Tag Archives: investing

Should I Buy Apple Stock?

We’re avid users of Apple products at WolfBridge Financial. From the iPhone, to the iPad, to the iMac, to the new MacBook Pro with Retina display – our business functions efficiently with a great deal of everyday help from Apple. Our CEO, Michael Kothakota, even penned a blog recently titled Steve Jobs: A True American.

At some point we may look back at August 20, 2012 and see that as the exact date when we should have seriously considered the merit of Apple shares.

Why? Because Apple is now considered the most valuable company of all time with stock rising 1.8% to $664.74 and pushing it’s market capitalization to $623.14 Billion.

Just a few days ago Jefferies analyst Peter Misek claimed a new iPhone announcement, that should come in mid-September, would boost his price target to $900.

Some analysts are even going as far to say that that shares could reach $1,000 with the launch of the new Apple TV product.

Should I Temper my Apple Expectations?

While Apple shares have no apparent reason to head in a negative direction based on their current 5 year growth trajectory – there are always reasons for concern when purchasing shares at such a high price.

That being said, there was a point not too long ago when Apple was trading at $7 a share.

Go ahead and do the math on if you had $600 worth of shares at $7 per share. We’ll wait.

That’s right. Your $600 investment in Apple would now be worth $56,562.

Is the time right to purchase some Apple shares? Contact us and we can give you our two cents.

In the meantime, check out this video from less than a month ago explaining when you should consider SELLING Apple shares.

Financial Aid, Part 2: Planning & Budgeting

Now that I’ve discussed what financial aid is, it’s important to go into detail about how financial aid can be your friend, or your enemy.

Although it is different at every school, many schools offer the federal financial aid package which includes grants, loans and work-study programs, depending upon your eligibility. Although it is hard to determine how much money you’ll receive each semester before hand, estimate tools are still a great way to plan ahead. The FAFSA website offers a great tool, FAFSA4caster . This will provide an early estimate of your eligibility for federal financial aid.

Remember that the individual school determines the total cost to determine college, not you. It is possible for a college to leave you with what is called an “unmet need” which is the money left over after the school determines your financial need.

Budgeting financial aid money is extremely important. If financial aid is not budgeted properly, it may result in being in massive amounts of debt due to spending it improperly.

In an ideal world, parents should sit down and talk to their children about college in the child’s early years of high school. This way the parents can discuss their expectations for the child, including how much money they will be able to contribute. This may give the parents an idea of where the child’s been thinking about going to school or talk about any extracurricular activities.

Why am I writing this?
Please do not spend your financial aid on anything but your education. Sometimes people use the loan to make a down-payment on a car, or on frivolous things… and they don’t have the money left to pay for their tuition or any other educational related expenses, including housing.

It’s your responsibility to budget your financial aid. If you run out of money during the semester, it’s difficult to find ways to get it.

Budgeting
It’s important to budget before you go to college.

Think about your sources of money. Will you be applying for financial aid? Have you applied to any scholarships? Is someone helping you pay your tuition? Are you going to be working a part-time job while in college?

Student loans and financial aid loans do not disappear. Especially in today’s economy, a student cannot expect to get a job right after graduating college or to be making enough money to pay off the debt. Remember what they say about the word “assume”… Bottom line: it’s important to budget properly and not to accumulate debt.

It’s important for you to think about how you plan on paying back any loans after you graduate. Will you start saving while in school?

Emergency Plans
Always remember that we can’t control what happens in our lives. It’s important to have some emergency funds saved up in case something happens. May you’ll have to pay to fix your car, or deal with a family emergency.

If you drop out of school, the Department of Education requires that you pay back your loans, and a portion of any grants that you’ve received. There are many reasons on why students drop out of school, so it’s important to consider the possibility of this emergency happening to you. Ask yourself, what would you do to pay back the federal financial aid?

Credit Cards
College is difficult. Credit cards are often used in college for living expenses, and anything else financial aid may not cover. College can be very stressful, but it’s still important to budget properly. If not, the debt accumulated will lead to a life of more stress and more problems.

I know that I’m guilty of “I’ll put it on my credit card and pay the bill later. I’ll get the money soon.” This is very dangerous! Life has a way of surprising you, and who knows, you may not be able to pay that next credit card bill. My word of advice to you is, if you can’t pay cash for it, it’s not worth purchasing it. If it’s a large purchase, give yourself 24-48 hours to think about it and try not to purchase impulsively.

If you have a credit card, use it with caution. Debt can be racked up quickly and so can the interest. Don’t think that it can be paid off when you graduate… by then you could be thousands and thousands of dollars in debt.

Sometimes saving is hard while in college, but it’s important not only to save, but to cut your costs.

Live like a college student while you’re in college, but don’t force yourself to live like a college student the rest of your life.

Investing in Private Equity

I was having a conversation with my father today.  We were discussing the fact that someone he knows is wanting to start a business.  Dad, who is very intelligent, asked what kind of specialized knowledge this person had to run that sort of business.  Interestingly enough, this guy has been waiting for someone to give him the money to start this business.  A year.  It is obvious that whoever this person is who is supposed to fund him, realizes that my Dad’s friend doesn’t have any specialized knowledge as well.  While he may be a nice guy, and a good guy, there is never a guarantee that a business will succeed.  When someone doesn’t even have a business plan or any sort of knowledge that would allow them to run a business, it would be foolhardy to invest in such a venture.  It is virtually certain to fail.

So, what things should you look for when investing a private venture?  Well, let’s start with the basics.  As Dad put it, what sort of specialized knowledge do they have?  Is there a written business plan?  What is the financial condition of the proposed business owner?  If there is some question about these, they are immediate red flags.  Stay away, keep your wallet locked up and politely say no.

Investing in private equity doesn’t have to be just investing in one business.  You could put your money in a private equity fund, where there is a professional money manager who makes the investment decisions.  You could also make sure that whatever businesses you are going to invest in, you yourself have a knowledge of that particular industry.  If you are going to invest in a single company, look for firms that help companies get started, either VC (venture capitalist) or firms that help new businesses run themselves.  Often a good idea is not followed by good execution.  There are a few firms that specialize in helping these ideas flourish.

Private equity can be a great investment, and it is often exciting to get involved in the growth of a new firm and new idea.  But remember, just like any investment, you need to do your homework.  And if your knowledge is not up to the task, find someone who you trust whose knowledge is up to it.

Gold Glittering?

You can’t turn on the TV without hearing about gold and how you should buy it. It is on commercials as well as being endorsed by political commentators such as Glenn Beck and others. The captain from Law and Order: SVU is even on there peddling gold to the public. “Our currency is becoming devalued, we must buy gold for when the world ends” is the mantra.

There has been speculation that gold will go as high $3000 an ounce! What a wonderful time to own gold, if that is the case. Since the decline of the stock and bond market that began in October 2007, there has been an increase in the value of gold of over 100%. Which equates of course, to an average annual return of 50% or more. This is tremendous and anybody who bought gold at that time would have doubled their money.

Is gold a bubble? Is it part of a broader commodity bubble? Or is it a genuine increase in the value of the precious metal that will allow those buying in now to reap the rewards of old ownership? To be sure, this has been a wonderful increase, and the pull of celebrities constantly telling you that gold is where you need to place your money is intoxicating. I have heard it suggested that gold will get to a 1:1 ratio with the Dow Jones Industrial Average! As of this writing, that would make it $12,282 an ounce!

Unlikely and $3000 is also unlikely. Of course it is not impossible. Those of you who have already bought gold will of course be upset with me for saying so, but this is not the time to worry about whether I am right or not.

It is a time to be cautious. As it always is when people are shouting from the rooftops that something is great. I am reminded of the client of mine who pulled all of the money out of his retirement account to invest in real estate in Phoenix in 2006, because people were “doubling their money in a month or two”. I urged caution, and to maybe take a portion of that money and invest it in the volatile real estate market.

That particular client’s wealth is wiped out. Gone. Not because real estate wasn’t at one time a great investment. The blame of course is on the investor. But I also blame the fact that so many people were urging the investment of real estate. The loans that were not only bad for themselves, but bad for the banks, because as everybody says, “Well, they aren’t making any more land, so real estate should always go up”.

The same holds true for gold. I am fairly certain that we can create gold, but from what I understand the process would be so expensive as to make it not worth it. But keep in mind that the real estate market was not supposed to tumble either.

Once again, I am urging caution. While it may seem like an attractive investment, the appreciation of gold is not something you want to put your trust in. Despite the celebrity endorsement.