A Penny Saved

CNBC is about to kick off their Million Dollar Portfolio Challenge in a few days and LAMoneyGuy has gathered a few of us PF bloggers together to play in a semi competitive group.  You can go over to announce your participation at It’s Just Money and you can Sign up for the Challenge at CNBC.

I’ll be participating.  If that’s what you want to call it.  The challenge is only 10 weeks, so it’s a little hard to properly invest, but you can certainly catch a few big runson short term buys.

Sign up and join us!

Technorati Tags: CNBC, million dollar portfolio challenge, portfolio challenge

Wow.  The Dow Jones closed down just over 416 points today.  Nearly everything took a beating.  Even Gold, the “recession proof” investment, took a bit of a beating.  All in all, most of my portfolio felt that blast with the exception of RadioShack(RSH) which ended up over 2 points on  a really nice announcement about their 4Q results.

Of course, now is not the time to panic.  Wait and see what kind of a rebound it makes in the next few weeks.  I think we’ll see a leveling off eventually and really not miss out on much except a few days profits.  Besides, at this point in my investing career, it’s all buy and hold anyways.

Technorati Tags: investing, dow jones, dow, gold, radioshack

I’ve decided to open a high-yield savings and would certainly like to make a little extra. I know that ING has a $25 bonus program, and I’d love to have one of those if you’ve got an extra. ING is the only one that I know of that has a program like this, anyone else have a similar program?

First one with a referral in the comments wins. If you need an email to send it to, leave a comment and I’ll get back to you.

Got One! Thanks Brett! Account opened, funded, bonus received. Isn’t the internet great!?! I’ve now got referrals to give away if anyone needs one!

Technorati Tags: high-yield, referral, ING, hsbc

It seems that Google has been working on the dreaded “quotes delayed up to 20 minutes” message that everyone gets with their stock quotes.  Unless you pay for realtime quotes that is.

In cooperation with the NYSE, SEC, and Netcoalition, they’ve worked on a proposition put forth by the NYSE to the SEC that would allow for the distribution of last price streaming quotes. If accepted, the filing would allow for the dissemination of real-time quotes to vendors at a flat rate of $100,000 a year.  Sounds like a lot, but from what I gathered, it’s a bargain compared to real-time quotes now.

What that all means is that sites like Google Finance will be able to provide real-time quotes for free.

source: Official Google Blog

Technorati Tags: google finance, NYSE, SEC, Real-time quotes

It’s that time of year again.  Time to take a long hard look at your finances and your accounts and make  all the necessary changes to ensure a great new year.

Here’s what I plan on doing with my things.

First, I need to take a hard look at my budget.  We’ve had a few shortcomings in the last few months.  Our son has been to the doctor rather frequently with a myriad of fun stuff(pinkeye,shots, etc) and the meds ate through what little reserves we had(nearly none).  I don’t think that our budget really needs a revamping as much as we need to stick to it much better than before.  Or at all in some categories.

Secondly, my top financial goal this year is to actually build up a quasi emergency fund that can be used when we have more doctor bills or car repair or vet bills that we just didn’t see coming.  At the moment, we have little to no liquid savings.  I’d like to have 1-2 months built up by the end of the year, but a more realistic goal is about 1/2 month at this point.  That being said, my other goal is to have that account in a high yield savings that pays more than the current 0.25% at my Credit Union.

Third, I really need to take a close look at my 401(k) and check the allocations.  This is something that really should only be done once a year, no more, no less.  I also intend to increase my contributions as the match next year goes up to 30% of the first 10%.  I’m currently only sitting at 3% and would like to get up to about 5% if possible.  It will depend a lot on what my raise(hopefully) looks like this year.  I may be able to go a little bit more if it’s better than expected.

Fourth and lastly, I’d like to create a more formal debt reduction plan for us.  Currently we’re a little disheveled in our payments and budgeting and I think the addition of a more concrete debt reduction and payment plan would help us keep track of what we are doing and how we are doing on our goal.

I’m sure there will be other little things that I will try and do, but those are the biggies that I have planned.   Do you do a New Year Cleaning of your finances?  Spring Cleaning? What do you do annually with your finances?

Technorati Tags: finances, budget, 401(k), retirement, debt reduction, contributions, employer match

Ever since my son was born, I’ve wanted to begin saving for his college tuition.  I’m not going to be overly optimistic and say that I’ll be contributing the whole of his tuition, but it would be nice to be able to pay for say a third to a half.  More if possible, but that’s my goal.

Even as a somewhat knowledgeable financial person(knowing and doing are two different things) I found the selections that are available to be overwhelming.  Answers to my questions were not necessarily readily available.   I wanted something that wouldn’t necessarily transfer to my son when he turned 18 which led me away from custodial savings accounts.  That left me with two main options.  A 529 plan and an ESA(education savings account) which is also known as a Coverdell savings.

I chose to go with the Coverdell ESA.  I found the 529’s way to confusing and I really just didn’t feel that I understood how they worked.  The other reason that I chose the Coverdell was that I could open it up at Sharebuilder.  I like the sharebuilder model, plus I was able to use a code that gets me a matching $50 Barnes and Noble gift card.  I would have liked to have used a code that gets money into the account, but those were unusable on the ESA account.  So what we will probably do is sell the gift card on eBay and send that money to the Sharebuilder account.

So, once the account was set up, I then faced the dilemma of what to invest in.  My son is only 6 months old, so I wanted something that was more aggressive but that also should show some good returns.  Rather than putting all the money into one company I decided upon an EFT.  I’m sure that we’ll miss out on the skyrocket stock, but it also saves us from the plummeting stock.

Plus, the EFT that I decided on is DVY.  It’s got a fairly good return history as well as it’s focus on dividend bearing stocks.  I like that especially.  I’m a big fan of dividends and passive income so I’ll try and use that for my son’s benefit.

Did anyone else have a similar story?  What did you do to save/invest for your children’s future?

Technorati Tags: esa, 529, college tuition, eft, dividends, college savings

There seems to be no end to people who will tell you that Real Estate is the best investment a person can make.  Recently, those people meant that in a “flipper” kind of way.  Buy low, renovate cheap, and sell really, really high.  At the time, real estate was gaining value at ridiculous rates.  Sometimes gaining as much in a few months as it would have normally done in a year before.  Most of that has come to an end.  There are plenty of people who were “flipping” that are not doing so well right now.

All that craziness may give some people an amazing opportunity for passive income.  Using real estate for passive income is simple.  Buy affordable, rent for more than the mortgage payment.  Well, it sounds simple.  There are lots of things that you have to take into account.  If you already own a house, you probably already know that.  Costs of maintenance, taxes, repair and even vacancy must be taken into account.  Each of those things are still your responsibility if you rent the house out.

While none of them individually is much, added together, they can be quite the burden.  Depending on your location, taxes can add thousands per year.  Even if it’s $1200, that’s an extra $100 a month that you need to account for.  Your average maintenance won’t be much, but lookout for the big breakdown.  The water heater will pick the most inopportune time to go out.  Having a escrow account for such things is necessary.  Depending on how much you plan on making the account total, this could mean a negative cash flow for several months.  And then there’s vacancy.  Nobody wants to think about vacancy, but you really must.  You have to have a plan for paying all the bills for the house if there’s nobody living there.

As you can see, there are lots of potential pitfalls to using Real Estate for Passive Income.  Of course with higher risks can come higher returns.  If you are careful in your selection of property, you could stand to have a source of income that will last as long as you own the property.  Eventually, as you pay down the mortgage, more and more of the rent income becomes real income.  And don’t forget that each payment you make on the mortgage increases your equity in the property.

Real estate is probably one of the best, if not the best, option for passive income.  Not only do you get a passive income stream, you get a tangible asset that can be sold later if need be.

Technorati Tags: passive income, passive, real estate, flipper, rent income, mortgage

Passive income comes in many forms. Each and everyone of them has it’s own risks, methods, and rewards.

One such method, one that most people will be familiar with is Dividends. Usually coming in the form of stocks that pay dividends. While many stocks pay a dividend yield of 2-10%, there are some that pay up to 18%.

With only a minimal investment, you can create a income stream that matches or exceeds many of the High Yield savings accounts that many personal finance blogs tout. Obviously, the risk is higher that your money will disappear. But it has also been shown that stocks that pay dividends are less likely to drastically change.

If you don’t need the income directly and simply want your money to go to work for you, consider a DRIP account. A DRIP account takes that passive income in the form of dividends and re-invests them in the stock. Each time you reinvest, you end up with more shares of the stock. More shares of the stock mean more dividends.

As an example, let’s say you purchase $1000 of a $20 stock. You have 50 shares of the stock. The stock pays a 5% yield. Each year, the company pays you $1 per share. That’s $50 the first time the dividend is paid. Reinvested, you would get 2.5 more shares. Next time the dividend is paid, you receive dividends on 52.5 shares. You receive $52.5 dollars in dividends. You’ll purchase 2.625 shares. And so on. You can see how it would quickly compound and build.

Of course, fluctuations in the price of the stock can drastically change how many shares you buy at each reinvestment. But, over the long term, you’re also taking advantage of dollar cost averaging. Some times you’ll buy lower, and others you’ll buy higher. Overall, it averages out to a median price.

Whether you participate in a DRIP or not, you can see how investing in dividend paying stocks can create passive income. If you keep the stock for the long term, it really has little to no maintenance.

disclaimer:When investing in stock it is important to remember that there are risks associated with that investment.  Research any stock before purchasing.  I’m not a professional, you should consult one before investing in anything.

Technorati Tags: passive income, drip, dividend, invest, reinvest, yield, dividend yield

If you’re unfamiliar with the Investment Pyramid, it is very similar to the food pyramid.  At the base of the pyramid are the investments that you should have more of and as you move up the pyramid, the risk rises and those investments should make up a lesser percentage of your portfolio.

It looks something like this. This example is a fairly simple pyramid.  There are no explanations as to what the investments are that make up each teir.  Stealth Bucks wrote an article on the investment pyramid and linked to another pyramid that is much more explanatory.  Unfortunately, it’s not so much a graphical representation as it is a textual pyramid.  It can be seen here.  It basically splits the pyramid up in the same way as this example, however it gives examples of the investments in each group.

In and of itself, the pyramid is a sound indicator.  Your portfolio as a whole should end up in roughly the ratios that are suggested by the pyramid.  However, for many of us who are younger, it’s ratios are way off.  None of us will retire if we have a majority of our investments in the Cash and Bonds earning 1% to 8%.  While the ratio for the speculative and extreme risk investments are probably universally spot on, for a younger investor, a portfolio should be heavy in stocks.

For that reason, a younger investors triangle should move the Stocks/Growth/Income portion to at least one spot lower on the pyramid.

The investment pyramid is not bad advice.  But any investor must keep in mind that things like this are created with the masses in mind.  Each and every one of us should decide just how much risk we are willing to endure in our investments and create our own investment pyramid from there.

What would your investment pyramid look like?  Do your investments match that?

Technorati Tags: investment pyramid, investments, stocks, bonds, cash, growth, income

After looking at it, it’s a little bit like American Idol on e-Trade. For as little as $10 plus transaction cost, you can invest in a band.

The Amsterdam-based company allows fans — or what Sellaband calls “believers” — to invest in unsigned acts in $10 increments. Once an act reaches $50,000, it is given access to a recording studio and professional production, song-writing and marketing expertise.

Appearantly, it’s gaining popularity as there is a big banner on the front page as of this writing celebrating the first band to reach $50k. Investors in that band will get a free copy of the CD, a cut of the revenue, and a share of all advertising revenue generated on Sellaband.com from the band’s downloads.

All investments are held in escrow until a band reaches $50,000 and can be moved from one band to another until the band reaches 50k.

Begin investing in Bands today at SellaBand!