INVESTMENT ACCOUNTS » Investing Money

If you’re new to the stock market, or are thinking about testing the waters for the very first time but haven’t done so yet, one question you may want to ask is, “How long does it take for my securities order to be filled?” The answer depends on how you place your order to buy a security.

Most people place orders to buy stocks and other financial products through a broker. Brokers can either be of the top-end variety, offering you advice as well as customer service, or of the discount sort, which generally means that they’ll place the order for you, but you have to do all the researching and choosing yourself. You can also place orders to buy securities through DRIPS (Dividend Reinvestment Plans) and DIPs (Direct Investment Plans), which will be offered by individual companies to their shareholders to buy more company stock.

All of these options for purchasing securities are generally pretty quick to fill. Orders can be filled instantaneously, or they can take a few hours. You must place your orders during business hours, however, if you place your order after trading hours have ceased for the day the order will not be executed until trading resumes the following day.

The current state of the economy is to blame as to why high yield CDs are becoming harder to find these days. In general, the interest rate is determined by a slew of factors but the most influential one is the rate set by the Federal Reserve. The Federal Reserve has the responsibility of taking steps to help ensure the stability of our economic infrastructure. One of the tools they utilize is the short-term interest, which gets tweaked according to market conditions. The short-term interest rate affects the cost it will take banks to borrow money from other banks.  When the economy is healthy, interest rates go up to fend off inflation. When the economy is slowing down, like during a recession, the Feds lower the interest rates to stimulate more big business in hopes of a trickle down affect.

Currently the U.S. economy is in a recession and the short term interest rates have been lowered. This is great news for those who are in the position of borrowing money, as the banks are lowering the rates it charges consumers to borrow money. But what is good for the borrower, does not necessarily help the investor as the interest rate for deposits has also been lowered.

Most people buy shares of their favorite companies through the help of a broker, who will charge a fee for the service. The broker’s services includes the advice and research about stocks you’re interested in. A discount brokerage will charge a much lower fee, but won’t help you with much advice or research. As a means for getting around middlemen like brokers and discount brokers, many companies offer Direct Investment Plans, also known as DIPs.

DIPs, also referred to as Direct Stock Plans, or DSPs, allow individual investors to buy stock in the company at regular, scheduled intervals. This way, you as an individual investor can go straight to the source and save some money on brokers’ fees. However, since discount brokers’ fees are so low, your savings are usually tiny. In addition, many companies that offer DIPs/DSPs attach all kinds of riders and qualifiers to their stock which is purchased in such a manner. For example, they may not offer the DIPs option unless you already own a certain amount of stock in the company. You may also be restricted from selling the stock whenever you want – that might be dictated by terms and conditions stipulated in the stock purchase agreement. Finally, while you may be dodging the bullet of broker’s fees when you participate in a DIPs program, you may still have to pay a fee to the company issuing the stock for the service. Determining whether a DIPs transaction is right for you, clearly, will take a bit of research on your part.

Investing for retirement can start at any age and it is never too early to start saving for your golden years. Many financial experts encourage workers as young as 25 to start putting some money aside monthly in order to prepare for long term savings goals. In the long run it will be much easier to save large gobs of money by putting a couple of hundred dollars aside every month starting in your twenties than it will be to scramble to save thousands monthly when you are in your mid fifties.

Then you need to construct a proper plan that can be used as a guide for the long term, but tweaked accordingly as you see fit. Although this plan needs to include the ultimate goal of retirement, investing solely in bonds that mature in thirty years time, would not allow for any flexibility when new scenarios like buying a home or starting a family may arise. Your general strategy needs to include a mix of both short-term and long-term investment instruments with varying degrees of liquidity.

If you are a mutual fund investor, you know that the 2008 fiscal year hasn’t given you a whole lot to be happy about. Recent downturns in the economy and plummeting stocks prices have resulted in large realized losses for most mutual fund accounts. However, as tax time rolls around, you may be surprised to find that your mutual fund losses can result in a nice tax break on your mutual fund that pays you back for years to come.

How You Can Offset Fund Losses

A term not too commonly heard of among non investors is a dividend reinvestment plan, commonly referred to as a DRIP. A DRIP is a way for people to buy shares in a company.

When you participate in a DRIPs program, you are authorizing the company in which you are buying your shares to take the dividends (profits) from the shares that you currently hold, and use those dividends to buy more shares of the company. These dividend reinvestment plans are offered by the company selling the shares. They allow investors participating in these DRIPs plans to buy more shares at set, certain times – sometimes monthly, other times quarterly, or in other time segments. Dividend reinvestment plans are also usually processed by a transfer agent.


Dividend reinvestment plans are often only open to people who already own shares in the company. The good news there is that you only need to own a single share to participate. These DRIPs are also a good way to be a prudent investor and spender: rather than giving you a dividend payment that you can quickly spend, the dividend reinvestment plan will take your profits (dividends) and put them back into more shares, thus increasing the size of your investment portfolio for you to access and enjoy for your retirement, or during a time of real financial emergency.

To learn more about DRIPs and how you can participate in one, and if it’s the right idea for you and your goals, be sure to consult with a financial advisor and go over everything in all the detail it requires.

The swine flu has been in the headlines for the past few days, and in this article we’ll look its impact on the stock market.

First, some background. The current flu outbreak is caused by a strain (variation of the virus), A(H1N1). New flu strains are not unusual: they appear quite frequently due to mutations of the virus. This particular strain happens to be easily transmitted between humans, does not encounter much resistance due to its novelty, and has a relatively high mortality rate. As a result, there is a risk of a flu pandemic (an epidemic on a global scale). How large this risk is, however, is far from obvious. The World Health Organization raised the pandemic alert to the second highest level, “Phase 5.” Some experts suggest the danger is greatly exaggerated. What all experts agree on however, is that calling this the “swine flu” is very misleading, since pigs do not spread this flu.

Here is how the swine flu affects the stock market.

1. Unfortunately, the vast majority of people are worried  about eating pork. In fact, in an amazing show of voodoo science in the modern world, the Egyptian parliament passed a law that destroys pigs near urban centers. While most governments are sophisticated enough to avoid such blunders, nothing will stop some consumers from shunning pork meat in the supermarkets. This may impact the share prices of meat producing companies, at least for a few weeks if not longer.

If you are wondering whether Savings bonds are taxed or not, there are general rules that owners of Savings bonds must adhere to. According to the US Treasury website:

• Interest earnings are exempt from State and Local tax
  
• Interest earnings are subject to Federal income tax but can be deferred until the cash in date
  

If bonds are cashed out and the money is used specifically to finance the cost of higher education for an individual, spouse or child, taxes on Savings bonds may be waived. However, it is important for an individual to verify the terms of their savings bonds with their tax preparers to ensure that they are completing their tax information accurately.


The reason that taxes on Savings bonds do not have to be paid at the State and local level is because the U.S. Treasury issues savings bonds. Investors redeeming savings bonds will receive a 1099-INT  form in the tax year of that transaction.

Prior to World War I, the government financed their bankroll for participating in wars by borrowing money from other countries. However, in 1917, the international banks were closed and the basis for our savings bond system was launched.

Like other predecessor bonds, Patriot bonds are marketed as another tool allowing Americans to support our wars. The proceeds of this particular bond are applied towards funding anti-terrorism efforts. The profits are deposited into a general fund. Ultimately the money funds anti-terrorist causes and must follow legal guidelines before being spent.

The US Treasury offers two categories of government securities available for investment options for US citizens. The government offers marketable treasury securities that are available to be traded on the secondary market. Additionally there are non-marketable Treasury products, such as I Savings bonds, that are issued to individuals and are not a traded.

The history of all bonds, including the I Savings bonds can be trace back to the first bond called Liberty bonds. Liberty bonds were developed as a way for our government to fund the expenses of fighting World War I. Previously the government was able to finance wars by borrowing from other countries, but at that time there was no one to borrow from. The solution was borrowing directly from the country’s citizens and offering them a financial incentive to provide the loan. The initial bonds caused some more crises for the government when they all matured.


Over time, bonds were redesigned to avoid any additional financial crunch on the US Treasury system. Since the mid 1930′s, the government has sold savings bonds to generate low cost loans to help build their reserves. For the privilege of borrowing taxpayer’s money, the government will pay interest and even offer tax incentives for those who are cashing in their matured bonds. At that time bonds were issued in an alphabetical order and today individuals can purchase I Savings bonds.