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Ask the Fool
Down Payment Savings
Q: I’m saving for a down payment on a home. How should I invest that money? — C.S., Kinston, North Carolina
A: It depends. If your home purchase is many years away, your money is likely to grow fastest in the stock market, perhaps via a low-fee, broad-market index fund (such as one tracking the S&P 500) that delivers roughly the market’s return. The stock market can be volatile over the short run, though, so if you expect to buy your home in, say, five or fewer years (or 10, to be very conservative), avoid stocks.
Keep short-term dollars invested in safer places, such as CDs or money market accounts or bonds, to protect your principal. Learn about the best savings rates, credit cards, mortgages and more at theascent.com
Q: What does it mean if a stock market halts trading in a particular stock? — G.D., Madison, Indiana
A: A trading halt can be imposed when there’s some big news coming out about the company, such as a merger, a product recall or the dismissal of the CEO. It often lasts about an hour or less and is meant to give investors a little time to hear and digest the news. Halts also occur if there’s a big imbalance between buy and sell orders.
Another kind of trading halt involves the entire stock market shutting down. That’s called a “circuit breaker” or “trading curb,” and it’s triggered by extreme volatility. On the New York Stock Exchange, for example, if the S&P 500 index drops by 7 percent or 13 percent between 9:30 a.m. and 3:25 p.m., trading will be halted for 15 minutes. If there’s a 20-percent drop, trading will stop for the rest of the day.
If You Lose Your Job…
It happens to many of us, and often at an unexpected time. Whether you were fired for cause or fell victim to a recent round of layoffs, finding yourself out of a job is a tough spot to be in. As you regain your bearings and start seeking a new position, here are some tips.
¯ Keep in touch with your former colleagues — even those with whom you weren’t very close. There’s a good chance that some of them will hear of job openings in your industry that might be right for you. They might not only inform you, but sometimes they can put in a good word for you, too. They might also provide helpful references once you’re being considered for a new position.
¯ Aim to do a lot of networking instead of just mailing out resumes. You want to stand out among the many applications companies receive for each position, so it can help a lot if someone at a company can vouch for you. According to LinkedIn.com, between 2015 and 2016, fully 85 percent of open jobs were filled via networking. Good ways to network include reaching out to all your professional contacts from past positions, as well as any other well-connected people you know. Inform them that you’re looking for a new position and ask them to keep you in mind and to connect you with anyone they know in fields or companies of interest to you. It’s smart to build a strong network well before you need it, by cultivating lots of professional relationships and tending to them over the years, through occasional meals, sharing articles of interest and so on.
¯ Don’t bad-mouth your former employer on social media or during interviews, as you’ll come across as unprofessional. Instead, say little or just stick to some simple facts about your separation from the company.
Losing a job can be painful, but your next position may be even better than your last one. So freshen up that resume and start being active on sites such as LinkedIn.com, Indeed.com, Monster.com and CareerBuilder.com.
Back in 1980, I invested in a limited partnership involving domestic oil exploration. My broker recommended it, and it seemed like a good idea.
For several years, this investment was successful and paid me well in dividends. But by the mid-1980s, domestic oil production started to drop, along with oil prices. The Wall Street Journal ran an article warning that my company was in trouble. I expressed my concern to my broker, and he pooh-poohed it, suggesting I should invest more money in it. So I invested another $2,500. By 1987, the partnership was out of business, and I was left with nothing.
I learned that your broker should never be your sole source of information and that you should rely on sources that have no financial stake in your investments. — B.W., online
The Fool responds: Even the best brokers can make bad calls, and some investments do implode, which is why you should aim to spread your money across at least eight to 15 different investments. (Or just park much of it in one or a few low-fee broad-market index funds.) It’s also smart to think twice or thrice before adding money to a plunging investment.
The company you invested in was overly optimistic about oil prices and borrowed heavily. Thus, it was in big trouble when prices fell. Meanwhile, in 1985, the Securities and Exchange Commission charged it with defrauding investors by issuing false statements.
The Motley Fool Take
Microsoft Has Been Changing
If you’re still thinking of Microsoft as mainly a producer of the Internet Explorer browser and software for your personal computer, you need to catch up. Microsoft has been reinventing itself, focusing on the cloud and the corporate market, and the results have been substantial.
The company’s recently reported fourth-quarter results exceeded analysts’ expectations, with total revenue growing by 17 percent year over year to $30 billion. That’s pretty good for a company with a market value recently topping $800 billion! Revenue from Microsoft’s commercial cloud computing businesses surged by 53 percent to nearly $7 billion, representing about a quarter of the company’s total revenue. The “more personal computing” division saw revenue grow by 17 percent, while LinkedIn, which Microsoft acquired in 2016, posted revenue growth of 37 percent.
EDITOR’S NOTE: The Motley Fool is an investment column created by brothers David and Tom Gardner and distributed by Andrews McMeel Syndication.