Negotiation, friend or foe?

The thing most people don't like about buying a new car, is dealing with the salesman and negotiating on the final price of the car. Nobody wants to pay sticker price and the dealer does not want to lower his price more that he has to. Because of this, companies like (now defunct) Saturn came out with fixed pricing. That is, there is no negotiating on the price. Take it or leave it. But for some people, like me, that takes the fun out of it. Again, nobody wants to pay more than they have to for something. But what about when buying other goods or services? Most people assume that you cannot negotiate the price of goods and services at stores and other businesses, but that is not true. In most cases, all you have to do is ask. Most retail stores change their prices all the time when they have sales or promotions, so why couldn't they do it for you on a one-on-one basis? I have a real estate friend who tells me that he negotiates the price on almost everything he buys. Ironically, he admits that he rarely negotiates the fee that he charges for his house buying clients! Just this week, I tried this out by calling my cell phone carrier to discuss the monthly fee that they charge me. I asked if they would lower my bill and was told that they could drop it $10 per month! That's a savings of $120 per year with no change in service plan just for asking! Most people who have traveled abroad have come home with stories about haggling over the price of a souvenir and how much fun it was. But they are afraid to do it here. The worst that can happen is they say no and you pay what you were going to pay anyway. Don't be afraid to negotiate for things you normally would not consider, you just might be throwing away money you could be keeping in your pocket. Like the business man says, don't leave money on the table!

Wordless Wednesday

The case for silver

Gold is back in the news...again. It seems when ever the stock market turns bearish or pessimism hits other asset classes (like bonds), the gold bugs come out of the woodwork to toot their horns. And who would blame anyone for wanting to invest in gold these days? After all, it has been a wild and crazy year to be a stock picker. With all the trouble in Europe, to the oil spill in the gulf, and the now infamous "Flash Crash" in May, people young and old alike are shunning stocks for other, more predictable investments. Suddenly bonds, commodities and gold are all the rage. But let's look at an often overlooked investment that might be a better bet than all of the above...SILVER. Yes, while gold gets all the attention, silver has quietly put together a better year than gold. While gold has returned over 15% year to date, silver has netted over 21%. And for value investors, silver comes in at a much lower price. While gold has topped $1200 per ounce and seems to be headed for $1300, silver can be had for roughly $20 per oz. So even smaller investors can participate in the silver rally without having to fork over thousands of bucks. And here is another thing you may not have considered about silver. While gold has limited use outside of coins and jewelry, silver has many, many uses in technology and industry, which makes it an even more sought after item, something that is a good thing for investors. To be sure, neither gold nor silver pays dividends like stocks and bonds, so this may not be the best investment for those looking to replace their low interest CD's. But silver is certainly something to take a look at more closely if you are wanting diversification in your stock and bond portfolio, and something with a good track record with good prospects for the future. The easiest way to buy silver is by purchasing the exchange traded fund, iShares Silver Trust (ticker symbol SLV). This is very liquid and can be held in almost any brokerage account. Hi Ho Silver, away!

Which are you, growth or value?

This is a tough year to recommend purchasing stocks. After all, the stock market is down year to date, but more importantly to investors, it's become too volatile and unpredictable. While most people who look at historical returns know that there are periods of time when the stock market goes up (bull markets) and periods when they go down (bear markets), the swings have gotten more pronounced in recent years (think 2008) that it makes people just give up and throw in the towel. How many times have you heard that the stock market has gone down in the last 10 years, or you can't make money in stocks anymore? But does that mean all stocks are bad? Let's look at two examples of stocks, growth stocks and value stocks. For simplicity think of it this way: Growth stocks are stocks that have had growth, are appreciating, and should continue to grow. Translation, they're making money! Value stocks are stocks that have been beaten down in price. Stocks that are on sale. Stocks that should go up in value and they're a great deal now. Think all stocks have gone down in the past decade? Let's look at McDonald's (ticker symbol is MCD). This stock is up over 21% year to date and over 35% in the past year. In the past decade it's up over 159%. Yesterday, it just hit it's all time high in price, $75.98, and it even pays a dividend of almost 3%! McDonald's clearly knows how to make money in good and bad times, and has become the indisputable leader in fast food restaurants worldwide. Now, let's look at Motorola (ticker symbol is MOT). This company makes cell phones and has seen better days. The stock had a high water price of $26 per share back in 2006, and today trades at $7.83 per share. They had suffered market share due to the success of the Apple iPhone, but have recently climbed back into the fold with their popular Droid phone, sold by Verizon. In addition their shares are being snapped up by company insiders, which is a great buying signal for many, because if the company insiders are putting their own money into this stock, they must think it has a good chance for an upswing. This stock doesn't pay a dividend either, so it's definitely a stock for more aggressive investors, but hey, it's up over 15% in the past 6 months! So there you have it. Two stock ideas, one a growth stock and the other a value stock. One has a great track record, one is a little sketchy. One is pretty expensive, and one is pretty cheap. What kind of investor are you, growth or value? Where will you invest your money when banks are only paying 1-2%? You make the call.

The case for dividend stocks

The search is still on for people looking for income. As this crazy, super slow growth, economy trudges on and interest rates stay at record lows, more and more people are throwing in the towel at FDIC insured CD's and money market accounts. With yields generally less than 2% on CD's and less than 1% on money markets, these types of accounts don't pay enough to pay the bills for those that rely on the income they produce. While bonds are a good alternative for many conservative investors, the media is playing up the possibility of a bond bubble so much that some people might be scared off from purchasing these types of fixed income investments. This leaves dividend stocks as another possible solution for folks who are looking for higher yields. Obviously, people know that the stock market presents a higher level of risk, because your principle is not protected. But with that, the reward is higher yields and the possibility for growth as well. We're not talking about start up companies here. We're talking about well established, very mature, blue chip companies with long track records to back them up. Let's look at a few examples. McDonald's, the fast food restaurant (ticker symbol is MCD), pays a 3% dividend. This company is prospering very well in this low budget economy as people still need to eat and kids love chicken McNuggets. Besides the dividend, this company's stock is up 17% year to date! Not too shabby. Want more than a 3% dividend? How about Du Pont, the chemical company and major competitor to Monsanto (ticker symbol is DD). This stock pays a 4% dividend and has grown over 21% year to date! Looking for 6% income? How about Altria, you might know it better by it's former name, Philip Morris. This tobacco company stock pays a 6.35% dividend and has been one of the best stocks you could have owned in the past 40 or 50 years. This stock is up over 13% year to date. Get the point? Don't believe the hype about losing your shirt in the stock market. If you do your research, buy stocks of solid companies with good track records and who are involved in businesses you can understand, you can make some money. Low interest rates are going to be around for a long time. Is 2% going to get you where you need to go?