Bank Routing Numbers

Hedge funds were designed to return profits on investment whether the market was good or bad. The term hedge fund, however, is slowly losing the reliability it once possessed thanks to the mushrooming of hundreds of wannabe hedge funds that are nothing more than mutual funds passing themselves off as hedge funds.

Here are a few of the more prominent signs that a hedge fund promises more than what it can deliver:

No meaningful record. Two-thirds of alternative funds didn’t exist before 2008. Heck, 20% of all these funds didn’t exist before 2010. Look for funds with records of solid performances, and beware of companies that tote back-tested hypothetical results. A good hedge fund will always be clear and precise with its results, not hide behind hype and semantics.

Extensive and unnecessary fees. Private hedge funds typically charge a 2% annual fee and take around 20% of all profits. You should, however, find justification for all fees being asked of you. For example, will a 4% annual fee being justified by the manager’s “expertise” really net you returns that exceed 4%? Again, reviewing the track record of a fund is a pretty good way to see if the fees are justified.

“Black box” strategies. If the hedge fund owner refuses to explain to you, the investor, where your money is going, then you had best take your money elsewhere. A good hedge fund manager will always be able to explain where an investor’s money will go to, especially if the investor insists on that information. These managers will also explain it in a way that you will understand it as well, so be wary of managers that resort to jargon when explaining their investment portfolios to you.

Our economy may technically be picking up, but it is far from back to what it was back in the pre-recession years. This does not mean, however, that you can’t grow your money. The question is how. How will you know whether an investment is good or not?

Here’s one pretty effective tip: Stop obsessing over the latest news and look at the historical performance of your investment options.

One look at the news and all you’ll see is doom and gloom. Heck, even I get depressed when sharing some of the more recent financial news on this blog. Behind all that bad news, however, is the fact that many investment options eventually recover from hardships.

You still need to keep an eye out on the latest news, though. Some bits of info will tell you whether your chosen investments will survive the weak economy or eventually collapse. Just don’t let yourself get too worked up over what you hear and then go off and sell all your assets.

Case in point: those that held on to their own assets during the peak of the recession saw these assets rise sharply in value when the economy came back around. Take a deep breath, consider your options and make your plans from there. You’d be surprised how effective that is for investing in a bear economy.

Many investors literally ran away from stocks when the economy melted down in ’08. One particular brand of stocks has not only weathered through the financial crisis but come out stronger and more sought-after: dividend stocks.

While the traditional buy-and-sell stocks have seen mediocre growth in the past decade, companies that pay dividends have kept their stockholders alive and well.

The whole thing is not fool-proof, though. Some dividend-paying companies can find themselves dying out as their businesses fail. These companies are typically characterized by excessive debt, weak balance sheets and even weaker cash flows.

Find companies that can manage their debt and provide solid balance sheets, though, and that dividend investment will see itself grow well over time.

Utility companies that offer dividend stocks are particularly attractive investments. People rely on these companies to provide an essential service, so business will never really run out. Banks can also provide reliable income, but investors need to spend more time picking out the golden eggs from the rotten ones.

Diversification is still the key to the game, though. An investor that spreads his or her portfolio over a variety of complementary businesses will find a reliable source of passive income over the years.

Your ability to make sound financial decisions will start to wane once you go past 60, no matter what your gender or education level is.

It’s not pleasant. It’s not politically correct. It’s not something most people want to hear. But it’s the truth – at least according to one Texas Tech professor by the name of Michael Finke.

Finke comes to this conclusion by simply asking a group of different people from equally different age groups, and suggests that we all undertake three “tasks” as we start to age.

One, accept that we will start losing our financial know-how later in life. Two, set up a plan that doesn’t require complex decisions in old age. Three, blend in some annuities in our income along with some passive investments i.e. stock investing.

These tasks are pretty sound when you stop and think about it. No matter how much we want to be the exception, we have to be prepared for the (high) possibility that our cognitive abilities will start breaking down in our later years.

So while the study is aimed squarely at older Americans, the young ‘uns still need to keep these bits in mind – especially since old age eventually comes for everyone.

A home in Oakville, California was originally listed for $1 million. When no buyers were taking the offer, the price was dropped to $1 in the hopes of fomenting a bidding war.

All the owners got, however, were even weaker offers and claims of false advertising – effectively forcing them to take the property off the market.

Legality aside, the concept (of $1 real estate listings) was doomed to fail from the very beginning. Mark Weisleder, real estate lawyer, says that many prospective buyers do not even take these $1 listings seriously.

He goes on to cite the importance of proper pricing in order to attract potential buyers. “Testing” the market with an overpriced listing will drive away buyers while making other cheaper but comparable properties more attractive.

Under-pricing a home, however, will not automatically mean that more people will be interested. Buyers, agents and brokers are more likely to become suspicious with grossly undervalued property; fearing that something is wrong with the house for it to be so grossly underpriced.

A value between the fair market value of the property and five percent below that level will appeal to the widest number of prospective buyers, Weisleder says. Being open and honest will make it easier to find and work with serious buyers, he adds.

Bill Spetrino, editor of “The Dividend Machine” and member of the Moneynews Financial Brain Trust, shares his take on the recent stock market crash.

Spetrino starts by boasting about the performance of stocks he has chosen and then moves on to subtly market the magazine he edits, but he does raise some very interesting points later in his article:

“In fact this is the best time to invest in the “right” stocks. Want some proof? The greatest investor ever, the $200 billion man Warren Buffett, recently said that on Aug. 8 he bought the most stocks in one day than he had all year. That was the day the S&P 500 was at its lowest. Sir John Templeton also said the best time to invest is at ‘maximum pessimism.’”

Stocks have been shown to perform historically well, even during times of trouble, and Spetrino explains why this happens:

“For me, it’s relatively simple. The last time the S&P dropped over 10 percent in a quarter was first quarter of 2009 when many felt the world was going to end. In fact, the next two quarters were up over 15 percent and the two after that were up over 4 percent each.”

The full article, “Don’t Let Fear Distract You From the Facts,” can be read here.

A lot of people are making a mad dash for gold despite its rollercoaster performance of remarkable gains followed by sharp drops and then followed by even higher gains.

There are also a lot of people that are willing to rip others off while rushing for gold.

“All About Investing in Gold” – a book by John Jagerson and S. Wade Hansen – is one particular source that talks about the different ways people can invest in gold. It also touches on some of the more common gold investing scams, including:

Counterfeit Gold is one of the oldest gold scams out there. This is why it is generally a bad idea to buy lower-than-market-price gold over the mail. It will be very easy to send pyrite or gold-coated lumps of lead over the mail while it will be very difficult to trace the source of the purchase as well.

Advance-Fee Frauds involves “fees” to help transport a large shipment of gold bullion in exchange for a cut of the pie. It will then be a simple matter to just take the money and run.

“High-Yield” Investment Programs are basically pyramid schemes where compensation is based on the “future” performance of gold assets while aggressively pushing an investor to invite other investors into the program.

Auto-Trading Systems are bogus programs that claim to regularly provide returns from trading gold in the short-term. Fees will be required, of course.

Private Mining Interests will solicit investors to put up money for a mining company that will “hit it big” soon. This is another form of take-the-money-and-run fraud.