Why Study Finance and Investing?

Posted on November 30, 2011 by Bernarr Pardo

Why Study Finance & Investing? Discover opportunities in the challenging global economy. Avoid investing mistakes; discover how to reduce your investing risk.  Learn some of the myths about finance and investing that can improve your cash flow and net worth. Explore great investing ideas and opportunities now & increase your financial learning by reading the posts below & finding topics of interest.

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A Bond Bubble? What You Need To Know About Bonds

Posted on May 16, 2012 by Bernarr Pardo
Bonds may be a dangerous place to invest at this time, yet many investors continue to put money into bonds. The returns are almost zero and negative when adjusted for inflation (that is, “official” inflation; we all know and experience “real” inflation to be much greater). Since June 2008 investors have withdrawn $376 billion from equity mutual funds and put $724 billion into bond mutual funds. You can use U.S. Treasury bonds as a proxy for all bonds.To provide some historical example, if you owned a 30-yr U.S. Treasury bond from 1946 to 1981 you would have ended with $170 for each $1,000 of your initial investment (an 83% loss). During that same period, what cost $1 in 1946 cost $4.67 in 1981. Holding your money in Treasuries for that time period would have meant a very large loss.

Also during the 1940s the Fed’s holdings in Treasuries increased 12-fold in 5 years. Since 2008, the Fed’s holding have increased 3.5-fold.

If you are invested in bonds, consider these issues.

To Your Success,  Bernarr
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U.S. Dollar Inflation, the Chinese Yuan, and How To Invest

Posted on May 7, 2012 by Bernarr Pardo
First some statistics you may have picked up in the media about the U.S. debt, but compared to China here:

  • U.S. GDP in 2010 $14.6 trillion; China GDP $14.8 trillion
  • U.S. economy grew by 1.2% in 2011; China by 9.1%
  • U.S. total debt about $145 trillion; China almost no debt
  • U.S. no cash; China has $3.2 trillion in cash
  • China is the #1 car maker, #1 manufacturer, #1 mine operator, and #1 exporter

The only way for the U.S. to pay down its massive debt is through significant inflation (or bankruptcy/default). The belief is that the Chinese yuan will increase in value as well. So what how should you invest with anticipated devaluation of the dollar.  Some suggestions:

  • Gold & silver
  • Resource stocks or ETFs (precious metals, energy, agriculture, raw materials)
  • Foreign currencies (New Zealand and Australian dollars)

Hope these ideas are helpful.

To Your Success,  Bernarr

 

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Personal Finance: 5 Keys to Your Financial Success

Posted on May 2, 2012 by Bernarr Pardo
My college son recently sent me a link to a short article “5 Keys To Financial Success” which I thought was worthy of passing on these 5. Your financial success really depends on some sound planning. Incorporate these in your planning:

  1. Create and live by a budget
  2. Prioritize debt repayment
  3. Have 6 months savings for emergencies
  4. Save for retirement on a continual basis
  5. Evaluate and negotiate your salary

Read the article I wrote about the most effective way to pay off credit card debt.

To Your Success,  Bernarr
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How Do Stocks Move During Hyperinflation?

Posted on April 30, 2012 by Bernarr Pardo
With the “out of control” Fed printing money, inflation is sure to follow. With high levels of inflation (hyperinflation) your U.S. dollars will be worth (much) less (i.e., prices will increase). Inflation is already much higher than the official government statistics (which effectively eliminate food and energy). Should you stay invested in the stock market if you expect hyperinflation? 

Look at the following short 3-min. video on what happened in Zimbabwe during its economic difficulties.

To Your Success,  Bernarr

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The Economy vs. the Federal Reserve: Abolish the Fed?

Posted on April 25, 2012 by Bernarr Pardo
The evidence is overwhelming that the Federal Reserve has done much harm to the economy and to the lives of the citizens of the U.S. In a recent speech to the New York Federal Reserve Bank, an economist outlined some of the failures of the Federal Reserve. Some highlights follows: 

  • There are studies by Nobel Prize economists that show that government extended unemployment programs actually “give rise to higher unemployment.”
  • The money supply has increased 12,230% since the founding of the Fed.
  • Since the founding of the Fed, consumer prices have increased by 2,241%
  • Since the start of the Fed, there have been 18 recessions.
  • According to Austrian business cycle theory, it is central bank money printing that causes business cycles, and the Fed has dramatically increased the money supply.

Read the full article at: Speech Delivered at the New York Federal Reserve Bank

Do you think the Fed should be abolished? Leave your comment below…

To Your Success,  Bernarr
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Is Gold Cheap? Fair Market Price of Gold

Posted on April 10, 2012 by Bernarr Pardo
Is gold cheap? It is if you required US dollars to be backed by gold. This might be one scenario if the dollar lost its standing as the reserve currency of the world. So here is the chart of the market price of gold (current price) vs. the “fair value” of gold:

While the US continues to print more dollars, they are still relatively valued in the world compared to other currencies. Hence, it does make sense to be bullish on the dollar for the intermediate term, and long on gold for the long term. There are developments that point to a weakening of the dollar as the reserve currency: some countries are selling oil—not paid in dollars.

To Your Success,  Bernarr
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Finance 101: Uses of Money—Lifestyle (#7)

Posted on April 5, 2012 by Bernarr Pardo
This is the seventh post of a series, contributed by Richard McDonnell  

—To Your Success,  Bernarr

Needs and wants as to life style: for most of us, we find ourselves in a typical money pattern of: Starting out in a job, a career, or business that begins with low pay and over time we get some raises or we get a better return on our time and we learn how to make more money per hour or per unit.  This increase in money comes to us at various speeds in life and we normally adjust our lifestyle accordingly.  One of the major keys to financial freedom is to understand and adjust our lifestyle at a pace that allows us to redirect some of this new found money into investments that will begin to give us a return on capital and not to just rely on a return on labor.  It is amazing to me how often I have heard people say, “I cannot possibly cut out this or that cost, as it is a necessity”, the same thing that a few years before they did not have or use and they seemed to mange just fine without it.  Luxuries often morph into necessities very quickly. Continue reading →

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Finance 101: Uses of Money—To Buy What We Want, part 2 (#6)

Posted on March 30, 2012 by Bernarr Pardo
This is the sixth post of a series, contributed by Richard McDonnell  

—To Your Success,  Bernarr

War chest as a cash well: In today’s world the interest you can make on just putting your money in the bank is pitifully low….most of the time below 1%.  Stocks can be fairly high risk, and real estate takes a very large amount of money to even get involved…. One of the greatest consistent returns on your early savings are:  what I call shadow interest.  This is interest on your ready cash that is not posted, but, will benefit you none the less.  Example of shadow interest:  Person A has zero extra cash in his account and needs stuff from time to time.  He often puts those needs on a credit card (at a rate that can be anywhere from around 8% to 24% or more) or borrows money from some other source and tends to buy only when he has a fairly immediate need for the product or service.  No real time to shop or take advantage of sales.  Person B has a money well (emergency/opportunity fund in a saving account) that in the short run earns a very small but safe interest from the bank or CD and can always be on the lookout for sales and has the time to shop for the very best buys.  The shadow interest on this saved money can be huge. Continue reading →

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Finance 101: Uses of Money—To Buy What We Want, part 1 (#5)

Posted on March 25, 2012 by Bernarr Pardo
This is the fifth post of a series, contributed by Richard McDonnell  

—To Your Success,  Bernarr

To buy what we want: to buy the things we want from time to time is one of the many benefits of having extra money.  To treat yourself for a job well done or an investment well planned is a good idea.  To have some of the extras in life can be one of the many pleasures of living and as long as this is truly affordable… no problem.  In modern times what is affordable is often hard to define.  If one has the cash to pay for it now without hurting your war chest… that may mean one can afford it.  If it is borrowed money or credit card money… it will almost always mean you cannot really afford it.  Afford it does not mean….can I manage to pay for it in some way now or in the future.  That is just the ability to pay, not affordability. Continue reading →

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Silver and Gold: The Value of Silver in the Economy as Currency

Posted on March 21, 2012 by Bernarr Pardo

This video presents some thoughts on keeping silver vs. gold, both for inflation protection as well as security as an alternative currency. Some states are moving to officially allow silver and gold to be used as a “currency”. Included in the video is a short partial video of Ron Paul and Ben Bernanke, where Ron Paul gives an example of real inflation using the price of gas as an example. 

What do you think?

To Your Success,  Bernarr
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