Prosperity

It has fallen upon the consumer to make our economy strong. All the politicians, economists and talking heads on TV are telling him (that's you and me) to get out there and spend your money. Buy that new car, build a new house and fly off to some remote place for an expensive vacation.

Where did the idea that consumer borrowing is a recipe for prosperity? As I recall when I was a kid my Dad told me to work hard, save my money and invest wisely. That still seems like a good idea. Where have I gone wrong to want to live within my means and save some of what I earn?

Corporations have also taken on huge amounts of debt. Many businesses were happy with a net, net profit of 5% to 10% yet today the real cost of company debt is running about 10% which doesn't leave much for the bottom line. Fewer and fewer companies are paying dividends because they don't have enough money left over for their investors. Now many have such poor cash flow that they do not have the cash for new equipment and the banks are not in a lending mood. Profit margins are at their lowest in the past 50 years. The talking heads on CNBC-TV mention capital appreciation as the way to make your profit. Pick a good stock and watch it go up.

We have had an 18-year bull market that ended in 2000. All you needed was a dartboard to be able to choose a stock that was going up. Everyone was weaned away from dividends. As long as it was going up who cares if you get a little check at the end of the year? Here is an interesting statistic that may shock you as it did me. From 1871 to 1997, 126 years, common stocks went up about 7% per year, BUT only 1.6% of the increase was due to price appreciation. The balance of 5.4% came from dividends. And today, for all practical purposes, there aren't any.

No one, including Mr. Greenspan, is encouraging you to save money. Why? Because for every one percent increase in the national savings rate it stops the spending of $75 billion (yes, that's a B). That would slow the economic recovery and our Washington politicians don't want that. Debt has become the "in" thing. People brag about how much they owe.

If you want prosperity now and when you retire you must create it for yourself. Don't figure that Uncle Sam is going to maintain your current life style after you quit working.

Saving money, paying your bills and smart investing have not gone out of style.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

In The News:

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A young investor’s guide to mutual funds  Economic TimesMany young investors, who are barely a year or two old in their career, are eager to start investing in mutual funds. ETMutualFunds.com receive many queries on ...
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SEC's new conflict rule does investors few favors  ZAWYANEW YORK - Investors just regained their right to be treated poorly. The U.S. Securities and Exchange Commission on Wednesday tightened conduct standards ...
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I want to invest Rs 1 crore in stocks and mutual funds for 5 years. How should I invest?  Economic TimesYou may consider the following asset allocation: 40% in large-caps; 40% in large and mid-cap, or multi-caps; and remaining 20% in mid- and small-cap funds.
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Why your core equity portfolio should be in index mutual funds  Economic TimesInvestors flock to the performing fund “after” it has beaten the index. Fund selection is not an exact science, and there will be hits and misses.
How income from stocks and mutual funds are taxed for an individual  Moneycontrol.comCapital gains from transfer of unlisted share are considered as STCG where period of holding is less than or equal to 24 months, and LTCG when holding period ...
What to do if your mutual fund scheme earns more return than your investment  Economic TimesAre the returns shown in your mutual fund account statement same as the returns delivered by your fund? It is quite likely that you might have earned less than ...
Top 30 stocks that fund managers bought & sold in March; do you own any?  Moneycontrol.comData for equity flows into a mutual funds for March came as a breather after a weak February. Increase in net inflows in equity and income category led to the ...
Investment limits Sebi prescribes for mutual funds  LivemintDid you know that there are guard rails that the Securities and Exchange Board of India (Sebi) has put in place to protect you from the risks of over-exposure to a ...
Mutual Funds increase holding in ‘attractively valued’ oil & gas stocks  Economic TimesMUMBAI: Mutual funds have been adding shares of oil and gas companies such as GAIL, HPCL, BPCL and ONGC over the last few months, encouraged by ...
Stocks vs Mutual Funds: Which is a Better Option to Invest?  EntrepreneurStocks and Mutual Funds have their own set of hiccups, which are better to know before making your investments.
Mutual funds shooting themselves in the foot?  Economic TimesWhat if banks take a leaf out of Kotak and HDFC Mutual Funds' decision to direct investors to come another day to get their money instead of paying them on the ...
What top 5 money managers bought and sold in February  Economic TimesFebruary was the fourth consecutive month of decline in net investment into equity mutual funds.
27-year-old rule changed: Disclosure limit on MF, stock investment up for bureaucrats  Economic TimesGroup A and B officials had to intimate government if total transaction in shares or MFs exceeded Rs 50K.
Here are 30 stocks that fund managers bought & sold in February  Moneycontrol.comEven the month of February witnessed the lowest inflow in equity mutual funds in the last 2 years. Only Rs 5122 crore of *fresh* inflows took place in equity funds.
Fund managers ready to go shopping after sharp correction in stocks  Moneycontrol.comDomestic fund managers are capitalising on the market fall and buying shares as they feel the valuations have become attractive after a sharp correction in the ...
Here are a few mutual funds that stocked up on YES Bank in Q4FY19  Business StandardShares of YES Bank tanked 30 per cent in trade on Tuesday, after the bank reported a massive Rs 1,507 crore loss in the fourth quarter of financial year 2018-19 ...
Stay away from stock tips  LivemintIf taming the stock market was easy, everyone would do it.Losing money in market is real and facing volatility is part of the deal.
Top 8 most common mutual fund investing mistakes and how to avoid them  Business StandardMutual funds garnered Rs 8,022 crore of its assets by way of SIPs in December 2018, 29 per cent higher than the previous year | Illustration: Binay Sinha ...
Common investment mistakes to avoid  LivemintRemember, time in the market is key, so don't get affected by volatile conditions.Here are some common mistakes you should avoid while investing.
Here’s a better tool to judge mutual fund performance than simple 1-year, 3-year returns  Economic TimesOne invests in mutual funds to earn potentially higher returns than those in traditional investment products, and I'm sure everyone looks at the one-year, ...
Investing in mutual funds? Size of fund doesn't matter  Economic TimesA bigger MF is not always a better fund. If you come across a well-performing small fund, invest in it.
Stick to MFs if you lack knowledge on stocks  LivemintWhile equity is surely the way going forward considering your age and the financial goals, how you buy in equity is important.Direct stocks work very well if done ...
Diversify equity portfolio with international funds  Economic TimesAs a part of diversifying your equity portfolio, wealth managers believe investors should diversify geographically using mutual funds. They can do this by ...
Spending time in stock market is must for wealth creation: Chandresh K Nigam, Axis Mutual Fund  Economic TimesInvestors make the mistake of projecting recent market performance onto the future and follow the market.
From Axis to ICICI: Mutual funds lap up private bank stocks ahead of rally  Business StandardDomestic money managers aggressively bought shares of private sector banks in February. Kotak Mahindra Bank and Axis Bank were the two most-bought ...
Investment in equity MFs drops 35% to ₹1.11 lakh crore in FY19  LivemintNEW DELHI: Investors pumped in more than ₹1.11 lakh crore in equity-oriented mutual fund (MF) schemes in 2018-19, a decline of 35 per cent compared to ...
Equity funds record highest ever exposure in banking stocks in March 2019  Business TodayAs per the latest data available from the SEBI, overall deployment of equity funds in bank stocks grew around 52 per cent year-on-year (y-o-y) in the month ...
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