Investment and Finance

Some reasons are greed, impatience, lack of goals, and unsuitable investment strategies which are overly leveraged. Other reasons include out of date publications or relying on out of step experts, as well as failure to understand or take risks.

Usually the late saver never catches up, even if he earns more income and saves more later. The benefits of compounding significantly helps the early saver.

Junk bonds are high yield corporate bonds. Some corporations, often new companies, do not have established credit history and a proven track record of consistent profits available to pay off loan principal and interest. As a result, when raising capital through bond offerings, the companies must pay a higher rate of interest to compensate the investors for the additional risks (e.g. default, late payment, inadequate collateral, etc.). Mutual funds that specialize in junk bonds can be suitable investments for investors seeking high income and are able to tolerate the associated risks. Often the higher interest rate earnings more than offset the portion of defaulted loans. However, seek out mutual funds that are the best performers and the least risky. Most investors should avoid junk bonds of issuers who are highly leveraged.

Some steps you should consider include (1) match the fund objective and risk level with the investor’s goal; (2) find the top funds that are the best on performance, fees and expenses, stability, and management; (3) determine other factors which might affect future performance, such as market trends and outlook; and (4) investigate any soon-to-be issued dividends for capital gains, and consider purchasing the shares after that date to avoid taxes.

REIT stands for Real Estate Investment Trust, which is a publicly traded closed-end investment company that invests in a managed, diversified portfolio of real estate or real estate mortgages. The income is tax-free to the trust as long as it meets certain requirements. Like mutual funds, REITs are conduits through which earnings pass to shareholders. REITs are readily sold on the New York and American stock exchanges and thus are much more marketable than other types of real estate investments. REITs offer a good way to invest in real estate, but the investor and or his advisor should carefully screen for performance, stability, fees, costs and outlook.

Price Earnings Ratio is the price of the stock divided by the earnings (usually projected) per share.

You get the ratio by dividing the number 1 by the Standard and Poors' 500 Index dividend yield. The higher the ratio, the higher is the risk.

You get this ratio by dividing the company's actual cash flow by the amount of dividends to be paid. If the company’s ratio is 2 or higher, then cash flow is double the dividend payout and is usually a sign of a sound company.

The Dow Jones Average is comprised of the Dow Jones Industrial Average (DJIA), the Down Jones Transportation Average (DJTA) and the Dow Jones Utility Average (DJUA). Currently, there are 30 industrial stocks in the Dow Jones Industrial Average, which represents about one-fifth of the value of all U.S. Stocks.
The Dow Jones Transportion Average includes 20 stocks and there are 15 stocks in the Dow Jones Public Utitliy Average.
The composite average includes these 65 stocks collectively. The Dow companies are weighted by stock price instead of capitalization, and thus companies of different sizes get the same weighting if their stock price is the same. Dow Jones Average is the best known U.S.index of stocks. It contains 30 stocks that trade on the New York Stock Exchange.
The Dow Jones Average is a barometer of how shares of the largest U.S.companies are performing.
There are thousands of investment indexes around the world for stocks, bonds, currencies and commodities