Invest to your advantage

I hear a lot of talk when I go to parties or some other social gathering. I can always count on someone coming up to me and asking about what hot stock I can suggest to them so that they can make a killing in the stock market. They want to buy the stock on Monday and by Wednesday they want to sell and buy some Bentley. Every single time I tell them that if I had that kind of information I would not be working for a living and would keep it to myself.

Most people have no clue when it comes to investing money. No, what I tell you, they do not teach in high school or colleges. I had to learn it from old retired steel workers in Pittsburgh, Pa. That is why money managers for the past 25 years have been robbing the average worker without their knowledge. They have been raiding their pension funds, bank funds, 401Ks, IRAs and the average worker has been saying thank you. Then they say, I will come back for the same treatment.

The same people are involved in every part of the business. Companies who have been giving their employees retirement accounts have been setting them up with the same investment firms. The traders in the market (who cause securities to rise and fall) work for the same investment firms. So the average person has lost a large part of there retirement funds over there working life time. The worker realizes it when it comes time to retire and live off the money. By that time it is too late for them.

Jim Cramer, the host of the Mad Money TV Show said something recently that I agreed with. I have been preaching this to you and anyone else that will listen for years. That is investing to your advantage, not the broker, the banker, your employer, or your friend’s advantage. Why buy stocks that give no dividends? By investing in income stocks you can reinvest the dividends and buy more of the same stock. Chances are, over the years, the value of your portfolio will go up even if the stock does not. Stocks and mutual funds are speculative because they do not mature. But with yields this high, I would take the risk.

This is also true for mutual funds that give high dividends. I have talked about Dreyfus High Yield Strategies Fund in my Blog before. I think it has come down to a price that I would start buying. As of Oct. 5, 2011, the price was $4.12 per share. It gives 54 cents per year in dividends. That is a yield of 12.62%. Using the rule of 72, dividing 12.62 into 72 and you have a little over 5.7 years for your investment to double. Using the rule of 115, dividing 12.62 into 115 and you have a little over 9 .11 years for the investment to triple.

Take this information and open a Share Builders Account or an account with the company that you are investing in and now you have a vehicle that charges you little if any commissions. An IRA allows you to defer taxes to the years where you are not working or working at a lower pay.

What can a person do with a self directed retirement account if they start at age 30 and stop at age 64? I think they can live a little better than their friends who thought that their investment firm is holding their hand and looking after their money for 34 years. This is called investing to your advantage.