The scripture instructs us to invest our assets in a variety of different sources because we do not know what types of hard times may come upon the earth and surround our lives. Therefore, you should study the ins and outs of real estate, stock, bond, as well as principle protected-interest bearing investments like money market accounts, certificates of deposits, and treasury bills, bonds, and notes. The return and/or stability of these types of investments can help cover short and long-term needs and help you make it through tough times when your nation, region, or life is facing economic trouble.
The stock market has earned more than corporate and government bonds in the vast majority of contiguous twenty-year periods. However, stocks are more risky than bonds over shorter periods of time because every day they fluctuate to a much greater degree between high and low values.
Bonds can fluctuate in price, usually to a much lower degree. This normally happens when you try to sell them to someone else prior to their reaching the maturity date when the corporation or government will give return your principle and pay you accrued interest. Bonds backed by the federal government are generally considered to have the ultimate in protection on principle and accrued interest when cashed in at maturity.
Corporate bonds on the other hand do not have the same level of protection because any guarantee is only as good as the ultimate financial condition of the company at the time of maturity of the bond. When you put your bonds for sale prior to that time, people in the market to purchase will take the condition into consideration when determining the amount they are willing to pay for the particular type and issue of bond.
Money market and certificate of deposit accounts usually have lower annual returns than corporate bond, stock, and real estate investments. These instruments are guaranteed by the federal government up to certain limits such as $100,000 per financial institution. Higher guarantee limits can be had on these instruments in some instances when you have joint, retirement, or a few separate accounts at one institution.
It’s important to study the FDIC.gov and NCUA.gov websites so you’ll know the guarantee limits. Then, with confidence you can place money in these accounts in a way that protects your principle and interest earned. The portion of your portfolio that you would definitely want to put in these types of savings accounts would be your emergency fund as well as any money that you may need to withdraw within five years due to anticipated replacement car purchase, home down-payment, etc.
Generally speaking, when you’re younger than 50 your portfolio should contain more than 50% in low expense diversified no-load stock mutual fund investments when you’re younger than 50 and contain less than 50% in diversified corporate and/or government guaranteed saving instruments.
When you reach 50 years of age you should take an assessment of your risk tolerance and adjust your portfolio weightings so that bonds and government guaranteed savings are used to a greater degree when you find that you will need the money within five years or you simply don’t have many years to recover from a large stock market downturn or when you just don’t have the stomach to take inevitable stock market downturns in your retirement years.
Through it all, craft your investment plan to invest in seven or eight different vehicles and re-evaluate it annually and don't worry about day-to-day stock market swings and economic cycles since you're generally invested in stocks for the long haul. This roadmap will help you be a good steward who prospers immensely.
Please pray for this ministry and email any questions. May God bless you richly as you follow His plan!!!
Proverbs 11:14, Ecclesiastes 11:2, Luke 19:13, 2Timothy 2:2
Please forward these bondage breaking articles to other people who can use helpful insight!!!
You can find books authored by Randy and Karen Parlor at www.Amazon.com.
No comments:
Post a Comment