often do you go to the nearest fast food restaurant for lunch, and how many times have you hit the bar to blow off a little steam after a hard day at work?

What if you cut out even half of those expenses each month, netting you an extra $50 per month? At the end of a year, you would have $600 to invest. Over 20 years that $600 could become more than $22,000, if you saved that same $600 each year. $600 may not seem like much to get started, but anything is better than nothing, and there are places to put that $600 to that will make a big difference.

DRIPS - DRIPS, or dividend reinvestment plans, allow you to invest small amounts of money into dividend-paying stock, by purchasing directly from the company. Companies like GE, Coca-Cola, Verizon, Home Depot and Johnson & Johnson are just a few of the companies that allow you to make regular purchases of very small amounts of stock, and reinvest the dividends. This can add up to a big investment over time and, as you gain a larger balance, you may consider diverting some of these funds into other investments.

ETFs - ETFs, or exchange traded funds, are financial products that track the performance of a certain sector of the investment market. You can buy as little as one share of an ETF through a broker, and some of these ETFs track the performance of the total stock market, the bond market and many others. Many ETFs also pay a dividend, making a purchase in a fund like the Vanguard Total Stock Market ETF (VTI) an instantly diversified portfolio that also pays a dividend.

Target Date Funds - Target date funds, as the name implies, target your retirement date by changing the percentage of stocks and bonds to assure that your money remains safe as you approach retirement age. Some of these funds require a minimum of $1,000, but they may serve as great products for investors who don't want to manage their portfolio on their own. Use caution when picking a target date fund because of the high fees that some funds charge.

Don't Forget the 401(k) - If you have a 401(k) that will match your contributions, invest there first. Since your company is giving you free money to invest, you should always fund your 401(k) before outside investments.

The Bottom Line - Some of these strategies may require the help of a financial advisor, but most people, if they're willing to give up a few small luxuries, can find small amounts of money to invest into their retirement.

Read more: http://www.investopedia.com/financial-edge/0312/How-To-Invest-If-Youre-Broke.aspx#ixzz1prZn2EcR

Finance Tips For Single Women

The way most people live these days is drastically different than in generations past. People are generally waiting until much later in life to marry and have families. Considering this, many women will be single for at least part of their adult lives. Also considering the current rates of divorce, there is a reasonable likelihood that many women will find themselves single again at some stage after marrying. Those time-honored gender roles tend to suggest that most women are not great at putting their own needs first, though when it comes to personal finances, women must consider their own needs and wants in order to secure their financial future.

Budget - First and foremost, build yourself a solid budget and stick to it. This is just good sense for absolutely everyone – single, married or divorced. Examine your monthly expenses, remembering to include everything from housing costs, utilities, groceries, car payments, gasoline, insurance and esthetics. Do the same for your income. Subtract your expenses from your income, and see what you've got leftover. You can divide the remainder up based on what you'd like to save and what you'd like to budget toward discretionary spending. Don't forget to factor in money towards repayment of credit card debt, student loans or any other debts you may have. You'll want to get debts paid off as quickly as you can in order to save yourself those pesky interest costs. You should also examine methods for reducing costs, like eating meals at home or reducing the amount you spend on entertainment expenses.

Avoid Giving in to Impulse - It's probably true that most women love to shop. It can be hard to avoid giving in to impulse when you find a great deal on a pair of cute shoes or a new outfit. It's also important to avoid emotional spending. Learning to avoid unnecessary expenditures can really help to improve your financial situation – especially when you've got other expenses that are more urgent, or when giving in means you have to borrow money on your credit card. Try to spend only what you've allotted to yourself for discretionary spending, or budget for larger items like a big holiday or a car over longer periods of time. If you're unsure if you're being impulsive or giving in to emotional spending, try waiting a day or two before making up your mind about an item you're considering buying. If you've changed your mind or forgotten all about the item before the time period is up, you've made a wise choice in walking away.

Save for Rainy Days - It's an unfortunate fact of life, but we can all expect things to go wrong on occasion. Keeping some money stashed away for those rainy days will help you to afford those unexpected expenses when they do come up. Think of vehicle or home repairs, or an unexpected illness that could keep you away from work for a long period of time. No one wants to worry about money in times of distress, so having a rainy day fund will help you to get over the hurdles life throws at you. Even if you're only able to set aside $25 a week, it'll add up over time. Get yourself a high-interest savings account to stash away your cash. You can then transfer your savings into other forms of investments with even higher interest rates once you've got a healthy stockpile. Just remember to set realistic expectations for yourself. Don't save more than you can realistically afford, but don't underestimate the importance of saving either.

Consider Your Retirement Plans - Even if retirement seems like eons away, you'll want to start thinking about it as early as possible. Financial security isn't only about achieving your short-term goals; you've got to consider your long-term goals as well. Even if you do intend to marry, you'll need to ensure you can take care of yourself in your retirement because statistically women tend to live longer than men. Build your budget so you can set aside some money. You can use monthly deductions or make yearly lump sum contributions to a retirement savings plan.

Don't be Afraid to Invest - So you've managed to budget and save your money. Now you've got a healthy stockpile of cash to get you through those rainy days. What should you do with all that extra cash? Though investing may seem like a scary thing, have faith in yourself and believe that you can learn the ins and outs of the finance world. You can always enlist the help of an investment manager or finance expert to guide you along the way. One of the biggest benefits of investing is the opportunity to earn extra money on your initial investment, referred to as return on investment. It may take a little courage on your part, but the payoff could be huge. Do some research and only take on as much risk as you feel comfortable with.

Invest in Yourself - Always keep in mind that you've got to enjoy life too, so don't completely give up on spoiling yourself once in a while. Go on a holiday, to a day spa or treat yourself to something truly special once in a while. View it as an investment in yourself and your own happiness. They key is making it a special treat, not an everyday event. You'll want to ensure that you budget for these occasional indulgences as well. Remember, it's not worth going into debt over a pair of shoes or a holiday.

Before You Walk Down the Aisle - Though it might be an exciting time when you're considering taking the plunge and getting married, don't forget that you really need to have a serious talk with your new partner about money before you get married. Though this may be an awkward discussion to have, you need to know what that person earns, what debts they owe and what their financial plans are for the future. When you make those vows, you're also agreeing to a financial partnership with your beloved. You will need to know that their goals and spending habits are compatible with yours and that you're not marrying someone who will drain you financially, destroying all the hard work you've done to create a financially secure life for yourself.

The Bottom Line - Long gone are the days of considering single women to be spinsters. Women are becoming more and more comfortable in taking control of their own finances, shaping their financial futures and turning their goals into realities. There's no doubt that making big financial decisions independently can be a bit frightening, but there are also a lot of perks. You can enjoy complete control of your own financial situation, without someone else's financial interests impacting your own. Whether you're young and never married or newly single, it's never too late to grasp the reigns and take control of your financial destiny.

Read more: http://www.investopedia.com/financial-edge/0312/Finance-Tips-For-Single-Women.aspx#ixzz1pZInhODo

Some Little-Known Tax Deductions And Credits

Do you want to minimize your tax bill? Then you need to know about all the deductions and credits available and which ones apply to you. However, if you don't have the time or desire to read tax-prep books in your spare time, then keep an eye out for these five deductions and credits that might save you some money come tax season.

Dependent Care Credit - If you're a new parent, you might not know that you can claim a tax credit called the dependent care credit to offset the expenses you pay to have someone watch your child while you're at work. Examples of allowable expenses include a babysitter, daycare, nursery school and preschool.

To qualify, your child must be younger than 13, you must pay for the child care expenses yourself and the purpose of the expenses must be so that you can work. If you're married, you must file jointly and both spouses must be working (unless one is disabled or a student).

The tax credit is worth at least 20% of your eligible expenses up to a maximum of $3,000 for 1 child and $6,000 for two or more children. The maximum credit is 35% of your expenses if your adjusted gross income (AGI) is $15,000 or less. Essentially, the credit will give you $600 to $1,050 to reimburse your child care expenses for one child and $1,200 to $2,100 total for two or more children. The credit probably pales in comparison to your actual child care costs, but every little bit helps.

Noncash Donations - Do you give bags of old clothes and household items to the Salvation Army or another tax-exempt charity? You can take a tax deduction for these used items if they are in acceptable condition. Clothing, furniture, electronics, appliances and linens are examples of items that qualify for this deduction. You should keep records of your donation that show the charity's name, the date and location of your donation, and a reasonably detailed description of the items you donate.

You can only claim the fair market value of these items, which will generally be much less than what you paid for them. The Salvation Army publishes a guide to valuing these items based on what it sells them for in its store. For example, it puts the value of a women's blouse at $3.00 to $14.40, a men's jacket at $9 to $30, and a complete double bed at $60 to $204.

You may want to limit your deductions in this category to $500 per year because the IRS's recordkeeping requirements increase substantially when your donations exceed this amount.

Volunteer Expenses - Unlike cash and noncash donations, the IRS does not provide any deductions or credits for the time you donate to your favorite charity. However, if you spend money out of pocket in the course of performing your volunteer duties, you are entitled to some modest tax deductions.

The miles you drive are deductible at a rate of 14 cents per mile. You can also deduct what you spend on parking, tolls, materials and supplies, fundraising, phone calls and some travel expenses. This deduction maxes out at $249, unless you get a written statement from the charity confirming your contributions of $250 or more.

Moving Expenses Incurred Because of a Change in Where You Work - Even if you don't itemize, you can deduct the money you spend to pack and move your belongings as well as some storage, insurance, personal transportation and lodging costs associated with the move. Furthermore, there's no limit on the deduction amount you can claim.

To qualify for this deduction, your new job must be at least 50 miles farther from home than your old job was. You also have to work full-time in the new location for at least 39 weeks in the 12 months after you move (but if you get laid off through no fault of your own, you don't have to meet the time test).

The Bottom Line - Remember to always keep complete and accurate records like bank statements, credit card statements, canceled checks and receipts to substantiate your deductions and credits, in case you are audited. Also, if you discover a deduction or credit that you should have taken in the past but didn't, you have up to three years to file an amended tax return and get some money back.

Read more: http://www.investopedia.com/financial-edge/0312/5-Little-Known-Tax-Deductions-And-Credits.aspx#ixzz1pZGXiQFj

4 Frequently Asked Savings Questions

By Maryalene LaPonsie - SavingsAccounts.com

There is no time like the present to begin saving. Whether you are building your emergency fund or squirreling away money for something fun like a vacation, you want to put your money in the best account possible. To get you started, here are answers to some of the most common savings questions.

1. How much should I be saving?

There is no magic number when it comes to savings. Ten percent is a typical amount to save, but it is by no means set in stone. Instead of relying on a preset number, consider the following:

• What are your savings goals?
• Do you have a timeline to meet those goals?
• Is your job stable? How long would you need to find a new one if you're laid off?
• Are you expecting a major event such as college or a wedding?

Ideally, all households should have an emergency fund of at least three to six months worth of expenses. In addition, saving for retirement is a must -- don't assume you'll be able to live off Social Security! Beyond that, you'll want to be sure you have cash on hand to pay your insurance deductibles. Once you have the essentials covered, any additional savings you accrue can be used to build wealth or save for future major purchases.

2. What savings accounts should I have?

Everyone should have at least two savings accounts: one for retirement and one of emergencies.

Retirement savings is best placed in a 401(k), IRA or similar account. These accounts are specifically intended for retirement savings and subject to special tax incentives. However, money in these accounts is also locked-in for the long haul. If you decide to withdraw money early, not only will the money be taxable, you could get hit with a sizable penalty if you are younger than 59 1/2.

Instead, you need to have a separate savings account available for emergencies and short-term savings goals. Money market accounts, CDs and yes, even your run-of-the-mill savings account will suffice. Money is these accounts is more liquid and easier to tap into should the need arise.

3. What is the difference between a savings account, money market account and CD?

A savings account is a deposit account offered by a bank, credit union or other financial institution. In exchange for your money, the institution pays a small amount of interest. Other than an interest-bearing checking account, savings accounts are the most flexible place to stash your money. You can access your funds at any time, although the Federal Reserve limits certain withdrawals such as those done by computer or over the phone to six per month per account. Since even the best savings account doesn't rack up much interest, this option is best if you are looking for a place for your emergency funds or short-term savings.

A money market account is another form of savings account. They may also be called a money market demand account or a money market deposit account. While money market accounts offer a more competitive interest rate than that available through a regular savings account, you are generally limited to five withdrawals per month. In addition, you may need to maintain a minimum balance in the account of $500 or more to avoid a penalty.

Of these three investment options, certificates of deposit (CDs) generally offer the highest rates. However, CDs are more restrictive when it comes to being able to access your money. When you open a CD, you agree to leave the funds with the financial institution for a specified term, and the institution agrees to give you a fixed interest rate in return. CD terms can typically last anywhere from one month to five years. Generally, the longer the term, the higher the interest earned.

3. What is the difference between APY and APR?

If you have spent much time around banks, you have likely run across the terms APY and APR. The APR is the annual percentage rate while the APY is an account's annual percentage yield.

What's the difference? Well, the APY takes into consideration compound interest -- that is, the interest earned on previous interest that boosts the effective yield from the principal over time. Generally speaking, banks will quote APR when they want you to borrow on a mortgage or credit card, since a lower figure will be more appealing in that scenario, and APY when they want you to deposit, when a higher figure will look more attractive.

The key here is to note the difference between the two so you don't confuse them in comparisons.

4. Which type of account is right for me?

Like the first question, the only one who can definitively answer this is you. The right type of account will depend on your financial goals. If you are setting aside money to build a deck this summer, a savings account may just do the trick. If you are trying to earn extra interest on your emergency fund, putting some of it in a CD ladder may be the right choice. Just be sure you leave enough out in other funds to give quick access to some of your cash should the need arise.

Starting a new savings effort can raise a lot of questions, but gaining some extra cushion in your finances should be worth the trouble of answering them. Plus, once you know the answers to these basics, you can share them with friends and family who'd like to improve their finances too.

Reasons To Avoid Facebook

It's hard to imagine an initial public offering (IPO) as heralded as Facebook's. Even Microsoft's 1986 debut (at $21) didn't garner this much attention. It's rare when a product or service that's so ubiquitous and so central to people's day-to-day lives, becomes available for the public to purchase a position in. Imagine if our Cro-Magnon ancestors had found a way to securitize fire or the wheel.

How Much? - Liberal estimates set Facebook's upcoming book value in the exospheric 12-digit range. One fun side effect to a well-publicized IPO is that it gives prognosticators who have no skin in the game of chance to make unrealistic estimates about the company's market value. $100 billion? Sure, why not? Sounds more memorable than $7 billion or $11.9 billion. Neither of which would make a memorable headline, be easily rattled off by journalists or make a good follow-up story a few months later, when Facebook's book value peaks without ever approaching $100 billion.

Prices are opinions, we know that, and they often have little correlation to value. No less an authority than Adam Smith himself pointed this out, observing that diamonds are expensive yet have little intrinsic value, while water is vital and essentially free. So what of Facebook, which is little more than a glorified contact list interspersed with baby pictures and Zynga games?

Followers - There are 845 million people that spend time on Facebook, or at the very least, have accounts. So, does that mean each one is worth around $118, and if so, to whom? Or is this a case of unnecessarily dividing one number by another? Even if the average Facebook user posts every conceivable detail about their life, could an ambitious marketer or advertiser get $118 of added value out of that? These aren't rhetorical questions, these are questions a conscientious investor needs to ask before going long with an overpublicized company, whose business model is easily replicable; and if you don't think Facebook can be replicated, ask the good folks at MySpace or Friendster.

Facebook's revenue stream is based solely on advertising; Facebook doesn't sell anything directly. It's a lucrative advertising vehicle, to be sure, with over $3 billion in advertising revenue last year.

By far the biggest American IPO in history was that of VISA in 2008. Not that longevity is a necessary condition for success in the marketplace, but VISA was a decades-old concern with millions of paying subscribers, both on the cardholder and merchant sides, before going public. VISA's IPO was valued at $17.9 billion and four years later the company's book value sits at about a healthy $78 billion.

The next largest IPO in history (among those companies that still exist in the same form, thus excluding AT&T Wireless and General Motors) was that of Kraft Foods in 2001 at $8.7 billion. Again, a company that produces a tangible asset and with significant barriers to entry. Facebook has announced that it hopes to raise approximately $10 billion when it first trades publicly, a bold statement that any investor should take under advisement.

Failures - Around 1998, when the public at large started to use computers for reasons beyond storing recipes, AOL represented most people's first exposure to online access. Back then, receiving email (or having any contact whatsoever with someone else without having to resort to telephone or face-to-face contact) was excitement writ large. The comparison with Facebook isn't a perfect one, but public mania helped AOL grow so quickly and so large that it bought and rebranded communications leviathan Time Warner. Within two years, AOL had surrendered $200 billion in market value and suffered some of the biggest losses in the history of commerce.

AOL developed something called the "walled garden," inaccessible to general Internet users. Once AOL's subscribers realized there was an unrestricted world beyond its boundaries, those subscribers left in droves. Today, Facebook operates in a similar fashion, yet members continue to patronize the service.

Naive individual investors think that it's possible to buy Facebook stock the day it goes on sale, hold onto it for an undetermined period then cash out, but IPOs rarely work that way. The lead underwriters stand to profit first, then their clients, then institutional investors. By the time Joe Investor places his order, Facebook's share price will likely have risen. With the stock in hand, "timing the market" becomes exceedingly difficult with such a short window. Hold onto Facebook for several hours? A day? Or ride it as a potential blue chip investment, holding it for years? The intelligent investor has already answered these questions before deciding to buy the stock. Especially a stock that has never traded before.

The Bottom Line - Facebook is a fantastic time waster, perhaps the greatest ever devised. It easily beats out the previous record holders going back throughout history: it trumps television, talking on the phone, golf, chess, trying to teach cats to obey simple commands, and getting drunk combined. But as an investment, the risk of buying Facebook stock could prove to be greater than any conceivable reward.

Read more: http://www.investopedia.com/financial-edge/0312/Reasons-To-Avoid-Facebook.aspx#ixzz1pCzQojQ2

When To Hire A Social Media Professional

The importance of social media for a corporation is a topic that is popping up more and more often. What kind of company needs to invest in their online presence? And if your company would benefit, how far should you go in terms of resources?

What Does Social Media Mean for a Company? - Facebook, Twitter, Tumblr and Quora – whatever means you are using, social media is about connections. Primarily, this means connecting your brand to your customers. As a byproduct, It also means connecting customers to other customers and generating brand conversation. Through these mediums, you can more effectively launch new products or promote existing ones, as well as reward customers for engaging with your company through promotions, discounts, giveaways, and simply by being accessible in terms of questions, comments and general feedback. An active and appropriate social media presence is an extension of your marketing efforts and can just as easily be detrimental as it is an enhancement.

Going forward, these services are reaching even further. Take ZenDesk, for example, a company that uses its "Twicket" system to convert tweets and Facebook posts into customer service tickets, in order to address common issues and answer customers’ questions.

Does Your Company Need Social Media? - It's easy to just say that every company needs an online presence, but that isn't strictly true. Is it in your company's best interest to have at least a basic website with contact information and basic services? Absolutely. However, not every company will see enough return on investment (ROI) to justify pouring a ton of time or money into a complete social media profile. An environmental consulting firm that gets 100% of its clients from referrals or cold calling is not likely to overly benefit from an active Twitter account – does that mean they should not bother? Unfortunately, it really depends on the circumstances. If an employee of that firm is passionate about taking on the project, and there is potential for new clients to find your company through that medium, it may be worth it. It may not be worth it to bring on someone new specifically for that role.

Take a hard look at your company and your industry. Find out if your competitors are updating their social media profiles and more importantly, if doing so is helping their image and expansion. Are there tools these sites provide that could enhance your customer service (i.e. ZenDesk), or extend the services you already offer? Social media offers the chance for you to be informed about what your customers think of you, and what services or products they like and don’t like. Meeting your customers in a space they already occupy brings you one step closer to all of that valuable information.

Getting Social - If you've determined that social media is an area you want to develop for your company, there are a lot of different tactics you can use to get started. Freelancers or marketing agencies offer the chance to bring in an expert (or a team of experts) to ensure that your message is consistent and appropriate for your audience. Hiring an in-office team member is also a great step; doing so means they will always be aware of your company goings-on without having to remember to notify an external team. If you're just getting started, consider un-handcuffing the staff you already have and letting those interested take on the project. Just remember, there will likely be a big difference in results between an inexperienced worker, who is fitting in social media around their existing duties, and an experienced social media professional. Be realistic about what you need and can afford, and don't be afraid to expand the role when needed.

Read more: http://www.investopedia.com/financial-edge/0312/When-To-Hire-A-Social-Media-Professional.aspx#ixzz1odLyI0CW

Taxing Times For Divorced Parents

Tax season is stressful for virtually everyone, but divorced parents face additional burdens. Those who have undergone a recent divorce have many emotional, financial and logistical issues to contend with already without adding on the nightmare of dealing with the tax issues surrounding children or dependents. Although much of the anguish from divorce is inescapable, some of the financial pain involved in this process can be alleviated through tax credits and deductions available for those who are eligible to file as head of household.

Dependent Relief from the IRS - The IRS passed a set of rules that came into play during the 2005 tax season that continue to apply. The rules changed the way divorced parents with dependents can file. These changes included:

The traditional rules pertaining to divorce mandate that the custodial parent with whom a dependent child lives for more than half of the year will get the dependency exemption for that child on his or her tax return. If neither parent has custody of the child for more than half the year, then neither parent can claim the exemption. The rule does allow for time away due to vacations, summer camps, short visits with relatives, and so forth, but it does not allow for extended stays with other relatives or guardians who end up providing more than half of the child's support for the year.

The main stipulation of the law resides in the support test, which determines who actually provided for the dependent child's support for more than half the year. A key point to remember here is that when one ex-spouse remarries, the joint income that he or she shares with the new spouse will count in the support test calculation. Of course, all of these conditions are subject to proper legal proceedings and court orders. If proper legal procedures are not followed, IRS regulations become irrelevant and many legitimate tax deductions and credits will be lost.

Another key condition that must be met is that ex-spouses cannot have lived together in any capacity during the last six months of the year for which they are filing tax returns. If they divorced with less than six months before the end of the year, then they cannot have cohabited during the remainder of the full year.

Keeping Friendly - When Exemptions Can Be Shared - In many divorces, the spouse who is eligible to claim a dependent may not necessarily benefit from doing so. For example, the custodial spouse may not have sufficient income to benefit from the dependency deduction(s) and/or credit(s). In these cases, the custodial parent can sign Form 8332 with the IRS and waive the right to the exemption, allowing the other parent to claim the child on his or her tax return.
This waiver can be an important bargaining chip for many lower-income spouses who cannot gain anything from claiming a dependent child on their taxes. Release of this privilege to the non-custodial spouse can be traded for other divorce or custodial-related privileges that may be substantially more beneficial to the giver.

Who Benefits More? - Of course, from a tax perspective, the spouse with the highest adjusted gross income (AGI) will benefit the most from the dependency exemption. Taxpayers with high incomes may need to negotiate this issue with their ex-spouses, as a parent who makes $80,000 a year will obviously reap a substantially higher benefit from claiming a child than another parent making $28,000 a year. If there are multiple children or dependents involved in a case like this, then the income tax preparers for both spouses may need to experiment a bit with possible dependent scenarios in order to determine which arrangement will provide the maximum benefit for all concerned. In cases where the divorced couple have joint custody of a child and the child has lived with each parent for half of the year, the parent with the highest AGI will receive the dependency exemption by default.

Other Issues - Generally, the parent that can claim the dependency exemptions will also receive the corresponding tax credits, such as the child and dependent care tax credit and earned income credit for those with dependents. In most cases, only a divorce decree can specify otherwise. Of course, the tax credits for dependents can be much more valuable than the exemptions claimed; credits are prorated dollar for dollar against actual taxes due for taxpayers, whereas deductions simply reduce the amount of taxable income.

Regardless of who gets to claim the exemption or the credits, any parent that pays his or her child's medical bills can deduct them on Schedule A of his or her tax return, as long as he or she is eligible to itemize deductions. On a side note, an above-the-line deduction can be taken for this if the taxpayer is eligible for a health savings account.

One other overriding factor to consider is that no parent can claim a child if the parent is subject to the alternative minimum tax (AMT). While this issue is fortunately not a commonality at this point, it should be seriously considered by those who are affected by it.

The Bottom Line - Exemptions and credits can be vital bargaining chips for lower-income spouses who will not benefit from them, but desire other conditions from the divorce that may not be achievable. In many cases, only one spouse will benefit from claiming a child, regardless of all other factors. This spouse may be willing to make other concessions in order to realize this tax advantage.

Read more: http://www.investopedia.com/articles/pf/08/dependent-tax-credits.asp#ixzz1odJyJcbh

Clear Sky Ahead? Presentation by Dr. Paul Mason, University of North Florida

Clear Sky Ahead?

Presentation by Dr. Paul Mason, University of North Florida

Professor of Economics

8 March 2012

The Good

Population relocation to Florida
3rd highest nationally
Fewer retirees (who are now heading to the Carolinas)
Increasingly younger population. Current population is aging less than national average

Real GDP Growth
National Q4 2011 was 3%. For the year it was 1.7%
2012 GDP projected to be -1 to 3%
Expect accommodating Fed policy; legislative inaction; and mediocre growth
5-6% annual growth necessary to reduce unemployment significantly

Inflation
Energy, drought, and raw materials spiked inflation to 4-5% prior to October 2011; fell off since
Official national inflation = 3%; local level inflation is 2.4%
Low inflation is acceptable but signifies economic weakness
Not much inflation since 2007
Growing economy accelerates inflation

Unemployment
Currently 8.3% which is a major improvement over 10%
13.7 million unemployed
58% unemployed are men
25% unemployed are teens
Average unemployment duration is 40 weeks
13.6% of unemployment is tied to construction industries

The Bad

Oil Prices
Lowest price was $32 bbl back in February 2009; Highest was $146 bbl July 2008
Currently at $106 bbl
2009 average price of gas was $1.61; May 2011 it was $3.90
Jacksonville area gasoline price is higher than the national average

Interest Rates
Must go up to incentivize lenders to redeploy cash to borrowers
Fed is not inclined to increase interest rates until 2014

Housing
Housing numbers up nationwide but not in Jacksonville
Local prices continue to fall; demand is not there; too much pent up supply
Most new permits are for multifamily homes
Renting is the new normal

State and Local Government Finances
Revenues down across the board; contributes to less infusion back into GDP

The Ugly

Healthcare
Will be dealing with an aging population for the next 30 years
Cannot solve the debt problem without solving the healthcare problem

Eurozone Debt
Solutions are not simple
Public sector cannot lead prosperity; it must come from the private sector

Federal Debt
$6 in debt for every $1 in GDP
2004-2008 debt was $2.2 trillion but with $2.7 GDP growth
Expansionary fiscal policy must originate from the private sector
Private sector needs to drive prosperity

Global Uncertainty
Businesses are unable to plan; private sector needs certainty

“People who work for a living are outnumbered by people who vote for a living.”

7 Steps To A Successful Investment Journey

The most successful investors were not made in one day. Learning the ins and outs of the financial world and your personality as an investor, takes time and patience, not to mention trial and error. In this article, we'll lead you through the first seven steps of your expedition into investing and show you what to look out for along the way.

1. Getting Started - Successful investing is a journey, not a one-time event, and you'll need to prepare yourself as if you were going on a long trip. What is your destination? How long will it take you to get there? What resources will you need? Begin by defining your destination, and then plan your investment journey accordingly. For example, are you looking to retire in 20 years at age 55? How much money will you need to do this? You must first ask these questions. The plan that you come up with will depend on your investment goals.

2. Know What Works - Read books or take an investment course that deals with modern financial ideas. The people who came up with theories such as portfolio optimization, diversification and market efficiency received their Nobel prizes for good reason. Investing is a combination of science (financial fundamentals) and art (qualitative factors). The scientific aspect of finance is a solid place to start and should not be ignored. If science is not your strong suit, don't fret. There are many texts, such as "Stocks For The Long Run" by Jeremy Siegel, that explain high-level finance ideas in a way that is easy to understand.

Once you know what works in the market, you can come up with simple rules that work for you. For example, Warren Buffett is one of the most successful investors ever. His simple investment style is summed up in this well-known quote: "If I cannot understand it, I will not invest in it." It has served him well. While he missed the tech upturn, he avoided the subsequent devastating downturn of the high-tech bubble of 2000.

3. Know Yourself - Nobody knows you and your situation better than you do. Therefore, you may be the most qualified person to do your own investing - all you need is a bit of help. Identify the personality traits that can assist you or prevent you from investing successfully, and manage them accordingly.

A very useful behavioral model that helps investors to understand themselves was developed by Bailard, Biehl and Kaiser.

The model classifies investors according to two personality characteristics: method of action (careful or impetuous) and level of confidence (confident or anxious). Based on these personality traits, the BB&K model divides investors into five groups:

• Individualist - careful and confident, often takes a "do-it-yourself" approach
• Adventurer - volatile, entrepreneurial and strong-willed
• Celebrity - follower of the latest investment fads
• Guardian - highly risk adverse, wealth preserver
• Straight Arrow - shares the characteristics of all of the above equally

Not surprisingly, the best investment results tend to be realized by an individualist, or someone who exhibits analytical behavior and confidence, and has a good eye for value. However, if you determine that your personality traits resemble those of an adventurer, you can still achieve investment success if you adjust your strategy accordingly. In other words, regardless of which group you fit into, you should manage your core assets in a systematic and disciplined way.

4. Know Your Friends and Enemies - Beware of false friends who only pretend to be on your side, such as certain unscrupulous investment professionals whose interests may conflict with yours. You must also remember that, as an investor, you are competing with large financial institutions that have more resources, including greater and faster access to information.

Bear in mind that you are potentially your own worst enemy. Depending on your personality, strategy and particular circumstances, you may be sabotaging your own success. A guardian would be going against his or her personality type if he or she were to follow the latest market craze and seek short-term profits. Because you are risk averse and a wealth preserver, you would be affected far more by large losses that can result from high-risk, high-return investments. Be honest with yourself, and identify and modify factors that are preventing you from investing successfully or are moving you away from your comfort zone.

5. Find the Right Path - Your level of knowledge, personality and resources should determine the path that you choose. Generally, investors adopt one of the following strategies:

Don't put all of your eggs in one basket. In other words, diversify. Put all of your eggs in one basket, but watch your basket carefully. Combine both of these strategies by making tactical bets on a core passive portfolio.

Most successful investors start with low-risk diversified portfolios and gradually learn by doing. As investors gain greater knowledge over time, they become better suited to taking a more active stance in their portfolios (i.e. tactical bets).

6. Be Disciplined - Sticking with the optimal long-term strategy may not be the most exciting investing choice. However, your chances of success should increase if you stay the course without letting your emotions, or "false friends," get the upper hand.

7. Be Willing to Learn - The market is hard to predict, but one thing is certain: it will be volatile. Learning to be a successful investor is a gradual process and the investment journey is typically a long one. At times, the market will prove you wrong. Acknowledge that and learn from your mistakes. When you succeed, celebrate.

The Bottom Line - What you achieve as an investor will depend on your goals, but sticking to these seven simple steps will help keep you on the right path. Bon voyage!

Read more: http://www.investopedia.com/articles/basics/06/sevensteps.asp?partner=ntu12&utm_source=18&utm_medium=Email&utm_campaign=3/7/2012+11:04:06+AM#ixzz1oSVgu2z1

The Best Ways to Give a Financial Gift to Children

By Christine Benz, Morningstar

Wealthy individuals often go to great lengths to pass assets to their heirs, setting up trusts and using other elaborate mechanisms to ensure an efficient transfer of assets. But don't think you need to be a Rockefeller to have a meaningful impact on the financial futures of your children and grandchildren. You can fund various types of financial accounts with as little as $25 to start.

Here are some of the key strategies to consider when giving children and grandchildren a financial boost. There's no one-size-fits-all answer: The right choice for your situation will depend on how much you intend to give as well as your grandchild's life stage and the goal of financial assistance.

Strategy: Set up a UGMA/UTMA account.

Best for: General savings and investing, particularly for relatively small dollar amounts.

Overview: UGMA/UTMA accounts provide a way to save on behalf of a minor child without setting up trust funds or hiring attorneys. As a donor, you'd appoint yourself or other adults (such as the child's parents) to look after the account. One of the key advantages with UGMA/UTMA accounts is flexibility: You can put a huge range of investment options inside a UGMA/UTMA wrapper, including stocks and mutual funds.

If you're saving fairly small sums, these accounts can be a decent way to go, but there are two major hitches. The first is that the assets become the child's property when he or she reaches the age of the majority--18 or 21, depending on state of residence--leaving the donor with no real control over where the money is spent. The second is that for college-bound children, substantial UGMA/UTMA assets will tend to work against them in financial-aid calculations.

If you're setting up a UGMA/UTMA account, my advice is to keep it simple and choose a plain-vanilla, well-diversified fund. Total market stock market index funds can make sturdy anchor holdings for UGMA/UTMA accounts.

Strategy: Contribute to a 529 Plan

Best for: Building college savings while possibly obtaining a tax break at the same time.

Overview: If you're saving for a college-bound child or grandchild, section 529 college-savings plans help you avoid the two key pitfalls of UGMA/UTMA accounts. First, the assets are the property of the account owner (in this case, you), not the child. So if your grandchild doesn't end up going to college, you can use the 529 assets for another grandchild. Second, because 529 plan assets are considered to be the property of the account owner, they have a relatively limited impact on financial-aid eligibility. In addition, you won't owe taxes on 529 plan investment earnings from year to year, and withdrawals from a 529 plan account will be tax-free provided you use them to pay for qualified higher-education expenses such as tuition and room and board. Finally, you may be eligible for a state tax break on your contribution; this article discusses the value of those tax advantages on a state-by-state basis.

Even though 529s have generally improved over the years, their quality is still uneven and some plans are costly. Morningstar's 529 Plan Center helps you assess the pros and cons of your state's plan; the 529 plans from Maryland, Ohio, and Nevada are among our favorites.

Strategy: Fund a Roth IRA

Best for: Saving for the long haul, especially for older children.

Overview: If your grandchild is older and working, you can contribute an amount equal to his or her earned income, up to $5,000, to a Roth IRA. As with a UGMA/UTMA account, you can put a huge range of investments inside a Roth wrapper; there are no investment minimums or age limits on contributions. The money inside the Roth can grow tax-free until retirement, and the vehicle also offers some flexibility for withdrawals before that time. Specifically, contributions to a Roth IRA can be withdrawn at any time and for any reason, to pay for college or anything else. (Those who need to tap the investment-earnings piece of an IRA will owe income tax on that portion of the withdrawal, but they'll circumvent the 10% penalty on early withdrawals if they use the money for qualified college or certain other expenses.)

Despite the big tax benefits, Roth IRAs for children carry one of the key drawbacks that also accompany UGMA/UTMA accounts: The child maintains control over the assets and can use the money for whatever he or she wants at the age of majority (18 or 21, depending on the state.)

Strategy: Give a gift of financial knowledge.

Best for: Gift-givers at all income levels.

Overview: Even if you're not in a position to make a financial gift to a child or grandchild, you can still take time to impart financial wisdom. Even for very young children, it's not too early to start discussing big-picture concepts such as the benefits of delaying gratification today for a greater payoff down the line. And if a child is slightly older, you can share some specifics of your own approach to investing; it's amazing how many great investors say they got their starts by reading the stock tables with their grandparents. You might also share a good basic book about investing: The Wall Street Journal Guide to Starting Your Financial Life is a fine entry-level book for new investors.

Gimme Tax Shelter

By Anna Prior, Smart Money

It has been said that nothing is certain but death and taxes. How much those taxes will be, ironically, is among the biggest uncertainties there are these days. Indeed, with the Bush-era tax cuts and higher exemption limits for the estate tax slated to expire in 2013 -- and talk of more reforms hot in Washington -- financial planners are at full pitch trying to reduce the Uncle Sam shellacking. The advice, in a phrase: Head for shelter.

While no official estimates exist on the amount of assets currently being sheltered from taxes -- which is to say, kept in investment vehicles that, because of intricacies of the federal tax code, allow money to accumulate with favorable treatment -- the figure is surely astronomical, says an IRS spokesperson. (In fact, every piece of real estate owned in the country could be considered one.) That number will only spike in coming months, as clients increasingly inquire about their sheltering options. And while opportunities to protect assets are becoming somewhat harder to come by, as the IRS seeks to close loopholes, some say some very effective (and legal) shelters remain -- many of which are often overlooked.

Some advisers, for example, are turning to the slightly exotic world of oil- and gas-drilling leases as well as to real estate investment trusts. Investors can get an immediate write-off of anywhere from 70 to 100 percent of an investment in oil- and gas-drilling leases. Essentially, such investments reduce your income by a dollar for every dollar you put in. The strategy doesn't come without risk, since the investor becomes a general partner and therefore would probably assume any liability for employees injured on the job -- though insurance can offset some of the exposure. As for REITs, direct investors benefit taxwise from a law that allows for a write-off for capital improvements and depreciation of a home or other type of property.

Another frequently ignored option is the 529 plan. Though many investors have ditched this college-savings vehicle in recent months (an estimated $354 million was pulled from plans in the third quarter of 2011 alone), some experts are encouraging their clients to stay in. While fund selections in 529s can be extremely limited, the tax-sheltering benefits more than make up for the weaknesses of the plans. For one thing, money in 529s grows tax-deferred and is tax-free if used for qualified education expenses. Plus, there's no limit on how often the beneficiary of the plan can be changed, in case the child ends up not needing the money for college. It's essentially an inexpensive multigeneration educational slush fund. One thing to note: States don't want these plans being used just as tax shelters and may investigate a contribution that's unusually large.

Many people also miss an effective tax shelter that's right under their nose: converting a traditional 401(k) to a Roth account. Tax rates are in the clearance bin right now, noting that after the initial tax bite, assets can grow tax-free and are protected from future tax hikes. Still, less than half of respondents to an Aon Hewitt survey of large employers said they offer 401(k)-Roth conversions. One reason, is that not all companies are eligible to get their own tax break for matching contributions if they are in a Roth account. Otherwise, it doesn't cost the company much to offer this choice. Too bad, any option an employee has to enhance their retirement situation has got to be good.