Buy low and sell high. That’s how you play the stock market and what could be simpler than that?

Well, it is simple. And it sounds nice. But for the most part, it’s an investment fallacy. It’s not what Warren Buffett does and you shouldn’t do it, either.

To start this discussion, let’s look at the tech-stock dominated NASDAQ index. Prior to the last two recessions, the NASDAQ index reached a peak of 6,948.75 points. That was in March 2000. It then fell to a late 2002 low of close to 1,000 points before skittering along for the next six years to a new peak of 3,000 points in 2008. It then fell again in the so-called Great Recession, which ran from December 2007 through June 2009. Now it is back to close to 5,000 points, the highest it has been since March 2000.

What this tells us is that the NASDAQ index was overvalued in March 2000 just prior to what is called the Dot Com Bust. The new peak of 5,000 points, while lower than March 2000, is thought to be a more solid value than the unrealistic and speculative peak of 6,000 points way back when. So, which would you rather own, a solid 5,000-point stock or a speculative 6,000-point stock that reflected the market’s guesswork on the value of Internet companies that were widely popular but didn’t even sell a product?

Despite what it looks like, the NASDAQ’s value now maybe more substantial than it was in 2000. Then it was a highly speculative market. Now, it is a more realistic one.

That said, the basic strategies for investment remain the same – and they are not really built on the concept of buying low and selling high, except for a few speculative investments. Unless you have a crystal ball, what you are investing in should be long term stock trends. You might say, philosophically, you are investing in time.

Yes, there are wildly dramatic success stories out there, just as there are wildly dramatic stories of people going broke on Wall Street.

So, let’s look at Warren Buffett for a moment. He’s frequently mentioned as the most successful investor of all time. He started his life in a modest home in Omaha, Neb., and went on to become one of the richest men in the world.

But he doesn’t believe in buy low and sell high at all. What he believe in is long-term investment.

In other words, Buffett only believes in buy low and sell when a company is beyond hope.

Buffet likes to buy low and hang on for dear life. Why stocks for a company that is in a low stretch, when you know the long-term prospects are good.

Any company that still has a pulse can still revive and go on to make a fortune. Look at Apple Inc. It is among the largest companies by capitalization in the world and it got there on the backs of its staggeringly successful smart phone business. But for a few decades there, when it just sold computers, Apple was kind of a stock market dog. It had many lows before it found its true calling. If a wise investor had sold Apple stocks when they were low, they would have missed the wild valuation that came about relatively late in the company’s history.

The real trick is buy low and hold on through thick and thin until the economy or fate props up your investments. When the recession hit, Buffett, for example, bought a railroad and invested $5 billion in Goldman Sachs, a huge Wall Street bank.

In other words, he invested in stodgy, long-term projects. With global warming on everybody’s mind, railroads, his research team decided, had a place in the greater scheme of things. Cheap shipping companies might just do well when the energy market shifted to reflect tighter resources and increased concern for the Earth’s environment.

The answer to the every day investor is diversify and hold on. Put some money in banks, a few dollars buying pharmaceutical company stocks, something in restaurant chains, a manufacturing company or two, and maybe some Blue-chip giants, like Boeing, Ford, Johnson & Johnson or Proctor and Gamble.

How much of your money do you use chasing around for the next Apple Inc? None. Unless you work at Apple, you had no business investing in them when they were the street corner punks of the computer industry. OK, some people had a good hunch or liked the quirky company – and, yes, the scored big. They were lucky. But if you trust luck, invest in lottery tickets. In general, don’t toss your hard-earned money on luck.

Invest in time. Invest in long-term stocks and wait for the tide to rise, the tide being the general economy. If you go down, you will have a lot of company. If stocks rise, you will also have company. Then maybe take 1 percent of your capital and make a few wild bets and once you get that out of your system, leave your stodgy investments alone. That’s the way to make your grandchildren proud.

As a homeowner, you probably have lots of different bills to pay, are we right? From property tax and mortgage repayments to your energy bills and home maintenance costs, being a homeowner is pricey.

The main problem for many homeowners is that when a bill is missed or paid late, extra interest and fees are added to that bill. This makes it even more difficult for that bill to be paid off, leaving many homeowners struggling to keep on top of their other bills. This then leads to other bills being paid late, and the whole cycle of added fees and interest continues.

Picture from Flickr

Admittedly, as a homeowner it isn’t always easy to keep on top of your bills. However, there are four simple things you can do to make keeping on top of your bills easier to manage.

  1. Know what bills you have coming

The worst thing you can do is not keep track of what bills you have to come, as this will only make it more difficult for you to stay on top of them. If you haven’t already, sit down with your partner and make a list of all the bills you have to pay each month.

This list should include every payment that you need to make, from mortgage payments to medical insurance, every bill must be on there. Once you have completed your bills list, you can then use it to budget for each month. This will ensure that you set aside enough money each month to pay off all of your bills.

  1. Set up direct debits

To avoid forgetting to pay any bills, as this leads to late payment charges and increased interest rates, use direct debits for payments. Setting up direct debits for each bill is ideal, as it means that even if you forget about a bill, it will get paid automatically.

Obviously, for the bills that aren’t the same amount each month, you won’t be able to set up a direct debit. However, for most bills you should be able to do so.

  1. Don’t let one missed payment affect your other bills

If you end up missing a payment for a bill, such as for property tax, don’t let it affect your other bills. You see, it’s common when a bill is missed, for homeowners to focus on that bill, forgetting to keep on top of the other bills.

If, for instance, you got behind with your property tax bills, don’t let it affect your other bills. Make sure that you continue to pay all your other bills on time and deal with the missed property tax bill separately.

The best way to get back on track with a missed bill, such as property tax would be to get a short-term loan from a loan company like Reliance Tax Loans. Getting a loan would allow you to pay off your late bills and you could then start making the loan repayments as and when you could afford them.

  1. Open an account for bills

Instead of keeping all your money in one bank account, open a second account just for money for bills. That account could then be used to put all of your money for bills into each month. From mortgage payments to payments for school fees, all bill money should be put into that account.

Then, any spare money can be left in your regular bank account and can be used for any additional spending. Such as for treats, luxuries and family days out.

Keeping on top of your bills as a homeowner can be difficult, especially when there are lots of different things that need paying. But, by following the tips and advice in this simple guide, you can make things much easier for yourself.

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