INVESTMENTS

INVESTING IN YOUR BUSINESS

An investment in your business may be the very basis for being in the USA.  (The Intra-Company Transfer Visa (L-1) or Treaty Investor/Trader Visa (E-2/E-1).  See “Immigration” section. 

Until you establish a credit record, banks will probably not lend you money without security.  Accordingly it is important that you maintain sufficient liquid cash for your business needs.  Consider SBA (Small Business Administration) loans if you do have a home as security, if a bank is not willing to lend you money.  See section on “Business.”

Investing in your own home With tax benefits

Owning your own home will enable you to have all the benefits of real estate investment together with the tax benefits of deducting the interest on your mortgage payments from your income.  Your equity in the house is an asset, which will assist you in raising loans for your business or other purposes.  There is a psychological benefit to lenders and people who deal with you in business to know that you have purchased real estate thus establishing roots in the United States.  Beware of buying a home if you are not certain where you intend to live in the long term.  You may initially be attracted to one city, but not have a business or a job in that city.  It is best to wait until you know with some certainty that the city you have selected is where you will be working for the long-term.  (Also see “Housing”).

INFORMATION ON INVESTMENTS

There is no limit to the kinds of investments that can be made in the United States.  There is also no shortage of so-called experts who are willing to advise you where to place your money for a commission.  This is an area where you would be well advised to tread carefully.

Take time to learn the financial trends in the United States as well as the various institutions and systems of investments.  There are many excellent television programs, newspapers, magazines, and newsletters that will enable you to develop a feel for the United States system.  The Internet is a magnificent way to research and track your investments.  

THE INTERNET

More and more Americans are managing their investments online. 

The traditional stockbroker made way for the discount stockbroker, and now the Internet allows the general public to track and trade their investments from an Internet connection. 

Financial information websites:

For people wishing to receive moment-to-moment news and numbers, they should check out:
CNNfn (www.cnnfn.com);
CBS MarketWatch (www.cbsmarketwatch.com), and;
TheStreet.com (www.thestreet.com).

For more commentary, analysis, and special features, please check out the subscription services: RealMoney.com (www.realmoney.com), and the less expensive Wall Street Journal Interactive (www.wsj.com).  The Wall Street Journal has a special discount deal for newspaper subscribers. 

Websites to manage your portfolio

Morningstar.com (www.morningstar.com) is a great source for mutual fund information, and stock evaluation.  It is free!

For special customization of your investments check out Quicken.com (www.quicken.com). 

US News and World Report has a Money section that is worth checking out. (www.usnews.com). 

TELEVISION

Most newcomers are familiar with CNN.  There is a spin-off of that cable channel known as CNNfn (Financial News).  Public broadcasting stations throughout most of the country air a program known as the Nightly Business Report.  CNN has a program called Moneyline. 

Louis Rukeyser has for many years had a weekly show called Wall Street Week.  His guests are well known financial personalities who make recommendations and predictions. 

NEWSPAPERS

The Wall Street Journal is not only a finance-oriented newspaper, but also contains general news information.  Home deliveries are available.  Also see their website.  For those investors seeking in-depth technical information, there is Barrons. 

MAGAZINES AND NEWSLETTERS

Newsstands are full to capacity with excellent publications.  Consider Business Week, and US News and World Report. We strongly recommend US News and World Report for the newcomer because it contains many practical tips on diverse aspects of life and has a section entitled “News You Can Use.”

Other magazines to consider are Forbes, Newsweek, Fortune, and Money. 

Entrepreneur, another magazine, lists many small business opportunities and has a great website. 

Business 2.0 and The Industry Standard are two leading magazines dealing with the new hi-tech economy.

THE STOCK MARKET

THE WATCHDOGS OF THE MARKET:

1)               Securities and Exchange Commission (SEC)

A federal agency established to help protect investors.  It is responsible for administering congressional acts regarding securities, stock exchanges, corporate reporting, investment companies, investment advisors, and public utility holding companies.

2)               The Federal Reserve Board (FRB)

The federal agency responsible for control of such important investment issues as the discount rate, money supply, and margin requirements. 

PREDICTING THE STOCK MARKET

The Dow Theory

This is the most popular and widely-used of all of the market concepts.  The Dow Theory is named after Charles H. Dow, one of the founders of Dow Jones and Company, Inc., the financial reporting publishing organization.  Broadly speaking, the Dow Theory signals both the beginning and the end of bull and bear markets.  Dow believed that the stock market is a barometer of business.  The Dow Jones Industrial Average (DJIA) was established in 1897.  Thirty major corporations involved in US industry are included in the Dow Jones Industrial Average.  Occasionally, one company will be replaced by another in the Dow Jones Industrial Average.  Recently, Microsoft and Intel, corporations from the NASDAQ stock market were introduced to the DJIA.  Sears, a major retailer, was dropped from the DJIA. 

Another average, the Dow Jones Transportation Average, consists of twenty different stocks involved in transportation. Both the industrial average and the transport average are used in applying the famous Dow Theory.  In essence the theory is used to predict future trends in the market. If both averages are climbing up that is a positive signal.  If both are going down that is a negative signal. If one average is going up and the other down, anything can happen. 

 Many financial analysts criticize the breadth, scope, and significance of the averages.  The original DJIA had only twelve stocks and the thirty large companies whose stocks make up the present average do not provide a true picture of today’s broad more technically-orientated market.  The addition of Microsoft, and Intel were intended to correct this problem.  Nevertheless, the Dow Jones Industrial Averages are closely watched on a daily basis by supporters and critics. 

The S & P Index/ The Standard Stock Price Index

This is made up of the stock market action of five hundred major corporations.  Some people believe this to be the best indicator of how the market is doing because it includes more stocks than other indicators. 

NASDAQ

In today’s hi-tech financial world the NASDAQ is watched as closely as the DJIA to analyze the economy. Although it was only established in 1971, it has had a major impact on the investing scene in the latest decade. 

OTHER INVESTMENTS

Mutual funds 

Mutual Funds have become extremely popular and sophisticated, and there are many to choose from.  Many people invest their Individual Retirement Accounts (IRAs - a tax break) in Mutual Funds.  Check out Morning Star, and US News for a good overview of what funds are out there, and fund performance. 

US Savings Bonds

These are extremely secure investments.  They are backed by the United States government and are not subject to fluctuations in the economy.  They can be quickly cashed in and one will always receive at least what was invested.  The interest is also not subject to state or local income taxes.  The interest rates, however, on savings bonds are low and they cannot be used as collateral for loans.  They can be purchased from banks. 

States and local authorities also raise money through the issue of bonds.   

Corporate Bonds

An investor in stocks acquires an interest in the assets of the corporation.  On the other hand an investor in corporate bonds becomes a creditor of the corporation.  The investor loans money to the corporation who promises to pay interest on such loan.  The owner of a corporate bond may hold it until maturity date or may sell it in the open market at the price then being quoted for such bonds.  

Corporate bonds are also rated.  For example, the Standard and Poors ratings begin with the least speculative being AAA, then continue with AA, A, BBB, BB, B, CCC.  The AAA is the highest grade, whereas the CCC is extremely speculative.  Corporate bonds can be purchased from investment firms and commissions are paid.

IRA's (Individual Retirement Accounts)

Traditional IRA: A tax-deductible savings plan for individuals with qualifying incomes.

Roth IRA: As part of the taxpayer Relief Act of 1997, this new type of IRA was created. Eligible contributions to a Roth IRA are not deductible, but withdrawals are tax-free for qualifying distributions. you may also withdraw up to your original contribution amount with no tax liability.

BROKERS AND BROKERAGE HOUSES

Always ensure that your broker is a member of the Securities Investor Protection Corporation (the SICP).  This protects investors against losses that are incurred if a brokerage house is unable to return cash or securities belonging to its customers if it goes out of business.  There are limitations on this guarantee.

A good broker can advise a client of a good investment. These brokerage houses charge commission on transactions. 

Discount Houses

Some brokerage houses do not make stock recommendations and therefore do not have a research department or a large sales staff.  They therefore offer their purchase and sales services at lower commission than other brokerage houses.  If you know what you want to invest in and are not seeking advice you can save substantial amounts of money by investing through discount houses. 

Do-It-Yourself Investing

Check out the information available through the National Association of Investment Corporation
(www.better-investing.org).   Also see website of Suzie Orman (www.suzieorman.com). 

Financial Planners

There are many people who claim to be experts in helping you prepare a financial plan with a view to retirement.  A good indicator that the people offering advice are serious about their profession is that they are Certified Financial Planners (CFP).  

Check out the sections on “Banking” and “Taxes” for more suggestions. 

CONCLUSION

This section overlaps with “Credit”, “Housing” and “Business”.  Check out those sections for more information.