Why are Financial Ratios Important? By analyzing investor ratios, stock pickers can seek out winning companies for purchase and eliminate the duds. The major investment ratio categories include profitability, valuation, liquidity, and debt. Profitability ratio analysis explains whether the company is making and keeping more money today than in the past. Valuation ratios uncover whether the firm seems to be fairly priced or not. Debt ratios uncover a company’s debt levels and liquidity helps investors understand how much cash is available to run the business. You might find a growing company that’s increasing profits, but if the firm is...
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Are Target Date Mutual Funds the Holy Grail for Investors? Guest contributor; Lawrence J. Russell Learn all about a TDF and the answer to, “Should I invest in a target date fund?” question. Target date retirement funds (TDFs) are usually “fund-of-funds” investments, which combine stock, bond, cash, and sometimes other investment asset classes. The target date fund buys stock and bond mutual funds or exchange traded funds in specific proportions, depending upon the final “year”. Thus, target date funds add a layer of management expenses on top of the expenses of these underlying funds. The primary added value of target...
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What is a Target Date Fund? Are you interested in buying one fund which holds all the stock and bond mutual funds you need? A target date fund (TDF) is like a big box retailer or a shopping mall. At the mall, you can buy everything you need at one destination. In a target date fund, you get all of your investing needs met within one fund. How the Target Date Retirement Fund Works A company, such as Vanguard, Fidelity or countless others create a mutual fund or exchange traded fund (ETF) for investors expecting to retire in a...
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“Investing should be dull,” according to Nobel Prize winning economist Paul Samuelson. “Investing should be more like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas” Are you interested in a market beating approach with less volatility? Do you want a set it and forget it investment plan? If you answered yes to any of those questions, then you must check out The Wall Street Journal, Marketwatch.com, Paul B. Farrell’s Lazy Portfolios and more. 5 Rules of a Lazy Investment Portfolio- Tips from “Build Your Own Lazy Portfolio” These tips give you the...
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Real Life Net Present Value (NPV) Example While teaching a Corporate Finance class for MBA students at a local university, I was asked a question that underscored importance of the net present value concept. Although NPV might be considered a panacea, there are definitely some pros and cons. Net present value is a method to put a dollar amount on future cash payments. It’s great if you win the lottery and want to determine whether to choose the lump sum payment or monthly option. Or what if you or your folks want to determine the present value of their monthly...
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Where to Invest in an Overvalued Stock Market? The market crashed in 2008, more than 10 years ago and has been rising ever since. This is awesome if you’ve participated in the climb. But, there’s a problem, with assets climbing for 12 years, it’s tough to find decent and well valued investments. Get 5 actionable investment ideas for a frothy overvalued stock market. *This article contains affiliate links to help pay for this website. 5 Places to Invest in an Overvalued Stock Market These 5 investment ideas will round out your portfolio until the overvalued stocks cool off and...
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