Merrill Lynch’s recent report stating the possibility of a GM bankruptcy is another reason to ask the following question:

What company will still exist in 50 years? How about 25?

The trouble with buy and hold philosophies for long term investments is that there really aren’t any companies that will surely be around in 50 years. We have seen many giants of the industrial revolution and beyond crumble in recent years. It seems that no industry is safe. The automakers are in trouble. The airlines are in trouble. Banks and Financial Companies, Energy Companies, Telecom companies, and many more…no industry is immune.

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Being frugally minded and debt averse I’ve always been proud to say that I pay cash for my cars. One of the cars in our household was bought new and the other one was bought used. After calculating the costs of buying a previous car for an upcoming post on the Lending Club blog, I’ve come to realize that paying cash may be costing me more for a number of reasons.

The main reason why paying cash for a new car costs more is the fact that new cars depreciate so quickly. As a result, leasing may be less expensive than paying cash and certainly less expensive than buying with borrowed money. To perform a reasonable comparison, I looked at the latest deal being offered at my local Honda dealer. Here’s what I found:

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photo credit: muztiko

Going “All In” is best known in the poker world, but also shows up in investing in the form of the All or None qualifier.

All or None is an option when buying or selling a security much like choosing the type or duration of the order. What All or None means is that the order will not be filled unless it can be filled in its entirety. Let’s say you place a limit order to buy 100 shares of stock at $50 each:

• Without using the All or None qualifier, your order would be filled as the stock became available at that price. So if there were any shares available at $50, you would buy them. As more were offered at that price, you would continue to buy them until you had the 100 shares you requested. You could end up making your purchase over the course of many transactions. In a highly liquid market, these multiple transactions might appear to occur at almost the same time.

• If you selected the All or None qualifier for the transaction above, your order would not be filled until a full 100 shares were available at your price. You would then get your shares in a single transaction. So, like the name implies, you either get all of your shares, or none of them.

The main scenario where I use All or None is when

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There’s an old saying on Wall Street that when you start getting stock tips from cab drivers it’s time to sell. The theory goes that if the market is doing so well that everyday people are buying into it, it’s probably overvalued and likely to fall. The opposite is also true. Though I haven’t ridden in a lot of cabs lately, everywhere I look I see people saying how risky the stock market is right now.

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One thing you notice when you watch a lot of golf on tv is that the same commercials are repeated over and over ad nauseum. This past week was no exception. I must have seen the ING Your Number commercial at least 10 times. Clearly their marketing tactic worked, because I did indeed go to their website.

The premise of the commercial is that everyone has a number that correlates to the amount they’ll need to have saved to retire when and how they want. In the ad, people are carrying around a physical number. By going to the website, you can calculate your number and then find a new financial professional in your area or email it to your existing one.

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There’s no doubt that social lending is gaining in popularity and growing in numbers every day. More and more you hear of P2P lending being described as an investment because of the sizable returns that are often possible. Opinions vary about whether or not it is a good investment, but I’d like to consider whether it’s a socially responsible investment.

For anyone who hasn’t heard of socially responsible investing, here’s an excerpt from a post I wrote on the subject:

“The practice involves trying to maximize financial return while investing in companies that are deemed socially good. Such companies tend to favor policies of environmental friendliness, workplace diversity, fair treatment of workers, etc. Many socially responsible investors also avoid companies involved with alcohol, tobacco, and gambling as well as big oil or military contractors.”

The difficulty in determining whether social lending is socially responsible is the fact

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Value cost averaging is yet another way to invest your money on a periodic basis. The strategy is similar to dollar cost averaging in that you make regular investments regardless of the current price of a stock. Instead of investing the same amount of money each time, like dollar cost averaging, you add a fixed value to your investment each time. So if you chose a value of $1000, then you would purchase $1000 worth of stock initially. You would use your second investment to bring the value of that holding to $2000. The third would bring it to $3000, and so on.

As the price of your chosen stock ebbs and flows, you would be investing different amount of money and purchasing different amounts of stock with each investment. So if you bought 100 shares at $10 each in the first round, you’d need to see what that was worth before your second purchase. Let’s say that the stock was worth $10.50 at your next investment,

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As someone who is debt free in all other aspects of my life, it’s probably not surprising that I prepay my mortgage. By prepaying, I mean paying more than the required payment each month. This will allow me to pay off my mortgage in about a third of the time. I’ll save a ton on interest and it seems like good financial sense, but there are some opposing views to consider. The fact that opinions vary so widely on the subject is a good indication that the right answer is highly dependent on your personal situation. Statements like “prepay 10% extra each month and you’ll be in a great position” are of no real value to anyone. There are simply too many other factors:

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As difficult as is can be to decide when to buy an investment, knowing when to sell can be even more difficult. This is particularly true of losing investments. When our investments decline, the decision needs to be made whether to cut our losses, do nothing, or invest more to take advantage of the lower price.

I wish that I could say that there’s a tried and true rule, such as when an investment has declined by a certain percentage, but there are too many other factors. The type of investment, time held, tax consequences of a sale, risk/reward profile, and countless other pieces of information go into the decision. Another aspect of selling a loser is that you have to admit that you may have made a mistake. Far too often people hold on to their losers, hoping for a turnaround. What’s worse: getting out of an investment only to see it recover or to hold on and watch a continued decline?

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I keenly remember the excitement that surrounded my first read of a book that has become a financal classic: Rich Dad, Poor Dad by Robert T. Kiyosaki. It wasn’t just the philosophical difference in how assets are traditionally defined (things you own with perceived value) versus the author’s new definition (things that put money into your pocket each month.) No, the real excitement came from the practical application that accompanied that definition: investing in rental property.

For all of the benefits that come along with finding a rental property with positive cash flow, the downsides (even if only perceived to be so) hold people back from such an investment. Even though the author provided many solutions (such as hiring a property manager) to the typical complaints of those opposed to rental property (such as “I don’t want to fix toilets”) there were still some things that were holding me back too. I liked the idea of investing in something that paid me back regularly, but the overhead and management of a rental property business dissuaded me from the investment.

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