How many kernals are there on an average ear of corn?
Find the answer below.
Growing your investment portfolio, one kernal at a time
Back in April, my wife and I went to my families farm in Henderson, NC to help plant the corn crop. This was my wife's first experience working on a farm and the first time a Burgess female had driven a tractor. My Dad and Granddad agreed to fertilize and water the crop and said it would be ready to harvest in 3 months. When we returned last weekend, we were overwhelmed at how much corn had grown. Although my city bride and I had to shuck, cut, silk, blanche, and package truck loads of corn most of the weekend, we appreciated the process after making some money selling our popular corn by the dozen at the Vance County Farmers Market!
Many of you can probably relate to farming and I'd like to point out the similarities of this process to that of saving and investing. The first and most important step is just to get started. Start by getting your hands dirty and plant a seed. In other words, do a little research and agree to set aside a percentage of your pay check each month. Next you need to determine your time horizon before you need to harvest. How long do you have to save before you retire? This allows you to determine how much to save, or how much fertilizer and water will be needed to grow your crop. It is important to monitor the weather forecast (economic conditions) in order to make changes to your crop (rebalance) on an ongoing basis. Once you retire, hopefully your hardword will have produced a nice yield. This is why it is nice to have an experienced farmer, or investment advisor, monitoring your crop!
Profile of a Successful Investor by Ron Copley, Phd, CFA
Dollar Cost Averaging: How to turn your fear of losing money into your advantage
Investing in the stock market is not for the faint of heart. The thought of putting hard earned savings into a portfolio of stocks and bonds and it possibly losing value in a short period of time can deter investors from being patient and miss out on the potential historically long-term gains of stocks and bonds. It's worth mentioning that ALL investments are susceptible to risk, even bank accounts insured by the FDIC are at risk of being eaten up by inflation. So what option do you have if you have a low risk tolerance? Luckily, there is a more conservative approach to investing for long-term gains above the rate of inflation and its called Dollar Cost Averaging, or a constant dollar plan. DCA is a simple but powerful strategy by which you consistently invest the same amount of money into the same investments each month or quarter. This plan automatically insures that you will buy more shares at lower prices and fewer shares at higher prices. Sounds too good to be true, right? Here is an example:
August - buy $100 of ABC stock at $20/share = 5 shares September - buy $100 of ABC stock at $10/share = 10 shares October - buy $100 of ABC stock at $5/share = 50 shares November - buy $100 of ABC stock at $25/share = 4 shares Total shares owned = 69 Average Price Paid/share= $5.80
Using DCA in this example, you would own 69 shares of ABC at an average price of $5.80 compared to paying $20 per share for 20 shares in August. This lower risk investment plan of easing into the market despite share prices works best when implemented with diversified investments in a tax deferred retirement plan like a 401k or IRA. Using dollar cost averaging, you might even smile when see the market had a down day!
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