Investing

Does a “Savings Club” Account Work?

Carol writes in: My local bank offers an interesting account each year. It starts on the first Saturday in January and the deal is that if you deposit the same amount each week for 49 weeks, they will make the 50th deposit for you and give you the money at the end of the year …

Categories: Banking, Investing

More Than 25 Percent of Americans Are Making a Huge Financial Mistake

What mistake? According to the Arizona Star, more than 25% of Americans are raiding their 401(k)s to stay afloat. The only way this even looks like a good idea at all is if you’re looking only at the very, very short term. If you look beyond that, making this move is pretty clearly worse than …

Categories: Investing, Retirement

Why I Never Use Stock Market Predictions to Invest

Let’s say, hypothetically, that I figured out some ingenious way to predict the stock market so well that I would always significantly beat the annual returns of the S&P 500. Every year, year in and year out, I could get a 30% to 50% return in the stock market. Assuming I’m not so altruistic as …

Categories: Investing

Financing to Make Money

Connie writes in: My husband and I are in great financial shape thanks to living well below our means for many years. We are in our mid 40s and have $300,000 in the bank along with no personal debts. We’ve been thinking about buying an apartment building in our area. There’s a person who may …

Categories: Investing

An Example of Dividend Stock Investing

Several people have written to me recently asking me how exactly investing in dividend-paying stocks actually works. I thought I’d walk through this in a step-by-step fashion so that people can see how it actually works. First, a few caveats. Dividend stock investing is something I do with only a small part of our investments. …

Categories: Investing

Investments, Taxes, and Worry

Johnny writes in: The one thing that has kept me from diving into investing is fear of taxes. Every time I read about taxes and investments, it seems really, really complicated and I’m worried I’m going to be stuck with a big tax bill at the end of a given year even if I think …

Stomaching the Roller Coaster

Jane writes in: I think you’re giving bad advice to people when you tell them not to put everything in stocks or real estate when making a long-term investment. Over a long period like ten years or more, you simply can’t beat the returns there. Long-term investing relies on several assumptions, two of which hinge …

Categories: Investing

Building an Investing Future

John writes in: You’ve mentioned before how a person might slowly build up income-earning investments to provide an income stream for them. How would that actually work? Let’s say I can squeeze out $100 a month for this. What would I do? Okay, let’s do this. First of all, you need to have selected something …

Categories: Investing

Five Red Flags for Bad Financial Advice

Every once in a while, I’ll find myself in an airport or somewhere else where a personal finance or investment program is on television. I’ll watch it for a bit and usually find myself frustrated because, every time I watch, I see a bunch of red flags that indicate that I should take what’s being …

Retirement Investing Obsession

Vitaly writes in: My problem is that I can’t stop looking at my retirement accounts. Whenever I see an investment option that’s doing a little bit better than whatever I’m doing, I start to feel sick to my stomach and I panic and I have to switch my investments over. Then a week later I …

Categories: Investing, Retirement

Saving for Future Uncertainty

I’m at a pretty content point in my life. We have no debts. Our home is paid for. I have work that I’m happy with and a number of long-term projects I’m passionate about. Sarah has work that she loves as well. We have some money saved up. When we look ahead, we don’t see …

Investing Advice For Indirect (or No) Financial Returns

When a person is free from debt and is earning more than they spend, the natural thing to do is to turn to investment advice. Should I invest in stocks or bonds? Should I buy some real estate? The goal of such investments is straightforward: the person simply wants to raise more money. Now that …

Categories: Investing

Savings Account as Investment

Quite often, I’ll get emails from readers saying that they’re looking to invest their money and that the money they want to invest is currently sitting in a savings account. What these readers often overlook is that the money in their savings account is already invested. An investment simply means that you’ve put aside a …

Categories: Investing

Review: The Bold Truth About Investing

Every Sunday, The Simple Dollar reviews a personal finance or other book of interest. Also available is a complete list of the hundreds of book reviews that have appeared on The Simple Dollar over the years. A week or two ago, I was scanning the radio dial while on a road trip, looking for something …

Saving Pennies or Dollars? Investment Fees

Saving Pennies or Dollars is a new semi-regular series on The Simple Dollar, inspired by a great discussion on The Simple Dollar’s Facebook page concerning frugal tactics that might not really save that much money. I’m going to take some of the scenarios described by the readers there and try to break down the numbers …

Categories: Investing, Saving Money

Unrealistic Returns in Personal Finance Writing

This is an issue that I’ve discussed a few times in reader mailbags, but I continue to receive so many questions about it that I think it needs to be thoroughly discussed. Over and over again in personal finance writing, you’ll find references to investment returns on the order of 10% to 12% per year …

Categories: Investing

Choosing a 529 Plan

A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas. On Facebook, Edita asks a simple question: “Among …

Categories: Education, Investing

How To Start Investing: A Collection of Resources

A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas. On Facebook, Shannon asked “What book/blog/resource do you …

Is It Worthwhile to Invest in Precious Metals?

A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas. On Facebook, Silver requested a post on the …

Categories: Investing