The Bull Hunters Guide

If you missed last weeks post in the investment series, don’t forget to check it out, there was some great information you may find useful about investing with treasuries.

Stock market investing has an appeal for many people because of its ability to generate a lot of capital quickly provided that one knows how to pick the right stocks in a pinch. However, what about those people who just want to invest their money and save it for the long term?

There are mutual funds to be sure, but even these require a commitment to managing the underlying securities and paying attention to the market overall. Is there any type of lucrative hands-off approach to investing? There certainly is…

What Is A Unit Investment Trust?

Unit Investment Trusts, also known as UITs are the answer for many people. When one invests in a UIT, one is investing in a portfolio made up of lots of different kinds of securities, which is then held for a fixed period of time until the point of maturity.

The securities that make up a Unit Investment Trust can vary widely, from municipal bonds to corporate bonds, and even common stock. In the event that common stock is part of a UIT, however, it will typically be of the dividend producing variety to ensure at least some pay off.

UITs are very popular among those who want to generate a continuous and steady stream of income without worrying about “watching the market” or having to choose that one investment that will pay off big.

The only real drawback to this is that, because of the long maturity rate of these investments, and the fact that the portfolio’s interest rate is fixed, it’s possible for a UIT to be overwhelmed by inflation. In other words, the cost of living is bound to rise at least some, while the interest rate on your Unit Investment Trust will remain the same as when you purchased it. On the other hand, the certainty of payout can more than make up for this, if you go in knowing what you’re dealing with.

See you next week for part 18 of Investments.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2009

Social Bookmarks:

Hoping you enjoyed last weeks post in the investing series, where we looked into investing in stock options. We are nearing the end of our segment on alternative methods of investment. After just a few more segments, you should have an intimate and thorough knowledge of all kinds of investment opportunities that simply elude most casual investors. And why?

It’s all because they think this kind of thing is too advanced for them, and so they never bother to learn how easy it really is. They keep doing the same old thing with their money, time after time. That might work some of the time, but you’ll never that you’re doing the absolute best thing at any given moment. That’s why it pays to be educated.

Investing In Preferred Stock

This time, we’re going to talk about preferred stock. Preferred Stock is very much like typical stock investments in that you’re buying a “share” (or multiple shares) in a publicly traded company. The real difference is that with a preferred stock, you’re given a fixed dividend that will be paid out at specific times, rather than the performance dependent variable dividend that is given to holders of common stock.

In addition to making this a more stable form of investment, it’s also the case that if a company does have to liquidate, then you’ll be paid off before common stock holders. Debt holders, however, still come first.

The Benefits

Another thing to note about Preferred Stock is that it’s callable. This means that at any given time, the company can choose to buy it back from you. However, this can be seen as a benefit, because to do so, they usually have to pay you a premium.

For those looking for a less volatile investment than common stock, but one that works roughly the same way, preferred stock trading is an excellent avenue to look down.

You can buy and sell Preferred Stock the same way you would your common stock investments – just ask your broker. Be warned, however, that depending on which broker you use, you might need to maintain a minimum balance in stock in order to hold a preferred account.

See you next week for part 14 of Investments.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2009

Social Bookmarks:

Last week in the investment series, we covered investing in Collectibles. We’ve been talking quite a lot about types of investments other than the stock market in an attempt to expand your horizons about just what it is that investment means. In doing so, it is our hope that you’ll come away with an increased awareness of how to successfully invest to your full potential.

Common Stock

However, in this entry, it’s worthwhile to take a look at the topic that brought us here in the first place: common stock. As most of us already know, common stock is a great way to invest money, and is far and away one of the most popular choices for both amateur and professional investors alike.

When you buy common stock, you’re essentially buying a small piece of a publicly traded company. As such, you’re entitled to a portion of the profits that are generated by that company, which is where the real value of the stock lies.

Why Is Common Stock Popular

The reason why common stock is so popular to so many probably lies in its careful balance between risk and return. For example, investing in common stock typically yields very high returns in the area of 11 to 12% a year. There is always the possibility that a company could go bankrupt and you would lose most all of the money that you had invested, but this is rare. Furthermore, while the most common return is the very good 12%, there is always the possibility of a company skyrocketing and providing returns well above that. In a sense, this is what most investors hope for: to make that one good investment in a company that takes off and makes them rich.

Another reason for the popularity of common stock is that it is very easy to buy and sell. There are hundreds of brokers out there, and while their areas of specialty do differ, common stock is something that is handled by nearly all of them.

I hope you have enjoyed this weeks post on Common Stock, it’s now time for me to head back to the bar for a cool drink, as I am on holiday in Port Vila, Vanuatu with my family and some good friends…Life is tough!!

See you next week for part 4 of Investments.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2009

Social Bookmarks: