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The motley madman | Nvdaily


Ask the fool

Start or wait?

Q. I am about to start automatically investing a portion of every paycheque in an S&P 500 index fund. However, the stock market could crash soon – should I wait?

– BN, Gainesville, Florida

A. No. It is true that the stock market (as measured by the S&P 500) has seen a tear, posting positive returns in nine of the past 10 years, and at the time of this writing it is up double digits. in 2021. But one the crash might have seemed likely a year or two ago, and if you had waited by then you would have missed out on any gains. It is generally not smart to try to time the market because no one can know what it will do in the short term (although in most long periods it has gone up).

If you’re worried about where the market is heading, you can make regular investments of equal size over time, also known as the “average dollar cost”. This is what you will do if your automatic investments are in a business 401 (k) account. The same amount will go from your paycheck into investments regularly, so you’ll buy stocks both when they’re cheaper and when they’re more expensive.

Q. How do I know what Social Security benefits to expect in retirement? –

FS, Adrian, Michigan

A. Visit the Social Security Administration website and create a “my social security” account at SSA.gov/myaccount. Then you can access anytime to see estimates of your future benefits, based on your income and when you will start receiving your benefits. Delaying the start date will make your checks bigger, but you’ll receive less – so read Social Security strategies to see what works best for you.

School of fools

Ownership: advantages and disadvantages

Many people think that it might be worthwhile to own, own and rent out a property. It can certainly seem like relatively easy money: You collect big checks every month, you can get big tax deductions – and real estate values ​​aren’t likely to fall suddenly, as some stocks might.

However, there are a lot of downsides to “owner”. For starters, it’s more than just collecting rent checks. You need to find tenants first, and it can sometimes be difficult to find good ones. Bad ones can cause massive, long-lasting headaches if they are repeatedly late with rent or, worse, damage your property. If you’re not comfortable dealing with a wide range of people, you may find it difficult to deal with some tenants – although you can hire a management company to do it for you for a fee (which is often around 10% of the rent).

If an eviction is necessary, it can be a long and difficult process. And there will likely be periods between tenants when you still make mortgage payments on the property but earn no income from it.

During this time, as with any property you own, you will not only be making those mortgage payments (unless you can buy it directly), but you will also have to pay insurance fees, property taxes, and mortgage charges. ‘maintenance and repair. These expenses include mowing the lawn, painting parts and replacing carpet between tenants if necessary, and fixing things that need repairs. Additionally, tenants may not take as good care of other people’s belongings as they would their own.

Learn about local laws relating to investment property before purchasing a rental property. You can also read a book such as “Real Estate Investing For Dummies” by Eric Tyson and Robert S. Griswold (For Dummies, $ 42). And weigh the pros and cons of investing in real estate versus those in, say, stocks. For example, you can sell some or all of your shares at any time, but selling real estate can take a long time.

My dumbest investment

my stupid quadrupling

My dumbest investment? I bought Starbucks stocks for $ 8, sold them for $ 32, and bought a motorcycle. I thought the stock had quadrupled so there was no way it would go any higher, right?

– JNW, online

The Fool replies: Well, you certainly know what happened: Starbucks shares recently traded around $ 114 per share (after several 2-for-1 stock splits over the years). Maybe your sale was the perfect fit if you really needed to generate some cash for the motorcycle, or you just hadn’t seen Starbucks growing much more anytime soon. But if you still believed that Starbucks had a golden future and you didn’t really need the bike, holding the stocks would have kept assets in your portfolio that would likely have appreciated further over time. Most motor vehicles, on the other hand, lose value over time.

Starbucks has grown from one store in 1971 to over 33,800 stores worldwide today, and there’s good reason to believe it can continue to grow. It recently sported over 5,300 locations in China, for example; it’s much less than in the United States, but China has more than four times the population of the United States. Meanwhile, the company is enjoying great success with its steering wheel and mobile control systems and its Starbucks Rewards program, which has nearly 25 million members.

Stupid anecdotes

Name this company

My roots go back to the founding in 1940 of a refining and petroleum company. Today, based in Wichita, Kansas, I am one of the largest privately held companies in the world, with annual sales of approximately $ 115 billion. My operations range from animal husbandry to data analytics, and my businesses include Flint Hills Resources, INVISTA, KBX, Matador Cattle Company, Molex, Infor, Guardian Industries and Georgia-Pacific – with brands Angel Soft, Brawny, Dixie , Quilted Northern, Sparkle and Vanity Fair. I have over 120,000 workers in over 70 countries, about half of them in the United States. Who am I ?

Answer to questions from last week

I trace my roots back to the 1830s, when a blacksmith from Vermont moved to Illinois. Cast iron plows did not work in prairie soil, so he developed the hugely successful self-scouring steel plow. By 1846 it was producing 1,000 plows a year and by 1857 it was 10,000. My founder (whom I am commonly known as) then moved his operations to Moline, Ill., And eventually became mayor of the city. I have expanded my offerings over time, adding cultivators, tractors, balers and even chainsaws and forklifts. With a recent market value exceeding $ 110 billion, I am the largest manufacturer of agricultural machinery in the world. Who am I? (Answer: Deere and Co.)

The motley fool

Play defense

Defense specialist Lockheed Martin (NYSE: LMT) has a fairly diverse business, including aeronautics (around 40% of sales), rotary and mission systems (25%), space (nearly 19%) , and missiles and fire control (the rest). He is involved in some of the biggest and most important long-term military contracts including the F-35 Joint Strike Fighter and the Patriot Missile Defense System. These types of programs provide a solid foundation for long-term income, even though the business’s revenue may grow and decline over shorter periods of time. The company works primarily for the US government (74% of sales) and its allies (25%).

With a massive recent market value of $ 95 billion, Lockheed Martin has a scale and reach that is difficult for smaller competitors to match. As such, it can take on large programs, outsourcing the work to smaller actors. And if these small players become big enough, he has the resources to step in and buy them. Generally speaking, this is how the military-industrial complex operates, with very large and diverse companies using targeted acquisitions to maintain their leadership positions over time.

Lockheed Martin also looks pretty cheap, with a recent price-to-earnings (P / E) ratio of less than 16 compared to its own five-year average of over 22. Its dividend recently returned 3.2% – and that dividend has been increased every year. for 19 consecutive years. (The Motley Fool recommended Lockheed Martin.)