Real estate syndication could be one of your most lucrative moves. Photo credit: Unsplash
Updated July 27, 2024. Are you interested in the great benefits of real estate syndication? As you may know, investing in residential real estate may be one of the most lucrative moves you could make. Our passion is to help you to actively and passively invest in apartments and hotels. Usually the next question is how do you go about doing it.
Many times investors have been buying, improving, and maintaining real estate with their own funds. These investors want to scale their buying of real estate, but their own funds have been exhausted. These investors realize that they can only scale if they have partners. This is where syndication can help these investors to continue to grow their wealth in real estate. Therefore, let’s take a look at the specific details of the great benefits of real estate syndication.
What Are The Benefits Of Syndication?
Definition: Real estate syndication, property syndication, or real estate partnership are alliances that are made between several investors with the common goal of making a real estate investment in properties such as apartment complexes or hotels.
Two Main Parties Involved In Real Estate Syndication
The Sponsor: The person or company with sweat equities, also known as the syndicator.
The Investor: You and your partners contributing the money and are known as limited partners.
Real Estate Syndication & The U.S. SEC
Real estate syndication is an investment contract between you and the syndicator. The syndicator collects the investor’s funds and performs real estate work such as buying, improving, and maintaining the property. As a result, it becomes a “security” as determined by the U.S. Securities and Exchange Commission (SEC).
Please refer to SEC Rule 501 under Regulation D to attain more information.
Accredited Investor Criteria
An individual must meet at least one requirement related to income or net worth.
Annual income: If you have an individual annual income of at least $200,000 USD or $300,000 USD with a spouse for the last two years and expect to earn the same amount or more in the current year.
New worth: If you have a net worth exceeding $1 million. The $1 million plus is without including the value of your primary residence.
Take Action With Syndications
Many real estate investors have heard of syndication, but they don’t know how to structure a deal. Syndications can be tricky. The time to build a network of investors, partners, and having boots on the ground may seem daunting. That keeps a lot of people from pursuing the syndication route.
This is where mentorships come in handy. What if that mentor already had a real estate network that you could lean on to get a syndication deal done? But what if you could connect with a general partner who already had a mentor who is ready and willing to walk you through the process from start to finish.
A passive investor is one who does not participate in the day-to-day decisions of running a company. Basically, you let your money work for you, rather than you working for your money. As a result, you can sleep well knowing that your money is working for you. Furthermore, participating in real estate syndications will help each person achieve their financial freedom that much sooner.
Let us know if you are interested in the great benefits by becoming a passive investor through real estate syndication. Next time an awesome deal comes up we will reach out.
Investing In Real Estate During A Recession
Real estate investing during a recession can be a very wise move. Investment in properties can be an intelligent decision if your goal is to build long-term wealth and financial stability. As you have probably seen, the stock market and other traditional investment options are extremely volatile with excessive moves in either direction during times of the economic downturn. However, real estate has a history of holding its value and providing steady returns. Find out some of the key Benefits Of Investing In Real Estate During A Recession.
Profit From Substantial Inflation Ahead
Profit From Substantial Inflation Ahead. Let’s take a look at how to profit from the substantial inflation that is already starting to happen. The US government has been printing massive amounts of new money. On January 6, 2020, the US Federal Reserve had around $4 trillion dollars. On January 4, 2021, the number increased to $6.7 trillion dollars. As a result, as of 2021, over 40% of US dollars were printed in the last 12 months.
A Bible Verse From Psalms
Psalm 128:2 NLT
2 You will enjoy the fruit of your labor. How joyful and prosperous you will be!
Have a great day!
Last Updated on July 27, 2024 by Financial Goodness
Financial Goodness
George Alexander Roy III and our team are experts in helping you to seek wealth through investing and tips on how to succeed. Join us at FinancialGoodness.com to increase your knowledge through education in the areas of personal finance, real estate, and investments. George has been an owner of a real estate investment business that focuses on wholesaling, fix & flip, and long-term buy-and-hold property strategies with a consistent increase of annual revenues. Consequently, as an entrepreneur, researcher, writer, and speaker he has sought the truth in everything he does, no matter how difficult. Hopefully this value and service will help each person achieve their financial freedom sooner.
Retire with a beautiful view. Photo credit: Unsplash. Thank you Alexandre Chambon @goodspleen
Updated July 27, 2024. Many of us dream of a beautiful house that is in a fantastic location, awesome vacations, and millions of dollars in the bank. Many people would like to become millionaires, but few know the steps it takes to reach this goal. Most self-made millionaires got there through hard work, disciplined saving habits, and investing wisely. If you want know how to be a millionaire by retirement, you are about to find out how to do it.
Most people would like to eventually retire and know that they have enough money to live comfortably in their retirement years. If you have already achieved the milestone of having accumulated $1 million dollars, congratulations! I invite you to continue reading this blog as a way to increase your wealth by focusing on developing multiple streams of income.
How Much Money For A Similar Lifestyle?
The big question that so many people have been asking is: how much money is needed to have the same lifestyle in retirement? If you try to research by looking online or talking to a retirement expert you will find that the answers vary widely.
Basically, this question of becoming a millionaire by retirement can be divided into two sub-categories. One: how much money is enough for retirement? Two: how to be a millionaire by retirement?
How Much Money Is Enough For Retirement
The 4% Rule
The widely accepted financial rule of 4% states that your savings should last for at least 30 years without exhausting their portfolio.
Many experts say that your retirement income should be around 80% of your pre-retirement salary. Suppose you make $100,000 a year at retirement. In this example, you would need at least $80,000 to have a comfortable lifestyle after you leave the workforce.
Of course, the $80,000 amount annually can be adjusted depending on your other sources of income, like Social Security, pensions, and other part-time employment. To have the $80,000 necessary, you would need a nest egg of about $2 million dollars. To calculate this using the 4% rule, simply take $80,000 and divide by 0.04. Also, keep in mind that this strategy assumes a 5% return on your investments.
If you are like many adults, you have probably thought of taking an early retirement at some time in your life. If you are thinking about an early retirement, is it possible to retire on $500,000? Let’s do the math. Using the widely accepted financial rule of 4%, the $500,000 will allow you to access $20,000 for 30 years.
If you have saved and invested your money wisely, the $500,000 would last you 30 years, assuming a 4% withdrawal strategy, for $20,000 a year. Say you live to be 85 years old if you are in good health. If you wait until age 55 this strategy could work.
Key Takeaways
If you retire on less than $1 million it could affect your quality of life.
Retiring before you reach 55 years will hinder you from your prime earning years that could potentially increase your Social Security benefits.
Ways To Become A Millionaire By Retirement
Would you like to retire and have the lifestyle that you already have, but you don’t have enough money to make it happen? In my opinion, $20,000 or even $40,000 is really not enough money to live on comfortably even if you live in a South America country. For instance, our family has been living for more than eight years in Colombia, South America, and the value of $20k to $40k is more or less equivalent to $80 to $100k in where we used to live in Charlotte, NC. The $80k to $100k in Charlotte, NC will pay your bills, but many people won’t have the vacation lifestyle that many are dreaming of.
Who wants to have financial stress in retirement? As we all know, people are living longer in the last century than they ever did before and we need to plan for this to happen as well. If you want to have more sources of income, I have researched some of the best ways that you can increase your cash and have the kind of retirement that we all dream of.
Money Rules To Help You Reach $1 Million
If you are motivated, then follow these rules of how to be a millionaire by retirement:
Become financially savvy. Learn as much as you can about money. Read websites and books about saving money, investing, generating multiple streams of income. Every piece of information will help to guide on your quest to become a millionaire.
Live like you are poorer than you are. Be careful and frugal about things you buy on a daily basis. Be humble and don’t show off to your friends or on social media. Live in a modest house. Make your meals at home. That way when you do go out to a restaurant you can really enjoy it and also do so on a modest budget.
Build an emergency fund. Start by saving a month’s worth of expenses. Then build toward having three to six months. Just be conscious and do not use this money for vacations. This fund can only be used for emergencies.
Manage your debt. The less debt you have the quicker you’ll be able save and not have to pay off credit cards and other monthly debt bills. If you have credit cards, many of these have high interest rates. Pay off these credit cards as rapidly as possible. Certain kinds of debt like a home mortgage are necessary and can help you move ahead long-term. The key is to find a house that fits within through budget.
Save daily. Each week contribute to a savings account or a 401(k) account. Try to save at least 20% of your after tax income each year.
Consider utilizing a conservative approach to value investing. If you think of the value stock market investors today, most likely you will think of Warren Buffett. Warren Buffett, chairman of Berkshire Hathaway, and Charlie Munger, vice chairman, are value investors that only invest in a handful of the best value stocks. Take an in-depth look at what many consider to be the best passive income investment stock: Berkshire Hathaway B shares (BRK.B). Warren Buffett and his team and his successors have purchased and are continuously investing in the best value stocks so that you don’t have to. On top of that, Berkshire Hathaway has an incredible record for the last 55 years of 20.3% annual compound interest! (link)
Earn more money. First try to maximize the money that you make in your day job. For instance, ask for a pay increase, work overtime, or consider switching jobs and finding a more lucrative position. Look for side hustles that you can do. This could be anything from driving for Uber or Lyft to selling things online.
Increase Your Wealth
If you are the type of person who realizes that just because you reach a certain age you really don’t want to retire. Maybe you have seen other people retire and watched them lose all their energy. If you are one of these people, chances are you said to yourself, I don’t ever want that to happen to me.
If this is the case, then probably you have an entrepreneurial spirit. Rather than watch your retirement wealth decrease, you see the opposite. You want to increase your wealth in retirement. At Financial Goodness, we are the same way. We are entrepreneurs at heart.
Owning your own business means that you directly reap the benefits of all the hard work that you have put in. When you work for someone else, working harder does not necessarily mean more money in your pocket. As a business owner, you also build equity in your business. You are calling the shots. Basically, you can work on the things that are important and add more to the bottom line and ignore everything else.
Finally, I would like to share with you the millionaire behaviors that are directly from The Millionaire Fastlane by MJ DeMarco. The ideas for starting a business that are listed below are the thoughts and behaviors that you need to have to achieve the millionaire mindset.
The good news is this: after the COVID-19 coronavirus, the U.S. estimates that people working for themselves will increase to around 40%. What even better is that many of these ideas you can do from the comfort your computer in your home!
The Bottom Line For Success
Many of the steps to becoming a millionaire are not overly difficult. However, they do take hard work, discipline, time, and perseverance. But, it’s the emotional side that prevents many people from reaching the millionaire mark. Perhaps the most important two factors are time and perseverance. Without these two, new ideas and new businesses will struggle and possibly fail.
Make the decision to focus on your goal of how to be a millionaire by retirement and write down your plan of action. With your plan of action of the key steps you will have the confidence needed because you know exactly how to be a millionaire by retirement.
Then put in the work and you will be surprised at how your net worth grows over time from your multiple streams of income. Through the hard work, discipline, and through your preseverance you will be grateful at the end result you and your family have achieved.
Last Updated on July 27, 2024 by Financial Goodness
Financial Goodness
George Alexander Roy III and our team are experts in helping you to seek wealth through investing and tips on how to succeed. Join us at FinancialGoodness.com to increase your knowledge through education in the areas of personal finance, real estate, and investments. George has been an owner of a real estate investment business that focuses on wholesaling, fix & flip, and long-term buy-and-hold property strategies with a consistent increase of annual revenues. Consequently, as an entrepreneur, researcher, writer, and speaker he has sought the truth in everything he does, no matter how difficult. Hopefully this value and service will help each person achieve their financial freedom sooner.
Warren Buffett is an American investor, business tycoon, philanthropist, and the Chairman & CEO of Berkshire Hathaway. Photo credit: https://www.marketwatch.com/story/this-mutual-fund-may-have-cracked-the-buffett-code-berkshire-hathaways-secret-sauce-2020-09-21
Updated April 13, 2024. My years of research tell me time and time again that the best stock to invest in is BRK.B by Berkshire Hathaway. The company is known for its control and leadership by Warren Buffett, who serves as chairman and chief executive. Berkshire Hathaway is a publically traded entity and is an overwhelmingly American multinational conglomerate holding company that is based in Ohama, Nebraska. This is a publicly traded stock under the tickers Berkshire Hathaway A or Berkshire Hathaway B (BRK.B).
The main difference between Berkshire Hathaway Class A and Class B shares is their price. The Berk B shares are much more affordable and offer the benefit of flexibility. Subsequently, if an investor owns just one share of Class A and is in need of some cash, the only option is to sell that single share, even if its price far exceeds the amount of capital he needs to access.
In contrast, a holder of Class B shares can liquate part of his or her Berkshire Hathaway holdings just up to the amount needed to meet cash flow cash flow requirements. In addition, Class B also provides a potential tax benfit. Its much lower price means that BRK.B stock can be passed to heirs without triggering the gift tax as passing Class A shares does.
One final difference is that Class A shares can be converted into an equivalent amount of Class B shares any time a Class A shareholder wishes to do so. The conversion privilege does not exist in reverse. Moreover, Class B shareholders can only convert their holdings to Class A by selling their Class B shares and then buying the equivalent in Class A.
Warnings Of Possible Financial Crisis Emerging
Many people are wondering what is happening with the U.S. and global markets. In a wide-ranging conversation, I recently watched a video where you were interviewed by Charlie Rose in April 2022. In the beginning of the interview you explained that after reading The Intelligent Investor, you understood to buy businesses that are publicly traded. You became an owner of the business and you did not care whether a stock went up or down the next day, or next week, or next month, or next year because you understood the principal of value investing. You didn’t care because you knew businesses. Looking at the numbers of the businesses that you completely understood made you comfortable enough to invest in these companies.
As Warren has said, he is an extremely bright man who is terribly interested in the work that he does. He has spent a lifetime doing it and he have surrounded himself with people who bring out the best in him. Warren has said many times that he doesn’t have to be a genius in what he does and that’s the great thing about it.
From my perspective, the genius is that Warren Buffett realized, many years ago, is that he is in a game that allows him to succeed over time to the highest of levels because he didn’t really need extra intelligence. He has dedicated himself and his eventual success by focusing on one thing: investments.
Warren said it best himself: you need the right orientation where the investor would think about what the companies are going to be worth 10 or 20 years from now. What I like best is that if a person truly internalizes everything, all the necessary ingredients, they too will make a lot of money. Warren Buffett has said, “I got rich when I understood this.”
The Gem: Berkshire Hathaway Stock
Berkshire Hathaway (BRK.B) is an American multinational conglomerate holding company headquartered in Omaha, Nebraska and is owned by Warren Buffett. As probably everyone knows, Warren Buffett is one of the most successful investors of all time. As well, my years of reading and research tell me over and above that BRK.B that the best stock to invest in.
Similarly, BRK.B is a stock that combines the best value in publicly traded companies as well as privately owning a number of companies themselves. Investing in Berkshire Hathaway provides investors with property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing, and services.
Berkshire Loves Collecting Dividends
Berkshire Hathaway famously doesn’t pay dividends. Nevertheless, Berkshire stock loves collecting them. In 2018 alone, Berkshire took in $3.8 billion in dividends. “A sum that will increase in 2019,” Buffett said in the annual letter.
As of August 2020, Berkshire Class B stock is the seventh-largest component of the S&P 500 Index. On January 10, 2018, Berkshire Hathaway appointed Ajit Jain and Greg Abel to Vice-Chairman roles. Abel is vice chairman for non-insurance business operations, and Jain is vice chairman of insurance-operations. In addition, for the fiscal year 2019, Berkshire Hathaway reported earnings of US$81.4 billion, with an annual revenue of US$254.6 billion, an increase of 2.7% over the previous fiscal cycle.
Berkshire Hathaway Is Undervalued By 20%
The Berkshire Hathaway current valuation is $495 billion. If Berkshire Hathaway businesses are valued at 20 times operating earnings approximating the S&P 500 Index, then they would have an enterprise value of $480 billion.
In comparison, subtracting the float of $130 billion would then result in an equity value of $350 billion. Then adding $350 billion (businesses) to $385 billion (stock portfolio plus cash) results in an overall equity valuation of $715 billion. As such, the Berkshire Hathaway current valuation of $495 billion represents a 30% discount!
Berkshire Has Top Management
Berkshire Hathaway is a stock that is run by top management. Consequently, the huge advantage is that the management regularly optimizes the companies Berkshire Hathaway invests in so that you don’t have to. Basically, you can sleep well every night knowing that your investment is secure.
When Warren Buffett speaks, Wall Street and investors listen intently. That’s because Berkshire Hathaway has a track record few other money managers can match. Over the last 55 calendar years, Berkshire Hathaway’s stock rose at more than 20.3% annualized pace, versus 11.8% for the S&P 500. More than 20% annually for 55 years! In my opinion, this is one of the best investments of a lifetime. The best stock to invest in is BRK.B. I ask you to research Berkshire Hathaway, if you haven’t already, and add your comments below.
Berkshire Stock With A 18.6% Annualized Return Since 1965 Versus S&P 500 With A 11.8% Annualized Return. Photo credit: https://svencarlin.com/berkshire-vs-sp-500/
Berkshire Hathaway Publicly Traded Portfolio
Below are the publicly-traded U.S. stocks owned by Warren Buffett’s holding company Berkshire Hathaway, as reported to the Securities and Exchange Commission in filings made available to the public. There are times when Berkshire asks for, and receives, the SEC’s permission to temporarily withhold data on some stock holdings.
Update March 2020. With the Covid-19 pandemic creating uncertainty around the world, it is unsurprising that many may have seen their top stocks underperform the benchmark indexes. Investing legend Warren Buffett is no exception. Indeed, it is reassuring that Berkshire Hathaway has managed to find value in this volatile environment.
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Many investors regularly look at investor Warren Buffett’s top holdings to see what they are and then to do their on research and decide if they like the value of these stocks. Berkshire Hathaway current top holdings by size are Bank of America, Apple, Coca-Cola, Kraft Heinz, American Express, Verizon, U.S. Bancorp, and General Motors.
Warren Buffett’s investment strategy is to build a portfolio of blue-chip companies with strong balance sheets, and then to hold this stock in BRK.B and invest with the right orientation over a long time frame. Apple is Berkshire Hathaway’s largest portfolio holding, comprising 49.1% of the portfolio. In addition, Buffett has held shares of Coca-Cola since the late 1980s; the company accounts for about 8.6% of Berkshire Hathaway’s portfolio. Furthermore, in 2011, Buffett began investing in Bank of America when Berkshire Hathaway purchased in a private offering 50,000 shares of the company’s preferred stock at a liquidation value of $100,000 per share.
Despite his unparalleled success, Buffett’s investment model has always been transparent, straightforward, and consistent. Fundamentally, he invests in fairly-priced, high-dividend paying blue-chip companies that feature strong balance sheets. Buffett buys such stocks with the intent to hang onto them over the long haul.
Listed below are the public and private businesses that add up to the best stock to invest in, which, in my opinion, is BRK.B.
Clothing: Union Underwear Corp., Fruit of the Loom, Garan, Fechheimer Brothers, Russell Corporation, H.H. Brown Shoe Group, Acme Boots, Brooks Sports, Justin Brands, Chippewa, Justin Boots, Justin Original Workboots, Nocona Boots, and Tony Lama Boots
Building Products:
Acme Building Brands, Benjamin Moore & Co., Johns Manville, MiTek Inc., Shaw Industries, Inc., Clayton Homes Inc.
Flight Services:
FlightSafety International Inc., and NetJets Inc.
Retail:
Nebraska Furniture Mart, RC Willey Home Furnishings, Star Furniture Company, Jordan’s Furniture, Inc, CORT Business Services, Ben Bridge Jeweler, Helzberg Diamonds, The Pampered Chief, Ltd., See’s Candies, Dairy Queen, Orange Julius, Karmelkorn, Oriental Trading Company, and Pilot Flying J
Media:
Buffalo Evening News, Buffalo Courier-Express, Business Wire, Omaha World-Herald, Richmond Times-Dispatch, Winston-Salem Journal, The Eagle, Waco Tribune-Herald, Tulsa World, Greensboro, North Carolina-based News & Record, Virginia’s Roanoke Times, Press of Atlantic City, and ABC affiliate WPLG
Real Estate:
Berkshire Hathaway’s Energy’s HomeServices of America, Home Capital Group Inc., Store Capital, and Clayton Group
Other Non-insurance:
From 1986 to 2003: Albecca Inc., CTB International Corp., McLane Company, Scott Fetzer Companies including: Kirby Home Cleaning Systems, Wayne Water Systems, Ginsu Knives, and World Book Encyclopedia.
In 2007: acquired TTI, Inc, and Marmon Group
In 2014: Berkshire Hathaway Automotive created through the acquisition of Van Tuyl Group; acquired Duracell from Procter & Gamble in an all-stock deal.
Finance and Financial Products
Clayton Homes
Investments
Russell Corporation including Spalding NBA Official Basketballs, and BIKE Athletic Company
Lubrizol Corporation
Preferred stock in Wrigley
Goldman Sachs
GE
Burlington Northern Santa Fe Corporation
Indian insurance BerkshireInsurance.com
H.J. Heinz Co.
Berkshire owns 1.74 million shares of Gannett, and Precision Castparts Corp.
2020: Berkshire added a position in the Q2 2020 of 20 million shares in mining company Barrick Gold
2020: Q3 2020 agreed to buy Dominion Energy’s natural gas transmission and storage operations.
Between September 2019 and August 2020, Berkshire purchased more than 5% of the outstanding stock of each of the five largest Japanese general trading companies: Itochu, Mitsubishi, Mitsui Sumitomo, and Marubeni.
The Rich Didn’t Get Wealthy By Investing In Stocks
Have you ever wondered how the wealthiest investors in the world became wealthy? For example, if you look at Warren Buffett you might think that the wealthiest investors in the world enjoyed their success due to wise investing decisions.
However, despite the fact that the best stock to invest in is BRK.B, the reality is that Warren Buffett is a rare exception. Buffett’s investment returns over the decades have been nothing short of phenomenal. His investments over the years are the reason for his success. While replicating his success might not be possible, you can emulate his strategies to become a successful investor.
One of the primary reasons for Buffett’s success has been his ability to recognize the deeper value behind a company. The best stock to invest in is BRK.B, but understand that Warren Buffett invests in businesses that he understands and knows that the inherent value of the business is more than its evaluation at the time of investing. As a result, all the work that Warren Buffett and his team of people do will add up to the best stock to invest in, which is BRK.B.
Create A Product Or Service To Add Value
Contrary to popular belief, the wealthiest investors did not use stock market investing to find the best stock to invest in such as BRK.B in order to maintain the wealth they had already acquired. Almost all of them made their wealth by starting companies that were very successful or some have received an inheritance.
I invite you to read my FinancialGoodness.com: About The Writer and scroll down to “Think of Knowledge As A Tree.” One of the entrepreneur’s I have studied is Ryan Daniel Moran.This entrepreneur realized that you have to strategically position yourself to create value in service to other people. Please read my blog on how to Build Unlimited Wealth With Money’s Untold Truth. To summarize this article, find the biggest problem you can think of and then solve that problem. You have to create a product or a service that people really want and then think of a way to deliver it to them. This is the secret for creating unlimited wealth.
Imitate Strategies Of Successful Investors
Once your business is profitable, you can then use some revenue to maintain your wealth that you have acquired over the years. You can then imitate the strategies of successful investors. In this way you can use your wealth by investing in wise investment moves in the stock market. The combination of these two strategies, of having a profitable business and then investing in the markets, is really the best way to maintain and to increase your wealth over time.
Consequently, have you ever thought about the relationship between money and wealth? Specifically the fact that money is just paper with a number on it. Nevertheless, people have equated money to value.
In the end, perhaps this was never about the money. Let’s face it, it was all about the freedom that you were looking for. Accordingly, if you make wise investments you will have the ability to do whatever you want, whenever you want. Thus I am talking about your choice of freedom.
This is the dream of freedom that you were seeking all along. Truly I challenge you to do it and have the courage, the belief, and the strength to make this your reality! When you do this, you will have completely conquered how to build unlimited wealth with money’s untold truth because now you know the secret to having a lifestyle of richness.
Conclusion
I hope you enjoyed my research on the best investment to make. If a stock market crash happens again or a big dip occurs, the long-term buy and hold value stock is apparent to me. My years of research tell me again and again that the best stock to invest in is BRK.B.
To conclude, I like the peace of mind that the BRK.B stock has with it. In the same way, I can invest in BRK.B and rest good every single night. In the final analysis, I know that the leading management at Berkshire Hathaway will look after my investment and make sure it grows slowly over time for years to come.
“An investment in knowledge always pays the best interest.”
– Benjamin Franklin
Matthew 7:8 NLT. For everyone who asks, receives. Everyone who seeks, finds. And everyone who knocks, the door will be opened.
Last Updated on April 13, 2024 by Financial Goodness
Financial Goodness
George Alexander Roy III and our team are experts in helping you to seek wealth through investing and tips on how to succeed. Join us at FinancialGoodness.com to increase your knowledge through education in the areas of personal finance, real estate, and investments. George has been an owner of a real estate investment business that focuses on wholesaling, fix & flip, and long-term buy-and-hold property strategies with a consistent increase of annual revenues. Consequently, as an entrepreneur, researcher, writer, and speaker he has sought the truth in everything he does, no matter how difficult. Hopefully this value and service will help each person achieve their financial freedom sooner.
Invest Wisely In The Stock Market Photo credit: Unsplash
Updated December 3, 2023. Myself and our team are commonly asked the question about how to invest wisely in the stock market. The answer to that question is that we really like the value investing approach. Generally, value investing involves selecting stocks whose share price is below its intrinsic value or book value. Warren Buffett is an example of value investing. Warren Buffett will buy a stock thinking that he could hold it for years without ever considering selling it. Trying to day trade or invest in the stock market on a short term basis will just add stress to your life. The reality is that no one knows what the markets will do in the short term. With this in mind, we highly recommend long term buy and hold strategies to will help you to create everlasting and perhaps generational wealth.
Volatile Markets
Updated November 28, 2023:
The USA Today reported that fears over a possible hard landing for the U.S. economy have subsided throughout the year.
The S&P 500 has gained a surprising 19% year to date in 2023. However, many of those gains have been concentrated in the technology and communication services sectors.
Updated October 13, 2022:
The markets sank in the morning after the Labor Department reported consumer prices jumped more than expected in September. U.S. equities roared back from big losses to post significant gains. The Dow had a 1,500-point swing, ending with a 827-point advance.
Updated September 14, 2022:
After a report for August 2022 which CPI came in higher than anticipated yesterday, the U.S. markets did a nosedive. The Dow and S&P 500 sank about 3% and the Nasdaq went down 4%. Core inflation rose to 0.6% in August, up from July’s 0.3% gain. If you look at the annual basis for core inflation, it accelerated to 6.3%, up for 5.9%. In conclusion, a higher than expected inflation rate will likely strengthen the Fed for more aggressive interest rate hikes. The FOMC will have a meeting on September 20-21, 2022 and will likely vote on a 75 bps rate hike.
Updated January 24, 2020:
On January 24, 2020, the S&P 500 index fell for its biggest one-day loss since October 8, 2019. But then the Fed, with their “expanded balance sheet” pumped more money into the markets to avoid the stocks from free falling. The good news is that it worked for almost a month. But, the big question many people are asking is what is the best way to invest wisely in the stock market?
Updated February 2020:
The last week of February the Dow industrials plunged 3,600 points. Consequently, the Dow’s weekly skid would rank within its top 15 in its 124-year history. In addition to this, the S&P 500 marks the fastest correction from a record in history. As a result, Thomas Lee, founder of Fundstrat Global Advisors, may be one of the few to acknowledge that something isn’t right with a market that was just enjoying a record close days ago. “This is not normal, and the market is clearly indicating to us a change,” Lee said in a research report on Friday.
COVID-19 Still Continues
Meanwhile, the coronavirus outbreak continues. Indeed, the coronavirus has spread to all continents except Antarctica. On March 2, 2020, The New York Times says the coronavirus has infected 90,000 people, and killed more than 3,000.
Then the last week of February 2020 arrived. The stock market bulls have been saying that nothing could keep the market from hitting new highs. But the investors could not avoid the fact that there is no cure for the coronavirus and many believe the price of stocks is hefty.
Warren Buffett and Berkshire Hathaway
On March 2, 2020, Warren Buffet appears to be bullish about the direction of stocks, sitting on $128 billion in cash. But this chart of Buffett’s record cash pile appears to tell something different.
In March 2020 Buffett Is Holding $128 billion In Short-Term Bonds. Photot credit: Marketwatch & Real Investment Advice.
However, when looking at Berkshire Hathaway’s Cash Holdings, RIA Advisors strategist Lance Armstrong is more pessimistic about the markets. He says, “Follow the money. If he thinks stocks will outperform bonds why is holding $128 billion in short-term bonds?”
December 3, 2023. Daniel Foelber wrote in The Motley Fool that the passing of Charlie Munger on November 28, 2023 marked the end of a chapter for longtime fans of Berkshire Hathaway. Munger lived 99 years and 11 months. Munger often spoke less than Warren Buffett during the company’s famous annual meetings in Omaha, Nebraska. But his wit and wry sense of humor lightened the mood and complemented Buffett’s bouncy cadence perfectly.
In valuing Berkshire Hathaway it is, without a doubt, a very complicated business to access. But at its core, the value comes from its public equity portfolio, cash, insurance business, BNSF railroad, BHE, and its manufacturing, service, and retailing segment.
Berkshire stock looks cheap even when assigning conservative values to all these moving parts. But it’s easy to see why it is probably undervalued, even though the stock is near an all-time high.
If we assume a 15 P/E on the manufacturing, service, and retailing business and add in the cash position, and Berkshire Hathaway would be worth $1.08 trillion. Berkshire stock looks cheap even when assigning conservative values and Daniel Foelber believes it is unquestionably a buy.
June 24, 2022. Berkshire Hathaway’s Warren Buffett goes on a spending spree and is now deploying billions of dollars in 2022. In 2022, it’s not just growth stocks are quickly selling off, but value stocks have gotten cheaper as well.
As a result, Buffett’s buying is sending a signal to all value investors. He is basically saying that stocks are now cheap and it’s a great idea to purchase noteworthy stocks when they are on sale.
What Berkshire Is Buying In 2022:
Chevron CVX. Chevron is one of the largest energy companies in the United States. Berkshire already owns some shares, but Buffet bought more making Chevron 7% of of the portfolio.
Occidental Petroleum OXY. Occidental Petroleum is now dirt cheap. Berkshire bought billions of dollars of Occidental Petroleum, pushing it up to the 6th largest position in the portfolio at 3.57%.
Citigroup C. Citigroup’s shares are down by a third. But Citigroup is also one of the cheaper large banks, with a forward P/E of 7.5. It also pays one of the higher dividends, currently yielding 3.9%.
Ally Financial ALLY. Ally Financial is also dirt cheap. It is trading with a forward P/E of just 5. Ally Financial pays a dividend yielding 3.1%.
Paramount Global PARA. Paramount Global is a global media company with many brands including Paramount, Showtime, MTV and other brands. Paramount Global’s earnings are expected to decline 23.6% in 2022, but it pays a dividend yielding 3%.
4 Passive Income Strategies For Stocks
Below are four passive income strategies for stocks that will help grow your wealth over time. Investing on a regular basis rather than trying to time a lump sum investment can help you become a more disciplined investor. You’re forced to invest regardless of whether the price is high or low. This takes some of the emotion out of investing and avoids any delays in putting your money to work. Most financial planners advise saving between 10% and 15% of your annual income.
An index fund is a mutual fund or exchange-traded fund designed to follow certain preset rules so that the fund can track a specified basket of underlying investments.
To select an index fund, first decide what stock market index or indexes you want to keep track of. The next step is to find the fund whose performance closely correlates with that index. Look at the funds that has a low expense ratio. Ideally look for a low expense ratio which denotes the annual management fee for that fund.
1. Dividends
A dividend is a distribution of profits by a corporation to its shareholders. When the stock of a company posts quarterly earnings, it is abl eto pay a proportion of the profit as a dividend to shareholders. The shareholder has to decide if the want the dividend distributed to them or if they want to re-invest in the business with the dividend.
It is very important to only invest in dividend stocks wisely. Remember to only invest in companies that you belive in long-term with strong growth and fundamentals, not just because they pay you a high dividend. If you are looking for dividend champions, check out the following companies and there dividends below.
Possible Dividend Champions
Becton, Dickinson, & Company (BDX). 5-year expected returns: 9.5%. Becton, Dickinson & Co., or BD,is a global leader in the medical supply industry.
AbbVie Inc. (ABBV). 5-year expected returns: 9.8%. AbbVie is a pharmaceutical company spun off by Abbott Laboratories (ABT) in 2013. Its most important product is Humira, which is now facing biosimilar competition in Europe, which has had a noticeable impact on the company.
Novartis AG (NVS). 5-year expected returns: 10.3%. Novartis is a Europe-based healthcare company. The company’s Innovative Medicines division offers medicines in the areas of oncology, cardiovascular, dermatology, respiratory and several others.
Eagle Financial Services (EFSI). 5-year expected returns: 10.6%. Eagle Financial Services serves retail and commercial customers and offers consumer, mortgage and commercial loans as well as other banking services.
AT&T Inc. (T). 5-year expected returns: 11.5%. AT&T is the largest communications company in the world, operating in three distinct business units: AT&T Communications, WarnerMedia, and AT&T Latin America.
Enbridge Inc. (ENB). 5-year expected returns: 12.9%. Enbridge is an oil & gas company that operates the following segments: Liquids Pipelines, Gas Distributions, Energy Services, Gas Transmission & Midstream, and Green Power & Transmission.
2. REITs
REIT stands for real estate investment trust. A REIT is a way to buy stock in a company that just owns real estate and in exchange for giving them your money as an investment, they will pay you back some of their profits in the form of a dividend.
REITs can specialize in anything from medical buildings, shopping centers, senior care facilities or residential buildings. This a way that you can own part of company without having to go through the hassles of finding the right deal, doing inspections, coming up with the money, and then physically purchasing a property.
When doing your research of possible REITs I would suggest looking at:
Vanguard Real Estate ETF (VNQ)
Vanguard Real Estate ETF (VNQ) provides attractive exposure to real estate to real estate through the ownership of U.S. real estate investment trusts. The portfolio spans all end markets, from industrial to residential to health care.
Due to its REIT ownership, VNQ offers income as well. The effective yield, adjusted for return of capital, is a healthy 2.33%. That’s better than the 10-year Treasury bond and a nice addition to the diversification and has a low expense ratio of 0.12%. Other REITs like the iShares U.S. Real Estate ETF (IYR) have an expense ratio of 0.42%. When you compare the 0.12% against other REITs it doesn’t looks pretty good.
3. Index Funds
Index funds are a basket of stocks that you could buy into individually, but index funds have the advantage that you can buy into the fund instantaneously. This gives you the best diversification because you can access many different stocks and it is incredibly easy to do.
Investing in the S&P 500 index funds is perhaps the closest way to guarantee wealth accumulation over time. To get you started, these are some funds to have a look at:
Schwab S&P 500 Index Fund (SWPPX)
Schwab S&P 500 Index Fund (SWPPX) is an official S&P 500 index fund and it is the cheapest with an expense ratio of 0.02%. In other words, if you invest $1000, your annual is just $0.20. The good news is that your returns are pretty much the same as the S&P 500 index. According to MarketWatch, the turnover percent is 4% and the dividend is $1.04 annually.
Fidelity ZERO Total Market Index Fund (FZROX)
Fidelity ZERO Total Market Index Fund (FZROX) is an index that is designed to reflect the performance of the U.S. equity market. FZROX is a float-adjusted market capitalization-weighted index designed to reflect large, mid, and small capitalization stocks. This fund seeks to provide investment results that correspond to the total return of a broad range of U.S. stocks. Another good advantage is that the expense ratio for FZROX is impossible to beat at 0%. According to MarketWatch, the turnover percent is 6% and the dividend is $0.17 annually.
Fidelity ZERO Large Cap Index Fund (FNILX)
Fidelity ZERO Large Cap Index Fund (FNILX) is very similar to an S&P 500 index fund because it tracks an index of over 500 U.S. large-cap stocks. However, this fund is not a official S&P 500 index fund, so it avoids paying licensing fees that are expensive to the S&P’s parent company. As a result, the FNILX has a 0% expense ratio. If you are just beginning to invest, another key point is that there is no minimum investment for contributions to this fund. According to MarketWatch, the turnover percent is 5% and the dividend is $0.16 annually.
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX). VTSAX seeks to track the performance of the overall total market. This fund uses an indexing investment approach to track the performance of the CRSP U.S. Total Market Index. The CRSP U.S. Total Market Index is a fund that has almost 4,000 companies across the mega. large, small, and micro capitalizations, representing nealy 100% of the U.S. investible equity market. The expense ratio is 0.04%. According to MarketWatch, the turnover percent is 8% and the dividend is $0.32 quarterly.
Vanguard Total Stock Market ETF (VTI)
Vanguard Total Stock Market ETF (VTI). VTI is an exchange-traded fund if you do not want to have a mutual fund index. This fund seeks to track the performance of the CRSP U.S. Total Market Index. The expense ratio is 0.03%. According to MarketWatch, the turnover percent is 8%.
Vanguard Growth Index Fund ETF (VUG)
Vanguard Growth Index Fund ETF (VUG). If you can afford to take on more risk in the pursuit of higher rewards, the tech heavy, exchange-traded, Vanguard Growth ETF VUG is a solid pick. The fund tracks the CRSP U.S. Large Cap Growth Index, which looks a lot like the S&P 500 Growth Index.It invests in each of 255 U.S. large-cap growth stocks. The tech stocks are heavily represented, accounting for 47% of its holdings, while energy stocks and utility stocks comprise only 0.3% combined. The expense ratio is 0.04%.
Vanguard Total Bond Market Fund (BND)
Vanguard Total Bond Market Fund (BND). For passive investors, the U.S. seems like the simpler choice when compared to Europe and Asia. Interest rates in Europe are artificially low, with some corporate bonds offering negative yields. Meanwhile, in Asia and emerging markets, risks are naturally higher. There are plenty of bond funds that are more aggressive and potentially could offer higher returns. But few offer the same peace of mind as BND which provides broad exposure to investment-grade American bonds.
4. Diversify With The All Weather Portfolio
Are you concerned about your investment in your portfolio of stocks? Would you like to sleep better with less stress at night? To do this you need to invest wisely in the stock market. Therefore, we highly recommend long term buy and hold strategies to will help you to create everlasting wealth.
This would be an excellent time to mention Ray Dalio. For those not familiar, Ray Dalio is the founder of the world’s biggest hedge fund firm, Bridgewater Associates, which manages $160 billion in assets. Ray Dalio is one hedge fund manager known for its all weather investing strategy.
Ray Dalio’s portfolio was back tested for the last 75 years. In the last 75 years it has been right 85% of the time. However, in the 15% that it wasn’t doing well its average mean was 1.6%, not a 50%, 40% , 30%, or 20% loss. In conclusion, his biggest loss was less than 4% and that was in 2008 when the market exploded.
30% stocks, even though stocks traditionally grow at 9.2% a year.
40% long term treasuries
15% intermediate term treasuries
7.5% gold
7.5% commodities
Rebalance these allocations once every year.
As you can see gold is an inflation hedge and a safe haven in unstable markets and a way to diversify risk. I like how the All Weather Portfolio is a balanced fund that works no matter what happens in the markets. I am thinking of designating some funds for this strategy in the long-term. What are your thoughts? Let me know in the comments below.
My Favorite Stock Market Commentaries
If you want to know more about how to invest wisely in the stock market, we recommend the commentaries below to give you a greater perspective:
Best Daily Market Commentary
Mott Capital Management and the owner Michael Kramer is one of the best people to follow and read on a constistent basis. He always gives you his unbiased opinion on where the market is and where is likely to go. As many investors know, sometimes the market will have multiple events in a week. So, hold on.
I am a value investor. Find good stocks and hold on to them for many years. That way you don’t have to worry about the micro-direction of the market from one day to the next and you can sleep a lot better. If you are interested in signing up for free commentary from Michael, go to mottcapitalmanagement.com. If you like it, you can subscribe as well for more content.
Best YouTube Trading Channel
In my opinion one of the best YouTube channels for the stock market is ShadowTrader. The host is Peter Reznicek. I have been watching this channel for more than six months and my conclusion is that Peter is an amazing person because he gets it right so much of the time. Many people know that the markets will tell you the story. So don’t try to go against the market or you will get crushed big time.
When I say Peter gets it right, I mean that sooner or later the markets will conform upward or downward to the directional prices that he gives out in his videos. His knowledge is phenomenal to watch, no matter what trading level you are at. This week’s title is “Buyers Shut Off”. Check out Peter Reznicek. He goes in-depth on his interpretation of what has happened and his predictions of key levels to watch.
In the chart below, everything to the right of the chart is bullish. Everything to the left of the chart is bearish. As you can clearly see, a clear majority of the past presidents enjoyed bullish markets. If you were trying to short the market you would lose your cash very quickly. Most of the analysts after the stock market crash are saying to buy the dip. The important question is: WHEN?
Presidents and their impact on the stock market. Photo credit: investopedia.com
Updated June 24, 2022. The chart below shows the end of President Trump in office and the beginning of President Biden. As we know, Biden is in the difficult position of the Fed printing trillions of dollars and then dealing with inflation as the price of oil and food continues to increase. So such for how to invest wisely in the stock market. As we have seen, through June 2022, the stock market prices are decreasing as inflation continues to go up.
June 24, 2022 Update. Presidents and their impact on the stock market. Photo credit: investopedia.com
You Are Responsible For Your Investments
Let’s go back to the original question about how to invest wisely in the stock market. Remember, you are ultimately in charge of your own investments. If you don’t feel comfortable being in the stock market maybe wait until the timing is better. As an alternative, you can always put your investment in a high interest savings account. The return wouldn’t be as good as investing in the stock market, but you will not lose money either.
On the other hand, if you are on the path to increase your wealth, congratulations! I encourage you to continue to learn how to invest wisely in the stock market. Investing in the stock market will definitely grow your investments long term. However, please understand that most people make money from their careers and then they invest their money in the stock market. Warren Buffett is a rare exception to this rule.
With is in mind, one of the best ways to increase your wealth is through real estate. Of the people who are millionaires, an astounding 90% got their wealth by investing in real estate. Real estate is one of the best ways to seek wealth and achieve financial freedom. I invite you to read our article Best Real Estate Strategies To Make 7 Figures.
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Further Reading on FinancialGoodness.com: For more articles and blogs, please check out our guides on how to increase your net worth.
Last Updated on December 3, 2023 by Financial Goodness
Financial Goodness
George Alexander Roy III and our team are experts in helping you to seek wealth through investing and tips on how to succeed. Join us at FinancialGoodness.com to increase your knowledge through education in the areas of personal finance, real estate, and investments. George has been an owner of a real estate investment business that focuses on wholesaling, fix & flip, and long-term buy-and-hold property strategies with a consistent increase of annual revenues. Consequently, as an entrepreneur, researcher, writer, and speaker he has sought the truth in everything he does, no matter how difficult. Hopefully this value and service will help each person achieve their financial freedom sooner.
