My Personal Finance Blog

Imagine that the best funds for 2011 might not be the best bond funds or stock funds from 2010, but rather funds that you might not even be aware of. Now imagine taking control of your investment portfolio so that you can relax in retirement. Times are changing and it’s time to think outside the box and diversify like never before.

Don’t expect to find the best funds for 2011 if you are looking in the wrong places. Bond funds have been good investments in recent times, but even the best bond funds could be running out of gas soon. Interest rates have fallen like a rock and can’t get much lower. When rates head back up virtually all traditional bond funds will be losers. Higher interest rates means lower bond prices or values. That’s the way it works.

General diversified stock funds are at the mercy of a stock market that can’t seem to get traction in a sluggish economy with high unemployment. But some of the best funds for 2011 could be stock funds that specialize in specific sectors. For example: mutual funds in the gold mining, energy, or commercial real estate sectors. Other opportunities could take the form of exchange traded funds (ETFs) rather than mutual funds. The big advantage here is the wide variety of investment options to help you diversify your investment portfolio even further.

Diversification is the key to investing in uncertain times. Think: How might I get hurt in the future with my investment portfolio, and how can I diversify to protect myself and profit at the same time. For example, inflation and interest rates and/or energy prices could go higher. Inflation-protected bond funds, gold, energy (natural resources), and real estate funds might be good investment options to add to your portfolio. All four of these come in the form of both mutual funds and exchange traded funds.

To fine tune or diversify your investment portfolio even further the best funds for 2011 are exchange traded funds. There are over a thousand to choose from and they trade as stocks on the major exchanges. Open an account with a major discount broker and you’re in business. Plus, you will have access to investment tools; and information on these funds will be at your fingertips. Now you can bet that interest rates will go up by simply buying shares in stock symbol TBT, or that natural gas prices will rise by buying UNG. You can buy or sell on any business day in a matter of seconds for a commission of $10.

Average investors today have all of the investment options they will ever need to succeed in the form of funds. Traditional bond funds and general diversified stock funds should remain as major components of the average investment portfolio, but in times of high uncertainty greater diversification is called for. Your best funds to accomplish this are those that invest in areas that can buck the trend when the going gets tough.

Warren Buffett is the most successful investor of our time, perhaps of any time. He is famous for his pithy quotes, which often appear in his annual letter to shareholders.

Taken together, his quotes pretty well sum up his investment philosophy and approach. Here are his best sound bites of all time on being a sensible investor.

1. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

2. Investing is laying out money now to get more money back in the future.

3. Never invest in a business you cannot understand.

4. I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.

5. I put heavy weight on certainty. It’s not risky to buy securities at a fraction of what they’re worth.

6. If a business does well, the stock eventually follows.

7. It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

8. Time is the friend of the wonderful company, the enemy of the mediocre.

9. For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.

10. In the short run, the market is a voting machine. In the long run, it’s a weighing machine.

11. The most common cause of low prices is pessimism. We want to do business in such an environment, not because we like pessimism, but because we like the prices it produces. It’s optimism that is the enemy of the rational buyer. None of this means, however, that a business or stock is an intelligent purchase simply because it is unpopular; a contrarian approach is just as foolish as a follow-the-crowd strategy. What’s required is thinking rather than polling.

12. Risk comes from not knowing what you’re doing.

13. It is better to be approximately right than precisely wrong.

14. All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.

15. Wide diversification is only required when investors do not understand what they are doing.

16. You do things when the opportunities come along. I have had periods in my life when I have had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.

17. [On the dot-com bubble:] What we learn from history is that people don’t learn from history.

18. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.

19. You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.

20. You should invest in a business that even a fool can run, because someday a fool will.

21. When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

22. The best business returns are usually achieved by companies that are doing something quite similar today to what they were doing five or ten years ago.

23. Diversification may preserve wealth, but concentration builds wealth.

Credit repair begins with you. Many people have bad credit and they don’t even know about it or they think they have no way to repair it. Everyone has the right to see their credit reports and to repair their credit score.
I have listed the top 5 steps to credit repair and how to restore your credit today:

Top 5 Steps To Credit Repair

1.  Pay Your Bills On Time – This sounds like a no-brainer, but I can’t stress how important it is. One little 30-day late payment will set you back a year or more. Set up automatic payments with all your creditors. If you can’t make a payment, call your creditor and make something work so that they won’t report it to the credit bureaus. You would be surprised how many times this works.

2.  Dispute Negative Items – The main reason most people get denied loans is because of past negative items. A lot of the time these items aren’t even yours because of identity theft, reporting errors and other factors. The Fair Credit Reporting Act was implemented to allow consumers the right to dispute or verify any listing that is on their reports. 4 out of 5 credit reports contain errors, make sure yours is not one of them.

3.  Increase Debt to Limit Ratio – Two ways you can do this, keep your balances low and increase your limits. Always make sure your balances are below 35% if possible. Increasing your limits will help the ratio as long as you don’t increase your debt on those accounts too.

4.  Diversify Your Credit – This can difficult for some that can’t get a mortgage or car loan. Start with the basics, get a checking account with your bank with a line of credit. Get a credit card attached to your bank account. Then get a merchant store card. All these things will help your score by diversification A mortgage and car loan are the best ways to diversify, but take time to get up to.

5.  Contact Your Creditors – Creditors want their money too and they will negotiate to get it. Make sure you have talked to your creditors before paying off a bill. Use your leverage to negotiate the removal of the negative items upon final payment.

There are many factors that can contribute to low scores, but credit repair can help bring it back up again. I urge you to use these steps to repair your credit today and get your finances back on track.

In 2009, the leading credit repair service forced the credit bureaus to remove over 1 million negative items. See how 500,000 clients used these credit repair methods to get the credit score they deserved.