Category Archives: Investing

Comparing & Contrasting a Roth IRA vs. 401K

At some point, many individuals will become serious about saving money and putting aside funds for retirement. This often, in turn, prompts the opening of various retirement savings accounts. At this point, Roth IRAs and 401Ks are some of the most popular options. However, these two accounts are not the same, by any means, and should not be treated as such.

Some people are better suited for 401Ks while others do exceptionally well with putting money into a Roth IRA. Nevertheless, a critical and thorough understanding of the differences and features of the aforementioned accounts is absolutely paramount.

An Overview

One of the greatest distinctions between Roth IRAs and 401Ks is the functionalities of the two accounts. Investopedia explains that while Roth IRAs are started between an investment firm and the people which come to them, 401Ks are plans where workers permit their employers to put a percentage of their pay into the account. Each individual has their own ideas of which retirement savings account is best for them. Both Roth IRAs and 401Ks each come with their own upsides, guidelines, and stipulations.

The Benefits

Both Roth IRAs and 401Ks come with their own benefits which are designed to appeal to prospective customers. The Simple Dollar lists the following benefits which are associated with Roth IRA accounts:

  • Future tax-free withdrawals
  • Ability to withdraw contributions without facing penalties
  • Ability to select desired brokerage firm and choices pertaining to investments

401K retirement savings accounts also come with their own unique upsides, which read as follows:

  • Potential annual tax savings
  • Opportunities for monetary employer match
  • Options to set up automatic deposits
  • Gradual increase on allowed contributions

Which One is Best For You?

Ultimately, each individual will have to decide which retirement savings account is best for them. Believe it or not, choosing whether or not to set up a Roth IRA or 401K does not have to be an “either/or” decision. There are some people who have both accounts and others who employ alternative means to save money and invest in their retirement.

However, for individuals who are interested in setting up one (or both) of the aforementioned accounts, Fidelity has some helpful hints and advice:

  • 401Ks may prove to be slightly more beneficial for long-term savings.
  • Roth IRA accounts are usually better for individuals who see tax increases in their future.
  • People who wish to diversify funds put aside for retirement may find that setting up a 401K and Roth IRA accounts is advantageous.

 

Authored by Gabrielle Seunagal

How to Become a Venture Capitalist

When the average individual hears the words “venture capitalist,” they usually imagine a wealthy person who rakes in millions of dollars from lucrative investments. While the attainment of wealth is certainly an aspect of a venture capitalist’s achievements, there are many other factors involved in the process.

Many people who aspire to become venture capitalists do so with the intention of garnering high funds in a relatively short time period. However, this is not how the game is played. Venture capitalism is, by no means, a get-rich-quick scheme. Like any other financial endeavor, this occupation requires time, skill, knowledge, and sound judgment.

Hence, those who are still interested in becoming venture capitalists will surely benefit from following the forthcoming steps.

Sharpen Your Business Skills

Many people are under the illusion that the sole job of venture capitalists is making wise and lucrative investments. However, Sales Force explains that requirements for successful venture capitalists extend way beyond making investments and letting the funds roll in.

Any individual who is serious about this line of work must also be proficient in areas such as networking, investigating, analyzing business markets, and working with entrepreneurs. In this business, having the right contacts and professional skills makes all the difference in the world.

Gain Professional Experience

The majority of prosperous venture capitalists usually work their way up to this profession. Thankfully, there are a variety of career paths and occupations which aspiring venture capitalists can partake in. Starting a (small) business, working as an assistant/banker, or even becoming an angel investor (assuming that the necessary funds are available), etc can be especially beneficial career paths for people who are serious about becoming venture capitalists.

However, acquiring the knowledge and skill sets for this line of work does not occur overnight; as a matter of fact, years, or even decades, could pass before an individual is truly ready to enter the world of venture capitalism. There is nothing wrong with this, seeing as each person is on their own unique journey.

Finally, all venture capitalists should maintain upstanding reputations, real-life experience, and passion for the products which they choose to invest in.

Seek Mentors

While business skills and professional experience are formidable assets in the world of venture capitalism, the opportunity to connect with a mentor in this particular line of work is unbeatable, as stated by Chron. Not only have mentors been where aspiring venture capitalists are going, but they also have savvy investing skills and information which will prove to be invaluable.

 

Authored by Gabrielle Renee Seunagal

How to Become an Angel Investor

Angel investors are usually wealthy individuals who invest in startup companies and entrepreneurs. The aforementioned investments usually come with the expectation that the “angel” will receive his or her money back (and then some) as the company takes off. In some cases, the investments occur simply one time; in other situations, the “angel” may make repeated investments.

Investing is one of the most common ways for people to capitalize upon their wealth, thus earning more of it. However, there are usually certain stipulations and requirements for individuals who wish to become angel investors.

Secure the Proper Resources

Contrary to popular belief, becoming an angel investor is more complex than simply throwing large sums of money at businesses which are likely to succeed later on down the line. According to Investopedia, angel investors are required to have a net worth of at least one million dollars, notable assets, a minimal yearly income of $200,000, considerable, professional investing experience, and liberal amounts of time.

Another critical skill for angel investors is good judgment. Many entrepreneurs have ideas and ambitions, but a plan for execution is paramount. Learning about the background, vision, experience, and finances of the company founders will provide insight into whether or not an angel investor can expect to yield profit from their initial investment.

Be Willing to Take Calculated Risks

Approximately 50% of startup companies go out of business within the first few years of their inception. For this reason, angel investors should carefully consider which enterprises they want to put their money into. Moreover, “angels” should not invest money which they need for other purposes, such as retirement, savings, etc.

Patience is yet another virtue for any successful angel investor. In many cases, it takes years for angel investors to see a return on the funds they put into certain companies. Hence, individuals who expect to see immediate gains and profits should steer clear of angel investing.

A Final Word

One of the most critical things to remember about angel investing is the fact that there are no guarantees. While one “angel” puts hundreds of thousands of dollars into a company and regains millions over time, another “angel” could invest just as much money only to lose it all to an enterprise which ultimately fails. At the end of the day, this form of investing all comes down to evaluating the business and ultimately deciding whether or not making a particular investment is worth the capital.

 

Authored by Gabrielle Renee Seunagal

How to Understand the Stock Market

There are many individuals who aspire to do well for themselves by investing in the stock market. However, making the right investments at the proper time is often easier said than done. Stocks and shares can be quite nuanced on many levels. People want to invest and create a new stream of passive income, but without the right knowledge, they are more hesitant to do so. The majority of the masses want to know and understand where their money is going, as they should.

Thankfully, there is some information out there regarding the stock market. Some of the best intel actually reads as follows:

Know the Basics

First and foremost, individuals who purchase stock shares are purchasing pieces of the particular company. Investopedia explains that stocks can rise and fall depending upon sales and overall market perceptions. This can be somewhat of a conundrum, especially for people who are looking to invest in stocks which they know will generate profit.

Most investors typically purchase stocks from companies which they believe will garner revenue or otherwise increase in value as time passes. Sometimes they’re right and other times, they’re wrong. Some of the savviest individuals consult with financial advisors prior to making major investments.

Select the Proper Brokerage Firm

Selecting the right brokerage firm is a critical part of investing. Using the aforementioned brokerage firm, the investor will then open up a brokerage account, explains The Balance. After setting up their brokerage account, investors can then deposit funds via their checkings or savings accounts. Once that cash has been transferred into the brokerage, the person can decide which stocks they wish to invest in.

Brokerage accounts can typically hold a variety of investments which include stocks, bonds, REITs, ETFs, MLPs, mutual funds, money markets, and certificates of deposit.

Know When to Buy and Sell

In regards to understanding the stock market, timing is everything. In other words, knowing when to buy and sell stocks is critical for investors who aspire to earn profit. City Falon explains that the relationship between buying and selling stock shares is somewhat intertwined; the best time to purchase stock is when others are thinking of selling. Conversely, the best time to sell stock shares is when other people are thinking of buying. This is also commonly referred to as buying low and selling high.

A Final Word

Successful stock market investments certainly require a fundamental understanding of the market, knowledge of which stock shares to purchase, and a degree of intuition regarding the proper times to buy and sell. Doing research, watching videos, and even consulting financial experts prior to making investments is strongly advisable, especially for first-time investors or other individuals who are not particularly familiar with the ins and outs of the market.

 

Authored by Gabrielle Seunagal

How to Make the Most of Bitcoin

Bitcoin’s inception as a popular form of electronic cryptocurrency began in 2009. Many individuals have their own thoughts, speculations, and even doubts about Bitcoin. While some view it as a great form of virtual currency, others worry about its potential to be used for illegal or other dubious means. Additional individuals remain in the dark or otherwise unaware of how Bitcoin truly works and all that it entails.

Now, this form of cryptocurrency is not for everyone and that’s OK. Nevertheless, having a fundamental understanding of Bitcoin, its ins and outs, and how to make the most of it, can come in handy for just about anyone.

Know Where to Store Bitcoin

As stated by The College Investor, users who purchase Bitcoin should also store their cryptocurrency in a virtual wallet known as Coinbase. Not only does this virtual wallet allow Bitcoin purchasers to hold their cryptocurrency, but users can also make payments, purchase goods/services, and experience security features which are designed to protect Bitcoin.

While Coinbase is a pretty reputable virtual wallet for storing Bitcoin, there are certain fees associated with the trade of the cryptocurrency.

Be Aware of Bitcoin Fun Facts

Bitcoin is a mildly complex form of cryptocurrency. While many people take time to do their research before making any purchases, knowing some basic trivia always comes in handy.

First and foremost, Bitcoin cannot be inflated, counterfeited, or otherwise manipulated unlike more mainstream forms of currency, as stated by We Use Coins. However, the overall value of Bitcoin also ebbs and flows. This can result in substantial gains or losses when purchases are made with the cryptocurrency.

Users can get the most bang for their Bitcoin by making purchases at opportune times; also be mindful of the fact that Bitcoin’s rapid surges and declines in value can make predicting the best times for purchase somewhat challenging. More often than not, it is often left up to either chance or instinct.

Another important factor regarding Bitcoin is its permanence. Transactions are completely nonrefundable and irreversible; therefore, users of this cryptocurrency should always be 100% sure that they want what they’re paying for. Moreover, Bitcoin does not have to go through a traditional banking system in order to be used.

There are also more and more companies and institutions which are accepting Bitcoin as payment; however, others are not. For this reason, doing research on Bitcoin-friendly organizations and businesses can save a lot of trouble.

Purchase Bitcoin Properly

Those who are interested in purchasing Bitcoin should be sure to do in via reputable sites. There are countless scams and phony web pages which pretend to sell Bitcoin all for the sake of stealing money from unsuspecting individuals. Therefore, established legitimate sites such as Coinbase, Indacoin, Kraken, and SpectroCoin should be used by people who are interested in getting ahold of some cryptocurrency.

 

Authored by Gabrielle Renee Seunagal