Why Gold?

Gold — It is the oldest form of currency, universally accepted by the human species across the world in different cultures and different eras of civilization. This shiny metal has always been attractive by one and all for a variety of reasons. But we are in interesting times….and while we get more educated and complicate our monetary system, the more people tend to forget what gold even is. Is it a currency? A commodity? Or as some claim, is it a pet rock (Hint: No)? In this article, I visit and present a few reason to own gold.

Money vs Currency

Over the past few months, I have been spending a lot of time reading and learning about gold and its place in human history and our current monetary system. Our present state has become overly complicated where central bankers control every little aspect of our lives through the currency. The fiat currency is only a piece of paper, a promise from the government that the value you hold in your hand is worth something. We can argue all day long about which paper is stronger than other forms of paper from around the world, but the point is just that — its a piece of paper that is worth something today but may not be worth the same tomorrow. In fact, that is the hope — that it is worth less tomorrow.

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Where to Get Good Dividend Investment Ideas

This is a guest contribution from Ben Reynolds.  Ben runs Sure Dividend, which is dedicated to finding high quality dividend growth stocks suitable for long-term investing using The 8 Rules of Dividend Investing.

The historical average price-to-earnings ratio for the S&P 500 is 15.6.  The S&P 500’s current price-to-earnings ratio is 24.2.  From a historical perspective, the market is very clearly overvalued.

It’s important to remember that the stock market is made up of individual stocks.  Not every member of the S&P 500 has a price-to-earnings ratio of 24.2.  Some are much higher, others much lower.

It is still possible to find great businesses trading at fair or better prices in today’s market.  This article takes a look at several different tools and lists to do just that.

Dividend Idea Generator #1:  Other Dividend Investors Portfolios

Many dividend bloggers share their own portfolios for others to view.  You can see Sabeel’s portfolio here (of Roadmap 2 Retire).  Sabeel’s portfolio is loaded with both high yield and high quality dividend growth stocks.

An example is Archer-Daniels-Midland (ADM).  Archer-Daniels-Midland currently has a dividend yield of 2.9% and price-to-earnings ratio of 16.1.  The company’s forward price-to-earnings ratio is even lower at 14.3.

Archer-Daniels-Midland is a has paid increasing dividends for 41 consecutive.  The company is also the largest farm procucts company in North America by a wide margin with its $24.8 billion market cap.  For comparison, its next largest competitor Bunge (BG) has a market cap of $8.2 billion.

You can read more about Sabeel’s purchase of Archer-Daniels-Midland here.

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Financial Diversification

The following is a guest post from Rudy from Smart Money Today. You can follow Rudy on Twitter @SmartMoney00.

Hi, my name is Rudy and my blog is Smart Money Today.

Sabeel and I have a similar†story; we had a hard time during the 2008 financial crisis, and we got screw from the so-called “financial experts” by paying too many fees. We realized is better invest in our financial education first and take the matter into our own hands to avoid paying “silly” fees and get better ROI (Return On Investment). But this isn’t what the article is about.

This article is about how you can use diversification to reduce your risks associated with investing. As a result, you can preserve your wealth but still be able to take advantage of the market stock high returns.

NOTE;†One thing you should know: I was born and raised in Italy, so English isn’t my native language. This is the reason why my English sometimes might sound “funny”, but I had the deep desire to help others to achieve more with their finances and English is the best language to spread my knowledge in the world.

I’m constantly working on my portfolio diversification to improve the bottom line; over the years, I went from a single digit growth to a double-digit not by taking extra risks but by diversifying my portfolio strategically.

I was reading Sabeel’s blog and found interesting his way to diversify†investments geographically, you can read his recent post; Geographical Revenue Diversification of My Holdings.

What is Diversification? Diversification†is the process†of allocating capital in a way with the goal to reduce risks.†

Well hereís the truth: investing is†risky.

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Disruptive Technologies & Exponential Growth

Lately, I’ve been thinking a lot about disruptive technologies & exponential growth. Over the course of past few weeks, discussions have been abound between fellow bloggers Jay from FI Fighter, Bryan from Income Surfer, and yours truly discussing investment themes. In trying to identify good investing options, we keep directing our focus towards technology and its disruptive nature. It is no secret that the ‘green’ movement is not a niche anymore and is now mainstream.

Jay from FI Fighter recently posted this article: Disruptive Technology – Always Underestimated, which I highly recommend readers to read and follow the thought process and also follow up on the links posted (there’s a lot there). It presents a great picture of how things are changing. Fast.

We humans are terrible at understanding exponential growth. Due to the way we evolved, we humans always think in linear terms or incremental changes. We don’t expect things to change fast and almost always get the timelines wrong. Even the ‘green’-oriented media gets most timelines wrong. When making predictions, they always predict that things will look better for the solar and renewable energy space by 2040 or 2050. That timeline is completely off-base. When you truly understand exponential growth, you realize that its going to come much faster than that.

linear-vs-exponential-41

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Multipronged Approach to Investing

I love Dividend Growth Investing. The main focus of my investing approach over the course of past few years has been Dividend Growth Investing. I am happy to subscribe to this model and still highly recommend it for investors looking for a reliable method of generating passive income. However, over the course of last year or so – as the bull market rages on in old age, valuations have been pushed to stratospheric levels amid the falling profits from strong blue chip companies. It is for this reason, I have decided to pursue a more multi-pronged approach to investing.

Regular readers of this blog may have noticed the change in my tone of the course of the past few months…I do not feel so hot about this market and the amount of purchases have dried up and my cash position has been building up steadily. Apart from a few pockets of companies, its become very hard to find compelling buys in this market as the debt-fueled share repurchase programs have made me question investing in certain companies.

Multipronged Approach to Investing

Strategy Falling in love with one single investment (or even an investment strategy) is not a very prudent behavior as an investor. Readers may be aware that we are already using a couple of different investing strategies in our portfolios. My wife’s portfolio uses a more passive approach to investing – using broad index funds via ETFs. My portfolio, on the other hand, focuses mainly on dividend growth investing and starting this month, a part of it will also be invested in index funds. This is a good diversification model. With dividend growth companies, I target some companies which I think will do well compared to its peers and let the investments compound over time. With the index funds, I let the market do what it does best; and allows me to instantly diversify providing me with a safety net, in case I had made a terrible mistake with my individual stock picks.

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