I took advantage of a promotional offer and opened a sharebuilder account through ING (I already have an account with them). If I put at least $50 into the account (which I have), they will put $50 into the account within 4 weeks. Not bad!

I am not planning on doing any significant trading, but since interest rates are so low on savings accounts, etc., I thought I would try to boost my returns a little bit. I plan on being conservative, at least as much as you can with stocks. I will focus on stocks that regularly pay dividends. We’ll see how I do this year!

Anyone else investing in dividend stocks right now? I would love to hear your thoughts.

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Sharebuilder Account is a post from: A Penny Saved, the best darn personal finance blog around.

As I was painting my wooden deck furniture last night I got to thinking (must have been the fumes). This furniture is 21 years old! Then I thought about the van I talked about yesterday that is 14 years old. And then I thought about the mower I traded in this year that was almost 25 years old. Now, not everything that I have is old, but the things I purchase do seem to last. I buy well made items, and then take care of them. And they “pay me back” with many years of useful service.

Although these items are not stocks and bonds, they are investments. I have spent money on them. I want my monies worth. By spending a little time researching and buying well made items (not necessarily the most expensive), and by spending the time to maintain and take care of them, the items last.

In this era of get rich quick and throw away goods, going against the flow and staying in for the long haul, whether it be in stocks or deck furniture, is the way to go. Wealth is built slowly and in spending wisely.

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Take Care of Your Investments is a post from: A Penny Saved, the best darn personal finance blog around.

Well, I am back from a week of vacation, and during that time it appears we are having a financial meltdown! I’ve been doing a lot of reading and listening to try and get caught up. My bottom line – this thing is so complex that I don’t think anyone really has a handle on it, even the so called experts. Every article or voice has a slightly different opinion on how we got here, how bad it it is now that we are here, and what must be done to get out of here.

Personally, I am not fond of government intervention. But I am afraid that a lot of innocent people are going to get hurt because of what others have recklessly done if nothing is done to shore up confidence in the markets.

At this point, I think I agree with the humorous sentiment that if you must do something now with your financial portfolio, the best thing to do is to turn off the TV, stop the paper, and unplug your computer – that’s probably the best thing you can do for your finances now!

More seriously, I will be doing a few things in the coming weeks and months:

• I am staying in the market, continuing to put money monthly into my 403(B) plan (similar to 401(K) but for nonprofits). I am in for the long haul.
• I will be rebalancing my portfolio to keep it in line with my set financial goals. This is a good thing to do anyway at least annually. I want to make sure my percentage of stocks, bonds, foreign investments, etc. is in line with my targets. I am sure they are out of whack right now.
• I will be building up my emergency fund. It took a few hits the last couple of months because of some small emergencies (car repairs, mower breakdown, etc.). I plan to get it back to where it was, and then maybe increase it a little bit. Now is not the time to be having to borrow money. This crises has made me rethink how much I need/want to keep in this fund.
• Finally, I will keep plugging away at our Home Equity Loan to get it paid off early.

Other than that, I will stay the course and continue to live within our means, which if enough others had done that we wouldn’t be in this mess! I hope you all are doing well and that this crises has not affected you personally. If you get a chance drop me a line and let me know how you are doing and/or what you think about the latest.

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Vacation and Financial Meltdown! is a post from: A Penny Saved, the best darn personal finance blog around.

It must be mistake week in the news. Last night U.S. News & World Report had an article by Kerry Hannon about “5 Mistakes that will Sink your Retirement”. Below are his five points and some personal commentary:

1. Cutting back on Contributions.

According to the article, 1/4 of American workers do not contribute to their 401(K) and many who do contribute do not give enough to get the full company match. That’s tossing away free money. Also, there is a tendency when times get tough to try to free up some cash by cutting back on retirement saving. That’s short term gain for long term pain. Unless it is a dire emergency, don’t cut back.

2. Using Retirement Savings as a Bank

Too many people borrow from their 401(K). Sure, you need to pay it back, but you are losing ground. And once you tap into, there is the temptation to go back and tap it again, and again. You end up “sacrificing compounding investment earnings.” This is a fools game. Leave it alone!

3. Avoiding losses by reinvesting in safer places.

None of us likes to see our account balances fall, but we need to hold our ground. Taking money out of equities and putting them into money market funds or bank CD’s will cost you more in the long run. Stocks, no matter how poorly they do in the short run, give you the best shot for long term growth. If you stay out of the market, it will cost you more over the long run than some temporary setbacks. Decide on your portfolio mix – stocks, bonds, etc., then stick with it, rebalancing as necessary.

4. Cashing out your 401(K) Balance

When leaving one job for another, or even for early retirement, it makes sense to cah out your balance – as long as you roll it over to an IRA or another tax deferred plan. And you only have 60 days to do so or the IRS will come knocking on your door (and maybe with a 10% penalty added!). Make sure you cross your T’s and dot your i’s with the correct paperwork.

5. Not having a post-retirement plan.

Some of us are so focused on saving for retirement that we forget retirement itself! We need a financial plan for the “golden years.” What will be your sources of income? How will you tap into your savings? What portfolio mix should you have during the retirment years? What about healthcare?

Not a bad article. Again most of it is common sense – but then sense always isn’t so common is it?

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Five Retirement Financial Planning Mistakes is a post from: A Penny Saved, the best darn personal finance blog around.

In the latest issue of World Magazine (May 3/10, 2008), David Bahnsen list six common mistakes that investors make. He notes that there are obviously more than six mistakes, but the majority of the errors that we make can be generally placed into one of these six areas. Below are the six mistakes with a little commentary from me:

1. Panic.

As I have mentioned before, the media loves to hype bad news. We need to be wary that we do not panic, ever – even if things are going south. We need to remain calm and make good financial decisions based on good information, not hype or greed.

2. Euphoria.

Just like we need to avoid panic, we also need to avoid the opposite extreme. Euphoria is what got some people into the financial mess they are in now – seeing how home prices were going up, up, and up, they bought into a lie that  this would continue indefinitely. They got caught up into the hype and made some bad financial decisions based on emotion and the moment.

3. Under-Diversification.

Not having a diversified investment portfolio can wreck havoc on you financially. How many times do we read about a company going under and then the media  talks to people who had their life savings invested in that company? None of us should have our investments in just one place, nor in just one type of investment. We should be in multiple stocks, bonds, etc. With the ease of investing today, there is no excuse for not having a broadly diversified investment portfolio.

4. Over-diversification.

Again, we need to avoid extremes. As I mentioned above, under-diversification adds unnecessary risk. But over-diviersification can also be bad – just think about the extra fees that will eat into your profits, or the complexity of trying to track everything.

5. Excessive Leverage.

Now before everyone starts commenting, it says excessive leveraging. Most of us do leverage things – even the idea of borrowing money for a house is a form of leveraging. But it is the excessive leveraging that gets people into trouble. Again, think of the housing market and those who were 100 percent financed, and then the bottom dropped out and they are now upside down on their mortgage. Do not leverage more than you can afford to lose. Period.

6. Allowing Tax Decisions To Guide Investment Decisions.

It is important to take taxes into consideration when making investment decisions. But that is not the only consideration. Yes we should try to minimize our tax exposure as much as possible, but not to the detriment of not being diversified, or missing out on profits.  

 If we can avoid making these six mistakes, it will greatly help us on our journey to financial freedom.

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Six Big Financial Mistakes is a post from: A Penny Saved, the best darn personal finance blog around.

I was reading an opinion piece by Marty Nemko in The Chronicle of Higher Education where he calls a bachelor’s degree America’s most overrated product. In the article are several astounding statistics:

• 40% of freshman at four-year colleges do not graduate in six years
• Percentage of class time spent in classes of fewer than 30 students – only 28%
• 50% of college seniors scored below proficient levels on a test that required them to do such basic tasks as understand the arguments of newspaper editorials or compare credit-card offers.
• 20% of college seniors had only basic quantitative skills.
• literacy among college graduates has declined over the past decade
• employers report that new graduates they hire are not prepared to work, lacking critical thinking, writing, and problem-solving skills

The author states colleges like to claim that college graduates earn more than nongraduates-but that he feels that this is terribly misleading. He states that “you could lock the collegebound in a closet for four years, and they’s still go on to earn more than the pool of non-collegebound–they’re brighter, more motivated, and have better family connections.”

Wow! That is a pretty harsh critique of our higher educational system. He goes on to say that colleges are businesses, but that their business is not teaching students, it is getting reasearch. Teaching students is a cost item while research is a profit center.

 As a parent of possibly 3 future college students, do I / the girls really want to invest in this? Would my children be better off investing in stocks rather than in a college education?

I guess college, like any other investment, will take a lot of research and investigation to get a good “return on investment.”

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Bachelor’s Degree – Most Overrated Product? is a post from: A Penny Saved, the best darn personal finance blog around.

If you have thought about investing beyond mutual funds, then you’re probably looking at individual stocks.  Sure they are scary, but you’ve done your homework.  So what’s holding you back?  Is it the steep commissions charged on each and every trade?  If you’re investing a relatively small amount, commissions can eat your earnings alive, even if you are earning a good percentage return.

Enter Zecco – and free stock trades.  As long as you have $2500 in your brokerage account, you get 10 free stock trades per month.  That way, you can make small trades ( $100 or $200 at a time if you want ) without fear of high commissions charges.  Making smaller investments helps reduce your risk, and you can diversify much easier.  Every financial planner or advisor worth his salt will talk about the importance of diversification.

Take a couple minutes today and open an account at Zecco.  You don’t have to fund your account today – you can wait until you have the funds.  But this way, you’ll be ready to go once you have the cash.  I like cheap stock trades, and I like free a whole lot more.  Signup takes about 10 minutes – what are you waiting for?

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Zecco and Free Stock Trades is a post from: A Penny Saved, the best darn personal finance blog around.

I signed up for Prosper early last year with the intention of trying to use it to borrow some money to pay down some other bills that had a horrible rate on them. I couldn’t get the rate that I wanted at the time and haven’t really tried to borrow on the site since.

What I have done is lent on the site. It was a pretty easy process to become a lender. Depositing money took a little longer than I had expected it to, but it managed to make it’s way there. It took me about 3 days to finally win a bid to fund a loan. The loan I ended up funding was a loan to a person with no credit. What that means is the interest rate is quite a bit higher because it carries a much higher risk. The rate on my winning bid was 22%. That’s right. I’m earning 22% (minus fees makes it about 20%) on my money. Try getting that anywhere else in the world. It’s no wonder Credit card companies, Banks and Credit Unions make so much money off of their lending.

Of course, the 22% is norm for the high risk loans, but the higher the risk, the more likely the loan is to be defaulted and then you don’t even get your original money back. The loan I funded has so far been a good one. Only late once and on time the rest. I’ve already made a little under $6 on my $50 and it’s only been about 8 months. Not bad if I do say so myself. I’m thinking pretty hard of putting a little more money into the system to see how well I can do at it.

You can give it a try also. If you sign up through my referral link (in this post or on the right sidebar) and become a lender with a funded loan in 90 days or less, we both get $25! If you become a borrower, I get a .5% bonus of the total of the loan if you get it funded in 90 days, but you don’t get anything. If you have good credit, you could theoretically borrow some money and then lend it back out at a higher rate and still get your $25 and a pretty good margin on the money.

The minimum bid on a loan is $50 so you can start relatively low to get a good feel for it. Go on over and give it a try. It’s almost addictive.

[tags]prosper,lending,borrowing,bank,prosper lending[/tags]

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Prosper Update is a post from: A Penny Saved, the best darn personal finance blog around.

I wrote about SellaBand late last year and since then three bands have reached their full 50k in believer funds.  While I can’t vouch for anything about those three, I’ve found another band that is on the rise.  BulletProof Messenger is one heck of a rock band!

At this point, I’ve only invested $10 for one part into BPM, but I think it will be well worth the effort.  In less than one month, they’ve managed to get well over $6000 in funds.  That’s 600 parts at $10 each.  The largest holder has a little over 60 so there are plenty of other people who have “believed” in the band.  They also claim to have well over 12k fans on myspace.

So, if you get a chance, head on over to SellaBand and check out BulletProof Messenger.  Maybe even invest.  You can listen to a few of their songs and decide for yourself.  It’s obviously not something to throw your whole nest egg into, but maybe a $10 spot or so here and there?

[tags]sellaband,bulletproof messenger,invest,believe[/tags]

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. SellaBand: I’m a believer is a post from: A Penny Saved, the best darn personal finance blog around.

This is part 2 of 2 of 20 real answers to the 20 dumbest finance questions. The questions come from a post called the 20 dumbest personal finance questions at Punny Money. I covered the first 10 questions in the first post and we’ll tie up the last 10 in this one.

• Q: How much is my house worth?
  • A: The short answer is I don’t know. The long answer is that only an assessment can really tell. That or selling the house. Since I’ll assume you don’t want to sell right now, try visiting Zillow.com and see if it has any info for your neighborhood. If not, you’ll most likely have to order an assessment if you want to know the real value of the house. Expect to pay anywhere from $200 to $500 for an assessment.
• Q: Why can’t I get a loan when I don’t have a job?
  • A: One of the key factors in your lendability (think of it as lending risk) is your ability to repay the loan. If you don’t have a job, and can’t show some other form of income, you in effect are not showing any ability to repay. Nobody will loan money to what appears to be a automatic default.
• Q: Extended Warranty. How can I lose?
  • A: Let me share a story with you. My first car would have stayed in my possession about 2 years longer had I gotten an extended warranty. The transmission went and had I bought the extended warranty, it could have been fixed. As it was, I didn’t have the warranty and I had to trade it off because I couldn’t afford to pay the money for a transmission up front. The car I got on the trade, I purchased the Extended warranty. I paid nearly $2000 for the warranty. I used it once for repairs that would have cost me about $600. The car cost me an extra $1400 because of the warranty. The truth is that the extended warranty is a crap shoot. The odds are against it paying off and as a general rule, they really should be avoided. Use the money you would have spent on the warranty to build an emergency savings to pay for those repairs instead.
• Q: How much money should I spend on ____?
  • A: A concrete amount is impossible without an actual item, but the best way to find a fair price for an item is to comparison shop. Look the item up on eBay, Shopper.com,and a few other sites like Amazon or niche sites where it would appear. Doing so should net you an average price for the item. Be prepared to pay a little more if you’re buying the item from a physical location as you’ll pay for the convenience.
• Q: Can I avoid paying taxes on interest by stashing my money in a foreign bank account?
  • A: No. Most foreign countries have agreements with the U.S. to report those things. Even if they don’t, if you get caught (you will) you can be charged with tax evasion. It’s a pretty serious charge and can bring some pretty serious fines about.
• Q: If I don’t pay this bill, will anything bad happen to me?
  • A: If you’re asking if Bruno the bat boy will show up at your door, the answer is no. However, not paying a bill can have serious effects on your credit rating and your future. The delinquency can be turned over to a collection agent and your rating will plummet. You’ll have a hard time getting a loan and find yourself trying to use 25%+ credit cards for the smallest things. It’s a downward spiral. If you truly can’t pay a bill, contact the debtor, and ask if there is anything that can be done so that you’ll stay current.
• Q: Are there any jobs where I can work from home and make over $100,000?
  • A: There are. They are very few and very far between but they do exist. In most cases, you won’t be working from home so much as from a hotel as they usually have travel ratios of around 80%. They also usually require oodles of experience in a very specific field. (think “husbandry habits of the northeastern mole.” yes, that specific)
• Q: I read the economy is heading towards recession/depression/annihilation. Is that true?
  • A: The odds are that it isn’t. There are many safeties that are in place to try and prevent that from happening. I didn’t say it was impossible, just not likely.
• Q: How much money do I need before I can start investing?
  • A: Very little. Places like Sharebuilder.com let you invest in as little as $20 increments. The real question is when should I start investing. The answer to that is: when you have little to no debt.
• Q: Why do hookers cost so much?
  • A: Surprisingly, it does have a little to do with supply and demand. It also has something to do with the fact that the customers are people who don’t realize that they can walk down to the bar and get it for free. I’d charge those customers a lot too.

And there are the real answers to the other 10 dumbest personal finance questions. This was a pretty fun series to write and I hope it was slightly educational. If you find yourself asking any of the questions, remember that there are plenty of sources online that will give you the truth in somewhat easy to understand ways. Just know that you might have to put a little time in to do research and learn.

[tags]dumbest finance questions,saving,debt,loan,credit rating,fico[/tags]

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. 20 real answers to the 20 dumbest finance questions: Part 2 is a post from: A Penny Saved, the best darn personal finance blog around.