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Ask The Fool

Q: How should I invest money that I’m saving for a down payment on a home, so that it grows the fastest?

A: It depends on your time frame. If your home purchase is many years away, you might invest most or all of your money in stocks — perhaps in a simple broad-market index fund (such as an S&P 500 or “total market” one) that will deliver roughly the market’s average return. Alternatively, you might invest in carefully chosen individual stocks.

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If you plan to buy that home within a few years, though, the stock market should be off-limits. That’s because while the market tends to rise over the long run, it’s unpredictable over the short term.

Short-term money should be kept in a safer place, such as CDs or money-market funds, to protect your principal.

Q: What are these “diluted” shares I’ve seen in earnings reports?

A: A company’s bottom-line profit, or “net income,” is divided by its total share count to arrive at its earnings per share (EPS). The EPS is often reported in two ways — “basic” and “diluted.”

Basic EPS uses the number of shares that currently exist, while diluted EPS is more conservative, including shares that could exist, for example, if people with stock options exercised them. Other securities that could be converted into common stock are also accounted for. It’s best to focus on diluted, not basic, shares.

The best way to help your teens avoid making common financial blunders in adulthood (living beyond their means, racking up credit-card debt, etc.) is to start them on the road to savvy money management early. Here are some things you might do:

• Teach your kids budgeting skills. If they get allowances or earn money, help them prioritize their spending and decide how to spend their cash, weighing expenses such as fast-food snacks with friends against saving for a fancy phone. Have your teens contribute toward major expenses such as their car insurance.

• Open IRAs for your teens when they have earned income (which is required for contributions), and encourage them to contribute a portion of future earnings.

• Avoid getting them a credit card at least until they’ve demonstrated a high level of responsibility. Using plastic can distance them from the reality of money and its limits, while handling actual bills keeps things real.

• Model good money management yourself. If you’re mired in credit-card debt, your teen will notice. Let them see you being a smart shopper and paying bills on time.

In our increasingly digitized world, Xerox (NYSE: XRX) has struggled to become more than just a copier company.

Its turnaround is in progress and is promising, as the company has diversified into other, more profitable, businesses such as digital document storage and information technology.

For example, Xerox offers services for health-care networks, pharmaceutical companies and hospitals. It has won contracts to process Medicaid documents for New York, California and other states, and has been an Obamacare service provider, too.

Xerox also manages databases, networks, data backup, digital infrastructure, cloud storage and centralized print services for other organizations.

Xerox has been generating more than $2 billion in annual free cash flow, and its revenue growth and profit margins have improved considerably since 2010, although they are yet to fully stabilize.

For patient believers, Xerox stock recently offered a 2 percent dividend yield.

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