5 Common Financial Myths

5 Common Financial Myths

It’s easy to fall prey to financial falsehoods that sound reasonable but may actually do your financial health more harm than good. It seems there’s no shortage of sources of personal finance advice on everything from savings and credit cards to retirement and buying a home. Here are 5 common financial myths that you are better off ignoring completely.

#1. I don’t make enough money to save:

Don’t assume that any amount of money you can set aside each month is too small to make a difference. Any amount of savings is better than nothing and the sooner you start this habit, the better it will protect you. Even saving 1% or 5% of your income can help you build an emergency fund to protect you in case of an unexpected financial emergency or begin building a nest egg for the future.

#2. A home is always a good investment:

Most people are taught that a home is always a wise investment and preferable to renting, but this isn’t always true. In many areas, rent is actually more affordable than owning a home, which comes with many hidden costs like property tax, maintenance, repairs, renovations, and yard work. Renting may be cheaper in the short term to help you free up money for paying off debt or even saving for your retirement.

#3. Carrying a balance improves your credit:

It’s a common misconception that you need to carry a balance on your credit card to improve your credit score. The truth is your credit score is influenced mostly by your payment history and credit utilization, or how much of your available credit you use. Using your credit card regularly and making payments on time is what builds a positive credit history, not the balance you carry. Carrying a balance on a credit card doesn’t just cost you in interest charges, it can even hurt your credit by increasing your credit utilization ratio. It’s best to keep your credit utilization under 20-30% for the best effect on your credit.

#4. It’s a good idea to get out of stocks when times are bad:

Market volatility is the price of great stock returns and there will always be times when your investment portfolio loses value. If you have a diversified portfolio, it will likely recover its value within 2 to 7 years of a market downturn. If you sell when the market is down, you are just turning short-term losses on paper into permanent and real losses.

#5. Estate planning is for the rich:

Almost everyone can benefit from estate planning, which isn’t just about avoiding estate taxes. A smart estate plan can ensure your wishes are followed in terms of financial management and health care if you are incapacitated. Your estate plan can also dictate who will care for your children if you pass away and who will inherit your assets. Estate planning can even be used to avoid the probate process for your heirs so they can access their inheritance quickly to reduce the financial burden of your passing.

Mark Angelo is the President of Yorkville Advisors.

Best Way’s to Appeal College Financial-Aid Decisions

Best Way's to Appeal College Financial-Aid Decisions

Going to college and getting a higher education is a practical necessity today in order to achieve professional success. While going to college is very important, it is also extremely expensive. In many cases, people will end up spending more than $100,000 for their four years in college.

To help pay for the high expenses of tuition and room and board many people end up getting financial aid from the school they are attending. Unfortunately, many people end up being denied a part or all of the financial aid that they are seeking. While it can seem challenging to do so, there are several tips that can be followed to help anyone appeal a negative financial aid decision.

Appeal to Financial Aid Office Directly:

The first thing that you should do when you want to appeal a financial aid decision is to appeal to the financial aid office directly. The financial aid office likely used a very calculated approach when they were determining your financial aid need and qualifications. While they will all have a system for determining need based on income, assets, and student records, these offices will also be able to take other factors into consideration. In a letter written directly to the financial aid office, you should highlight other issues that could impact your need that may not have come across in your initial application. This can include a recent job loss, family member death, or sudden rise in other expenses.

Apply for Other Aid Through Admissions:

The financial aid office of a college typically focuses on providing students with need-based financial aid including student loans. However, there are other places in the school where you could also seek financial support. By contacting the admissions office of your college, you could learn more about grants and scholarships that are available. These are also often a preferred option as you will not be required to repay them upon graduation.

Show Competing Offers:

Ultimately, one of the best ways that you can show that you deserve financial aid is by providing a competing offer. When you are applying for schools, you should apply to at least three or four to ensure you are able to get into a good program. Once you have narrowed down your list, you should also apply for financial aid at each of these schools. If you are able to qualify for financial aid from even one of these schools it will act as a great competing offer that your target school may be willing to match.

Avoid Giving a Deposit:

When you are looking to go to a new college, you also need to avoid giving your school deposit until it is too late. Once you have given notice of your intent to enroll and your deposit, it will look to the school like you are locked in. Instead, a better option would be to delay your notification and deposit submission. The financial aid office may then offer you more money in order to entice you to commit to the school.

Mark Angelo operates as the President and portfolio manager for investments made by the fund and has seen more than 500 financial transactions during his time with Yorkville Advisors.

The Highest-paying Jobs in Finance, According to LinkedIn

The Highest-paying Jobs in Finance, According to LinkedIn

Financial careers are well-known as lucrative, high-paying paths for aspiring wealth builders. But not all finance jobs pay the same. A recent article appearing in Business Insider, in collaboration with the social website LinkedIn, reveals which finance jobs are the highest paying.

The article incorporated salary and compensation data from jobs “in the banking, capital markets, financial services, insurance, investment banking, investment management, venture capital, and private equity industries.” Keep in mind that many of these jobs provide total compensation packages beyond base salary, often including sign-on bonuses, stock options, annual bonuses, and commissions. The rank is ordered against Total Median Salary (TMS), which includes these extra compensations. TMS is often substantially larger than base salaries for financial jobs.

Managing Director:

TMS = $375,000. The managing director of a company is in charge of the whole business and included the big picture, the day-to-day stuff and everything in between.

Managing Partner:

TMS = $236,000. The holder of this position is a senior partner in the firm, charges with the overall practice, management and operations of the business.

Investment Banking Associate:

TMS = $235,000. The Investment Banking Associate helps in raising capital to enable the business to conduct their profit-making activities and to fund future growth.

Treasurer:

TMS = $200,000. Treasurer is charged with managing the cash and cash-flow of the firm, with the overall goal of forecasting and developing future cash management for the firm.

Director of Analytics:

TMS = $192,000. The holder of this position supervises the team that analyzes business performance against specific targets, metrics and benchmarks, with the goal of identifying area that need improvement.

Research Director:

TMS = $190,000. The Research Director plans and directs the activities and deliverables of the research staff, ensuring the research results are provided in a timely fashion to impact the organization.

Tax Director:

TMS = $187,000. Responsible for tax compliance, tax planning and income-tax accounting, the tax director often assists the Treasurer of the firm in assuring that taxes are payed in accordance to regulations while also ensuring that the company’s profitability is maximized.

Director of Financial Planning and Analysis:

TMS = $180,000. The person with this title is in charge of business forecasting. By scrutinizing the firm’s financial trends, this person recommends strategies for performance improvement.

Private Equity Associate:

TMS =$180,000. The focus in this position is to attract capital to the firm from institutional investors as well as from individuals who have major funds and are sympathetic to the business.

Director of Product Management:

TMS = $170,000. A critical job, this person develops and oversees the company’s product line, with an eye to maximizing business deliverables.

In summary, not all finance jobs are created equal but many are very high paying. Finance continues to be an arena where talented individuals will be compensated handsomely for the value they provide.

Mark Angelo is the Co-Founder of Yorkville Advisors.

What You Need to Know about Investing in IPO’s

What You Need to Know about Investing in IPO’s

IPOs, or initial public offerings, are an exciting time, both for the company going through the IPO as well as investors. Here’s everything you need to know about IPS from an investing perspective.

What is it?

An IPO is a process by which a company goes from privately held to publicly traded. There are many changes that take place within a company when this occurs and one one of the most important is that the company has to provide much more information than it did as a private company. IPOs are very public events and don’t happen in secret. At a certain point, the company will make an announcement of it’s intent to go public. There are usually months between this announcement and the actual IPO. A common primary goal for the company is to get a very large amount of money very fast, as both a number of shares to be sold and a price to sell them at will be picked. As an investor, there are a couple reasons to be interested in an IPO. Often, getting in on the ground floor is attractive in and of itself. Additionally, in many cases, the stock price at IPO is the lowest it will be for a very long time.

How do I participate?

You’ll need a brokerage account, and that’s pretty much it. Once the date is made public, you’ll be able to buy and sell the stocks after that point. When the date is announced, it will likely be accompanied by a price. Don’t be fooled! This price isn’t the ‘public’ price. This is a price reserved for a relatively small group of people, specifically picked investors or employees, usually. The picked investors are usually very, very large. The actual price you’ll pay is what is available on the open market and that may look nothing like the offering price.

Risks:

There are quite a few risks in attempting to participate in an IPO. Of course, this is an investment and all investments carry some risk. However, there are some additional risks for this particular process. One is that there is often a lot of media noise about an IPO for some companies. This can lead some to invest without doing the proper research. This is a big risk, as this is still an investment and should have the same amount of research as any other investment. In addition to this, many beginner investors view IPOs as sure bets. They aren’t. There have been as many huge IPO failures as there are fantastical successes.

Mark Angelo is the Co-Founder of Yorkville Advisors.

Investing Tips You Should Always Keep in Mind

Investing Tips You Should Always Keep in Mind

If you want to build wealth beyond what your ordinary income can furnish, learning to invest is one of the most important things you can possibly do. To be a successful investor, there are some basic concepts and tips that you should learn and apply whenever you plan to buy shares of a given stock. Here are three of the top investment tips you should always keep in mind.

Invest Based on Fundamentals:

Too many investors look at day-to-day gains or losses as the measure of whether a stock is a good buy or not. Historically, however, the best way to invest in stocks is to buy shares of companies that are likely to appreciate over time based on their own business performances. Stock fundamentals include both quantitative and qualitative factors. Some of the more important quantitative factors include the company’s debt-to-earnings ratio, the profitability of the company and whether the business is growing yearly. Qualitative evaluation should include factors such as whether the company is in a good business niche and whether the current management seems to be making sound decisions. If you can answer these questions, you can perform a much more useful analysis of the stock than simply looking at share price history will allow.

Don’t Try to Time the Market:

As appealing as the idea of perfectly timing the market to buy stocks at the lowest possible price and sell at the highest is, it’s virtually impossible to do with any consistency. Investors who try to time the market often end up holding shares they should sell for too long in an attempt to get a higher price for them. A better approach is to find basically good stocks, hold onto them for long periods of time and sell when it makes sense from your own financial perspective. If you try to time the market, you’ll almost certainly blunder into bad buying or selling decisions.

Be Skeptical of Predictions:

Market analysts and financial leaders are in the business of making predictions, but they’re not always right. Investing in a stock based on someone else’s prediction about it can work from time to time, but it can also lead you into bad investments that fail to pay off. A good way to use the expertise of others to your own advantage is to look at stock predictions and then perform your own analysis to see if the predictions seem sound. When they do, you may have a real opportunity to buy a good stock. When they don’t, though, you should avoid investing in stocks that don’t seem to make good sense to you as an investor.

These are just a few of the basic keys to investing successfully. Though none of them may seem glamorous or secretive, they are all important things to keep in mind to avoid making unwise investments. If you invest your money with these principles in mind, you’ll have a much higher chance of achieving success.

Mark Angelo is the Co-Founder of Yorkville Advisors.

Best Ways to Invest Without Lots of Money

Best Ways to Invest Without Lots of Money

Many Americans put off investing because they believe they do not have enough money. In the past, it did require a substantial amount of money upfront to start investing. Most brokers would require a minimum of $1,000 down. Fortunately, with the digital revolution well underway, it is much cheaper to invest. The bottom line is, you do not need lots of money to invest. Here are three ways to invest with very little money.

Micro Investing:

Micro investing involves saving small sums of money to invest in stocks, bonds, exchange-traded funds and index funds. Platforms such as Betterment, Acorns and Robin Hood allow you to invest with little to no money, and many of the platforms do not require account minimums. For example, you can invest small amounts of money in a portfolio developed by a micro-investing platform. The catch is that many of these investing platforms use sophisticated software to run their portfolios instead of human stockbrokers. That is why these companies can charge very little in brokerage fees and typically do not require any account minimums.

Commission-Free Exchange Traded Funds:

Exchange-traded funds, known as ETFs, continue to grow in popularity among novice investors with little money to invest. ETFs are marketable equities that track a specific index, such as the NASDAQ or the S&P 500 indexes. You can buy and sell ETFs just like you would individual stocks. Many brokers who buy and sell ETFs for investors do not charge any commissions. That is why ETFs are fast becoming one of the most popular investment vehicles for people with little or no money. For example, one of the most popular online brokers, TD Ameritrade, offers a comprehensive list of over 300 commission-free ETFs. For the price of a single share of an ETF, you gain exposure to a broad range of assets listed in a market index.

Company 401(k)’s:

Although it may seem like common sense to start investing small amounts into your company’s 401(k) retirement account, many Americans decline to enroll because the company automatically deducts the investment dollars from their paychecks. The problem is, many people are unaware that the deductions are so small, they probably would not miss the money. You can deduct as little as 1 percent of your paycheck into your employer’s 401(k) is you so choose. Combined with some of the tax benefits of 401(k)’s, that 1 percent gets smaller over time while still earning the same returns. If your company gives you an annual pay raise, you can start increasing your contribution each year.

Mark Angelo is the Co-Founder of Yorkville Advisors.

Investing Strategies for the Wealthy

Investing Strategies for the Wealthy

Smart investors are constantly searching for strategies that will help them save money while also accumulating more wealth. With that being said, here is a look at several investment strategies that wealthy people should consider using to accumulate even more wealth.

Focus On Tax Free Investments:

While the majority of tax reducing strategies do not necessarily benefit wealthy people, there are some strategies that can be used as assets for wealthy investors. Look at tax free municipals. A tax free municipal bond can help lower the interest rate on the bond.

Do Not Neglect Cash:

Many wealthy investors have a relatively high percentage of their assets in cash. Having a lot of cash on hand allows wealthy investors to take advantage of any sudden market opportunities as they arise. Without having a lot of cash, investors will not have the flexibility to adapt to the market.

Pay Attention To The Fees:

Investment fees can quickly accumulate for wealthy investors. Wealthy investors should do research on the different types of investment fees that they are responsible for paying. It may be more beneficial in the long run to look at other investment options.

Re-balance:

Wealthy investors should look to re-balance their portfolio. Without consistently re-balancing their investments, wealthy investors are at risk of seeing their assets improperly allocated. There should never be an over reliance on stocks or bonds.

Diversify:

Diversification is an easy way to avoid imbalance in a portfolio. Wealthy investors should have a diverse portfolio made up of assets in equities, bonds, real estate, and hedge funds, among other assets. Diversification helps reduce portfolio risk. Wealthy investors have access to more opportunities to diversify their portfolio.

Ask For Help When Necessary:

Many wealthy investors network with their peers in order to learn more about investing. Investment professionals can be a real asset as well, especially for investors who are unable to devote a lot of time to studying the market. Do it yourself investing has continually proven to be a mistake.

Go Private:

Wealthy investors are aware that large amounts of wealth are accumulated in private markets compared to public markets. Wealthy investors are aware of how lucrative investing in private businesses can be.

Develop Risk Tolerance:

Wealthy investors often take time before making the choice to invest. They look over any potential scenarios that could arise after they have invested. Successful investors have the risk tolerance to know when to make the right decision to invest and when to pass on an opportunity.

 

Mark Angelo is the Co-Founder of Yorkville Advisors.

Dividend Growth Investing Strategy

Dividend Growth Investing Strategy

Dividend growth investors are very special kinds of investors who are looking for dividend growth specifically. In most cases, this kind of investor want to find a stock that has increased its annual dividends over many years without a break. In order to find these stocks, it is important to understand the conditions that create success in this arena.

One Week Pullback Strategy, Trading Every Week:

This very successful strategy involves getting into a stock as it pulls back significantly over the course of five to seven days. Over the past 10 years, investors brought in an annualized return of around 10%. It was not uncommon to see returns of 13% or more over the course of a single year.

If a trader buys and sells every week using this strategy, he has a chance to grossly outperform the market.

One Week Pullback Strategy, Trading Only Once:

The performance of the same stocks in the example above do not hold muster when the trader only trades once for the same investments. Short term investing is actually the preferred strategy here, not long term investing. The factors that cause changes in stocks – sentiment, volatility, quality and value – take their toll over many months and years and do not provide a good rate of return for the dividend growth investor.

Testing Our Strategy With Low Volatility:

Let us assume that we bought 50 low volatility stocks with dividends reinvested into new positions rather than into the same companies. Compared against the Vanguard Dividend Appreciation ETF, we beat the market by around 140% if we had bought in 1999 and latched on until 2009.

Testing Our Strategy With High Volatility:

Let us take the same case – however, instead of the 50 lowest volatility stocks on the market, we purchase the 50 with the highest volatility. The risk is not as extreme as one might think over the same time period. If the investor can stomach the slightly higher swings, the overall result after a 10 year hold is slightly advantageous.

The trick with dividend reinvestment is to define what you consider low and high volatility stocks. If you ask five investors, you will get five answers, but choosing the right benchmark has a lot to do with the success of the people who come out ahead. In general, staples will give you low volatility while things like tech and finance will give you slightly larger volatility (and a bigger reward if you can just hang on).

 

Mark Angelo is the Co-Founder of Yorkville Advisors.

Is Indexing Doomed? Financial Leader Believes So

Is Indexing Doomed? Financial Leader Believes So

The End of the Era of Mutual Funds:

Index funds -mutual funds that track an “index” of dozens or hundreds of companies- have been a popular investment for decades. With nominal expense ratios and built-in diversification, they offer a strong basis for a retirement portfolio. But Niels Jensen, the UK-based founder of Absolute Return Partners, has written a book predicting that mutual funds will soon lose their luster. By analyzing long-term macroeconomic mega trends, he has come to the conclusion that mutual funds will go belly under.

The Debt Super-cycle May Stop Churning:

Borrowing -particularly on a margin- has led to unparalleled standards of living. As TV dad Archie Bunker once said, “[c]redit is the only thing that stands between us and Communism.”

But as the sovereign debt of developed nations is untenable, as some economists predict will happen soon, the entire global financial system will have to be restructured. This means that the dominance of mutual funds will also end, and leads us to Jensen’s next salient point…

The Rise of the East:

With the ascendancy of the BRICS countries (Brazil, Russia, India, China and South Africa), some are doubting the centuries-long dominance of the Anglo-American economies and their allies. Though the BRICS nations still have multiple millions of people living on wages less than $2 a day, which means they also have more room to grow. China, in particular, has been a development success story. Many index funds are focused on the developed markets of the US, the UK, the EU, Japan and increasingly South Korea. Even international funds are woefully underexposed to developing markets.

The Baby Boomer Bust:

The West is facing a demographic crisis: the Baby Boom generation is beginning to retire. That leaves to the smaller generations X, Y, and Z to make up for their productivity. Jensen suggests that industrial automation may be able to make up for some of this workforce loss. Also, Baby Boomers are having to make more with less due to inflation and other factors. This segues into another of Mr. Jensen’s points…

The declining spending power of the middle classes:

As the price of consumer staples declines, middle-class people are left with less discretionary income. This leads to a stagnation for cyclical firms as consumer spending decreases. Worse still, this leads to fewer jobs being created. This vicious cycle could do serious harm to index funds that depend on cyclical businesses to heighten gains during booms.

The death of fossil fuels:

Renewable energy firms have been taking advantage of the jump in demand for their products. The solar and wind sub-sectors, specifically, are challenging conventional fossil fuel utilities for market share. This threatens mutual funds, as some of their best dividends come from companies like BP and ExxonMobil. While yieldcos offer decent dividends, they still fall far short of those provided by conventional energy. Will investors accept lower dividends from more sustainable sources?

Mark Angelo co-founded the Investment Manager in August 2009.

What to do With Your Tax Refund

What to do With Your Tax Refund

While preparing and filing a tax return is one thing that most Americans agree is no fun, the silver lining for the stress and hassle of it is that many people will get a tax refund. Millennials may love the fact that they can get an extra boost of funds after filing a tax return. While your first impulse may be to splurge and treat yourself with your refund money, a smarter idea may be to save and invest this money. You may think that saving a few hundred or thousand dollars here and there would not have a huge impact on your financial future, but you may be surprised by what a difference this simple action can have on your life.

Investing the Money:

The average tax refund that Americans receive each year is approximately $3,000. This is enough for millennial’s to pay for a nice vacation, buy new living room furniture or splurge on a few nice electronics. These are all instant gratification items that offer little to no long-term benefits. On the other hand, investing the money can yield rich rewards over the course of a lifetime. Consider that $3,000 invested in popular stocks over the last ten years would have turned a tremendous profit. While only $30,000 would have been saved, this invested amount could have grown to more than $220,000 with a reasonable return. While this is certainly not enough to plan a very early retirement around, it is a life-changing amount of money that can yield financial security that many millennial’s otherwise do not have access to.

Paying Off Debts:

An alternative to investing the money is to use it to pay off debts. A common scenario for millennial’s involves being heavily in debt with student loans and credit card debt that they took on in college. This scenario is worsened by the fact that many young adults have trouble finding well-paying jobs in their field. Many millennial’s have tried to overcome these life obstacles by moving back in with their parents to get control over their finances. What happens if you use half of your $3,000 tax refund each year to pay down faster and the other half to invest? Your total nest egg may be smaller at the end of the ten-year period, but your debt balance would also be dramatically reduced or even wiped out. Remember that paying debt off early can reduce interest charges and ultimately help you to save money over the years.

Avoiding Speculative Actions:

Some millennial’s are inclined to view a tax refund as extra money that can be used for speculative investments, such as by purchasing cryptocurrencies or very high-risk stocks. In some cases, these types of investments may pay off. However, there is also a very high risk of loss related to speculative moves. The better financial option is to avoid speculation and consider debt reduction or less risky investments.

Splurging or treating yourself with your tax refund provides instant gratification, but the impact is short-lived. If you want to get lasting benefits that have considerable impact on your life, think about how your use of a tax refund could play a major role in your financial future.

Mark Angelo is a Co-Founder of Yorkville Advisors.