Investment Advice for 2010

Top investment consultants have agreed upon five areas for you to focus this year as you maximize your investments.

1)  Houses – The housing market is full of great prices; just remember, houses are currently poor short-term investments.  Analysts predict that housing prices will increase at a very slow rate in the future.  Therefore, don’t get involved in home equity loans because the equity will be difficult to replace.  Reducing the total amount remaining on your mortgage is a much better use of your money.

2) Keep faith in the power of stocks – An efficient retirement portfolio should be comprised of some stocks.  As long as an investor maintains a long-term focus, stocks are still regarded as an essential financial investment, with the highest probability of consistent returns.  Investment consultants warn investors about the dangers of quick trading in the market.  The best advice is to stay in the market with a long-term goal, re-invest your dividends, and contribute to your portfolio consistently.

3) Credit card rules have changed – New laws affecting the credit industry were recently passed with the intention to stop some of the historical abuses by credit card businesses.  For example, in the past, companies could advertise your card as having fixed rates of interest, yet legally change the rate anytime they wish. Also, the new rules have outlawed the practice of applying interest rate penalties to purchases made in the past.

There is one major area, however, where banks are trying to create a loophole.  In the past, by going over your credit card limit, you would receive a $25 or $30 penalty.  The new guidelines forbid that practice unless you agree to accept over-limit penalties.  Now banks have stopped the penalties, but your card will be refused if you go over your limit.  Your credit card company has expectations that you will then accept the over-limit penalties in order to keep using your card.  The best advice is to keep track of the limits on all of your credit cards, and always stay below it.

4) Save money – Investing in your home no longer is the investment it used to be, and the probability of a large stock market bubble in the near future is extremely low.  The best way to increase your wealth is to lower and eventually eliminate your debt, consistently save, and invest intelligently. The goal should be to have zero debt by the time you reach your retirement day.

5) Shop around for higher interest rates – Internet-only banks such as ING Direct and HSBC Direct are paying you more than standard banks, as well as charging no fees and requiring no minimum deposit.  Additionally, you can get a list of federally-insured banks throughout the country with high interest rates on CDs at www.bankrate.com.