Category Archives for "Invest"

Seven New Years Financial Resolutions for 2010

This is a guest post from the National Endowment for Financial Education (NEFE), a non-profit dedicated to improving the financial literacy of all Americans.

Control spending: If you spend less you'll have more money available to pay down debt and save for the future. Write down your expenses for a month to see where your money is going. You might be surprised by how easy it is to find places to scale back.

Create a debt repayment plan: If you carry credit card debt, write down everything you owe and make a plan to pay it off. Start with small items you can act on right away–it will make tackling the bigger debt easier. Also, try buying with cash only. It’s a sure-fire way to prevent increases in your credit card debt.

Set up auto-savings plans: Arrange with your bank or another financial institution to have a set amount deducted from your checking account to a savings account each pay period. Of the Americans who have been able to contribute to emergency savings funds, automatic withdrawal is the most popular method, according to the Consumer Federation of America.

Boost retirement savings: If your employer offers a 401(k) plan, increase your contributions. If you don't have an employer plan, open an Individual Retirement Account (IRA) and arrange for contributions to be made automatically from your checking or savings account.

Create a long-term plan: Write a list of your long-term goals, such as buying a home or saving for college or retirement. Visit the Life Events section of Smart About Money for concrete tips on accomplishing those goals.

Protect Yourself: Be prepared for the unexpected by making sure you, your family, your assets and investments are insured and fully covered. If you do not have a will, make 2010 the year you establish a life plan.

Find a financial buddy: Share your financial resolutions with a friend, colleague, or family member, and you’ll be more likely to keep them. Find someone else who wants to turn around their debt or cut their spending, and establish a mutual support system.

NEFE operates the site Smart About Money and have developed a series of articles filled with tips to help you make 2010 the year of financial freedom.  You can also find Economic Survival Tips, worksheets and articles focused on financial education related to housing, spending, credit and job change. Follow NEFE on Twitter at @nefe_org.

New Money Hacks Store

I just added a new store to the Money Hacks site. I know, I'm a little late to the party, but that's my MO! 🙂

It's hosted by Amazon and it's filled with hundreds of personal finance books from authors like Jim Cramer, Andrew Tobias, George Soros, Peter Lynch, and Jim Rogers.

Check it out. There's still time to order before Christmas (I can say that, right)!

Mortgage Rates Hit All-Time Low

I've recently been very lax in keeping up with the news. Last I heard, Dubai caused a minor stir in the already-screwed up credit markets, sending markets into a tizzy.

I saw on today's newspaper the big headline, "Mortgage Rates at All-Time Lows." Sheesh. Haven't we seen this TV show before?

Must we go down the same stupid road that got us here? I know, the credit standards are supposedly much higher now than they were in 2006-2007, where anybody with a pulse (and some even without) could get a loan for a piece of property. But I have heard random radio spots that hint that things really haven't changed much. Stuff like "no money down," "seller financing," and "no doc" loans…

I'm afraid we haven't learned a thing from our very recent past. I can't say I'm surprised.

The fundamentals of the market psychology hasn't changed: It still seeks short-term profits over long-term prosperity. Slow and steady hasn't kept the market happy for decades. It likes the hare, not the tortoise.

I also saw that gold hit $1200.

So how does one protect himself during these times? I'd suggest that you stick with the same old, same old:

  • Stocks – still the best bet for long-term prosperity
  • Cash – in case all hell breaks out
  • Bonds – if interest rates ever go up again, they might become a little more enticing
  • Gold – in case it gets worse than all hell breaking out
  • Real Estate – your real inflation hedge

Depending on where you are in your life, you would do best to keep the bullk of your investable assets in stocks, some in cash, a little in bonds, very little in gold, and a bit in real estate. Note that I am not including your home in this assessment. If I did, most of us would have more than 50 percent of our assets in real estate (which might be a big part of the problem, right).

I still think the US is the place to be for innovation: IT, bio tech, medicine. But I think you may want to invest a considerable portion in foreign markets. China will not stop growing for some time. India is still going to improve. Latin America still has lots left, as does Canada, Russia, and Europe.

The world, as they say, is your oyster. Choose wisely, or else you may get one that's toxic.

Young, Broke, Fat, and in Debt

Now what?

In 12 years, Antoine Walker(notes) made more than $110 million playing professional basketball moderately well.

It always seems to happen.

Whatever the details, it was a big chunk of change, which, amazingly, wasn’t enough.

These guys seem to wind up in debtor’s prison or the poor house, or both. It’s a shame, in a way, to see all that money wind up gone, but at least these guys stimulate the economy, right? I mean, that money didn’t just vanish; it just moved from his pockets to everybody else’s.

I’m really surprised that the professional sports leagues haven’t really come up with a solution to this widespread problem. Why haven’t they employed the likes of American Express, Fidelity, or some of the better-known financial institutions to not only teach these guys how to manage their money, but why not even do more than that?

Don’t you see a very lucrative niche here? I guess much of this is handled by the athletes’ agents. But maybe therein lies the problem.

Why not employ financial planners? Why not, instead of giving them x percent (10 percent, is that the going rate for “talent?”) on the front end, give them 7 percent on the backend?

If I make you money as a financial guru, give me a piece of it when it’s bigger? Then, there is an incentive for both parties to utilize my services?

What am I missing here?

Is it that these guys are so toxic that nobody wants to touch them? Are the sports agents so powerful that nobody can “break in” to this aspect of an athlete’s life?

Why aren’t the players unions more involved? Or are they in on the money grab, too?

Just think what a really talented money manager could make out of an NBA star? It boggles the mind how much better off he could make not only the athlete, but the athlete’s community. And all without the extreme sadness experienced by the once highly-sought after athlete, once he is put out to pasture.