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The 401-KegPlan 2008-04-15 19:31:52 Here a funny (I think) investment joke I received recently. I don't know if the numbers are entirely accurate and the figures look a bit dated, but you get the point.- If you had purchased $1000 of Nortel stock one year ago, it would now be worth $49.00- With Enron, you would have had $16.50 left of the original $1000- With WorldCom, you would have had less than $5 left- If you had purchased $1000 of Delta Airlines stock, you would have $49 leftBut, if you had purchased $1,000 worth of beer one year ago, drank all the beer, then turned in the cans for the aluminum recycling REFUND, you would have had $214. Based on the above, the best current investment advice is to drink heavily and recycle. It's called the 401-KegPlan. Check to see your company matching policy.***************************
No title 2008-04-15 16:48:33 From, Michael Fischer's book Saving and Investing: Financial Knowledge and Financial Literacy that Everyone Needs and Deserves to Have!, here is a simple and effective summary of the various investment classes that I reference throughout this blog.DEBT AND BONDS (FIXED INCOME INVESTMENTS)The first way that we as savers can interact with users of capital who are looking for funds to grow their business or to undertake a project is through debt – we can effectively lend them money. Our return depends on the ability and willingness of the other party to pay us a return, usually in the form of interest.EQUITY AND STOCKS The second way that we as savers can interact with users of capital is via equity (which includes stock investments), where we become owners or part owners of companies.MUTUA
Money and Happiness 2008-04-17 08:31:35 Awhile ago I came across a poignant article in the Wall Street Journal - You're Not Super Rich? You Lucked Out, by Jonathan Clements which got me thinking about this concept. Here are some excerpts from it that I think ring especially true.On the face of it....We all swoon over nice and expensive things - a big house, flashy car dinner or private jets. We see others with these things and wish we could have them - a completely natural instinct But the fact is, while it is comforting to be financially secure, money is no measure of self-worth, no guarantee of happiness -- and no reason to be impressed.We all tend to sit up and take notice when we come across people with fancy titles, hefty incomes and immense riches. Yet these aren't signs of genius or virtue. Want proof? All it takes is two Read more:Money
How to buy shares - Two simple steps 2008-04-20 16:44:41 My brother-in-law recently decided he wanted to buy some Visa shares
(V) following a discussion we had around the postive outlook for the company. However he has never bought shares before and asked me about the process. So this post is for him and others new to the stock market. It may look complex with all those charts and numbers but the good news is that in today's digital age, trading shares is simpler than ever. Just follow these two steps
:1. Find and Sign up with an online brokerFor most people who just want to trade shares, the best bet is to sign up with an online broker. You can sign-up with a full service broker who provides trading advice and executes the trades for you, but they can charge a lot and you need to be investing some serious money to really warrant the use of a fu
Beware - IRS Stimulus Email Scam 2008-04-22 09:39:38 I recently received an email from the IRS as shown in the screen shot below. Do you think it looks real? I did and for a minute I was about to do as it instructed - provide my social security and bank account details. Then I thought why would the IRS be asking me to do this if I had already provided it in my tax return. Luckily I took the time to check the real IRS website, and found that this "phishing" email is part of a far reaching identity theft scam to get your personal financial information. Here is what the official IRS website has to say about itAn e-mail claiming to come from the IRS about the "2008 Economic Stimulus Refund" tells recipients to click on a link to fill out a form, apparently for direct deposit of the payment into their bank account. This appears to be an identity Read more:Beware
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Decoupling debunked 2008-04-23 19:26:38 There is a popular theory going around that the U.S. had become "decoupled" from the rest of the world due to the emergence of new powerhouse economies like China and India. The theory goes onto say that a downturn in the U.S. would not slow the global economy since the new growth economies on the block had matured to a point where they weren't as dependent on U.S. demand for growth. How wrong this was shown to be!This theory is clearly flawed (for now anyway) as evidenced by the sub prime fiasco and associated fallout which wiped away trillions of dollars in real and paper wealth both in the US and globally. Most share markets around the world are down significantly and growth economies like India were down 30% this year. So when the US sneezes the rest of the world does indeed still catc Read more:debunked
Save $29 in minutes 2008-04-22 22:20:46 I came across an article recently about how to save money and shop on-line more effectively by taking advantage of freely available merchant discount codes. These codes can be entered at the checkout page of most on-line retailer web sites and can result in some real savings ($29 on average) with minimal effort. Well, I put this to the test over the weekend when I bought a digital camera. It was a regular single click Sony model which I bought for around $200 from an on-line retailer I found through Amazon.com. Using a 15% merchant discount code I was able to get $30 off the price - not bad for a few minutes
of effort. So how I did I find the relevant merchant discount code? There are various sites like, Currentcodes.com, RetailMeNot.com and CoolSavings.com but all I did was a Google searc
Beware Paid Links and use the "no follow" attribute 2008-04-24 19:30:29 I have started receiving the following type of emails recently, which offer to pay me between $10 and $50 to embed a link to specified external websites. Hi Andy,I was looking at your page on credit scores - 10 things to know about your credit - , and I'm interested in paying you $30 to place a text ad on with the possibility of a multi-ad deal for more money upon further review of your website and your interest. The ad will link to a site offering credit repair services.I can pay you immediately via paypal or check once the ad has been posted. Please let me know if you are interested and I will send you the ad. Thanks!! :)Best,JudyGenerally the emails are for paid links to credit repair, loans or debt management type websites. When I first started blogging (on my other site), I used to ju Read more:Beware
Top ten myths about buying a franchise 2008-04-24 19:15:47 This post is by Tony Parker, an experienced investor across various asset classes.Generally most Americans are not happy working for someone else or being in the corporate rat race. So the idea of being your own boss and controlling your destiny is very appealing. Besides some of the many “get rich quick” schemes on TV, there is one type of business that seems like an easy escape from the corporate (READ: Dilbert) world. It is to buy a franchise
. Now there are many franchises available in a multitude of industries, but they all have two things in common. First, they project the image of financial freedom. Second, beyond a few boilerplate legal disclaimers - “By signing this contract, the franchisor is in no way guaranteeing the franchisee a profitable enterprise” – the franchise
Insuring pregnancy - is this going too far? 2008-04-26 17:15:55 Expectant mothers will now be able to insure their unborn babies against pregnancy complications, birth defects and even death. This type of insurance, possibly the first of its kind, is being offered by ING Australia. It is aimed at the growing number of older mothers (who have the greater the risk of pregnancy complications and birth defects) and if successful it will only be a matter of time before it comes to American and Europe. The following are the reported coverages:Mothers whose children have disabilities such as blindness and deafness or other congenital malformations, including spina bifida, Down syndrome, cleft palate and heart disorders, will receive $50,000 from an insurance policy launched this week. Women suffering dangerous complications such as ectopic pregnancy or eclamp
Appearances this week 2008-04-26 10:06:13 I started this blog in Decemeber as I dipped my toe into the personal finance blog pond. However over the last month or so I have started committing more time and effot to the blog and have increased the frequency of posts to almost 1 a day. Over this time I have also contributed some of my articles to related blog carnivals/festivals and it was nice to see some of them referenced at host sites during the week. What's more I discovered a number of great articles (and blogs) along the way. Here are the highlights:149th Carnival of Personal Finance - Chasing Dreams EditionMy post on I am NOT going to cut back on my cup of coffee was mentioned at arguably the most popular personal finance carnival hosted at The Happy Rock. Frank (aka the Rock) runs a great blog over (on my blogroll!) and here Read more:Appearances
The Rental Squeeze 2008-04-25 08:56:20 We have all heard about the sad state of the US housing market thanks to the subprime driven credit crisis. However, now the rental market is starting to feel the effects of this as less people buy and instead choose or have to rent. This is feeding the philosophy that when times are bad, the rich get even richer. So all those landlords who own property to rent are cheering as they see rents go up, by double digits in some areas. Rents, in fact, are accelerating in most markets across the USA. Vacancy rates are down from last year, and average rent is projected to rise 5.3% in 2008, up from a 3.1% increase in 2007, according to the National Association of Realtors. In some cities, rents are climbing at a double-digit clip (see the table below for the median rents by metro area)I got to exp Read more:Rental
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Financial Spring Cleaning - Organize your Clutter 2008-04-27 22:20:28 Is your financial documentation clutter getting too much to deal with? Signs of this include bills piling up, statements in random piles and your desk barely visible under all the stacks of paper. Most of us have, at some point, experienced this and need to get organized. Start now by making "Financial
" spring cleaning part of your future using the four simple steps provided here that I myself have followed for a number of years.1. Assess the situation. Where do you need to focus your energy? One way to get to the root of your organizational challenges is to ask yourself questions like: What are most important financial documents? Which ones do I need to action regularly? Are any over due bills? What do I always have trouble finding? Then think about how you want things to be and identify Read more:Cleaning
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Taxes and my Paycheck 2008-04-29 13:56:30 When I moved here one of the financial mysteries for me were the taxes on my paycheck, what would be deducted and more importantly how much should I withhold to meet my tax obligations. I learnt the importance of understanding this the hard way with a hefty tax bill, due to not withholding enough taxes during the year. Luckily I had sufficient funds to pay the tax liability and there was no fine as this was the first year I owed taxes. If I owe taxes again next year, there will be a $300+ fine. With this in mind, I thought I would summarize my learning experiences around the taxes in ones paycheck and how they are calculated. I work in large Fortune 100 corporation, which outsources it paycheck process to a national payroll company, so I imagine it contains most of the common elements pres Read more:Paycheck
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Who does the finances in your household? 2008-04-30 07:57:39 I do in my household. For me doing the household finances
are something I don't mind, apart from seeing all the bills which means money going out the door. I also do the budgeting, taxes and investments. I have a natural affinity for all things finance, a reason I write this blog, and my wife thinks all this finance "stuff" is extremely boring. She has a good job, deals with numbers in her job, but when it comes to household finances, she is more than happy to leave it to me. I used to be fine with this, but once we had a child I started realizing that should something happen to me, she should be aware of our finances. Also, when it comes to investing and saving, 2 heads are always better than one.The Newyork times recently had a piece on finances and women in which the line I liked best w
Which Personal Finance Blogging Platform is best (plus 3 tips) 2008-05-04 18:59:23 Having run this personal finance blog for a few months now on Google's blogger platform one question I ask myself as I become more serious about blogging, as a possible full time pursuit, is what is the best and most effective blogging platform to be on for the long term. To answer this I looked at a cross section of the top personal finance and investing blogs (based on various sources) out there. The table below presents a summary of my findings which I think represents a good cross section of the data I looked at. BlogBloggingPlatform
Published Subscribers://www.thesimpledollar.com/Wordpress31617://www.consumerismcommentary.com/Wordpress9151://www.thedigeratilife.com/blog/Wordpress2967://www.moneysavingmom.com/BloggerN/AYou can see that from the list that Wordpress is clearly the bloggi Read more:Personal
Macau Play : Melco PBL (MPEL) - on the up and worth a gamble 2008-05-06 09:51:17 One of the stocks I own in my portfolio is Macau (in China) casino operator Melco PBL Entertainment (MPEL). In a previous post I lamented my losses on it but believed it still had some good upside in the medium to long term. Well it had a nice run up this week ahead of its first quarter earnings report, thanks a positive review in Barron's magazine which labelled the stock the "The Best Bet in Macau". Here some excerpts from the article and my comments on them."Crown Macau started slowly, but it's gaining share in a hotly contested arket. More recently, however, Melco's hand has improved. It's found ways to grab more customers, and has a huge new casino on tap. The Chinese government is now limiting new competition, aiding all the local houses. Meanwhile, shares of the Las Vegas Sands and
Start budgeting for $5 gas now! 2008-05-07 15:11:04 With global oil prices rising every other day and most projections forecasting the average national price of gas to rise to $4 (a gallon) by summer and to $5 the next year, it is time to accept the fact that high gas prices are here to stay. So stop complaining and start revising your budgeting to mitigate the impact from these higher prices down the road. Based on national averages, the average number of times a car is refuelled in a month is 1.86, which equates to twice a month for most people. The current average price of gas is $3.40 (regular) and a normal family car has a 15 gallon capacity. So if gas prices rise to $5 a gallon within the next year, the impact to your budget will be ($5-$3.40)x15 gallons x 2 times a month x12 months = $576 a year after tax. If you have a longer commut Read more:Start
Results from 2008 IT Salary Survey 2008-05-07 09:19:27 I work in the technology sector and so it was interesting to see the results of the 2008 US IT salary survey. Overall it looks like the median salaries for business technology professionals fell for the first time in 11 years. From 2007 to 2008, median base pay for IT staff fell to $73,000 from $74,000 and for managers it dropped from $97,000 to $96,000. This was probably due to the general economic slowdown which led to lower corporate spending and increased outsourcing thereby driving down internal labor costs. However, as the overall drops are not significant I don't think you can read too much into the numbers yet.Some other points of note from the survey were:1. There are still some jobs that are seeing an uptick in salary, particularly those with Web design and Enterprise wide type r Read more:Salary
The Importance of Diversification 2008-05-09 10:26:18 In a recent post I talked about the 5 "buy" signs for a stock. However, your portfolio should never consist of just one stock, Exchange Traded Fund (ETF) or mutual fund in the long term because of the potential exposure to loss you will have. So to manage your risk, you must diversify your portfolio. A good rule to remember is that "The more diversified you are, the less pain your portfolio will feel in the long run"Another reason to diversify is that it is possible to have too much of a good thing. That's especially true when strong performance in a particular market sector causes one part of your investment portfolio to bulge while other parts shrink or grow only modestly. In such situations, instinct may tell you to celebrate your good fortune and leave your portfolio as is—or even to Read more:Diversification
Frugal ways to keep your home safe 2008-05-08 10:04:57 Recently there has been a spate of minor burglaries in my apartment complex, which prompted my wife and I to consider getting an alarm system for our apartment. We looked into this via various on-line sites and calls to security companies in our local area and found that the costs would be about $500 to install/wire the system, and then $60 dollars per month to have back to base monitoring. Total cost for the year would be around $1220. Ouch. Given the break-ins were relatively minor and as we had home insurance I got around to thinking that there must be cheaper (frugal) ways to protect ones home. Here is a list I came up with, and am already using some of these precautions. Best of all, the cost is significantly less than a full fledged alarm system. Feel free to suggest any more ideas Read more:Frugal
I bought into the market hype for Visa and got burnt! 2008-05-10 14:42:39 Over the last week or so Visa (V) stock has been on steady run up from about $60 to $90 – until the last 2 days of this week when it lost 7% of its value. I had bought some stock when it was $64 (just after the IPO) and was looking to buy some more based on how the stock performed. It off course performed very well and kept on going up. I kept on waiting for a pullback, but it never came. Finally I got tired of watching the relentless run-up and decided that the uptrend was going to continue – spurred by what I was reading and hearing in the media – and decided to buy some Sep $95 call options. This gives me the right to buy the stock at $95 before the options expire in September. I decided to buy options rather than the actual stock as they provided more upside potential for a small Read more:burnt
Until the nation is broke, viva la credit card 2008-05-12 11:38:31 It was recently reported, by the Federal Reserve, that consumer borrowing surged again in March. Consumers increased their borrowing at an annual rate of 7.2%, compared with a 3.1% rate of increase in February. Here is a summary of the worrying borrowing and debt figures:The increase in consumer debt totaled $15.3 billion at an annual rate in March, much bigger than the $6 billion increase that ec Read more:broke
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How people are (mis)spending their stimulus checks 2008-05-11 15:22:33 Here are interviews with various people
on what they plan to do with their stimulus checks
. With the government hoping people will spend a majority of the $100 billion dollars, they may be concerned with some of the sample responses where a number of folks are just going to save the stimulus payment ($600 per person). What I found interesting was how the various folks responded in line with the th
Top ten myths about buying a franchise - Part 2 2008-05-13 14:01:44 This is the second of my three part series looking at myths around buying, running and owning a franchise
based on my own personal experience. Following some comments I received on the first article of this series, I just wanted to clarify that I am not anti-franchising. I think it can be a very profitable venture if done correctly and you go in with your eyes open. That is the aim of this series
Why the fall in stock prices was good for your 401K 2008-05-15 13:13:49 I hope you didn't reduce your 401K or other retirement account contributions over the last four to six months as stock prices and markets tumbled. Even though the value of your current 401K or retirement plan probably fell over this time, in the long term the power of dollar cost averaging and recovering/rising markets would have ensured that your portfolio will be worth more than it would have be
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