Nov
4
Fire Your Financial Advisor
November 4, 2008 | 1 Comment
… the funds transferred over. At the time, it seemed like a big pain and I welcomed the help. However, as time passed I began to research investing. You have a lot more incentive with more wealth. Who cares what happens to a $500 Roth.
Well, turns out you really need to care when you have a small amount. Fees and expenses will eat you alive. It turns out it's very easy to roll over money to a new investment firm. Vanguard made the process really easy.
You Get What You …
Oct
30
The Right Time To Save Money
October 30, 2008 | 3 Comments
… get 4% interest from on online bank, getting 2% might be acceptable, if your money is secure.
How much do you need? I'm very conservative (smart) so I have at least 2 to 3 months in easy accessible savings. I also have a full years salary in savings. I keep my emergency money in savings account in a local bank. I keep the rest in a combination of CD's and online savings accounts.
This is not long term investment money, this is short term, the poop hits the fan money. If I lose …
Oct
29
Securitization - Good Idea Gone Bad or What Just Happened
October 29, 2008 | 1 Comment
I used to work for a credit card/finance/mortgage company. I always wonders how they got around the capital requirements I learned about in Money and Banking class. Well know I finally understand the big picture. Most of the expansion in the last 20 years has been a result of securitization.
What the Heck is Securitization?
The government requires that every bank hold a certain amount of money in reserve in case their loans go bad. So for instance if you get …
Oct
27
Time to Buy Gold?
October 27, 2008 | Leave a Comment
… than you paid for it. So if you adjust for inflation gold loses 4% of it's value every year. However, gold prices fluctuate widely based on speculation in the gold market.
In a true crisis, the grocery store is not going to take payment in gold coins. If a true financial crisis hits the US gold is not really going to do any good unless you can convert it to some kind of usable form.
You're better off stockpiling canned food, water, guns and ammunition than gold. You'll need to …
Oct
23
Magical Thinking
October 23, 2008 | 1 Comment
… were they thinking when they produced not just 1 but 2 or 3 children out of wedlock with no idea how to support them?
Magical thinking isn't limited to welfare queens. It's infected the whole country. When you put your money into the stock market and expect 12% returns on a stock that's selling for 30 times earnings, you're using magical thinking. When you buy houses at historically high prices hoping to turn a quick buck, magical thinking. When you buy a house you can't afford …
Oct
22
Fed Chief Pushes for Another Stimulus Package
October 22, 2008 | 5 Comments
… he supported another stimulus package. President push also supported another stimulus package. However, Bush wants the new package to be "targeted, temporary and timely."
What is the Plan?
Right now the plan is still taking shape. Any stimulus plan would have to go through Congress and the President. This could take some time. Democrats are pushing for increased unemployment benefits and funding public works projects (schools, roads bridges).
Republicans favor tax breaks for …
Oct
15
Why A Mortgage Increases Your Risk
October 15, 2008 | 1 Comment
… you comrade Bush ).
The banks failed ultimately because they ran out of capital. They had too much debt and no one would lend them any more money for fear of losing it.
Now relate this to your personal life. A mortgage is a loan against your future income stream with a a home as collateral. Your bank doesn't want your house, they want a steady stream of income at a guaranteed return (at least the smart ones do).
If/when you lose your job, how is your mortgage going to help you? …
Comment by Jeff: … you lose your job, how is your mortgage going to help …
Oct
14
A House is a Consumer Good Part 2
October 14, 2008 | 2 Comments
… by bank and real estate agent marketing) will say that a house is an investment. I will show why it's a poor investment.
The House as an Investment
The only way a house can be seen as an investment the appreciation angle. Unless you have a money tree in you back yard, your house isn't generating income.
When you purchase a home, you assume it will go up in value. The typical number is 3 to 4% a year. This 4% corresponds to the rate of inflation.
According to Robert …
Comment by Jeff: … is 11% return. However, you'll have to adjust that …
Oct
11
A House is a Consumer Good
October 11, 2008 | 2 Comments
… $1 million dollars in stocks/bonds/CD's/Land?
When's the last time you had to water your stock?
Comment by Jeff: … of the country is much more than I need/desire. …
Oct
8
Were You Diversified?
October 8, 2008 | Leave a Comment
Every morning in the locker room I hear the same thing. People talking about how much money they just lost in the stock market. The problem is these people are OLD. I really want to walk up to one of them and ask if they were diversified or if the stock market was their only hope for retirement.
I'm fairly fortunate (read smart). I am extremely diversified. Yes my retirement statements are just as bad as everyone else's (except for a few of my wife's …