I know the stock market is going gang-busters. Many economic pundits say the worst is behind us and the market has bottomed.
Even the revered Nobel Prize winner, Paul Krugman, believes the global economy free-fall may be ending soon.
I am not keen to invest heavily in the stock market and have cautioned my friends and relatives against using margin accounts or leverage to pursue profits. A major correction may happen soon and our money could be trapped. In the worst case scenario, we are forced to accept huge losses from liquidation of our stock holdings.
Patience is a virtue, especially in investing. There are better ways to spend our hard earned money than speculation.
Saturday, May 30, 2009
Thursday, May 28, 2009
An Irish daughter had not been home for over 5 years. Upon her return her Father cussed her.
"Where have ye been all this time? Why did ye not write to us, not even a line? Why didn't ye call? Can ye not understand what ye put yer old Mother thru?"
The girl, crying, replied, "Sniff, sniff.... Dad.... I became a prostitute.. ."
"Ye what!!? Out of here, ye shameless harlot! Sinner! You're a disgrace to this Catholic family."
"OK, Dad-- as ye wish. I just came back to give mum this luxurious fur coat, title deed to a ten bedroom mansion plus a £5 million savings certificate. For me little brother, this gold Rolex and for ye Daddy, the sparkling new Mercedes limited edition convertible that's parked outside plus a membership to the country club........ ......... ....... (takes a breath)..... ........ and an invitation for ye all to spend New Years Eve on board my new yacht in the Riviera and... ..."
"Now what was it ye said ye had become?" says Dad.
Girl, crying again, "Sniff, sniff.... a prostitute Daddy! Sniff, sniff."
"Oh! Be Jesus! Ye scared me half to death, girl! I thought ye said a Protestant. Come here and give yer old Dad a hug."
Monday, May 25, 2009
The stock market is in rip-roaring form of late. My neighbor just informed me of his killing in the stock market - a cool $90,000 over the past three weeks. To be sure, I am tempted by the easy money which he pocketed almost effortlessly.
However, skepticism of this stock market rally lingers in my mind and I am not in a hurry to risk any of my hard-earned money to chase the bull. It wasn't too long ago that this same neighbor who exalted about his new found wealth was losing sleep over his credit card debts and impending foreclosure.
One will have thought he has learned a valuable lesson but the robust stock market rally has enticed him back to his speculative ways. I am less than impressed with his behavior but since I am in no position to lecture him, I can only review my own portfolio and investment strategy to see if any adjustments need to be made, in light of the exuberance.
Before we commit to any investment, we have to understand that it entails an element of risk and the higher the risk, the bigger your returns. This is the basic tenet of investing. So if your risk profile is high, you can choose to invest in stocks, bonds or commodities.
I have a low risk appetite, hence, over the years, I invested substantial savings in Certificates of Deposits. While the returns are not eye-catching, my wealth wasn't decimated by the financial crisis. On the whole, I am satisfied that the investment strategy is sound and I am sticking to it for my retirement goals.
There are very few secrets to successful investing in Certificates of Deposits. I mean, you don't have to deal with complex financial jargon or formula. Here are some reasons why I love CDs as well as tips to excel with this simple financial instrument.
1. Your Investment Is Safe.Unlike many investments, the money deposited in a Certificate of Deposit is safe, meaning it is guaranteed by the federal government. As long as you purchase the Certificate of Deposit through an FDIC insured bank and don't withdraw the money before the CD matures, you aren't at risk of losing your money.
2. Only Invest Money You Don't Need In A CD.As I just mentioned, you should not pull out your money before the maturity date, in order to receive the maximum benefit of a CD.
If you take money out of a Certificate of Deposit before it “matured”, you pay a penalty fee. Depending on how hefty the penalty is, it can decrease the amount of interest you earn or even eat into your principal (ie. you withdraw less than your original deposit).
Hence, you must be prepared to invest for the long haul. That excludes your emergency fund which must be liquid.
3. CDs Have Higher Interest Rates Than Savings Accounts.I know there are many online savings account which offer attractive interest rates, but rarely will they surpass the interest rate from a Certificate of Deposit. The reason is because you are essentially giving the bank a loan when you deposit money for a specific period of time in a CD.
The time frame for the "loan" can range from 3 months, 6 months, 1 year or 10 years and in exchange, the banks have to provide a higher rate of interest than a savings account.
On the other hand, savings accounts can be withdrawn at any time, without any penalty, and therefore this money is less reliable for the bank to make any meaningful investment. Hence the lower interest rates.
4.Using A Certificate of Deposit Ladder.Laddering will maximize your savings through certificates of deposit. CD laddering is a method of staggering your maturity dates on multiple Certificate of Deposits, which enables you access to parts of your money at different intervals.
Each time a CD matures, you can withdraw without penalty or re-invest into another Certificate of Deposit or investment of your choice. This will lower the chances of any premature termination of CDs because of tight cashflow.
5. Comparison Shop Before Investing In Certificates of Deposit.Many people assume that Certificates of Deposit are the same everywhere. Well, CDs do vary and you should comparison shop for the best.
While the traditional, plain-vanilla Certificate of Deposit is the most popular, there are also “bump up” CDs which allows you to receive more interest if the interest rates rise before your CD matures.
“Liquid” Certificates of Deposit makes it possible to withdraw money penalty free before maturity is reached. Other CD variations include callable, zero-coupon, brokerage and high-yield, which all have slight variations of the traditional Certificate of Deposit.
With these 5 tips, you should be doing relatively well in your investment on Certificates of Deposits.
Friday, May 22, 2009
I know it is a terrible feeling to be in debts. Debts can cause many sleepless nights and even depression, when you feel like you can never repay all the money you owe. You may not be consciously thinking about the debt but it weighs on your mind and mood.
Debts may be overwhelming but who says you can't put a positive spin to the situation. Here are some tips for boosting your mood and having a smile.
1. Do Not Deprive Yourself Of Sleep
Many people are stressed out by debts and cannot sleep well. If you've been restless because of the money you owe, it's time to tell yourself to stop using your bedtime as your thinking time.
Your debt did not come about overnight and a quick-fix will not appear while counting sheep in your sleep. Learn to relax and think of positive thoughts at bedtime.
Once you catch forty winks, you will enjoy a brighter outlook in the morning (not to mention immense health benefits from sufficient sleep) and have more energy to tackle your debts.
2. Don't Dwell on the Debt
Debts are no laughing matter especially when creditors are banging down your door or threatening to foreclose your house.
But place it into perspective and you realize it is not the end of the world. Thinking about debt all day will not solve the problem, except to make you sick with stress and anxiety.
Just keep records of your debts so that you don't have to memorize them. You can free your mind up to think about earning more money.
3. Appreciate The Positives In Life
Even if you owe a lot of money, you can still be thankful. Don't let your stress over the debts cloud your ability to see the blessings you have in your life.
You have other assets which are priceless, like your family and friends. Focus on the positives in your life and you'll instantly improve your mood.
4. Seek Help From Community
You are not alone... millions of people around the world are in similar situations - facing more debt than they know how to repay.
There are non profit organizations and many helpful websites like this one which give you support and can help you make some progress towards becoming debt free. Take advantage of the resources available to you.
Tuesday, May 19, 2009
My kid loves to visit the amusement parks during the summer holidays. This is part of a reward which we promise for his achieving of good grades and no doubt, it is an enjoyable family outing.
However, amusement parks can wreck havoc on the household budget, especially when your kid insists on return trips. Due to my wife's indulgence of our kid's petulance, I have to learn the hard way on saving money at amusement parks, from discounts on admissions to minimizing food expenses.
I will start off by researching Internet specials and coupons in newspapers. I may even call the amusement park to ask about special deals if I don't see any on its web site.
Alternatively, you can also check with your employer to see if they have a corporate discount rate for local parks. My former company has such a tie up which turns out to be extremely popular for employees with kids.
There are also special deals at gas stations, fast food chains and products which offer discounts to amusement parks. If you plan to visit more than once, a season pass pays for itself in less than two visits.
I usually avoid the big theme parks, for good reason. Regional amusement parks are cheaper, have much shorter queue lines and more discounts for locals. Some amusement parks forgo gate receipts and allow us to buy tickets for individual rides, unlimited-ride wristbands or discount packages.
The day and time you visit can also affects ticket prices. If you arrive in the late afternoon, you could pay less (or maybe get the next day free for some attractions). If you want to avoid the crowds and the sun, visiting the amusement park in the evening may be a good idea. Most are open on weekends until 10 p.m. or later.
Our family don't like to stay overnight but if you have a good time at the amusement parks and plan to explore further, you should find out if the attractions offer discounts for multi-day visits or when you packaged your accommodations and admission tickets together.
As for saving on food, I must say this is one of the biggest bugbear for a trip to the amusement parks. If the park allows picnicking, bring your own drinks and sandwiches, else it will cost a bomb to eat at the cafes.
Otherwise, you should stake out the amusement park for special food deals like all-day, all-you-can-eat buffets, discount meal plans or perks for an extended stay.
It's also cheaper to purchase a big $10 souvenir plastic cup with unlimited refills (more than 1 person can drink out of it) than to buy $5 sodas for each thirsty kid four times on a hot day. You can bring the souvenir cups back for refills on your next visit, too. Alternatively, just carry a water bottle to refill from drinking fountains, which is what we do.
Individually priced games and attractions inside the park add up. If you're on a tight budget, be firm with the kids: No souvenirs, no games or arcades, no add-on experiences like the $10 Bungee jump.
Tell your kids beforehand that you want to splurge on a day at the park, but you can only afford it if they promise not to ask for extras. This will cut down on whining as well as expenses.
Saturday, May 16, 2009
Traditional coupons are not in vogue with the younger generation, especially college students. Not that they dislike saving money. Instead, they prefer online discount coupons and promotional codes.
Platform-A’s Business Intelligence's study is telling.
The study found that over 50% in the college-age group are likely to use discount codes if presented online even though they are historically disinterested in traditional coupons.
Young couples who do not yet have children are most likely to use promos codes. This is odd as you will think young families have a greater impetus to save money than their childless counterparts.
The difference lies in the comfort of youngsters in using modern technology. The study found, that almost 25% of coupon clippers are senior citizens (a group that is not at all likely to look for online discount codes).
As technology improves to allow for more methods of using discount codes online and via mobile phones, it is likely that the trend towards increased use of these coupons by younger generations will continue.
Wednesday, May 13, 2009
The common understanding was that we need a job to make ends meet but apparently for this lady, quitting her job saves money and time.
One of the main reasons she quit was because she wasn't making enough money after her paycheck had deductions from childcare.
"Once insurance was paid and day care paid for, for those hours, I had about 2 dollars left out of the paycheck"
$2? Well, that is not acceptable. It is tiring enough to bring up kids, and to go out to work, only to have only $2 to show at the end of the ordeal is ridiculous.
Fortunately, Allie has enough entrepreneurial spirit to launch her own day care center at home. For other mothers in similar position, working at home may be a better option indeed.
I will discuss a bit more about work-at-home schemes for mothers later since my wife is experimenting with a few concepts currently.
The key discussion today is about transportation expenses. I know this item is often overlooked, especially when gas prices have tumbled. Also, most people think they don't really go anywhere besides work and grocery shopping so these are necessary trips. But even then, there is much room to save money on gas bills.
I can easily save $5-$10 each time I reduce the trip to the grocery store or wake up earlier and take public transport for the day.
It is important to plan ahead and consolidate your short car jaunts. For example, it is wasteful to drive to different stores to chase down bargains, just to save pennies while guzzling gasoline dollars. To put it simply, this is penny wise, pound foolish.
You should also look for online stores. Many items are cheaper when bought online due to the lower costs of not running a business requiring a shop front, staff etc.
Don`t forget about bargains at thrift stores, or charity shops too. You can buy designer clothes which are often sold at very low prices. So whenever I drive there, we buy in bulk. It is silly to pick up just one or two items which cost as much as your gas expense.
Allie's case may be rather extreme that her income is reduced so drastically by child care and gas expenses. However, do not underestimate the effect of transportation expense on the household budget.
Managing gas expenses well will put you in good stead when gas prices rise back or exceed $4 per gallon.
Friday, May 8, 2009
Living in the modern world is all about catching up. We are often overwhelmed by so much information or work to do that we mindlessly waste money on little things for convenience.
Some bad habits I am guilty of indulging before I started saving and managing my money includes overpaying for postage on my mails. This is because I was too lazy to go to the post office and weigh out my packages.
Now, a stamp may not cost much and I don’t mail things out often, so I probably waste less than a dollar each time. Nevertheless, over the long term, the money wasted on extra stamps add up to quite a nice chunk of change.
Another example of wasting money on little things is a grocery store trip. I often purchase Snickers, sandwich, gum or a bottle of Coke on my way home to get a sugar rush. If I went home to eat my lunch or dinner (since I wasn't particularly hungry) and purchased only the items on my shopping list , I could again avoid the pitfall of wasting money on little things.
Purchasing these snacks set me back by about two to three dollars but in those days, I never buy in bulk, so I make trips to the grocery stores about 3-4 times per week. That works out to a cool $50-$60 per month on snacking alone. Or to put it in another manner, I could use this money to buy another week of staples for my family.
There are a lot of other little ways in which I waste money that are dismissed without a second thought. I have cut out most, if not all, of these bad habits but it is still useful to remind myself of the need to watch out for trivial items during the course of maintaining our household budget.
Tuesday, May 5, 2009
We store our data in different storage materials like CDs, DVDs, HD (internal or external) but they can get dirty, damaged or just fail over time.
Multiple backup points are necessary if your data is valuable and critical. Off site services and online backups are viable alternatives.
I have not tried out BlackBlaze services though. You can use this video as a guide and conduct your own research to get the best discounts available if you go with online backups.
Sunday, May 3, 2009
How do we curb impulse buying? You know what I mean, buying less crap. But we don't say impulse buying without a reason. Human beings are irrational when faced with choices.
Just ask my wife when she goes on her weekly therapy of window shopping. She has been kinder to my wallet and credit cards ever since we got serious about balancing our family budget but she still fall prey to impulse buying occasionally.
Needless to say, my money management goals for the month is busted when I looked at her shopping bills after returning from those once-in-a-lifetime Sales.
To be frank, I am frustrated by impulse buying but I don't believe in shouting or banging tables to resolve money conflicts. Such activities are unproductive and will only cause a happy family to split up.
Instead, I sit down with her, review our household budget and explain what sacrifices we have to make to offset this sudden expense. I also reiterate the importance of a joint effort in achieving our financial goals. There will be "punishments" for breaking our family budget too.
Now, precaution is certainly better than cure. Rather than antagonize over the impulse purchases, fighting the urge in the first place will save all the trouble. Here are some tips we have used to prevent impulse buying.
You may have heard these cliched tips before and though they are not the most inspiring, I assure you they go a long way towards curbing our age old habits.
1. Define what you need before you shop. Go into the store with a specific goal so that you never get tempted by instant gratifications.
2. Go home and wait a day before returning to buy. After rationalizing the purchase, you may not want to make the return trip back to store. Just think of the gas bills.
3. Do not shop when you are depressed, lonely, hungry, angry, worried, tired, etc. You will be most vulnerable to impulse buying and the momentary high will result in weeks of regret and penny pinching.
4. Comparison shop for the best price rather than buy the item on impulse when you first see it.
5. Think of a punishment if you burst the budget or use the credit card again(for example, there will be no vacations and you will have to cook and do the dishes for an entire month).
6. Appreciate the simple things in life. Treasure what we have, inclduing the used stuff. We already have enough junk in our house and should be giving them out to charity instead of buying more.