August 15th, 2010

Easy Investing Strategies is starting a new series of posts related to stock research and stock picks. We will be tracking our selected stock picks, and all stock selections will be done using the Easy Investing Strategies outlined on our site.

To start off our research, we dove into  a stock screen using a criteria we should hold all reputable companies to.  First, we selected companies that currently pay a 5% dividend or higher.  To understand how you can further benefit from dividend stocks, read our post High Dividend Investing post.  Second, we selected only companies that had zero debt, and had cash balances on their latest balance sheet of $100 million or more.

As expected, the results produced a large number of companies known as REIT’s.  REIT’s are Real Estate Investment Trusts, and usually have high dividends due to the law that REIT’s must pay out a large portion of their earnings each quarter as dividends to their shareholders.  Since the real estate market is still depressed in most areas due to the sluggish economy, we decided to remove all companies that are REIT’s from our list.  This left a few interesting companies left over.

Himax Technologies, Inc. (HIMX) is the first company that caught our eye.  Their current dividend payout is at 9.8% based on the most recent closing stock price, and they have $161 million cash on hand.  The 52 week stock price ranged from $2.16 to $3.58 per share.  The narrow trading range was also something that we liked as it meant the stock is less of an overall risk.  Sometimes stocks have high dividends because their stock price drastically drops, making it more volatile and a higher risk choice.  Himax Technologies shows more stability in the stock price, making it a better choice.  Himax Technologies designs, develops and markets flat panel displays.  Based on the number of flat panel monitors, TV’s, and mobile handsets in the market today, there is no foreseeable end to the consumer demand for Himax Technologies flat panel display technology.  Easy Investing Strategies is giving Himax Technologies a high recommendation.

Garmin Ltd. (GRMN) is another company that stuck out on our stock screen.  The dividend currently sits at 5.4% with $1.192 billion of cash.  The company has recently introduced the Garminfone, which combines GPS features from the mainstream Garmin GPS models, and a mobile phone together.  Garmin seems to be keeping up with the latest technology, and with a decent dividend and loads of cash, Easy Investing Strategies highly recommends them.

After our highly selective stock screen and analysis of resulting companies, Easy Investing Strategies top pick is Himax Technologies (HIMX).  This is due to its low stock price, excellent dividend, and visible demand for their technology in the marketplace.

Disclosure: Easy Investing Strategies does not own or hold Himax Technologies or Garmin Ltd. stock.

Investing isn’t just about the stock market, although it can be a great way to grow your money, if you time it right. Sometimes taking out payday loans to pay off a tuition bill can be a form of investment in your own growth. When people think of investing, they don’t always understand that an investment is simply a vehicle to grow the value of your money. Whatever you spend initially on an investment should return more when it the investment matures. That can include things like investing in commodities, real estate, a home garden, a skill, an education, or even a savings account.

Real Estate

You would think that no one is buying real estate in this market, but you’d be wrong. There are plenty of investors looking to buy foreclosed homes because the prices are rock bottom and the market has no where to go but up. They may have to put several thousand back into the place to get it presentable, but they expect to make many tens of thousands when the market recovers.

Skills and Education

Many people are finding the return on their savings account miniscule compared to the investment of retraining in a new field. When old jobs have disappeared, there’s no choice but to get a new skill or a brand new education to be able to compete in the job market. If it literally raises your potential for income too, it can be a very good investment to make in bad times.

Other Investment Types

You can get certificate of deposits that are based on gold or foreign currencies. You can even buy gold and silver coins, as a commodity. You can buy seed and start a home garden. Of course, that takes a bit of investment in skill and gardening know-how. The point is to diversify your investments and always seek to get the best yield for your money so that you can build wealth slowly, but surely, over time.

What is the easiest way to make a million dollars?  This is an age old question.  Most people want to know what the fastest way to make a million dollars is.  The method described here is definitely not fast, however it is fairly simple.  On average, this technique will take between 10 – 15 years, and will virtually guarantee the accumulation of a million dollars.  Patience is a virtue, and you will definitely need patience for this strategy.  It is however  much faster compared to traditional long term approaches of saving in 401K and IRA’s with targets of achieving a million dollar portfolio by the time you retire at age 60 or 65.  Let’s discuss how one can achieve making their first million dollars in real estate investing.

Real Estate investing here refers to purchasing a home and leasing it out as rental property.  There are multiple benefits to investing in properties this way including cash flow from tenants, appreciation on the home over time, depreciation deductions, and tax benefits.  Also, it is always advisable to purchase investment properites with as minimal down payment as possible in order to maximize leverage.  This is where making your first million dollars comes in.  Leverage is essentially using other peoples money to purchase real estate, allowing the little money you put to grow exponentially.  For example, say you put a 10% down payment on a $150,000  investment home, and mortgages 90% of the value.  You would be putting $15,000 of your own money into the investment.  Now say you hold the home for 10 years, with average appreciation of 5% annually on the home price.  The gross profit in appreciation alone would be $95,000.  So essentially, you would of turned $15,000 into $95,000 over 10 years, but it gets even better.  Your tenants would of paid down your mortgage substantially over those 10 years as well.  This also doesn’t include any cash flow received from tenants over the 10 years, depreciation deductions, and tax benefits either.  So this begs the question again, how do you make your first million in real estate?  How about borrowing a million dollars and having someone else pay off your debt!

In this scenario, the “someone else” is the tenant or tenants, and you are the one borrowing the million dollars.  For example, you could purchase one home each years over a ten year period in the $150,000 price range.  With each mortgage you would be borrowing greater than $100,000 of the purchase price.   By the 10th year, you would be have borrowed over a million dollars, and your tenants from your first few homes would of paid off a big chunk of those home’s mortgages already.  Taking into account appreciation, cash flow, and tax benefits, you will actually reach a million dollars quicker than you might think.

Other Articles:

• High Dividend Investing
• Saving for College Education through Investing Properties
• Getting the Best Investment Property Loan

Peer Lending can be a mutually beneficial investments from both the standpoint of the lender and the borrower.  There are many classifications of peer lending ranging from friend-to-friend loans, family lending, as well as organized methods of orchestrating peer-to-peer lending solutions.  Benefits of peer lending are that it can provide an above average income or cash flow stream compared to main stream investments, and terms/fees are completely negotiable.  From the borrower side, benefits include easy access to money without the need for credit checks, bank statement reviews, and lower upfront loan costs.

Of course there are downsides to peer lending as well.  Default rates are generally higher due to the eagerness of lenders wanting to achieve above average rates of return.  Also, sometimes terms are worse than bank loans or mortgage loans in the aspect of pre-payments and/or fees.  It all depends on how the loan agreement is structured.

There are a few popular peer-to-peer lending sights available on the internet today.  The most popular two are Lending Club and Prosper.   Both sites allow you to become either a lender or a borrower.  Note that lenders are limited to specific states that have been approved.  Advertised rates range from 6% up to 30% depending on the risk a lender is willing to take.  The downside to these peer-to-peer lending sites is that they usually require a credit check, and adjust the rates based on credit score.  Prosper.com works more along the lines of an ebay style site for loans.  So the credit rating is not as critical for Prosper.com.  Lending club rates are completely based on credit score, assets and background information you provide during the sign-up.

Other means of peer lending or private lending is simply to ask friends or family members for loans.  There are sites (Virgin Lending) and documents that exist to make these peer loans more official instead of just taking your friend of family members verbal commitment to pay you back.  These are the best loans to come by and can be structured  to be very flexible depending on the needs of the person loaning the money and the borrower requirements.

Peer loans can be used for real estate purchases, credit card debug consolidation, home remodeling, home rehabbing, or simply to fund  at dream vacation.  Next time you are in the need of money, consider bypassing conventional bank and financial institution loans and consider Peer Lending.

Other Articles:

Getting the Best Rates on Investment Property Loans
Mortgage Rate Trends
Residential Hard Money Loans

Determining mortgage rate trends is thought to be a difficult activity, however with access to many mortgage, banking and economic indicator sites, figuring out mortgage rate trends is easier than you think.

Sites like zillow.com and bankrate.com are excellent resources for tracking and predicting where mortage rates will be headed.  For example, on zillow.com, you can track mortgage rates for the average 15 and 30 year rate based on daily, weekly, monthly or quarterly charts.  Note that rates are different for each state, so rates shown on sites like zillow.com show the average rate across all states.

To find local rates, it is best to search for mortgage companies in your local area.  For example, if you live in Austin Texas, one of the local mortgage companies called SweetWater Mortgage shows rates for the local area and Texas.  Rates can be as much as a 0.5% difference from state to state, so make sure to check your local rates in comparison to the US average mortgage rate trends.

Bankrate.com provides a zip code input form so the site can cater mortgage rates to your specific area.  The search results will provide the lowest rates around and disclose any points or fees associated with obtaining that specific mortgage.

Next time you are looking to find out current mortgage rate trends and understand what direction mortgage rates are headed, look no further than you local mortgage provider web sites or industry specific sites like zillow.com.

Other Articles:

Getting the Best Mortgage Rate on Investment Property Loans
HUD Foreclosure Properties
Residential Hard Money Loans

HUD, or the Department of Housing and Urban Development, has a primary goal of helping families purchase and own a home.  This is accomplished by providing FHA low cost and low down payment loans which are backed by the federal government.  These FHA loans are easier to obtain as credit history is usually not as important, and down payments can be as low as 1 – 3% instead of the typical 20%.  This makes it extremely feasible for first time home buyers to obtain an FHA loan and purchase a primary residence.

It should be noted that HUD mortgages (which are really FHA loans) should not be confused with HUD homes.  HUD homes are homes that have been foreclosed on which were financed with a FHA loan.  These homes can be purchased with HUD mortgages (FHA loans) as long as the purchaser is a first time home buyer and qualifies for the HUD program.  HUD homes can be a cost effective way for first time home buyers, but beware that these homes usually require a lot of repair work.  Since HUD homes are foreclosed homes, they are usually not in the best of shape.  The benefit rather is that usually HUD homes can be purchased at a discount compared to comparable homes in the same area.

Other Articles:

HUD Foreclosure Homes
Investment Property Loans

Many  people don’t realize it, but finding or changing to a job that pays a higher hourly rate or salary is a type of investment.  It’s an investment in your future earnings growth and potential.  Even if you earn as little as $1000 more annually, investing that extra $1000 over a period of 5, 10 or 20 years will result in a substantial difference in long term savings.  This also applies to retirement accounts, since an increased salary enables more money to be socket away in 401K and IRA savings plans.  What is the best way to start your job search and boost your income potential?  Let’s look at how technology can help job hunters out.

Social networking sites are more popular than ever.  LinkedIn is a social networking site targeted towards connecting professions with potential opportunities.  The opportunities can range from business ventures and changing jobs to head hunters targeting you.  Make sure your LinkedIn profile is updated with your latest job status and responsibilities.  This gives potentially employers up to date information on you in case they come across your LinkedIn profile.

Another social networking site worth joining is Twitter.  Create an interesting user name or handle, and broadcast messages on your skills, interests, and desires.  By doing this daily (or once you are addicted, it will most likely be hourly), you will build a large network of contacts, some of which might just be your next employer or a referral to one.

An easy way to attract attention to your resume and skills is to build a simple web site where potential employers or head hunters can view your most up to date resume.  Domain names can be purchased for as little as $10, and if you hire someone to do your website, it might cost a $100 – $200.  If you are skilled enough yourself, it should only take a couple hours to get a site up and running.  Advertise your site to the major search engines to attract visits, and make sure to search engine optimize (SEO) your site.  This will enable search engines to find your site and update their relevant links accordingly.  Also, make sure to Twitter about your site and any recently posted information or details.

Above are just a few easy investing ideas to spruce up your chances of finding a job and increasing your income potential.

An easy investing method for determining if a stock is at a good purchase or sell point is to determine the stocks moving average. A Moving average is basically the average of the stock price over a specific period of time charted over a broad time period. For example, a 15 day simple moving average is the plot of the average value of the previous 15 days closing stock price values. To calculate a 15 day moving average, you would add the closing prices together for each of the previous 15 days, and then divide by 15. This would be one point on your indicator chart. So what are the benefits of calculating moving average and why is it used? Great question, let’s take a look.

Most investors use various types of moving averages, including the Simple Moving Average, Exponential Moving Average, Smoothed Moving Average, and Linear Weighted Moving Average. Each moving average calculation has its Pros and Cons. For this article, we will stick with the Simple Moving Average.

As mentioned previously, the simple moving average is just the average value of the stock price over a designated period of time. Investors and analysts generally use two different plots for the simple moving average. On a chart with the stock price plotted, analysts usually overlay both a short term moving average line and long term moving average line. Typical values for the short term moving average are 10, 20 and 50 day moving average calculations, and long term are generally 100 and 200 day moving averages. The key is to calculate what is know as the crossover point, which is where the moving indicator lines cross. Below is the criteria that move analysts use when analyzing stocks with the simple moving average.

• When the short term moving average (50 day) crosses and continues above the longer term moving average (200 day), it is believed this is a signal to purchase the stock because it will continue on an uptrend.
• When the short term moving average (50 day) crosses and continues below the longer term moving average (200 day), it is believed this is a signal to sell since the stock prices is likely to continue its slide downwards.

The below charts shows an example of a positive crossover point in which the 50 day moving average crossed over the 200 day moving average, and the stock price continued to increase.  This is a chart of Intel’s (INTC) stock performance for 2009.  The green line is the 50 day moving average, and the orange line is the 200 day moving average.

Note that at the crossover point, the stock price was $16.  If the stock price was purchased at the crossover point and held until December 2009, the return would of been greater than 25%.

Simple Moving Averages and crossover point analysis is a very simple and effective method that individuals can integrate into their overall stock analysis approach.

Other Articles:

Easy Investing with PE Ratio
IRS Tax Relief Tips
Cascading Investment Strategy
High Dividend Investing

The PE Ratio (also know as P/E and PER) is a fundamental indicator of how well a stock is doing compared to its earnings. “P” stands for Price, and “E” stands for Earnings, so basically it’s the stock price to annual earnings ratio. It can also be looked at as a way for investors to understand how in demand the current stock is. Higher PE ratios usually indicate more volatility in the stock price, as investors are currently paying a premium for the stock with the expectation the stock price will continue to produce healthy returns. On the other hand, a relatively low PE can potentially mean the stock is currently on sale as investors do not expect high returns. So how does the individual investor use the PE ratio to analyze a stock?

There are several suggested methods for using the PE ratio as a fundamental indicator in the value of a stock. One method is to find the average PE ratio across the stock industry. For example, if you are researching biotechnology companies, stock screening and research sites usually provide the industry average PE ratio. If the stock under research has a PE ratio lower than the average industry PE, it may signal a good buy.

Some investors use the PE ratio calculation with the forward looking earnings value. By dividing the stock price of one share by the future yearly earnings expectation, you can determine the forward looking PE Ratio. If the value is lower than the industry average, this can also strongly suggest the stock may be at a prime purchase point.  The reason is that the stock is discounted based on the future earnings, and if the stock hits its future earnings, its price should rise to the industry average, resulting in a healthy stock price appreciation.

Now that you know what the PE Ratio is and how it’s used, have fun searching through stocks to find which ones stick out as exceptional discount prices. Most stock screen sites and stock search pages allow you to search and sort by PE Ratio.

Please note that PE Ratio should not be the only indicator or piece of information used to make decisions on stock purchases. It is however one of the most fundamental indicators used by stock analysts when researching stocks, and should be used as one component when deciding which stocks are best to buy.

Other Articles:

Investing Basics
Building Wealth in your 20′s
High Dividend Investing
Dollar Cost Averaging

Are you a passive or active real estate investor? This is a key question to ask for anyone involved in purchasing and/or leasing investment properties. Passive investing means just that, the management and oversight of the property is passed over to someone else for management. When a property management company is being hired to manage a property, find tenants, screen tenants, and collect rent checks, it is for the most part considered a passive investing strategy.

On the other hand, active real estate investing means the purchaser is actually actively involved in the management, tenant search, maintenance and rent collection.  This method is generally more time consuming, but can have major tax advantage compared to passive investing.

Passive property investors can mainly deduct expenses such as mortgage interest, home insurance, maintenance repairs and depreciation against the earned income from their properties.  On the other hand, active property investors can deduct similar expenses against their property income as well as other means of income.  This means if the active investor has other income streams from other jobs or investments, the deductions from real estate are first taken against the real estate income, and then taken against any other income assuming there is still a deduction remaining.

There is a fine line between hiring a property management company to manage a property and still being considered an active investor.  Most people do this by documenting any time spent preparing or maintaining the investment property by themselves, recording milage driven to the property for any services or repairs done or rent collection, and documenting any decisions made by you which were requested by the management company.  By doing these simple things, you can still be partially considered an active investor, and reap some of the tax benefits.  Be warned however that the deduction limit is only up to $25,000 total from all properties that can be used against other streams of income in this scenario.  The deduction limit is much higher if you are truly considered an active investor where you manage your properties and spend the IRS required amount of time per year dealing with investment properties or real estate.

As you can see, active investing or hiring a management company and being involved to get partial active investing tax benefits is well worth the time.  This is the case especially if multiple properties are considered resulting in large depreciation deductions each year.

Tax laws change yearly, please consult your tax expert for the latest details and changes to investment property and real estate tax scenarios and laws.

Other Articles:

Residential Hard Money Loans
Property for Investment
Investment Property Tax Deductions
HUD Foreclosure Homes

Need fast hard money to close a real estate transaction quickly?  Have you thought about hard money loans?  Hard money lenders are private lenders offering collateral based loans generally backed up by the value of the property being purchased.  Hard money loans can close much quicker compared to bank based loans, enabling quicker real estate transactions.   Sometimes termed residential hard money, hard money loans offer a way for real estate investors to act quickly on properties they are ready to make a deal on.  Bank loans take on average a month to close.  Sometime real estate deals need to be resolved quickly to provide the most benefit to sellers.  Below are some facts regarding hard money lending:

1. Hard money lenders usually can close much quicker than bank lenders
2. Hard money loans are mostly shorter term loans 1 month to 10 years, and have roughly double the annual % rate interest compared to bank loans.
3. Hard money loans are based on the collateral (property) being purchased rather than the credit scores and financial status of the buyer.
4. Hard money loans are great for bridging investment property purchases that need rehab.  Once the rehab is complete, a typical bank mortgage can be obtained to pay off the hard money loan.
5. Hard money loans are for the borrower that needs to resolve a problem quickly.  For example, purchasing a foreclosure for investment, flipping a home, or rehabbing an investment home.

Next time you need money quick for a real estate transaction, why not check out hard money lenders in your area.  They provide a quick means for closure, enabling investors to potentially beat out other bidders on investment property.

Many people are looking more and more at how to reduce their tax burden as their income stream increases over the years. There are several IRS tax relief strategies one can take to get maximum tax relief benefits. Below are some tips and suggestions on how to limit tax liability and regain some of that income that keeps getting redirected to taxes.

1. Purchase a home instead of rent or lease an apartment or home.  The interest paid on the mortgage is tax deductible.  Sometimes it’s actually more beneficial to purchase a home or condo instead of rent when the tax deductions are taken into account.
2. Purchase your car or luxury vacation with a home equity loan instead of a bank loan.  Again, the interest from a home equity loan is tax deductible, providing an advantage to funding automobile purchases or luxury items.
3. Pay your January mortgage bill in late December.  This way the interest on your mortgage payment for December will be included in your current years tax deductions instead of rolling into the next years tax deductions.
4. Purchase Property for Investment.  Most wealthy individuals already know that investment property provides the landlord some of the most advantageous tax benefits around.  Interest on the investment property loan, maintenance costs, property management costs, travel costs to the property, insurance costs, and repair costs are all tax deductible.  In addition, the property can be depreciated over a set amount of time, providing even more tax benefits weighing against the income received from tenants.
5. Start a home business and keep track of all expenses.  Self employment income has excellent tax benefits, including home office and travel deductions.  Keep a log of all travel related to your business and deduct those expenses at years end.
6. Max out your contribution to your explorers 401K and/or your IRA.  Funding these retirements accounts reduces your overall tax burden by lowering your total earnings by the amount contributed to these plans.  As an added bonus, the money invested in these accounts grows tax free.

Above are just a few examples of how one can achieve some IRA tax relief.  Look for more tax benefits for investment property owners in the article Investment Property Tax Deductions.

Other Articles:

• HUD Foreclosure Homes
• Cash Flow vs Capital Appreciation from Investment Property
• Investment Property Loans – Getting the best rates