Making Fortunes With Long-Term Value InvestingWritten by John B Keown
The key to making money in stock market is invest for long-term, buying only undervalued stocks which, to quote Benjamin Graham, have a "Margin Of Safety". Ben Graham and Warren Buffett both made enormous fortunes through long-term value investing. Indeed, Buffett continues to do so and has averaged over 22% average compounded annual gains over a 39 year period. These results are phenomenal and not easy to emulate. However, with time on your side and a little bit of work it is possible to do nearly as well as Buffett. Even if you beat S&P 500's average long term return of around 11%, you are doing very well indeed. Suppose you invest $3,000 in a Roth IRA or other tax-efficient retirement account every year for 20 years and achieve an average annual compounded gain of 11% over that period. At end of 20 year period you could have around $238,000 disregarding dealing costs and dividends. You have only invested $60,000 - so $178,000 is generated entirely through compound interest. If you were to emulate Buffett's 22%, that $60k would become $1,031,000. If you were to start earlier and invest $3,000 a year for 40 years at 11%, you would end up with $2,132,483. Match Buffett's 22% on these investments over 40 years and you may wind up with a whopping $55,000,000, for an investment of $120,000! That is power of compound interest. Many people ask me "Which stocks do I buy?" and "How do I start?" They keep making excuses NOT to start investing for long-term. My advice is a bit like a Nike commercial: JUST DO IT! Get started. Open a Roth IRA, start by putting money in regularly, even if it's only $25/month. It's important to get into HABIT of regular savings. In meantime you can worry about which stocks to buy. Picking stocks to buy is not actually that hard. It should not take a great deal of work. There are lots of places you can look for investment ideas: in fact there are hundreds of investing websites, including The Graham Investor where we tend to profile stocks that come up in value-based screens and give an opinion as to why a particular may be worth following - not necessarily buying. There are many different strategies to take; a typical one is to first screen for stocks that meet a particular value criterion which might be any one of: a low PEG, high intrinsic value when compared to current price, price below two-thirds of Graham Number. Once we have a list of suitable stocks meeting basic criterion, we can filter out stocks with poor cash flow, excessive debt, poor earnings, or insignificant anticipated growth. We also avoid stocks with low liquidity by making sure average daily volume is as high as possible, and stocks with low prices (typically steering clear of stocks trading
| | Debt consolidation – Consolidate Your Student Loans Now!Written by Charles Essmeier
The Federal student loan program has benefited thousands of college students in forty years since it was introduced. Interest rates for program have historically been quite competitive, and program has allowed many people to acquire a college education who otherwise might not have been able to afford one.
At moment, interest rates on Federal student loans are lowest in history, but that is about to change. On July 1, 2005, interest rates on Federal student loans will rise, due to an increase in price of Treasury, bills, to which interest rates on student loans are tied.
While an increase in interest rates is seldom viewed as a good thing, knowing about it ahead of can be helpful. Between now and June 30, new graduates or those who have been repaying existing loans can consolidate their student loans at current rates. The rates
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