Opinion: Investors have much to be grateful for this Thanksgiving

These long-term benefits should not be taken for granted

If you’re an individual investor, you have a lot to be thankful for.

The recent U.S. market rally is plenty of reason to feel good as the calendar hits the holidays, but that’s a bit like feeling thankful on Thanksgiving because there’s a good football game on television. Yes, you may be happy to watch it, but the greater joy — and reason to give thanks — is that you can share the experience with family and friends.

The things investors should be grateful for are less tied to short-term results and more to how they can succeed in all conditions over time. They are like the side dishes on a Thanksgiving table: they can be shared and passed around and there’s enough for everyone. Moreover, like holiday traditions, they are there every year, in all conditions.

     

Thousands leave post-it notes on NYC subway wall

(2:29)

Since Election Day, more than 10,000 positive post-it messages have been left on a wall in a New York City subway station by people from around the world.

Savers and investors alike can be thankful for:

Compounding: Just as parents spend every holiday thankful for the blessings of their children, so should investors be grateful for the undeniable power of compounding.

Compounding is the ability to generate earnings from previous earnings. It’s how a $2,000 Roth IRA deposit made by a 25-year-old and growing at 6% annually turns into more than $20,000 by the time that youngster reaches retirement age. It’s how small amounts of money become large amounts, given enough time, and it’s free, just for setting money aside and letting it work.

Employer matches on retirement savings: Anyone who has an employer that matches your savings — and sadly, too many workers do not — should be grateful to have been given a real leg up on generating a significant portfolio that beats the market.

Think of every matching dollar as a real return; if your employer matches dollar-for-dollar, it’s an instant 100% gain on everything you set aside. That’s a huge head start on solid investment performance, because the market would have to crater for you to come away with fewer dollars than you put into the program.

The market doesn’t give us guaranteed returns; an employer match is a guarantee. Whether your employer gives a small match or a full one, you should be thankful for — and take advantage of — what you’re getting, because it’s the best deal out there.

Index funds: You don’t have to like or use index funds to be thankful for them, because the ability to buy shares in, for example, the 500 stocks in the SPDR S&P 500 exchange-traded fund SPY, +0.05%   at an annual cost that is fractions of pennies on the dollar has forced all money managers to be cost-conscious, and to prove that their methods might be a superior choice. Everyone pays less for investment management simply because no one is willing to pay any amount that is ridiculously higher than what it costs to buy the index.

Moreover, index funds have allowed shareholders to capture the market’s return over time. That has been a particularly good investment over the last seven-plus years, and has helped investors create financial plans they can stick to when times look turbulent. That’s easy to overlook in the long-running bull market, but it is something most people will be thankful for whenever the market turns.

Low trading costs: Some industry critics worry that low-cost trading encourages average investors to make more moves — increasing the chances of short-circuiting their portfolios. In truth, reasonable transaction costs allow investors to manage their holdings better.

There may not be reason to be thankful for each trade, but be grateful that the days of getting soaked for making a trade — good or bad — are gone and that you can make the moves you believe are smart and savvy at a reasonable price.

Social Security: There’s no denying the flaws and problems in the system; it’s current status lies somewhere between badly injured and completely broken. But talk to any retiree who lived through the financial crisis of 2008 and you’ll understand why you should be thankful for a safety net that will provide a backstop when the market tanks again.

Social Security is not meant to be your sole support in retirement, or even a huge part of your income once you stop working, but it’s a nice salve for the financial mistakes most savers and investors make throughout their lifetime. For as much as we can grumble about the politics of it, the cushion it creates remains worthy of appreciation.

Health insurance: We can politicize the subject after the holiday, but if you have health-care protection and if it has done its job this year — giving you benefits and coverage you needed to stay healthy — it’s a blessing.

The nation has a health-insurance crisis that will not be easily solved. You may not like the coverage you can afford or the benefits it provides. You may not like paying for it if your health is perfect. And you may not like the overall health-care system that makes medical costs so outrageous.

But appreciate the positive outcomes, if you have been fortunate enough to have them. Talk to people with real medical issues but little or no coverage, or families that have been through medically induced bankruptcy, and you will be grateful for what you’ve got, even if you know there could be something better out there.

All the things money can’t buy: No matter how your portfolio does, it’s important to remember that the best things in life are free. Holidays and spending time with family tends to prove that to us, but it’s something we should be thankful for every day, no matter what the market is doing.

By Chuck Jaffe

Source: http://www.marketwatch.com/story/investors-have-much-to-be-grateful-for-this-thanksgiving-2016-11-23

Money Matters : Self-made millionaire: Don't put money in your 401(k)

Source: Grant Cardone

Grant Cardone

After graduating from college, Grant Cardone was broke and swimming in $40,000 of student debt, he writes in his new book, "Be Obsessed Or Be Average."

By 30, he'd made his first million. Since then, the 58-year-old has built five companies and a multi-million dollar fortune.

The self-made millionaire refuses to play by anyone else's rules, particularly when it comes to saving money.

"I would never, ever invest money in a 401(k)," Cardone tells CNBC. "Why would I go to work, have my employer give me another $6,000 a year, and then take that money and send it off to Wall Street, where I can't even touch it for 30 years? I wouldn't do that."

The popular retirement plans are "traps that prevent people from ever having enough," Cardone writes on his website. "The 401(k) is merely where you kiss your money away for 40 years hoping it grows up."
Rather than focusing on saving, focus on earning — you can't save your way to
millionaire status, he says.

"Wall Street is telling you to invest little bits, early. They don't believe in your ability to earn money," Cardone tells CNBC. "People need to show the ability to produce more revenue — not invest it — first. People get rich because they produce revenue, not because they make little investments over time."

And don't just focus on earning — focus on earning big, says Cardone. "Keep stacking that paper until you have a hundred grand in the bank. I know this is very unrealistic for a lot of people, but the reason it's unrealistic is because you've been conditioned to think small."

Grant is promoting saving the money you earn, but counter to most advice, he says to put the money in a good old-fashioned savings account — where your money is accessible at a moment's notice — until you have at least $100,000. Then, you can start investing.

"Put your saved money into secured, sacred (untouchable) accounts," he writes on Entrepreneur. "Never use these accounts for anything, not even an emergency. ... To this day, at least twice a year, I am broke because I always invest my surpluses into ventures I cannot access."

It's important to note that the median retirement savings for all families in the U.S. is just $5,000, and the median for families with some savings is $60,000, according to the Economic Policy Institute (EPI). And many families have zero saved. Employer-sponsored retirement plans are meant to help address this and are a good option for many people. But of course, to Grant's point, they won't help you get rich quickly or invest in opportunities today.

He's not the only self-made millionaire to encourage this kind of thinking. After studying wealthy people for more than 25 years, self-made millionaire Steve Siebold found that rich people set their expectations high and aren't afraid to think big.

After all, as he writes in "How Rich People Think," "No one would ever strike it rich and live their dreams without huge expectations."

By Kathleen Elkins

Source : http://www.cnbc.com/2016/10/26/self-made-millionaire-dont-put-money-in-your-401k.html

Buy These 11 Small-Cap Stocks for Their Solid Dividends

NEW YORK ( TheStreet) -- Investors love dividend stocks.

Companies offering strong dividends typically are in the financial services, materials and utilities sectors. But these small-cap stocks with strong dividends span a variety of sectors.

The thing with small-cap stocks is that you need to be very careful when investing in them: They can be very volatile and investors who invest in these kinds of small stocks often do poorly. 

That's why we generated these picks using TheStreet Ratings, TheStreet's proprietary ratings tool.

The 11 stocks have buy ratings with B- rating or better. They also have the highest annual dividend yields in their various sectors, according to TheStreet Ratings. Check out which stocks made the list. And when you're finished be sure to read about which large-cap oil stocks you should sell immediately.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year. Note: Reports are dated Apr. 26, 2015. Year-to-date returns are based on April 27, 2015 closing prices. UBCP data by YCharts 

11. United Bancorp Inc. (UBCP)
Market Cap: $39.3 million
Sector: Financial Services/Regional Banks 
Annual Dividend Yield: 4.58%
Rating: Buy, B-
Year-to-date return: -2.5%

United Bancorp, Inc. operates as the bank holding company for The Citizens Savings Bank that provides commercial and retail banking services to individuals, businesses, and other organizations in Northeastern, Eastern, Southeastern, and South Central Ohio.

"We rate UNITED BANCORP INC/OH (UBCP) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, growth in earnings per share and attractive valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Commercial Banks industry average. The net income increased by 22.4% when compared to the same quarter one year prior, going from $0.60 million to $0.73 million.
• The gross profit margin for UNITED BANCORP INC/OH is currently very high, coming in at 83.08%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.83% is above that of the industry average.
• UNITED BANCORP INC/OH has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, UNITED BANCORP INC/OH increased its bottom line by earning $0.53 versus $0.52 in the prior year.
• UBCP, with its decline in revenue, slightly underperformed the industry average of 0.4%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

• You can view the full analysis from the report here: UBCP Ratings Report

Must Read: Sell These 5 Large-Cap Stocks Despite Their Juicy Dividends

   SAR data by YCharts 

10. Saratoga Investment Corp. (SAR - Get Report)
Market Cap: $88.2 million
Sector: Financial Services/Asset Management & Custody Banks
Annual Dividend Yield: 5.33%
Rating: Buy, B-
Year-to-date return: 10.4%

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies.

"We rate SARATOGA INVESTMENT CORP (SAR) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, increase in net income, attractive valuation levels and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The revenue growth came in higher than the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 25.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
• Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 173.6% when compared to the same quarter one year prior, rising from $1.27 million to $3.47 million.
• The gross profit margin for SARATOGA INVESTMENT CORP is rather high; currently it is at 62.68%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SAR's net profit margin of 47.44% significantly outperformed against the industry.

• You can view the full analysis from the report here: SAR Ratings Report

   KFFB data by YCharts 

9. Kentucky First Federal Bancorp (KFFB)
Market Cap: $70 million
Sector: Financial Services/Thrifts & Mortgage Finance
Annual Dividend Yield: 4.89%
Rating: Buy, B-
Year-to-date return: 1.2%

Kentucky First Federal Bancorp operates as the holding company for First Federal Savings and Loan Association of Hazard, and First Federal Savings Bank of Frankfort that provide various banking and financial products and services.

"We rate KENTUCKY FIRST FEDERAL BNCRP (KFFB) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• Net operating cash flow has significantly increased by 102.57% to $0.79 million when compared to the same quarter last year. In addition, KENTUCKY FIRST FEDERAL BNCRP has also vastly surpassed the industry average cash flow growth rate of -184.63%.
• The gross profit margin for KENTUCKY FIRST FEDERAL BNCRP is currently very high, coming in at 83.35%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.08% trails the industry average.
• Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.1%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
• KENTUCKY FIRST FEDERAL BNCRP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, KENTUCKY FIRST FEDERAL BNCRP reported lower earnings of $0.23 versus $0.37 in the prior year.
• The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Thrifts & Mortgage Finance industry average, but is greater than that of the S&P 500. The net income has decreased by 3.2% when compared to the same quarter one year ago, dropping from $0.60 million to $0.58 million.

• You can view the full analysis from the report here: KFFB Ratings Report

Must Read: 3 Big Cable Companies to Add to Your Portfolio, Including Time Warner and Comcast

   DOM data by YCharts 

8. Dominion Resources Black Warrior Trust (DOM)
Market Cap: $47.2 million
Sector: Energy/Oil & Gas Exploration & Production
Annual Dividend Yield: 11.73%
Rating: Buy, B-
Year-to-date return: 5.4%

Dominion Resources Black Warrior Trust operates as a grantor trust in the United States.

"We rate DOMINION RES BLACK WARRIOR (DOM) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The revenue growth came in higher than the industry average of 20.3%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• DOM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
• The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DOMINION RES BLACK WARRIOR's return on equity significantly exceeds that of both the industry average and the S&P 500.
• The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 1.5% when compared to the same quarter one year prior, going from $1.39 million to $1.41 million.
• The gross profit margin for DOMINION RES BLACK WARRIOR is currently very high, coming in at 100.00%. DOM has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, DOM's net profit margin of 84.54% significantly outperformed against the industry.

• You can view the full analysis from the report here: DOM Ratings Report

   CSPI data by YCharts 

7. CSP Inc. (CSPI)
Market Cap: $25.7 million
Sector: Technology/IT Consulting & Other Services
Annual Dividend Yield: 6.3%
Rating: Buy, B-
Year-to-date return: -3.6%

CSP Inc., together with its subsidiaries, develops and markets information technology (IT) integration solutions and high-performance cluster computer systems to industrial, commercial, and defense customers in the Americas, Europe, and Asia.

"We rate CSP INC (CSPI) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

6 funds you can own for $500 or less

Even with just a little seed money, you can find an attractive mutual fund to fit your needs.

The entry fee for many mutual funds is often upward of $2,500 -- an amount a lot of folks might consider too steep a price to commit to a single investment.

Young investors eager to get in the game might not have enough cash to afford those minimums yet. More-seasoned players might prefer to diversify their portfolios in smaller increments.

Whatever your reason, if you seek a good investment for $500 or less, consider buying into one or more of these no-load mutual funds. Collectively, the six funds, organized by the amount required for a minimum initial investment, don't necessarily constitute a balanced portfolio. However, these diverse offerings can help fill holes in existing portfolios or serve as building blocks for new portfolios. (All returns and related data are as of March 21.)

$100 funds

A low-cost index mutual fund, which is designed to mirror the performance of a broad market segment, can give you a solid investing foundation that's diversified and simple to understand. With just $100, you can reap the benefits of index-fund investing and make an initial investment in Schwab Total Stock Market Index (SWTSX -2.16%, news). It tracks the Dow Jones U.S. Total Stock Market index, which is made up of about 3,600 stocks. While the fund's current portfolio is primarily invested in large-company stocks, it also dips into medium- and small-caps, giving you a good sampling of the entire domestic market.

Best mutual funds for the long haul

Schwab Total Stock Market Index has done well over the past year, gaining 24.2 percent and outpacing the 23.3 percent return of the widely followed Standard and Poor's 500 ($INX -0.95%). Over the past decade, it has returned an average of 8.2 percent a year, ahead of the S&P 500's 7.5 percent annualized return and better than 85 percent of the funds in the "large blend" category. (Large blend funds invest in stocks with both growth and value attributes, and are fairly representative of the overall stock market.) The fund's annual expenses are a very low 0.09 percent.

Schwab also offers a set of target-date funds with low minimum investment requirements. Another easy core option for your portfolio, a target-date fund asks you to simply pick the year you want to reach your investing goal (typically, retirement), and the corresponding fund's managers take care of the rest. They select the appropriate mix of investments based on your time horizon and adjust the portfolio as your selected year nears.

For example, a 24-year-old aiming to retire at age 65 would opt for Schwab Target 2055 (SWORX -2.04%, news), which opened in January 2013. The fund requires an initial investment of just $100; annual expenses are 0.73 percent.

Being so young, the fund has little past performance to recommend (or disparage) it, but its older siblings -- guided by the same manager, Zifan Tang -- indicate a promising future. Over the past three years, Schwab Target 2025(SWHRX -1.43%, news) has gained 10.2 percent annualized, beating its category by an average of 1.8 percentage points a year and ranking it in the top 8 percent of all 2021-25 target-date funds. Since Tang took the reins in 2012, the fund has gained a total of 26.5 percent, topping its category by 4.9 percentage points.

One note on fund performance figures: Stocks have been on a tear since the last bear market ended in March 2009, resulting in outsized gains during the past five years. Over the long term, the average annual return of the stock market is closer to 10 percent.

Deadly Sins of Investing

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$250 funds

If you want to raise your portfolio's moral standard, consider this pair of so-called socially responsible funds, which invest according to clearly established principles. Amana Growth Investor (AMAGX -2.34%, news) and Amana Income Investor (AMANX -1.71%, news) are run in adherence to Islamic law, meaning they do not invest in businesses involving alcohol, gambling, tobacco or pornography. They also avoid businesses that charge interest, such as banks, and investments that pay interest, such as bonds. Both funds invest primarily in large companies, but the Growth fund focuses on fast-growing firms, while the Income fund seeks undervalued stocks that pay dividends.

The strategies, including the ethical code, have hindered the funds recently. "This bull market of the past five years hasn't been very favorable," says Morningstar analyst David Kathman. "With interest rates so low and money so cheap, it's given a boost to companies that aren't necessarily pristine, and those are not the types of companies that these funds own."