George Divel’s Blog

Investment Blog Sponsored by George Divel

George Divel Investment Tips #6

A Tip About TIPS

If the threat of inflation is making you nervous and your investment timeline is one the short side – for example, if you are retired or nearing retirement. Here’s a tip:

Consider TIPS. (Treasury Inflation Protected Securities) Tips are treasury securities that are indexed for inflation. The mere prospect of facing inflation justifies a place for TIPS in the portfolio of retirees who are concerned about maintaining the purchasing power of their nest eggs.

TIPS perform well even in periods of rising inflation coupled with stagnant economic growth (known as stagflation), a condition that we may be experiencing right now.

If you buy a conventional Treasury, you receive the same interest payment semiannually for the life of the bond. With TIPS, the Treasury adjusts the principal value of a bond each month (with a two-month lag time) to keep pace with inflation. A higher principal value also lifts interest payments.

Of course you pay a little more but it could be worth it.

When experts compare Treasuries and TIPS, they study the break-even inflation rate. In mid-January, 10-year Treasuries yielded 3.8 percent, and 10-year TIPS yielded 1.6 percent. That implies a break-even inflation rate of 2.2 percentage points. If inflation over the next 10 years tops 2.2 percent annually, you’ll do better with TIPS than with the equivalent Treasuries.

So if Inflation is on your mind, ask your investment advisor to explain TIPS to you.

Advertisements

March 11, 2008 Posted by | Uncategorized | Leave a comment

George Divel Investment Tips

# 5  Don’t try to time the market

Everyone wants to buy low and sell high.  What could be nicer than to buy a stock at $3 and sell it at $30, or $60 or $200? But for most of us this is just a fantasy. It is very difficult to pick the best time to buy a stock or to time the market in general.
Actually  it is time in the market and not timing the market that counts.  The best way to be a successful investor is to get help finding good investments and then  stick with it for the long term. Most people make the emotional error of buying into an investment when it is at the peak of its performance and then selling out when its value has dropped.  To invest wisely, keep emotion out of your investment decisions as much as possible and try to get as much help as you can selecting investments that will serve you over the long term.

February 20, 2008 Posted by | Uncategorized | Leave a comment

George Divel Investment Tips

#4 Diversify

The notion  not to “put all your eggs in one basket” is probably the oldest piece of investment advice. It is also great advice.

Nobody, even the smartest investors can foretell the future but if you keep your investments diversified, you are protected because the odds of any one bad investment hurting hurt are greatly diminished.

If you ask an investor who has lost a great deal of money their greatest regret, it will likely be “I should have been more diversified. I should not have put so much into one investment.

Whether you are a small investor or have millions of dollars in assets, you won’t go wrong by starting your investment program with diversification as your goal

Talk to your investment advisor about what diversification means to you.  Some investors think it means buying different stocks. But there is much more to diversification than that.  A balanced portfolio should not only have diverse stocks or mutual funds, there should also be diversification between stocks and bonds. That’s why it is important to tell your financial advisor about all your assets, including real estate so that you can get advice to truly diversify your holdings.

February 5, 2008 Posted by | Uncategorized | 1 Comment

George Divel Investment Tips

Tip # 3  How much risk can you tolerate?

Are you a risk taker or are you risk averse? Do you have a clear idea of what risk is or do you confuse risk with volatility?  These are important questions that you should discuss with your investment advisor.

Big investment firms and banks have skilled professionals who are employed full time as risk managers. Their job is to estimate the amount of risk in every investment to increase the odds that the investments will be profitable.

But for most individual investors, risk has to do with you gut.  The biggest investment rewards go to those investors who are willing to risk their money.  Do you have the stomach to lose your hard earned cash in exchange for the possibility of high returns? Or would you rather invest more conservatively and earn returns that are less but steadier?

It is very important to be honest about how much risk you can comfortably manage and then to invest accordingly.

Also, even if you are a risk taker, you must also consider your investment time horizon to make sure your goals are realistic. This is another conversation you need to have with your investment advisor before you start any financial planning.

January 29, 2008 Posted by | Uncategorized | Leave a comment

George Divel Investment Tips

#2  Set Realistic Goals

There is a great advantage to writing down your goals. Too many investors have vague or poorly defined goals and as  result, they can’t possibly be successful.  It isn’t enough to say: “My goal is to be rich.”  The more specific your goals, the more likely you are to reach them.  For example: First identify and write down your financial goals, whether they are saving to send your kids to college, buying a new car, saving for a down payment on a house, going on vacation, paying off credit card debt, or planning for retirement. Second,  decide whether  each financial goal  short-term (less than 1 year), medium-term (1 to 3 years) or long-term (5 years or more). Write everything down and  then start to work with your list of clear goals.

When you have all your assets and all your goals written down, you are in great position to get your finances in great shape.

January 20, 2008 Posted by | Uncategorized | Leave a comment

George Divel Investment Tips

Tip # 1: Consider ALL your assets.

Many individuals think that an investment plan means stocks and bonds only. But if you have a goal for your investments: a vacation home, retirement, educating a child, paying for a wedding or any other goal, it makes sense to begin your investment program by including all your assets including real estate, pensions, savings, even IRA accounts that you may have forgotten about.

Whether you are investing for yourself or benefiting from the help of an experienced investment advisor, it is important to begin by listing all your assets.  It’s the only way you can begin to see a clear and accurate picture of your financial health.  Especially in these times of economic turmoil in the credit markets, it is important for you and your advisor to have an accurate picture of your real estate holdings and the terms of your mortgage.

There are many factors to weigh when you are planning your financial future — and we will cover them all. But the first rule is to identify all assets and evaluate them honestly.

January 20, 2008 Posted by | Uncategorized | Leave a comment

Hello world!

Welcome to the blog of George Divel.

I am starting this blog to provide investment tips based on my experience as an investment advisor. I invite comments and questions.

January 20, 2008 Posted by | Uncategorized | 1 Comment