Category Archives: Finance

10 BDCs to Buy for Big-Time Income

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Business development companies (BDCs) were literally designed with dividends in mind. These 10 BDCs to buy yield up to 10.9%.

Business development companies provide firms with debt and equity capital, or a combination of the two, to help them grow. Many of the largest BDCs available to investors today provide equity and debt financing to middle-market companies, a considerable number of which operate industrial businesses with stable cash flows.

They first came to be in 1980 when Congress passed an amendment to the Investment Act of 1940 that created a new category of closed-end investment company: BDCs.

For tax purposes, BDCs must pay out 90% or more of their taxable income in the form of dividends so they can retain the tax benefits of regulated investment companies. BDCs may raise their dividends in boom times, however it’s not uncommon for some to cut their payouts depending on the business environment.

BDCs have become popular with retail investors over the past decade because of the significant income they generate. These companies often yield more than 8% on their distributions.

One thing to pay attention to when evaluating BDCs is costs. Externally managed BDC pay advisory fee and typically pay a low double digit percentage of returns or profits to the fund advisory manager. Internally managed BDC do not pay advisory fees. It does, however, incur the operating expenses of employing investment professionals to do investment analysis, research and other duties.

— Read on www.kiplinger.com/slideshow/investing/T018-S001-10-bdcs-to-buy-for-big-time-income/index.html

7 Secrets of Highly Successful Investors | Kiplinger’s Personal Finance

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Prosper in this volatile market (or any other) by focusing on fundamentals.

In investing, it’s as important to practice good habits as it is to avoid bad ones, and the stakes have rarely been higher. The longest bull market on record is in its 11th year, volatility is sky-high, the economy is uncertain and market sentiment is skittish.

But long-term investors should rise above the fray and focus on the fundamentals. You already know you shouldn’t buy stock on a tip from your Uncle Fred. But it’s even more important to set appropriate goals, save regularly and monitor your progress. Don’t beat yourself up for the occasional mistake. But if you follow the seven steps below, you’re likely to feel good about your portfolio over the course of a long investing career.

— Read on www.kiplinger.com/article/investing/T023-C000-S002-7-secrets-of-highly-successful-investors.html

The Basics of Creating Your Emergency Fund | MakingCents | Navy Federal Credit Union

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Saving for Your Emergency Fund

Having an emergency fund can help you feel at ease and prepared for the unexpected. Putting aside three to six months of living expenses takes time. Start by opening an emergency savings account and begin making regular deposits, no matter how small. Look for accounts that pay the most interest, so your money can grow even faster.

Set a deadline to reach each of your goals. It’s helpful to have a plan in place to hold yourself accountable for reaching your goals. Having a deadline can help you stay on track. Don’t worry if you get a little behind. What’s important is that you’re moving ahead.

Track your progress. Remember-every little bit counts. Even if you only save a small amount each week, you’ll be building a cushion you didn’t have before. When you track your progress, you’ll see that you’re not only earning interest on the money you contribute, but you’re also earning interest on the interest you earned before. Take the time to enjoy watching your little fund grow. 

Resist the urge to spend it. It might be tempting to use your money on the latest technology or a fun vacation, but resist spending your emergency fund unless you really have an emergency. That way, it will be there when you really need it.

— Read on makingcents.navyfederal.org/knowledge-center/financial-literacy/saving–getting-started/emergency-funds.html

Financial health: Know your vital signs

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It’s important to know where you stand before moving forward with planning decisions.

FIDELITY VIEWPOINTS  – 09/30/2019

Key takeaways

  • Understanding your current financial position can provide a solid foundation for your financial planning process.
  • Knowing how much you spend and save can provide some key insights into your financial health.
  • It is also important to review some of the basics of financial planning, like your insurance, college savings, will, and more.

When you start a financial planning process, you usually begin with the goal or the problem you are trying to solve. Then, you take a deep look at your financial wellbeing. It’s a bit like getting a physical for your finances.

You will review some financial vital signs—key indicators of your financial health—and then take a careful look at key planning areas to make sure some common mistakes don’t trip you up.

For full article, go to:  https://www.fidelity.com/viewpoints/personal-finance/financial-health?ccsource=email_weekly

 

What is Inflation?

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What is Inflation?  Inflation is the rate of increase in goods and services.  According to Wikipedia, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.

2019 is shaping up to be one of the best years ever for investing |CNBC

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This could be the first year ever where stocks, bonds, gold and crude oil all returned double digits, according to LPL Financial.

The S&P 500 has returned nearly 22% in 2019 while gold and crude are sporting returns of 16.1% and 17.8%, respectively. Treasuries are right on the cusp, with the the 10-year Treasury note up more than 9%

Through Wednesday’s close, just 75 stocks in the S&P 500 were down for the year while 361 were up at least 10%.

Assets have gotten a boost from lower Federal Reserve rates as well as generally strong consumer spending.

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Socialism Failures

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Many young American adults seemingly believe that capitalism is failing to lift the economic boats of a majority of its citizens. They believe that it is only benefiting the wealthiest Americans, the top one percent. Theses young American adults are beginning to listen to socialist leaning politicians, and embrace their philosophy and beliefs of socialism.

“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery”.— Winston Churchill

However, socialism is not the solution to American’s woes of unequal sharing of economic prosperity and vast unequal distribution of wealth. Americans only have to look in its own Western Hemisphere backyard at the failed economies of Cuba and Venezuela for glaring examples of socialism grandiose failures. In both countries, socialism proved once again that its “…inherent virtue is the equal sharing of misery”. They stand as reminders just like the economies of the former Soviet Union and East Germany, and the pre-capitalist economy of People’s Republic of China of last century prove that socialism simply does not work.

Winston Churchill once said: “No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.” And, capitalism is a lot like democracy, it’s the worst form of economic system except all those other economic systems that have been tried from time to time, according to John Hope Bryant on CNBC Morning Squawk.

“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” -Winston Churchill

Former Prime Minister Churchill further stated that “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” In socialist countries, government officials seize and exercise central control of the means of productions and take ownership or embezzled most of their society’s wealth. 

In 2019 America, the country must find someway for all Americans, not just the wealthy and political elite, to share in the nation’s prosperity brought about by capitalist economy.

Chinese Stock Investors Beware

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Florida U.S. Senator Marco Rubio was recently on CNBC warning American investors and public pension funds who invest in stocks of Peoples Republic of China businesses listed on U.S. stock exchanges to beware. Like Enron and Worldcom, the companies could potentially be fraudulent enterprises, or like they say in Texas, “big hat, no cattle” entities. Essentially, these Chinese “public” companies are not regulated by the Securities and Exchange Commission (SEC) like their American counterparts. And, these listed companies are not currently required to abide by U.S. or Western generally accepted accounting practices (GAAP) standards.

The SEC exists to protect U.S. investors from the shenanigans of public companies. Yet, trillions of dollars of U.S. capital from American investors and pension funds are invested and continue to flow into these highly risky non transparent companies that are not regulated by the SEC.

If there was ever a time for investors or buyers of stocks to beware, it would relate to investments in Chinese stocks. Even the large cap highly own stocks of Chinese companies such as Alibaba (BABA), Tencent (TCEHY), Nio (NIO) and Baidau (BIDU), pose major potential risks to U.S. investors since no independent accounting firm has audited their financial reports or filings to assess their veracity.

Just like the quarterly and annual numbers of gross domestic economic product provided by the Chinese Communist government are viewed as works of fiction by most Western economist, Chinese companies’ financials should be reviewed with similar, if not , more scrutiny and skepticism.

CNBC Mad Money host Jim Cramer has commented on many occasions to viewers that he personally avoids and would not recommend his viewers to invest in Chinese companies stocks. He cites their lack of financial transparency and unknown corporate governance as reasons to avoid all but the largest of these stocks.

Finally, Senator Marco Rubio and Hayman Capital Management founder Kyle Bass, have been sounding the alarm for years about the threat potentially posed to the U.S. financial markets and to the retirement pension plans of millions of Americans by these listed foreign companies. Senator Rubio, along with a bi-partisan group of Senators, have been both sounding the alarm and proposing that all companies listed on major U.S. security exchanges be required to follow the same reporting standards and independent audit requirements followed by U.S. public companies. And, those foreign companies found not in compliance with SEC regulations for public companies should be de-listed from American security exchanges.

Strong U.S. Consumers

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Most economists or financial pundits concede that it is difficult to have a U.S. economic recession in the next twelve to eighteen months with the historically low (3.5%) unemployment rate and strong consumer spending. Essentially, the U.S. consumers, who represents 70% of the U.S. economy, are coming to the rescue the economy.

Eventually, those predicting and appear to be even rooting for a recession prior to the 2020 Presidential elections will be correct someday in the future. Bottom line, since the business economic cycle has not been repealed, recessions are inevitable and a normal part of the cycle.

Business hiring and historical low unemployment rate are lagging economic indicators for forecasting the strength of the economy. Today’s strong U.S. consumers due to hiring and low unemployment rate have buoyed the economy and can mask moderating and slowing economic growth.

China trade talk uncertainty and threat of additional U.S. tariffs on China and the European Union continue to weigh on the global economic growth and health.

No one…repeat no one, is able to forecast the future direction of the economy.