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NOTE:  This post is part of an ongoing education series.  This information is for educational purposes only.  This information does not constitute investment advice.  No rational person would make investment decisions based on a blog post.  Please consult with your financial advisor before taking any action.  If you wish to have specific advice for your situation please contact Polaris Financial Planning.

via CNN.

Foreclosure filings in April fell for the third straight month to the lowest level since July 2007.

Total foreclosure activity for April, including default notices, scheduled auctions and bank repossessions, was down 5% from March, according to RealtyTrac.

They are still high but the trend is in the right direction.  (Note the numbers in the chart below are units not dollars as marked)

While the total is down, some states are still having serious problems.  The best improvement seem to be in states that were the hardest hit.

In Arizona and Nevada, for example, bank repossessions were down roughly 70%. In California, they were more than 50% lower.

With a little luck this is a sign that home prices will stop falling and provide greater confidence with consumers.  More people are buying houses and fixing them up.

I am proud to announce that the Reason Rally has landed its first corporate sponsor. Polaris Financial Planning not only provides services to atheists, freethinkers, skeptics etc… It actively promotes this world view.

Polaris Financial Planning is committed to supporting the growing secular movement in the United States and donates at least 10% of all revenue to support this cause.

Polaris has already sponsored these major events:

Skepchicamp Chicago 2010

Skepticon 3

2011 American Atheist Convention

JREF in the classroom (Polaris is the first corporate sponsor)

Skepticon 4

Skepticamp Chicago 2012

Reason Rally – 2012

2012 American Atheist Convention

Skeptics of OZ – 2012

Madison Freethought Festival – 2012

If you need investment / retirement planning advice please contact Polaris.

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In: Investing

Comments Off on How Much Can I Make In The Stock Market In One Year?

NOTE: This post is part of an ongoing education series. This information is for educational purposes only. This information does not constitute investment advice. No rational person would make investment decisions based on a blog post. Please consult with your financial advisor before taking any action. If you wish to have specific advice for your situation please contact Polaris Financial Planning.

Recently, I had a friend tell me that their broker said they can help them make a 100% return in just one year. My friend wanted to know if this was a reasonable expectation.

The answer was very easy – NO.

Let’s look at some historical information to get an idea of what has happened. I pulled these S&P 500 charts off of the CNN Money page. The S&P 500 Index is: (via investopedia)

An index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

It is a much better reference than the Dow which has just 30 stocks. Look at the image below and you can see the Year-to-date return. So, From Jan 1 2012 to Feb 28, 2012 the S&P 500 has gone up over 9%. The is fantastic. The graph is for a total of one year and you can see that the market when up and down – this is called volatility. The return over 12 full months can be seen in the lower right had corner (3.39%). You could have made far more money in 2 month than in 12 if you knew when the market was going up.

 

The problem is that you don’t know when the market is going to go up. 3 years ago people were worried that the market was going to fall and look at what happened (below). Total 3 year return of 100%. If you put $100,000 in the S&P 500 index 3 years ago you would now have $200,000!

As you may have guessed the market does not always go up. The total return over the last 5 year has been -3.43%. Your money would have done better under your mattress. If you invested $100,000 5 years ago you would have seen your investment fall to about $50,000 in just two years. Then three years later it would be worth about $97,000.

So, it depends on the time frame that you are looking at. The stock market is NOT a good place for short term investing. It can go up or down a lot in just a year or two. However, over the long term 20+ years you can estimate a return of around 9-11% per year.

So, if someone tells you what the market is going to do in the next year – it is only a guess. You can very easily turn your investing into gambling. You may win big or you could lose it all. Be careful with your money and get a long term plan. If you need help contact me at Polaris. You can use the contact tab above.