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Financial Bargain Hunting

Financial Bargain Hunting

There are many ways to hunt for bargains today. You can go online and look for great deals on merchandise, as well as services. Additionally, there are plenty of money saving apps that can help you save money and clip coupons. However, you can save money on more than just consumer products and services. Financial bargain hunting is also important – especially in times of economic uncertainty and market volatility.

Recent news events, such as the debate over the debt ceiling, as well as the recent stock market drop of more than 500 points on August 4, 2011, has many wondering what they should do next. Financial bargain hunting is on the rise, and many are wondering how they can benefit – no matter what happens next with the economy and in the financial markets. Here are a few ideas for financial bargain hunting:

Buying on Stock Market Dips

For those looking for great deals, stock market dips can actually represent opportunities. When stocks are lower, you can buy them at bargain prices. Whether you invest more in an index mutual fund or index ETF, there is a chance for profits when you buy more when stocks are “on sale.” Adventurous day traders may buy on a crash day, and then turn around and sell on a relief rally, or on rebound. Long-term traders can hold their bargain stocks until prices are much higher.

Individual stocks, especially dividend stocks, can be found for bargain prices in many cases. This can be a great way to build your income portfolio, and increase your dividends. Choosing solid dividend stocks, like dividend aristocrats, can provide the potential for even better results down the road. Increasing your IRA investments might also help in the long run.

Of course, there is always the risk that this will backfire on you (since you could choose wrong, or the market might not behave as you would like), but it is an opportunity nonetheless, and one worth considering.

What About Silver And Other Commodities?

Right now, gold is a little too rich for some people’s blood. However, for some, silver might be doable. Investing in silver can be one way to get your money in what some consider a “safer” asset, protect you against inflation, and provide the chance for future gains. Silver often rises when gold does, so you can take some advantage of the relationship, while not needing as much capital to get started.

Other commodities might be tempting as well. If you know about crop trends, and how the weather can affect crops, you might want to invest in those that might see a rise in price due to poor harvest. Some are interested in oil, which has seen some price reduction since economic fears have raised issues about future demand. Many, though, expect that long-term oil prices have nowhere to go but up. With China and India increasing demand, and since oil is a finite resource, some think that buying now will provide a bargain that can benefit you in a few years, when oil prices rise.

Of course, commodities come with their own risks, and it is important to do research and have an idea of what you are doing before investing. And, as with all investments, you might end up investing at the wrong time, or the market might devastate your investment. But if you are looking for a little more diversity in terms of assets and risk, certain commodities might be considered bargains right now.

Looking for Higher Cash Yields

For many, though, safety is paramount. This usually means that the bargain hunting done is for higher cash yields. This means looking for the best rates on high yield savings accounts, or looking for high yield CDs. For those who believe that more easing is to be expected, and that the economy will weaken, locking in higher rates for the next year or two is desirable. Setting up a ladder that can allow them to take advantage of higher rates down the road can be a way to get the best yield now, but still be ready for interest rate increases if the economy begins recovering and inflation needs to be reined in.

A bank with a reputation for high savings account yields might also be a good choice right now, as long as it is FDIC insured. This way, you can have your money in place for the possibility of future interest rate increases.

Lower Loan Rates

Finally, you can enjoy lower loan rates with the help of some financial bargain hunting. While this low interest rate environment is murder on cash yields for savers, it can help those looking to reduce debt, or to borrow more inexpensively. Now might be a good time to refinance your home loan, or your auto loan. It’s also a good time to pay down your high interest credit cards, while more will go to your principal. There has been an increase in 0% balance transfer deals lately, so if you have good credit, you might be able to find a balance transfer bargain that can help you pay off your credit cards that much quicker.

Finally, if you have been planning on making a large purchase using a loan, this is the perfect time for this type of bargain hunting. You can lock in lower rates so that you pay less in interest over time. This can help you save money in interest payments.

Bottom Line

While there is a great deal uncertainty right now, there are also a number of opportunities. For those who have practiced good financial habits in the past, and who make efforts to be financially free, even times of economic turmoil and downtown can present opportunities. A lot of it is about being in a place where you can seize the chance in front of you.

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dbl118   |     |   Comment #1
You suggested buying on stock market dips.  In order to make money that way you have to essentially be more knowledgeable than the day traders and people that are doing this for their living.  You'll have to be quicker than them, and you'll have to be so good that you can make a profit while still paying whatever fees your buying and selling would cost. 

So raise your hand if last week (when the market yo-yoed back and forth every day) if you knew which days to buy and which days to sell.
TampaBayBC   |     |   Comment #2

dbl118, while I agree with you that it is impossible to predict the daily ups-and-downs of the stock market, I think that perahps you might have missed the spirit of the "buy on the dips" comment by the author.

Any market pullback offers a great opportunity for the long-term (non day trader) investor to add to their positions, retirement accounts, etc.  Why not buy lower if you are in a position to?

The best investing strategy is to carefully develop an investing plan and stick with it through the daily ups-and-downs. Adjustments should only be made if there is a fundamental change to your goals or life situation.

You are right, though, in suggesting that day trading the market for quick in-and-out profits is a fool's game. 
dbl118   |     |   Comment #3
I hear ya TampaBayBC, and I see some logic in that line.  I guess my thoughts are that if you are in the market for the longrun because you think it's going to go up, the best strategy is to pile it in there as quickly as you can.  If you can't time the market in the short term, then you can't time it the long term. 

Twice in the last week the DOW had spectacular drops.  Look at what happened the next day.  One time it had another spectacular drop the next day.  The other time the market rose by several hundreds the next day.  Hope you picked the right day to pile it all in.  The problem is that the person waiting around for a time like now to invest in the market probably sat out the last couple years which were some of the best ever. 
51hh   |     |   Comment #4
People say it is the "time in the market" that is important, not timing the market.  Even if one is correct selling at the peak, one has to have the correct timing to buy at the bottom.  Statistics stands against being correct twice. 

That said, one can always develop some strategy (e.g., oversold/overbought indicators) that follows the market trend closely. 
LisaPA   |     |   Comment #5
It's not about timing the bottom any more than timing the top. If a stock you've had your eye on for a while is suddently trading down $10.15 per share and you buy, then it drops another 13 cents, you've still gotten a $10.15 per share discount. It doesn't matter if it's "the bottom". It's no different than seeing a car you want on sale for 20% off. You might get a better deal if you wait around, but you might not, which is why waiting for "the bottom" is usually a bad idea. Same argument for selling at "the top". Decide in advance what your sell price is. You've still made a profit, even if it's not as much as the guy who sold for 20 cents more.

Of course, this requires you to have done the research and know what a good price is on the stock in the first place.

Day traders aren't investors, they're gamblers.