As submitted by NewRulesofInvesting

This is a side to side comparison of two of the best online financial sites: Yahoo Finance and Google Finance.  Yahoo is still the largest and most popular finance site by far but Google is serious about finance.  Let’s see how the two financial portals stack up against each other.

Speed

Google Finance: Typical fast-loading Google pages.  Google’s site is broad and doesn’t go deep.  Pages for individual stocks are only 1 page deep (Google links out for things like option chains, major holder, etc.)

Yahoo Finance: Yahoo Finance is fast.  As opposed to Google, Yahoo content resides primarily on Yahoo pages and Yahoo is responsible for page load speed throughout the site.  This can fluctuate as any large website can throughout the day.

Charting

Google Finance: Google primarily uses a simple javascript-loaded chart without any bling.  It loads fast and allows easy to manipulate x-axis (time period).  When you’re figuring out what a particular stocks has done over the past 17 days, the chart also calculates the return for a given time frame beyond the standard 1-day, 5-day, 3 month, etc. time period.  Google also plots news events onto their charts which is kind of cool (not necessarily tradeable).

Yahoo Finance: Yahoo Finance charts are much more robust.  Advanced charts have incorporated a similar charting function like Google’s and provides an overlay of numerous technical indicators (MACD, RSI).  Because these charts are so powerful, they also tend to be bulky and seize up.

Real Time Quotes

Google Finance: Google provides real time quotes both during market hours and pre- and post- market.  Google’s quotes on market indices tend to skew erratically during the transition to an open market as well as trails when the market makes large moves to the upside or downside.

Yahoo Finance: Yahoo also provides real time quotes both during market hours and off.  Yahoo’s premarket quotes are not as reliable as Google’s.  Yahoo occasionally doesn’t have a price premarket for a wide array of stocks.  Yahoo has a scrolling ticker as well for stocks that is personalized to the behavior of the user.

Breadth

Google Finance: Google gives basic info all on one page.  Anything more a user needs to link off.  News, financial info, blogs all included.  Very shallow, quick and dirty use.  Google does a good job bringing in blog content but lacks good, standardized PR content, still necessary in the research process.

Yahoo Finance: Yahoo provides an entire research environment.  All the content and data is supplied by Yahoo.  From major holders to options chains to blogs and PR, Yahoo is a virtual poor man’s Bloomberg.

Innovation

Google Finance: Google allows users to download data, making the site more portable than we’ve traditionally seen.  Google portrays the data environment well around a stock.  Beyond that, nothing particularly innovative about what Google’s done so far.
Yahoo Finance: Yahoo Finance is the 800lb gorilla and essentially helped to democratize financial information.  Yahoo has done a good job bringing in financial blogs in a controlled environment, using SeekingAlpha to help filter.  Charts are very powerful.  Not too much current innovation going on either on the surface.

Economics is not a complicated topic when viewed in a broad sense. The economy can either do well or do poorly. When it does well, prosperity lasts for a while, but it almost always slows down and starts to do poorly again in the future. Then, it will swing back up again. Those times of economic slow down are called “recessions.”

Recessions are inevitable, so it is only sound financial advice to tell you to plan ahead for them, even if you are currently experiencing a time of economic prosperity. If you are in a recession, there are steps you can take to keep it from impacting you too much.

The most dangerous thing that happens in a recession is job loss. As the economy slows down, people slow down their spending, and businesses suffer. This forces them to lay off workers, and those workers are the ones that suffer the most during a recession and most likely need financial help.

The best way to protect yourself from this possibility is to lay up some cash reserves. Economists recommend having three to six months worth of living expenses saved. This takes time, but you need to start working towards this goal in your financial planning.

Another danger of a recession is price increases. As companies try to make up for the lack of sales, they are often forced to raise prices. You can combat this by learning to cut coupons, shop sales, and stock up on your necessities when they are at a good price. Also, make sure you are only buying what you need. Save the “extras” for an occasional treat, but learn to tone down your spending habits. A recession is not the time to buy a lot of “extras.”

Finally, whether the economy is good or bad, make sure you do not take on too much debt. Your non-mortgage debt should be as close to zero as possible. If possible, keep your monthly payments that are going towards debt, including your mortgage payment, around 30 percent of your total monthly income. Anything more than this is dangerous, particularly during a recession. Learn to live without using your credit cards, as this is one of the most expensive and dangerous forms of debt.

Getting good financial help and planning through a recession is not as difficult as it might seem. Make sure you are saving your money, and limit your credit spending. Soon you will see the economy swing back toward the positive side, as it always does.

The goal of SingleMomFinancialHelp.com is to help women change the world through information and education. We are creating a support structure through which all women of the world can educate one another about where they have been, where they are right now and where they are going. With help from our site and the information and articles we distribute women will be more educated in finance, business, home matters, relationships, career and higher education.

My sweet 81 year old friend called today and told me she saved over $50.00 by using a suggestion from a sheet of organizing tips she had been given. Of course, I am always looking for organizing tips.

Now, I have to say, this tip is in the gray area between organizing and cleaning, but since I have several videos that border between organizing tips and other things (crafts, cleaning and interesting stuff) I am going to share this one.

Her dishwasher hadn’t completely drained the last two times she used it. She called the plumber who charged $50.00 just to come to the house. But he didn’t come when he said he would. She read on her sheet to use vinegar in the dishwasher to wash out the pipes. She used a gallon of vinegar without any dishes in it and ran the washer through a cycle. That took care of the problem. Imagine that one little idea saved her over $50.00!

Do you have any money saving organizing tips that we could use? If so, please share.

Marilyn Bohn is an energetic, lively, compassionate, hard working and creative organizer. She was born to organize! Before becoming a professional organizer she worked professionally in diverse environments. She is involved in her community, providing her clients with a broad base of experience and knowledge.  She is a member of the National Association of Professional Organizers (NAPO).

Sometimes it’s hard to stay positive during tumultuous financial times. So, I thought I’d highlight at least a few good things that have resulted from the economic downturn to keep things in perspective:

* Lower gas prices

In a time where already cash strapped consumers are witnessing the evaporation of their retirement accounts and house values, a little relief at the pump will be a welcome change. Gas prices have tumbled from their July highs of $4.11 a gallon down to just under $3 in many U.S. cities, due in large part to shrinking global demand. A happy by-product of this is the negative financial impact it will have on psycho oil-rich dictators like Chavez (Venezuela) and Ahmadinejad (Iran) who are now scrambling to restructure national budget obligations. Sorry boys….looks like the energy orgy is over and it’s time to sober up. I guess this might put a damper on their record of “checkbook diplomacy”, in their efforts to sway leftist or anti-West support in cash poor, vulnerable nations.

*Global warming will slow down

Okay, so I don’t have any scientific evidence to support this claim. But, I figure, if there’s less global demand for oil (and that includes oil guzzling China), then there’s less driving/flying/manufacturing, which means less carbon emissions, which means some slight relief for the ozone layer. Well….at least we can hope, right?

* Responsible bank lending

The days of easy credit are officially over. And while this is bad for some consumers, it’s the responsible thing for banks to do (not only for their balance sheets but for the economy as a whole). If there’s anything that we’ve learned from the sub-prime debacle, is that responsible lending is a critical component for a sound economy. Banks are reverting to their old ways…that is, prudent lending practices that were prevalent before the housing frenzy spiraled out of control. Borrowers will actually have to be credit worthy (gasp!) and will be forced to save for down payments in order to buy a home (gasp, gasp).

*Americans will FINALLY recognize the value in SAVING

It’s no secret, Americans are among the worst savers on the planet and that will come back to bite many of them in the tush right now (and of course in the future). A joint survey conducted by Princeton Survey Research Associates International for the National Foundation for Credit Counseling and MSN Money, found that Americans are largely unprepared for economic hard times–many don’t even have an emergency fund! I suspect that after we all survive this bitter dose of economic reality, many folks will learn their lessons and give serious consideration to saving for unforseen circumstances (like now) and also for their future. Sometimes it’s the negative experiences that teach us the best lessons and serve as a source of discipline and inspiration in later years.

Cathy Pareto, MBA, CFP®, AIF® is the Founder and President of Cathy Pareto & Associates, Inc. For over twelve years, Cathy has been helping financial consumers and professionals understand the world of investments and finance with a sound, but down to earth money management approach. For over a decade Cathy was a Senior Financial Advisor for another Miami based investment advisory firm, where she managed over $200 million in assets for high net worth clients and retirement plans. She has extensive experience in retirement issues, asset allocation, investment selection, investment management, education planning, estate planning coordination, and asset protection strategies. Additionally, she was an Adjunct Professor and Faculty Coordinator for the CFP® Program at Florida International University’s College of Business.

Part of the hysteria that we are experiencing can, in part, be blamed on the overused comparison to the Great Depression. My goodness, pundits and financial media are using the “D” word like it’s going out of style. We are NOT in a Depression people!

Here are some great blurbs from today’s Wall Street Journal to give us some perspective:

(Source: Wall Street Journal, Jason Zweig “What History Tells us About the Market“)

“In fact, the market is probably wrong again in its obsession over whether this decline will turn into a cataclysmic collapse. Eugene White, an economics professor at Rutgers University who is an expert on the crash of 1929 and its aftermath, thinks that the only real similarity between today’s climate and the Great Depression is that, once again, “the market is moving on fear, not facts.” As bumbling as its response so far may seem, the government’s actions in 2008 are “way different” from the hands-off mentality of the Hoover administration and the rigid detachment of the Federal Reserve in 1929 through 1932. “Policymakers are making much wiser decisions,” says Prof. White, “and we are moving in the right direction….”

” A few weeks ago, investors were gasping; now, en masse, they seem to have gone numb….This collective stupor may very likely be the last stage before many investors finally let go — the phase of market psychology that veteran traders call “capitulation.” Stupor prevents rash action, keeping many long-term investors from bailing out near the bottom. When, however, it breaks and many investors finally do let go, the market will finally be ready to rise again. No one can spot capitulation before it sets in. But it may not be far off now. Investors who have, as Graham put it, either the enterprise or the money to invest now, somewhere near the bottom, are likely to prevail over those who wait for the bottom and miss it.”

I confess…the markets suck right now. But for goodness sake, let’s stop this Depression mindset and get on with life.

Cathy Pareto, MBA, CFP®, AIF® is the Founder and President of Cathy Pareto & Associates, Inc. For over twelve years, Cathy has been helping financial consumers and professionals understand the world of investments and finance with a sound, but down to earth money management approach. For over a decade Cathy was a Senior Financial Advisor for another Miami based investment advisory firm, where she managed over $200 million in assets for high net worth clients and retirement plans. She has extensive experience in retirement issues, asset allocation, investment selection, investment management, education planning, estate planning coordination, and asset protection strategies. Additionally, she was an Adjunct Professor and Faculty Coordinator for the CFP® Program at Florida International University’s College of Business.

When a new client who had recently received an inheritance opened up an account with me, he transferred this new portfolio from a well-known brokerage firm. After the transfer was completed, we sat down to review his current holdings and adjust the portfolio. Some of the client’s stocks were showing large losses. However, he explained that since he had received them as an inheritance, he felt awkward about selling them. He felt attached to them and didn’t think they should be sold. He then said that as he realized that such attachments were not beneficial to investment, he was going to wait for them to move back up to the price for which his recently deceased father had bought them. Then, he would sell them.

This is a very common scenario. Children often refuse to make changes to a portfolio that they have received as an inheritance. Very often, this is due to sentimental reasons. In other cases, investors stick with a losing position for years in the hope that it will return to the original price they paid for it. However, this is not the best approach to investing.

We All Make Mistakes

Sometimes you may have a little extra money at your disposal, and you decide to invest it. Maybe a friend gave you a handy stock tip, or you read about a company that sounded like an interesting prospect. After doing some research, you decide to invest in this company because it seems like an obvious winner.  But when you receive your first statement, you see that the stock has dropped. So you decide to follow the policy of being patient. As time goes by, you keep checking, but the stock keeps dropping. Eventually, you become living proof of the old adage that patience is a virtue. The stock market may be moving up, but you are stuck with a loser.

In fact, chances are that if the stock starts dropping by 10, 15 or 30 percent, there could be problems with the company, and it may potentially pay to sell. However, many of us find it psychologically difficult to admit that we have picked the wrong stock. It’s hard for us to say that we made a mistake.

Opportunity Cost

Very often, the longer you hold onto an under-performer, the more money it costs. The reason for this is that the investor could have put his funds into something that actually made money. Therefore, stubbornly holding onto a losing stock will only cause financial harm to the investor. In economics, this situation is referred to as opportunity cost. Opportunity cost is defined as the cost of an alternative that must be forgone in order to pursue a certain action, or the benefits that could be received from taking an alternative action.

Profit from Losses

Never think that all is lost. Some good can actually be derived from losing stock positions. When the position is sold, the investor realizes the loss, which may have certain tax advantages. The loss can be used to offset other gains, thus lowering the tax bill. In fact, although they may not realize it, for many investors tax-loss selling may be the most important way to reduce their tax bill. If done correctly, receiving the appropriate advice before making any trades, it can save the investor money and help diversify the portfolio in various ways.  

Working with licensed and experienced financial advisers can help you evaluate objectively whether you are holding bad positions. It is then worthwhile working with an accountant to create a tax-efficient portfolio. Many professional investors live by the credo that you should ride your winners and dump your losers. The reason is simple. There may be a reason why the stock is performing poorly, namely, that the company is not executing their business up to its potential. This indicates that is probably a good place for you, the investor, to avoid putting your hard-earned money.

There is a good chance that the relative that left the money for you as an inheritance would like you to gain from it. Speak with your financial adviser to see if your newly inherited portfolio matches your investment goals and needs and whether it is invested in an efficient manner.

Aaron Katsman is President of Global Investments at Profile Investment Services.  He is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the U.S. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, SIA. For more information, go to www.profile-financial.com  or email aaron@profile-financial.com 

Thinking about what’s happening in the market right now. I don’t want to wade into what the Treasury’s plan means for the market. Nor do I want to analyze the consolidation occurring in the Investment Banking industry.

I’d like just to put some thoughts down on how current events may impact investment research going forward and what that means for investors.

1. Investment banks are currently the best we’ve got in terms of researching companies.  I don’t mean to say that they are always (ever?) right, but my point here is that individual investors can never get as close to a company as does a sell-side equity analyst.  As outsiders, we’re left frequently to decipher using shadow-puppetry what’s actually going on inside a company.  Certainly, there are times and certain companies where analysts are equally outside but I’m just describing, not prescribing.
2. Fewer banks mean less research.  As investment banks consolidate into retail banks (as Merrill Lynch has with Bank America, for example), it ultimately means further consolidation in research departments as it doesn’t make sense to keep both brands separate and maintain separate teams.  This means fewer stocks actually covered with research and fewer opinions on those stocks already covered.  This is bad for investors as investors have proven that they, like many professionals, have an aversion to paying for research from independent research outfits.
3. Importance of New Rules of Investing (NROI) grows: In order to compensate for the loss of research, investors are going to continue to flock towards free web resources (see my Top 5 Investment Sites) to make their own decisions.  This is a huge opportunity for those competing in the Online Finance 2.0.  In addition to expert communities and pickybacking sites, look for a flurry of new models in addition to incremental changes online with new charting technologies, blog aggregation, etc.
4. Opportunity for Investor Relations firms who “get it”: As a buy-side analyst at a hedge fund, I always felt that Investor Relations firms were missing an opportunity.  In a the Web 2.0 world, as investment banks continue to consolidate research ops and struggle with their business model, investor relations firms can really innovate here with new distribution models for disseminating information, new models for interfacing with company executives, etc.  The old road show/press release model can be improved upon by those who get it.  Firms who “get it” have an opportunity to compete against the i-banks, albeit coming at the game from a different perspective.  Maybe, as the result of all of this, we’ll see the role of the IR firm change as well.

The investment industry has seen various modes of expansion/contraction throughout its lifecycle.  I believe that this stage is natural in this evolution.  This economic contraction for the industry happens to correspond to an expansionary period in web technologies so that when these firms emerge, they may be left behind in their research.  This is a huge opportunity for other participants.

Although we often hear about the “wonders” of compound interest, many people don’t know what it actually means and they miss out on its benefits.

Two quotes are attributed to Albert Einstein regarding compound interest. Einstein apparently referred to compound interest as “the greatest mathematical discovery of all time,” and on another occasion he claimed that it was the “eighth wonder of the world.” Although we don’t know if these quotes are accurate, there is definitely something magical about compound interest.

What is it?
Compound interest is the ability of an asset to generate earnings, which are then reinvested in order to generate their own income. In other words, the term “compounding” refers to generating earnings from previous earnings. The magic of compound interest transforms your hard-earned money into a very efficient tool for building long-term capital. For compounding to really work, however, it is necessary to reinvest all earnings over time. When an investor gives more time to his investments, he is more likely to optimize the income potential of the original sum.

Example
If an investor had $5,000 in an account that paid 5% annually in simple interest for five years, he would earn $250 a year. This would generate a total of $1,250 in interest. In this case, the interest rate and the yield are the same — 5% per year.
However, the same $5,000 investment paying 5% in compound interest could earn more. In this situation, if the money is reinvested and compounded annually for five years, it would produce a total of $1,381.41 in interest. This is because when the investor earns interest on his interest, the yield — an average of 5.52% per year — is higher than the actual interest rate at which he initially invested. This difference of 0.52% a year may seem insignificant, but we should also consider that the investor did not need to work to receive this money. Moreover, this half a percent could make a significant difference over a longer period, such as 20 or 30 years.
The Earlier the Better
When an investor starts investing at a younger age, he will benefit far more from compounding. To understand this further, let’s take the case of two investors named Tzivia and Moshe Aryeh, who are both the same age. When Tzivia was 25, she invested $15,000 at an interest rate of 5.5%, which was compounded annually. By the time Tzivia reached 50, she had $57,200 in her bank account.

Moshe Aryeh, on the other hand, did not start investing until he reached the age of 35. At that time, he invested $15,000 at the same interest rate of 5.5% compounded annually. By the time Moshe Aryeh reached 50, he had just $33,487 in his bank account.

What happened? Both Tzivia and Moshe Aryeh are 50 years old, and both invested the same amount of money ($15,000) at the same rate of interest (5.5%). However, Tzivia had $23,713 ($57,200 - $33,487) more in her savings account than Moshe Aryeh, even though he invested the same amount of money! By giving her investment more time to grow, Tzivia earned a total of $42,200 in interest while Moshe Aryeh earned only $18,487.

Annual Contributions
The above example clearly demonstrates the positive benefits of compound interest. Taking it a step further, imagine that Tzivia, who invested $15,000 at the age of 25, also adds an extra $2,000 a year to her account, where everything is invested at a rate of 5.5%. If she were to continue this disciplined investment approach until retirement (at the age of 65) she would end up with over $413,000. And if Tzivia were to add some risk to her investment profile in the hope of getting an even higher return, her nest egg at retirement could grow even more substantially.
The Cost of Waiting
As mentioned earlier, the two essential aspects for compounding to work are reinvesting the earnings and time. Each year that goes by without any investment will therefore affect your retirement. If you have 30-40 years until retirement, every year that you forego saving or investing money today may subtract between 1-5 years from your retirement.

Just Start
You don’t have to be wealthy to start investing. If you start saving early and make disciplined contributions, compounding may mean that you, too, can retire with a very large nest egg.
 

Aaron Katsman is President of Global Investments at Profile Investment Services.  He is a licensed financial professional both in the U.S. and Israel, and helps people who open investment accounts in the U.S. Securities which are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, SIFMA. For more information email aaron@profile-financial.com

For the past nine months or more, most business news reports will tell you that the global stock markets are down again. However, although the media tend to play this up, it is in fact nothing unusual. Generally, though past performance is no guarantee of future returns, markets have a few good years, followed by a less-than-stellar year or two. For example, in the current market cycle, there were four or five good years, and now the markets have dropped. That’s precisely why investors in the stock market need a long-term horizon, as well as to be able to withstand all of the market ups and downs. Below are three investing tips that may help investors remain sane during market downturns:

Diversify
To understand this concept more easily, we first need to define the meaning of diversification. Diversification is an investment technique that uses many varied investments within a single portfolio. The idea behind it is that a portfolio of different kinds of investments may, on average, yield higher returns and pose a lower risk than a single investment. Diversification tries to smooth out volatility in a portfolio caused by market, interest rate, currency and geopolitical risks. In laymen’s terms, don’t put all your eggs in one basket. It’s important to remember that diversification does not assure against a loss.

If you include bonds or FDIC-insured Certificates of Deposit (CDs) in your stock portfolio, it may take away some of the volatility of the portfolio, allowing for potentially, more stable returns over the long run.

Don’t Panic
Keep you eyes glued to your long-term goals. It’s important to remember that markets go up and down, and if you made a financial plan, it would have taken this type of market volatility into account. The worst thing you can do as an investor is panic and sell everything and then wait for the market to recover. The market tends to recover very quickly. Large market gains often come about in quick and unpredictable spurts, and missing just a few days of strong market returns can substantially erode long-term performance. Remember the famous investing principle of buying low and selling high. Investors who panic often end up selling low.

Rebalance
The third principle is for investors to update or rebalance their investment portfolios.  Rebalancing is necessary for two main reasons. First of all, it keeps your asset allocation in line with your risk level and, secondly, it keeps your portfolio in line with both your short- and long-term goals and needs.

Let’s use the following example: When you first decide to invest, you decide that an allocation of 70% stocks and 30% bonds seems right for your $100,000 portfolio. We can also assume that over the course of the past few years, the stock market moved up strongly, and bonds barely moved up at all.

Based on the assumption that all gains and dividends were reinvested, and you didn’t deposit or withdraw any money, you would find that the stock portion of the portfolio would be worth a lot more than the initial $70,000. On the other hand, your bond holdings would be worth little more than the $30,000 invested in them.

However, while it is true that over the last few years your portfolio in this case would have grown, it would unfortunately have also become riskier. The reason for this is because the portfolio would move from being a 70% stock and 30% bond allocation to an allocation of 80% stocks and 20% bonds.

In this situation, if you don’t rebalance and you have a riskier portfolio, when the market starts to drop, this could lead to a greater loss.  It is a good idea to implement these three tips, as they are a possible means to help you weather the storm of volatile markets.
Past performance is not a reliable indicator of future results. The S&P 500 index measures large-cap stocks and US stock market performance of leading companies in leading industries. An investor can not invest directly in an index.

Aaron Katsman is President of Global Investments at Profile Investment Services. He is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the U.S. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, SIA. For more information, email aaron@profile-financial.com

One popular way of investing is putting funds into companies that pay dividends. Some of these companies pay a return that is as high as 7-8%. As global financial markets continue to be volatile, investors are searching for ways to enjoy growth in their portfolios while lowering the volatility usually associated with such growth. But what are dividends, and how can they help your investment portfolio?

What Are Dividends?

Dividends are the share of a company’s profits that it decides to pay to its shareholders.  They are an important part of the return that an investor receives from investing in shares, in addition to any increase in the share price.  Although companies are under no obligation to pay dividends, they usually choose to do so because dividends provide an incentive to invest in their shares. 

When a stock pays an 8% dividend yield, what does this actually mean? If a certain company is trading at $25 a share, and it distributes $2 a share in dividends, if this dividend is divided into the price of the stock, the investor receives 8%. This yield changes according to the price of the stock and the amount of money that the company decides to allocate. In the example given above, if the share price were to drop to $20 the dividend yield would be 10%. Conversely, if the price of the stock would move up to $50, the yield would be 4%.

How Do They Help?

Much research has been done on the impact of dividend investing versus non-dividend investing over the past 30 years. According to Ned Davis research, from January 1972 through 2005, the companies in the S&P 500 index that paid a dividend returned over 10% annually, while the non-payers returned a lowly 4.1% annually. Over time, more than 65% of the return on stocks has come from the compounding of reinvested dividends. Dividend-paying stocks tend to be less volatile than the non-payers because the dividend acts as an extra cushion in falling markets. Keep in mind, past performance is no guarantee of future returns.

Too Good to be True?

With all this in mind, it is still important to be careful when deciding whether to invest in a dividend-paying stock. When a certain company has a dividend yield of 15%, this may sound very attractive. However, a key factor to note is whether the company will be able to continue to pay or even increase the amount of the distribution. Historically, companies that cut the amount of money they distribute have very poor performance going forward.

Dividend Downside

On the other hand, many investors don’t like it when companies pay out dividends because they prefer that the available cash is reinvested in the company, growing its profitability.  Other investors say that if the company is in debt, some of the available cash should go into reducing or eliminating it. This school of thought is similar to what we learn in home economics. If a household is in debt, and suddenly the family comes into a large sum of money, all of its debts, loans and overdrafts should be paid off. It is better to use the opportunity to have a clean slate, rather than spending the newfound money on a vacation or other luxuries.

If you are considering investing in dividend-paying stocks, speak with your financial adviser to find out if it is appropriate for you.

The S&P 500 index measures Large-cap stocks in the US and stock market performance of leading companies in leading industries. An investor cannot invest directly in an index.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.