Diworsification: How Much Diversification is too Much or Little?

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Diworsification

When I was picking stocks, I saw my portfolio lose 15% of its value in one day.  Simply put, I had too many of my eggs in one basket or too many of my investment dollars in one stock.  I wasn’t diversified.  Sure, I could hit it big with a stock, but I could also lose.  I saw the amount of time I was spending on picking stocks and knew it could be put to better use if I let the professionals handle my money.

My portfolio was under diversified, but many people also suffer from too much diversification of their portfolio or diworsification.  Diworsification occurs when you continually invest in the same asset class and keep your risk low but hurt your overall return potential.  It would be the equivalent of investing in many different mutual funds that only contained U.S. stocks.  If you want exposure to the U.S. domestic stock market that is great, I highly recommend it, but pick a fund that gives you just that and move on.

My investment strategy has come a long way from my earlier days when I was picking and choosing stocks.  I thought just like many that I could pick homerun stocks that nobody else could.  I did well on some and poorly on others.  I would come home every day from work and watch Jim Cramer’s show Mad Money.  I soon realized that the effort I was putting in wasn’t yielding the rewards I desired.  I quickly shifted all my investments to a mutual fund.  Being young, I knew I wanted a large exposure to stocks.  What better stocks to invest in than the U.S. Stock Market?  Warren Buffett has been noted to say that when he passes he wants the remainder of his fortune put into a low-cost index fund that mirrors the S&P 500.  That’s right, just one fund.  If he wanted his fortune to be spread across many funds that mirrored the S&P 500 he would be subject to diworsification.  I decided to follow Warren’s advice.

While my investment dollars are placed into a single low-cost Index fund that mirrors the U.S. Stock Market, not everyone will agree with this position, and that is fine.  Investment advice can be given to you from a hired professional or you can decide on your own.  My knowledge came about through the reading of numerous books.  If you want to invest in South America, there are funds for that.  If you want exposure to corporate bonds, there are funds for that.  If you think that the pharmaceutical sector is the next big thing, then by all means find a fund that suits you for that investment.  There are many ways you can invest your hard-earned money, but try and keep to the One and Done Philosophy when investing in mutual funds to prevent diworsification: Pick one mutual fund that covers the class or sector you are wanting exposure to and leave it at that.  Not only does it simplify your portfolio, but it keeps you diversified and away from diworsification.

How Rookies Can Invest in Real Estate

If you are interested in investing in real estate property, you may have started doing research about it. However, there is so much information out there about the topic that it can sometimes be confusing and leave you wondering how you should get started.  Fortunately there are a few not so complicated ways how rookies can invest in real estate.

1 Rentals

If purchasing a single family rental appeals to you but a lack of time to research and find an investment property is holding you back, there is a way to get it done fairly easily; Let someone else do the research for you. But saving time may not be the only thing making you hesitate. You also have to find renters, collect rent, do upkeep, and the many other tasks involved with owning a rental. It all takes time and it can be somewhat intimidating to a rookie real estate investor. So why not allow someone else to do some of the work for you? In addition, it is possible to purchase turnkey rentals even if you don’t have the expertise or time to manage the property yourself. Also, if you think you are locked into buying rentals only in the area where you live, think again. You can invest in properties in a different part of the country altogether even if you haven’t personally seen the property. Does this sound like a dream? There are companies in existence that can help you overcome these hurdles so you can purchase a rental and get started investing in real estate even as a rookie.

2 Crowdfunding

Crowdfunding is another way to help you get started as a rookie real estate investor, especially if you don’t have much money to get you started. By choosing this method you can put your money together with money from others and invest in real estate so everyone benefits. This is done through an REIT, or Real Estate Investment Trust.

REIT’s are a lot like mutual funds in that they give investors the power to diversify their investments and have steady money coming in. They are made up of knowledgeable team members who devise ways of investing pooled money in real estate investment options not usually available to the lone investor. They do this by putting the investment capital into more than one property, which makes the risks low and raises the growth potential of your investment. There are several companies that offer this type of investing, so it shouldn’t take too much time to research and find one to your liking.

3 Partnership Investing

Of course, you could also pool your money with someone else without the help of an outside company. Choose someone you trust to get started with and you could still invest in real estate even if you don’t have a lot of money or experience. When you work with someone else who has real estate properties already, you can learn a lot from them about choosing, financing, and managing rental properties or flip properties. It may also allow you to start investing a lot sooner than if you were to try to purchase a property on your own.

As you can see, even if you are new to real estate investing, there are different ways how rookies can invest in real estate. Don’t let whatever is holding you back prevent you from securing your future.

What other options do you know of how rookies can invest in real estate?

Kayla is a personal finance blogger in her mid-20s who loves to write about money topics of all kinds.

Blue Apron Free Trial: Review

Let’s be honest, many of us lack the time or the money to cook unique, cost-efficient meals today.  Whether you are a couple or a family, it is sometimes easiest to just eat out.  Eating out on a regular basis can get very expensive.  I recently received a Blue Apron free trial.  I was eager to try and cook my way through a new and adventurous meal, something I wouldn’t normally eat.

As this was a Blue Apron free trial, I had nothing to lose.  I had three meals delivered right to my door.  All of the packaging was recyclable, and it came with a couple of nice reusable freezer packs.  Here is my experience:

Meal: Chipotle-Glazed Meatloaf

Blue Apron Free Trial: Chipotle-Glazed Meatloaf

What I expected: Blue Apron said the prep time for this meal was just 10 minutes with the cooking time of the meal being between 35-45 minutes.  The card (included in the picture) came with a quick description of the meal along with all of the ingredients for the meal.  Each ingredient listed even came with a picture in case you weren’t sure.  The flip side of the card came with step by step instructions on how to prepare the meal and also some pictures to assist you along the way.  I laid out all of the ingredients on top of my counter along with the card and began.

The Good:  You have all of the ingredients you need to create a unique dish.  If you tried to go to the grocery store and buy all of the necessary items to create something similar, you would spend way more than $10/meal.  All of the items looked fresh and appeared top notch.  Everything from the beef, to the potatoes, to the garlic looked like it had been prepared just mere days before.  Finally, Blue Apron also pairs each of the dishes with a wine.

The Bad:  While the meal card said the prep time was just 10 minutes, this was not the case.  It took me about double that time to prepare the meal.  The only way someone could have done the prep in 10 minutes is if they were highly experienced in the kitchen or if they had prepared this meal before.  The meal also lacked a side of vegetables.  While this might seem quite minor in the details, some healthy vegetables to go along with this meal would have made it complete.  I ended up cooking some green beans to go along with the meat and potatoes.  You also needed some cooking experience to help guide you through.  I don’t believe these meals are for the complete rookie.  For instance, you had to mince garlic, slice potatoes, and needed a few kitchen accessories to complete the meal.

Chipotle-Glazed Meatloaf Dish

Conclusion

Ultimately my Blue Apron free trial was a success.  I was able to create a delicious, unique meal all by myself.  At just around $10/meal, it is also a great value because the same ingredients would cost much more if you purchased them at the store.  Downsides would be that it requires some basic kitchen knowledge and elementary kitchen items.  This meal service is great for a couple who enjoys cooking together and wants to spend some time create different dishes and bonding over the experience.

Are you interested in Blue Apron? Get $30 off your first week using this link.

How Do Millennials Finding Affordable Dental Health Care?

How important is a great smile? According to ABC News research, the first impression is the most important. Whether it’s a lack of affordable dental insurance, anxiety of going to the dentist, or burden of financial responsibility, many Millennials have put a trip to the dentist on the back burner. Underestimating the important link between oral health care and overall wellbeing can not only jeopardize that vital first impression, but cause health issues for Millennials as they get older.

Staying Away Means More Decay

A study by the National Health and Nutrition Examination Survey (NHANES) shows 62 percent of adults ages 35-64 went to the dentist in the past year, compared to Millennials, those ages 20-34, which was just slightly over 50 percent. Millennials also had the highest percent of untreated cavities, according to the study.

Millennials now represent over a quarter of the nation’s population, 83 million, exceeding Baby Boomers for the first time. It is reported most of them have avoided the dentist for 2 to 3 years. In the end this game plan ends up being painful and expensive. Unfortunately, many employers don’t offer dental insurance and Millennials are unsure how to find affordable dental care.

In a case study by Quirk’s Media, How Millennials Are Reshaping Health and Wellness, found two thirds of Millennials “believe that insurers have too much power and are often perceived as putting profits ahead of patients.”

No Pain Means No Problem? Don’t Be Misled

Many Millennials believe if they aren’t experiencing pain, there isn’t a problem. The fact is, by the time there is pain, there is likely a severe problem. With over 85 percent of Millennials with missing teeth, fillings, or tooth decay, delayed dental visits have become a serious issue.

The American Dental Association warns, “Too many people mistakenly believe that they need to see a dentist only if they are in pain or think something is wrong, but they’re missing the bigger picture. A dental visit means being examined by a doctor of oral health capable of diagnosing and treating conditions that can range from routine to extremely complex.” Dental health is about prevention, “During a comprehensive exam, dentists examine the teeth and gums, but they also look for lumps, swellings, discolorations, ulcerations — any abnormality.

Where to find dental health care that is affordable?

Good dental health is about brushing, flossing, eating a healthy diet, and regularly visiting the dentist. Quality oral health care should be affordable for everyone. A healthy smile and good first impression is important for every person.

Today’s Millennials are discovering the benefits of discount dental plans. True Dental Discounts is not dental insurance, but gives individuals and families access to a variety of highly qualified dental care providers at a discounted price. Since there aren’t any deductibles, waiting periods, or limit to the number of visits, it’s not only affordable it easy!

Paribus Review: A Good Way to Save Money?

paribus review

Have you ever purchased something online only to find out there was a price drop three days later? Frustrated, you don’t even bother contacting the retailer because it’s time-consuming.

What if there was an app that tracked all the possible price changes, missed coupons, and better-elsewhere deals online and contacted the retailer on your behalf to get your money back?

Now there is! Paribus.co, pronounced pair-uh-bus, is a one-of-a-kind money saving app that does the work of finding better deals, coupons, and price changes for you.

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How to Pay Off Student Debt

Nearly three out of every four students graduating from a four-year college or university will have some sort of debt.  Despite the fact that college is supposed to be some of the best years of your life, paying off your student debt after you have graduated can seem like a mountain too big to climb for many.

How to Pay Off Student Debt

According to a recent Forbes article, the average student graduating from college has over $37,000 in student loan debt.  This number is expected to continue increasing due to the constant hikes in college tuition throughout the United States.  Whether you have graduated or are about to graduate from college with debt, there are ways to help you manage the financial burden.




Example 1 on How to Pay Off Student Debt:

Susie went to a four-year state school.  Fortunately, she had academic scholarships to help pay for schooling, and she also lived at home during the four years.  She graduated with $10,000 in student debt.  Susie was able to get a job right after school in the town where she went to school and where her family lived.  She continued to live at home and made a budget.  Susie focused on keeping her expenses low and used every bit of extra money she had left over in her budget to pay towards her loans.  Most importantly though was that she included a category in her budget for paying off her student loans each month.  She devoted $500 per month towards her student loans.  Because of her frugal living and her devotion to get out of debt, she was able to pay off the entire balance of her loans in less than two years!

Example 2 on How to Pay Off Student Debt:

After graduating high school, Chris decided to attend a private university to continue his studies.  The tuition at his university was expensive, but with the help of aid and an alumni scholarship he was able to limit the costs.  Regardless, Chris graduated with $45,000 of student debt after it was all over.  Chris accepted a job with a non-profit after graduation.  Even though he wouldn’t be making much money, he felt a calling to do something he passionately cared about.  Because of his situation, a high amount of student debt and a low salary, he enrolled in an Income Based Repayment Program.  This allowed Chris to avoid the high monthly payments his loans would typically have required him to pay and instead allowed him to pay a small percent of his income every month.  Even with this program, Chris still had to create a budget, but the repayment of his student loans was not as high of a priority as it was for Susie.  Nonetheless, Chris was able to still live comfortably, doing what he loved, while also meeting his student loan obligations.

The examples above illustrate a couple of real-life situations that people face when paying off student debt.  To some, paying off the debt is a very high priority.  To others, not so much.  Only you can decide how quickly you would like to pay off student loans.  The commonality that both Susie and Chris shared in both examples was that they created a budget.  Susie created a budget that allowed her to aggressively pay off her debt.  Chris created a budget that allowed him to live within his means but also meet his payment every month.  Regardless of which category you fall in, creating a budget is a great foundation to tackling any debt, especially student loans.

Should I Invest in Stocks?

The U.S. Stock Market is at an all-time high, and many are wondering how much longer this can be sustained.  People are asking themselves if it is still worth investing in stocks at this high.  The simple answer is: YES!

Below is a chart of the S&P 500, which covers the broad range of the stock market.  The chart below illustrates performance from 1950 until the end of last year.

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Should I Invest in Stocks?

As you can see based on the chart, there are rises and falls, some of which are quite big.  If you look at the chart as a whole, you can ultimately say that U.S. stocks have increased in value over time.  Here are three reasons why one should consider investing in stocks.

Should I Invest in Stocks? Reason 1:

U.S. stocks have outperformed almost every other investible asset over the past 100 years, especially government and corporate bonds.  People often think of bonds as a safer alternative to investing in stocks, but what they really mean by “safer” is less volatile.  Yes, stocks can fluctuate with higher highs and lower lows in a given period of time, but over the long-run they will outperform bonds.

Should I Invest in Stocks?  Reason 2:

Stocks are the easiest and safest way to build wealth.  What I mean by this is that continual investment in stocks will yield higher and higher returns over time if you let your returns compound.  Compounding interest is a great thing when it comes to building wealth and all it takes is two simple steps:

Step 1: Continued investment and reinvestment

Step 2: Time

By continually putting money into your stock investment on a consistent basis and allowing your returns to reinvest, after a period of time you will be able to build a substantial amount of wealth.  And again, since stocks outperform other investments over the long-term, you are compounding a greater percentage each year.

Should I Invest in Stocks?  Reason 3:

Because Warren Buffett says so!  At the time of this post, Buffett’s net worth is estimated to be in excess of $75 billion USD.  It has been said that he is the greatest investor the world has ever seen.  How did Warren and others like him make their great fortunes?  Through investments in stocks.  Warren has constantly invested in companies throughout his time via stock purchases in what he calls “value investments”, which is a simple way to say in companies he believes to be cheap in valuation.  Buffett has gone so far as to say that even upon his passing he would like the remainder of his fortune to be placed in a low-cost index fund that mirrors the S&P 500.  The greatest investor ever believed and still believes in the power of stocks.

Hopefully by now you have been convinced that investing in stocks is the right thing to do, but how do I get started?  Simple, to begin investing in stocks I would recommend investing in a mutual fund that covers a wide range of the U.S. Stock Market.  Investment firms such as Vanguard and Fidelity offer these sorts of funds that will allow you to get exposure to the broad range of the U.S. Stock Market and begin reaping the rewards.

Does Everyone Need An EIN?

If you’re trying to start a new company, then you are probably wondering how you go about making everything legal in the eyes of the government. While the process can be time-consuming, it all boils down to filing paperwork. One of the most important parts of starting a new business is getting an IRS tax ID application so that you can make sure that you won’t get into trouble with Uncle Sam.

Perhaps you’ve heard of the different tax IDs, such as SSN (social security number), ITIN (individual tax ID number), or EIN (employer ID number). Since you’re starting a new business, you may think that you need an EIN, but is that always the case?

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4 Free Online Budgeting Courses to Take Advantage of

As the years progress people keeping finding themselves more and more in debt to creditors. There are some online resources who have deemed this as a major problem. In their efforts to help people better understand money management there are multiple websites that now offer free budgeting courses. If you’re currently struggling with your debt load be sure to act on these courses below.




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