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Money Market Investing Basics

As we inch ever closer to a recession, it is wise for investors to examine their portfolios to make sure they are protected if the market makes significant downturns. Perhaps one of the best ways to protect your investments during such unstable times is to re-allocate your investments into stable securities such as money market funds.

Money market investing is one of the more conservative plays investors can make. Outside of an FDIC insured savings account or certificate of deposit, the money market fund is the next best place for conservative investors to invest their money. For those of you unfamiliar with money market investing, this article will provide a brief overview on the basics of money markets and what you need to know to begin investing in a money market fund.

First and foremost, a money market fund is very similar to a mutual fund, so it is important to note that investing in a money market fund carries some risk. That being said, money market funds have traditionally been very stable investments. Like a mutual fund, money market funds are managed by an individual or individuals who buy and sell securities that comprise the fund. Similarly, the money market fund will be governed by an investment objective — usually stable long-term capital appreciation.

Investors buy into a money market fund the same way they would a mutual fund. You can purchase lump-sum shares or invest small amounts of cash at a time. Usually, the money market fund will have minimum investments and fees associated with it. Additionally, there are money market funds specifically tailored for investors who are investing large sums of cash in excess of hundreds of thousands of dollars. How you choose to invest is up to you.

One of the biggest advantages of investing in money market funds is that they allow you to access your cash very quickly — some the next day, some immediately. However, unlike a high-yield savings account, money market funds are not FDIC insured securities. That means that you will lose money if the fund performs poorly.

When speaking about liquidity, your needs will determine whether or not you should purchase a “purchased” or “sweep” fund. Purchased money market funds afford next-business-day liquidity and are bought and sold like other securities you are invested in. But, unlike these other securities they don’t charge fees for additional transactions. A “sweep” money market fund affords the investor same-day liquidity by trading shares to cover transactions such as trading or check writing. While purchased funds may have initial investments and minimums, sweep funds typically have higher fees and require more household assets to participate.

If you are thinking about investing and want a conservative investment vehicle, money market investing is worth considering. Just remember, that while relatively safe, they are not risk-free.

Quicken® versus QuickBooks®, Which is Better?

You need help organizing your finances, but you don’t know where to start. Maybe you’re starting your own small business and you want to make sure everything with your finances is safe from the get go. When choosing a computer program to help you organize your money, there is one fundamental debate; Quicken versus QuickBooks. Each of these programs has its advantages and disadvantages, just as each business or financial situation is unique. When debating Quicken versus QuickBooks, you really just need to think about what you need for your business or situation. Know what is important to you and what features you can easily live without. I will not pretend to have all the answers when it comes to Quicken versus QuickBooks, so here is an article from about.com by Shelley Elmblad that compares QuickBooks Simple Start and Quicken Home and Business. Let’s try to shed some light on the Quicken versus QuickBooks debate:

Dedicated vs. Dual-Use: Quicken Home & Business includes a multitude of features for personal finance management along with small business features, which appeals to those who want all financials in one place. QuickBooks Simple Start only has features relevant to small business accounting. Without the distraction of small business finance features, it is easier to learn to use QuickBooks Simple Start.

Look and Feel: Because QuickBooks Simple Start focuses only on helping you do small business accounting activities, it has a cleaner interface than Quicken Home & Business and is easier to navigate.

Account Reconciliation: Account reconciliations in Quicken Home & Business start from within account registers, and adding or changing transactions during the reconciliation process is uncomplicated.

Account reconciliations are handled somewhat differently in QuickBooks Simple Start and while not difficult, the process is not as intuitive as it is in Quicken software.

Downloading Transactions: Quicken Home & Business downloads transactions for bank, credit card and investment accounts. Unfortunately, QuickBooks Home & Business does not currently offer this convenience and all entries must be done manually.

Categories: Quicken Home & Business uses income and expense categories while QuickBooks Start uses expense accounts and income accounts to classify transactions per standard double entry accounting procedures. The income and expense accounts look like categories to those familiar with personal finance software, but double entry accounting is not always as simple as recording a check. For example, if the check is written to purchase new equipment for the small business, an asset account needs to be established for the equipment.

Quicken Home & Business or QuickBooks Simple Start?

Quicken Home & Business and QuickBooks Simple Start both address small business accounting needs, but QuickBooks Simple Start is true small business accounting software and it will better serve a growing small business.

QuickBooks Simple Start is better at quickly guiding you through small business transactions, where Quicken Home & Business works well for someone who uses Quicken for personal finances and who makes an occasional sale with a handful of customers.

I recommend using QuickBooks Simple Start if you are very serious about your small business and you have a plan in place for growth. When your business grows, QuickBooks Simple Start data will transfer to higher version of QuickBooks with richer small business accounting features. If you use Quicken for managing personal finances and you frequently have small business accounting transactions, your best bet is to use Quicken Deluxe or Premier for personal finances and QuickBooks Simple Start for small business finances. You can try QuickBooks Simple Start Free Edition to experience how it makes small business accounting easier.

Hopefully, this sheds some light on the Quicken versus QuickBooks debate.

Beginners Guide to Investing in Euros

As the value of the American dollar continues to decline, in relation to other currencies, interest in investing in Euros has increased. There are hundreds of web sites dealing with this current trend in the market. Money-Zine.com has a great article about investing Euros that I think you will find interesting.

 Euros Versus Dollars

 Currently the Euro is trading around $1.46 U.S dollars – on the stock exchange floor, this is known as the exchange rate. That means, it costs $1.46 to purchase one Euro. About a year ago, in 2006, Euros were trading at around $1.26. Understanding that the difference in prices means that the Euro is not fixed to the dollar, means that you can see that there is an opportunity to make or lose money from the change in the exchange rate over time.

So, if the value of the dollar declines relative to the Euro, then you, the investor, can make money from this decline. Let’s look at this opportunity a little closer.

 How and Why the Euro Exchange Rate Changes

Investing in Euros does not guarantee you a profit. If you think about the global economy, one of the major factors that affect the value of a currency is the faith in that country’s economy. If one country’s economy is weakening relative to another, then over time there should be a change in the exchange rate.

For example, if investors believe that the dollar will weaken against the Euro, then that means they think Euros will be worth more in the future in terms of dollars. Over the past twelve moths, that is exactly what happened. If you purchased 100 Euros last year, it would have cost you $126. If you traded those 100 Euros back in for dollars today, you would have gotten $146. So you would have received a gain of $20.00, which is a 15.8 percent return on the $126 investment.

In order to combat inflation here in the United States, the Federal Reserve has been keeping interest rates relatively low. Specifically, they have been low relative to interest rates found in Europe. This brings up the second reason for investing in Euros - taking advantage of higher interest rates in Europe relative to the United States.

By taking U.S. Dollars and buying government bonds, in Euros, then the investor has a second chance to earn a higher return on their investment.

 Risks Involved When Investing In Euros

When you invest in a foreign currency, you are placing a bet that the Euro will grow in value relative to the dollar. Before you place a bet like that, you need to understand the relationship over the past several years and try to predict what might happen in the future. In this case, the Euro has strengthened versus the dollar over the past year. The question is - Can this trend continue, will it turn around and for how long?

So, while investing in Euros is not a win-win situation, it is a rather stable and consistent means of investing your money into a foreign market.

Hydrate Your Wallet: Start Investing in Water

When I was a little girl, I thought water was free. I mean, it seemed so abundant, and it was a necessity of life. Little did I know that I should have listened to my father when he told me that nothing in life is free, not even water. But investing in water? Definitely, I found out. I had never heard of something as obscure as investing in water, though, so I looked it up. I needed information on this subject. I found a detailed article by Jon Markman on moneycentral.msn.com called “Invest in the Coming Global Water Shortage.” Scary but true. Here are some highlights from Jon Markman’s article about investing in water.

Not Making Any More Water

There is no more fresh water on Earth today than there was a million years ago. Yet today, 6 billion people share it. Since 1950, the world population has doubled, but water use has tripled, notes John Dickerson, an analyst and fund manager based in San Diego. Unlike petroleum, he adds, no technological innovation can ever replace water.

Although not widely appreciated, investing in water has been recognized by conservative investors as an opportunity – and it has rewarded them. Over the past 10 years, the Media General water utilities index is up 133 percent, double the return of the Dow Jones Utilities Index. Over the past five years, water utilities are up 32 percent – clobbering the flat returns of both the Dow Jones Utilities and the Dow Industrials. One of the long-term value drivers of investing in water, according to Dickerson, is that demand is not affected by inflation, recession, interest rates or changing tastes.

Virtually all of the U.S. water utility stocks are regulated by states and counties, which makes them pretty dull. Governmental entities typically give utilities a monopoly in a geographic region, then set their profit margin a smidge above costs. Just about the only distinguishing factor among them are the growth rates of their regions and their ability to efficiently manage their underground pipe and pumping infrastructure. Here are a couple of potentially more impactful ways for investing in water.

The central problem is that less than 2 percent of the world’s ample store of water is fresh. And that amount is bombarded by industrial pollution, disease and cyclical shifts in rain patterns. Its increasing scarcity has impelled private companies and countries to attempt to lock up rights to key sources.

Investors interested in investing in water can consider a number of variant plays. None are extremely exciting, but my guess is that, over the next few years, some more interesting purification technologies will emerge, along with, perhaps, a vibrant attempt at worldwide industry consolidation.

One current idea for investing in water is a Tennessee-based copper pipe and valve maker Mueller Industries, a $1 billion business with a trailing price/earnings multiple of 15 that is still not expensive despite a 47 percent run-up in the past year.

Another is flow-control products maker Watts Water Technologies, which is a little richer at a $975 million market cap and a trailing P/E multiple of 19, but is still owned by several leading value managers, including Mario Gabelli.

And possibly the most interesting is Consolidated Water, a $160 million company based in the Cayman Islands that specializes in developing and operating ocean-water desalinization plants and water-distribution systems in areas where natural supplies of drinking water are scarce, such as the Caribbean and South America. It currently supplies water to Belize, Barbados, the British Virgin Islands and the Bahamas, and it has expansion plans. It is the most expensive, but it may also have the greatest growth prospects and the future of investing in water. Of all of these, it is up the most over the past five years, a relatively steady 355 percent.

Of course, there is one other benefit to water investing: When these companies say they’re going to do a dilutive deal, its not something to worry about.

QuickBooks® Add Ons Help You Customize

QuickBooks can help you keep your business on stable financial ground and help you track all your money and expenses. If you are a small business owner, you have more than enough to worry about so using QuickBooks and QuickBooks Add Ons can be a great help to you and keep you from making costly financial mistakes. One problem that you might run into is not being able to find the QuickBooks program that is just right for you. Every business is unique and will have different needs. There is really no way for there to be as many QuickBooks programs as there are types of businesses. This is where QuickBooks Add Ons come in to play. This is the easiest way to customize a QuickBooks program so that it can be as beneficial as possible for your unique business. You might find that the Pro version works well for your business, but there are just a few things that you wish it could do for you that don’t come with the standard version of the program. Here are some QuickBooks Add Ons that you might find helpful or necessary to run your business.

Credit Card Processing – One of the important QuickBooks Add Ons if you are planning on making money is credit card processing. QuickBooks can provide you with everything that you need to accept credit and debit cards. There are three ways in which you can accept credit cards with QuickBooks Add Ons. Your business can accept credit cards by phone, fax or mail order. QuickBooks will automatically enter your transactions into your accounting software and is one of the credit card processing functions that is designed exclusively for QuickBooks. There are also QuickBooks Add Ons for Web stores so that you can set up your online store and accept credit cards. This will also help you to track your money more easily than other credit card processing. You can also use QuickBooks to set up terminals at an actual store and accept credit cards. If you already use QuickBooks, then you can also use this software for receiving credit card payments rather than having another system installed to accept credit cards.

Point of Sale – If you own a retail store, it is important to have a system for ringing up you sales and keeping track of your sales. One of the QuickBooks Add Ons you might not think about is the Point of Sale system. You will receive the barcode scanner, printer and all other essential hardware and software that are needed. This is another feature that is very easy to install if you already use QuickBooks. This will help to track your inventory as well as easily ringing up your sales, and all those other tasks that keep you from doing the important stuff. There are certain things that need to be automated so you can keep your attention on the more important things.

There are plenty of other QuickBooks Add Ons that can help cater to the needs of your business. If there is something you wish your QuickBooks program could do, don’t just wish, check to see if there aren’t QuickBooks Add Ons to help you.

Pros of Investing Money

Last night I was watching TV and came across a television show about investing. One of the callers wanted to know why they should even bother investing during an unstable time like that we which are currently facing. Then they asked what are the pros of investing in the first place. And while I understood why they would ask the first question, I could not believe that they asked the second question.

So, what are the pros of investing your hard earned money? Two words: compounding interest.

Some people go to magic shows to be amazed, I take a look at investing calculators. There is no better way to convince a person that investing is a brilliant idea than by showing them how compounding interest works.

For example, if you make an initial deposit of $1,000 into a standard savings account that yields 0.2 percent (the current rate at Wells Fargo) and invest $500 every month for 30 years you will end up accumulating approximately $186,000. Not to shabby, right?

However, should you invest the same amounts for the same time at an average rate of return of 8 percent, your $1,000 will be worth nearly $757,000! That is almost four times as much and that is the beauty of compounding interest.

Still not convinced about the pros of investing?

Fine, allow me to provide additional arguments.

Investing is a brilliant idea because saving money for the proverbial rainy day will not just make you rich; it will also make you an intelligent and responsible individual. What happens if your car breaks down and you do not have any money in the bank? You put the costly repair on your credit card. Compounding interest works with debt too, and I am not sure you want me to put those numbers in front of you. But if you want to find out how credit card abuse can kick your financial butt, visit any compounding interest calculator online to see.

And what about your child’s education? If you are planning on having children and you expect those children to go to college, you need to ask yourself who is going to foot the bill. You are? How are you going to do that? Hiding money under your mattress probably won’t send your kids to college. On the other hand, setting up a college fund and investing in securities that have high rates of annual returns will allow you to send your child to whatever college they can get in to.

I could go on, but I think you know the most important investing pros by this point. And if this article failed to convince you of why you should be investing your money, well, there probably isn’t any hope for you.

Good luck.

Stock Investing Basics

So, you just landed your first “real” job and are ready to start investing. Or maybe you came into some money and want to make sure you do the right thing with it, but you do not know how to do it. Well do not despair, this article will show you the ins and outs on the basics of investing.

First and foremost, congratulations. Making the decision to start investing your money is one of the wisest decisions you will ever make. And while you might initially feel the pinch of a tighter budget, after a while, you’ll hardly even miss the money that you are socking away.

Perhaps the biggest question facing new investors is “how should they invest?” This fundamental question is also one of the most basic, and the answer is as open as the question.

When considering the basics, ask yourself the following question: do I have time to diligently research and manage my investments or would I rather have someone do it for me? Most folks will say they want to do the research and management themselves. However, they will soon realize that investing involves more work than they are capable of handling. Investment professionals exist to help you manage the world of investing. If you do not have the time or patience to actively manage your portfolio, hire a professional.

If you do want to conquer the investing world by yourself then you need to identify your investment objectives and base your investment decisions on that objective. Are you an aggressive or conservative investor? Do you plan on frequently entering and exiting the market or do you plan on buying and holding? What is your timeframe? Such basic questions must be truthfully answered before investing in a single security.

So, what should you invest in? That answer depends largely on how you answered the basic questions asked above. If you have the time to do your research and plan on being very active in managing your investments, you should consider investing in individual stocks. If you want to manage your portfolio, but don’t want to spend as much time doing research, you should look at mutual funds, ETFs and index funds. Lastly, you will want to consider investing in bonds and cash instruments such as money market funds.

The thing to remember when it comes to all types of security investing is that properly balanced asset allocation is key. You do not want all your money tied up in one stock or mutual fund. Instead your goal should be to create a well-balanced portfolio consisting of large-cap, small-cap and international stocks with a percentage of your portfolio invested in bonds and cash. This asset allocation percentage is determined by your investing style (aggressive, conservative, etc. and your time horizon). If you have many years before retirement, you will want to have the bulk of your portfolio made up of stocks. If you are close to retirement, you will want more stable and conservative investments in your portfolio (bonds, money markets, precious metals).

Investing in stocks is a great way to build your retirement nest egg. If you properly educate yourself on the basics, you will find the experience to be lucrative and positive.

An Investment Primer

If you are new to the world of stock investing, now is a great time to familiarize yourself with the basic fundamentals of investing in stocks. Whether you are new to investing or simply want to learn about stock investing, this article should provide you with a brief tutorial on the subject of stock investing.

So what is a stock?

Simply put, a stock represents partial ownership in a company. For the investor, one stock equals one share in the company. Some companies have millions of shares outstanding, or issued, while other, smaller companies might only issue a few shares of stock.

Stocks are securities that are purchased and sold at any one of the world’s financial markets. Americans are familiar with the NYSE or New York Stock Exchange and the NASDAQ or National Association of Securities Dealers Automated Quotient. The NYSE is commonly referred to as the “Big Board” and is the largest stock exchange in the world. Stocks are also exchanged at the Nikkei in Japan and the London Stock Exchange in England.

For many new to investing in stocks, the decision to begin investing can be fraught with danger. Many financial and investment advisors do not advise those new to stock investing to invest in individual stocks. Why? Because for the casual investor, investing in individual stocks takes more knowledge and time than they possess.

If you are an investing rookie, you should more than likely consider getting your feet wet by investing in index or mutual funds. Doing so will allow you the time to get comfortable with the principles of investing. Another thing you may want to consider is becoming a member of a web site that allows you to place mock trades and open a “training portfolio.” Tools such as that are very good ways to learn how to make trades, conduct stock research and track your progress. Best of all, you do so at absolutely zero risk!

Investing in the stock market is a great way to build up your retirement nest egg. Over the course of time the stock market has outpaced other investment options by a substantial margin. However, you should know that investing in the stock market carries risk. Many people fail to stick to their investing strategy and let their emotions make their decisions. If you have an extended time horizon until you retire, you will want to be more aggressive because you have the time to ride out the market’s lows. If you are near retirement, well, you probably aren’t reading this article.

The most important thing is to remember that when investing in stocks, research is key. Don’t waste your hard money chasing hot tips and emotions. If you think big picture and subscribe to the buy and hold philosophy, you’ll find your stock investing experience a good one.

Global Investing and How You Can Get Involved

Let’s talk green. And I’m not talking about the environmental movement, I am talking about the green in you wallet, or perhaps lack there of. Looking to start investing but nervous to take that first step, me and CNN.com are going to give you a little heads up. What could it be? Try the top global investing companies in the world! So, grab a drink, lean back and read on as we do the grunt work in global investing for you.

1) Apple®

Yeah, you have heard of them, I have heard of them, heck, I am writing on a Mac right now and listening to my iPod. If Apple is going to take over the world, at least we are all going to look super cool with our white and black electronics and super tiny players. What makes them so great? Try their innovation in the computer technologies market. Their people management skills and quality of products and services make them desirable candidates for global investing. They are a financially sound company and socially responsible. So, as far as Global investing goes, this American-based company stands tall.

2) Hewlett -Packard®

Another American based company, Hewlett-Packard is ranked number three in a list of highly desirable computer companies to invest in. They are innovative, know how to keep up with trends and have been financially sounds for quite a while now. Global investing opportunities knock with Hewlett-Packard on the front.

3) Canon&reg

Headquartered in Japan, this fun little company is a household name when it comes to personal electronics. Personally, I have a Canon camera and love it! With long term stability and great customer service, Canon is ranked one of the top global investment companies in the computer industry.

4) Lenovo Group

This Hong Kong-based company is cranking out personal computers like it’s nobody’s business. With tiny think pads and a great business plan, the Lenovo Group is marching upwards, quickly in the global investing market. Sometimes, its better to jump before the oven is heating up, that way you can stay along for the ride.

5) Nestle

Based out of Switzerland, who doesn’t know about and love Nestle? They do just about everything tasty, and so much more. Global investing opportunity here? I think so! They are ranked No. 1 globally for consumer food products offering you, the investor, everything from long term financial stability, customer service, innovation, social responsibility and much more.

So, there you go, five great companies that can help make you some green. Still not convinced? Go online and research a little yourself! You will find the world of global investing is much bigger and much more stable than you previously thought. Good luck, and get your green on!

Get to Know: Gold

With the U.S. and global economies behaving like an unruly five year-old, many investors are pulling their money out of stock and investing in precious metals. And with gold hitting record highs seemingly every day, it appears that trend will continue as the markets plunge into recession.

For many investors, choosing to invest in gold is a way for them to protect their investment portfolios during periods of financial and economic instability, because while the dollar continues to plunge, gold investments have increased and held their value. Likewise, investing in gold allows an individual to diversify their portfolio as well as hedge against market downturns, inflation and a weak dollar (when the dollar goes up, gold prices go down). And as many people are finding out during these unpredictable economic times, diversification is a great insurance policy.

So how can one get started investing in gold? The standard gold investment vehicles include gold bullion and bars, gold accumulation plans, gold mining shares, gold options, and mutual funds. However, for the majority of casual investors the primary investment vehicles are gold bullion coins and gold mining shares. For investors looking for greater reward, playing the gold options market is the way to go. But be careful, higher rewards usually mean higher risks.

However, there are those who would argue that investing in gold is not such a brilliant investment strategy. Among other reasons, they feel that investing in gold is foolish because it has lagged behind stocks. In fact, over the last 80 years gold has only appreciated in value at an annual rate of 4.5 percent. Compare that to common stocks, which have increased a full percentage point higher per year. And if you factor in dividends and compounding interest, that one percentage point turns into dramatic gains compared to that of gold. Additionally, those bearish on gold point out that gold diminishes in value as the supply increases, whereas stocks increase in value and supply over time.

Precious metals, such as gold, are the “it” investment of the moment. However, your investment decisions should be made with great care. As with any investment, it is vital that you do your homework before investing. Because, while all financial advisors would tell you that it is important that you diversify your portfolio, how you do so can have far reaching implications.