The Bull Hunters Guide

There are many ways to invest your money beyond simply buying and selling stocks, and we touched on one of these strategies in our last post on municipal bonds. In this series of blog entries, it’s been our mission to bring those opportunities to your attention and make you aware of how to make the best decisions for your money in any given situation. The more you know, the better you can take care of your investments, and prepare for your future.

The Mutual Fund

This time out, we’re discussing one of the most popular of all investment opportunities, the Mutual Fund. The mutual fund is essentially just like investing in the stock market, only it’s less volatile, and gives the investor in question much less of a headache.

Okay, so maybe that’s not the most accurate description. Let us just say that the value of a mutual fund depends largely upon your personality and intelligence.

If you’re an adventurous sort of investor, and someone for whom the main draw of the stock market is the risk and gamble, then mutual funds aren’t for you. But if you’re just someone who wants to invest for the sake of getting a better return than from a savings account, but would rather not bother with all the fuss of researching individual companies before buying and selling their securities, then you should definitely look into them.

Long Term Investment

When you invest in a Mutual Fund, you’re pooling your money with many other people so that a manager can invest in stocks on your behalf. The idea is that you then just sit back and let the account accrue value, making it ideal for long term investments.

While long term is typically the best strategy for mutual funds, you should be well aware that there are other variations available, such as mutual funds that offer more aggressive growth possibilities in exchange for a lesser “security”. Take your pick, as any type of Mutual Fund is an excellent opportunity for your money to grow.

See you next week for part 12 of Investments.

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

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In last weeks post, we discussed investing in the Money Market and hopefully you’ve been learning a lot from our recent series intended to introduce you to all the other types of investment opportunities out there besides just investing in stocks.

The more options you’re aware of when it comes to investing your money, the wiser the decisions that you can make, and that leads to a happier, more secure future.

Talking Mortgage Backed Securities

Today we’re going to be talking about Mortgage Backed Securities. To put it simply, a mortgage backed security refers to an investment plan whereby you loan money to a homeowner or more frequently, to a corporation, with the promise that you are then entitled to a percentage of the interest that they are obligated to pay on their mortgage.

This is a type of investment that many banks are keen on making, because it allows them to act as a middle man, so to speak, without the responsibility of handling funds directly themselves.

Mortgage Backed Securities are usually secured by government institutions, so there is a minimal risk involved in their buying and selling. They are considered to be a very safe investment for the most part, with a payoff that is actually slightly better than that of treasuries, another popular option.

Monthly Income

Mortgage backed securities are a popular form of investment for those who want to be able to draw a monthly income from their investments, rather than selling for a lump sum of value. The amount of the monthly payment received is usually directly in line with the present interest rates driving the market.

The only drawback to Mortgage Backed Securities is simple: mortgages are expensive. That means that these securities are usually traded in large denominations, sometimes only going as low as 25,000 dollars a share. However, much like money market funds, there are some collaborative efforts available to allow amateur investors to get into mortgage backed securities. If you’re interested, it’s best to start out with these.

See you next week for part 10 of Investments.

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

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I hope you enjoyed last weeks post on Corporate Bonds. This week, we’re going to expand our discussion of alternate investment strategies to discuss futures contracts. This is an important topic to discuss because futures is one area where investors are particularly reluctant to tread, feeling that the process is “too advanced” for them, or that futures carry too high a risk.

Futures Can Be Risky

This is largely a misconception. Futures Contracts can indeed be risky, but if they are used wisely, they can also be used to guard against excessive risks! Let’s look at it this way. Suppose that you were to buy a futures contract on a stock for one year from today at $5 a share.

When the day comes, if the stock is valued under $5 a share, then you’re stuck with purchasing them and will have to suffer the loss. However, there’s also a chance that the stock could be valued at more than $5 a share, and you would have the unique opportunity to purchase it at a discount.

Minimizing this risk

In order to minimize risk on a futures contract, you need to understand the difference between hedging a risk and speculating. When you purchase a futures contract, or sell one, with the intention of minimizing a downside risk by locking in the current price on a particular commodity, then you are making a very common and wise use of the futures contract.

On the other hand, if you’re buying on the speculation that the commodity will soon soar and make you rich, then you’re taking quite a gamble. As you can see, futures can be an excellent source of investment, but it does require some thorough knowledge of the market before hand. However, if you possess that experience, you should not be unduly reluctant.

If you take the notion to purchase a futures contract, note that it can be done through most full service brokers. These same stock brokers can get you involved in futures trading, which is essentially the same concept, but applied to the trading that you’re already familiar with.

See you next week for part 7 of Investments.

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

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Recently in this blog, we’ve been discussing the importance of diversifying your knowledge of investment opportunities beyond just the stock market, such as last weeks article on Convertible Securities. In doing so, you should be able to make more intelligent decisions about where to put your money, no matter what kind of turn the market takes. In today’s times, this is obviously a very useful skill to have.

Discussing Corporate Bonds

Today we’re going to discuss corporate bonds. Odds are, like most people, you’ve dealt with a bank before in the past. Whether it was to get a mortgage to buy a house, or a loan to purchase a car, you borrowed money from them and then had to pay it back over the course of time by a predetermined date, along with a premium called interest. When you purchase a corporate bond, you’re doing the exact same thing with a corporation, only you’re acting as the lender.

Whatever cash value you purchase the bond for, this cash is then distributed to the corporation so that they can put it to use just as you would a loan. In return, they must repay you on a pre-determined date called the date of “maturity”. But of course, you would need a greater incentive than that to loan your money. Just like you pay interest, the corporate you buy a bond from will then pay you interest at periodic intervals until the bond is paid in full.

Good Continuous Income

Corporate bonds aren’t the greatest way to earn a lot of money in a flash, because even when they offer a decent yield, it tends to be spread out over time. However, this very feature does make them a really good source of continuous investment income. Retirees might take note of this and use corporate bonds to their unique advantage.

If you’re interested in buying corporate bonds, this can easily be done at just about any broker in the game, as well as at many banks. Unlike taking out a loan, you’ll want to buy when the interest rates are at their highest, though.

See you next week for part 6 of Investments.

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

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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

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