A Penny Saved

Zecco, a finance community website still in beta, has announced plans to begin offering trading on their site.   Not only that, but they will be offereing the trades at exactly $0.00 commission.  That’s right.  Free Trades! 

The trading begins on October 9th.  I wouldn’t expect too many deals like we see with a site like sharebuilder, but it only takes 10 trades to make up the difference.

Our model is different. We run a lean operation, use the latest technology and rely entirely on word of mouth, guerilla marketing, viral campaigns and public relations to get the message out. As a result we can look at the $2 per trade as the cost of doing business – and still turn a tidy profit

They plan on making up the $2 a trade in advertising revenue which has become a very popular business model lately.

Other things that can be found on Zecco right now are free blogging, free forums and what looks like quite the burgeoning community of financial minded people.

Technorati Tags: zecco, commission, trades, free trades

Yahoo stock dropped like a rock yesterday after they announced that the revenue from their advertising programs was expected to be lower than previously expected. As of the writing of this post, the YHOO price is sitting at just under $26.00 a share.

If I had the money, I’d be dropping it in YHOO right now.  I don’t so I won’t.  Oh, and I don’t currently own any either. So, this is merely an objective look at the stock followed by a recommendation to buy from someone with no experience in the field.  You really must speak with your personal expert before following any advice I may give.

So, why is YHOO a buy in my book?  Let me show you.

You can click on the chart at left to see a larger version.

What it will show are three things.  The first arrow, to the left and above, shows the most recent extreme peak of the stock.  The second, is the extreme dip it took when YHOO revised estimates in July.  As you can see, it recovered partially, but not completely.  The third arrow is the dip after yesterday.

Keeping in mind those spots on the chart, the 52-week moving high is $43.66.  Just under double the current price. The 52-week moving low is $24.91.  The stock is much closer to the moving low than the high.  Yahoo is a strong company that merely revised their estimates of the revenue and profit from one section of their business.

The dip in price that we see today is merely an overreaction to the announcement yesterday.  What we can expect in the near future is a return to prices in the $30 range and depending on the actual announcement of the financials, it could stay around there or could drastically move upward.  If it were to take another dip at that time, it would return to $30 within 15 days or so.

This stock also has a great deal of potential for long term growth.  From the current price of ~$25, it would be reasonable to expect the probability of a return in the 50% range to be fairly high.  In fact, if you bought now, and it returned to it’s 52-week high, the return would be nearly 70%.

It could be a potentially really good buy at this price.

Are there any people more expert in the field than I who have a differing opinion?  Or a similar one?  I’d love to read them.

Technorati Tags: YHOO, yahoo, stock, stock pick, return, roi, buy

Many of us invest in stocks.  Some of you invest a lot and others invest very little like myself.  But what it all comes down to for all of us is making money on our investment.  And that’s why, to this day, I tout the benfits of a dividend paying stock.  Not only do you get any appreciation in value on the stock, they pay you to be a stock holder as well!

Here’s a handy dandy little graph courtesy of The Dividend Guy blog.

Take a very close look at it.  It graphs the historical returns of stocks.  The grey line is the historical return of stocks that does not take dividends into account.  The green line is the return of those with dividends added in.

Note the large disparity between the two.  I would imagine that that disparity would get even larger if you took into account dividend reinvestment.

Dividend reinvestment is amazing.  Not only does the company pay you to be a stockholder, they use that money to buy more stock for you.  It’s dollar cost averaging with no dollars from you.

Of course, it’s important to remember that not every stock that pays a dividend is a good stock investment.  But on average, if a stock pays a dividend, they perform better and generally are sounder investments than those that do not pay dividends.

Technorati Tags: dividend, reinvestment, stocks, stock purchase, dividend reinvestment

Everyone assumes that doing any renovations to a house would instantly raise the houses value right?  Maybe not claims Gerri Willis of CNNMoney.  There are some renovations that can thin the potential buyer market and reduce the amount people are willing to pay for the house.

She gives the top 4.

1. Swimming Pools.  Think young children.  The potential home buyers thin out pretty quickly if they are afraid of having their young children around a swimming pool.  I would think that a properly fenced and gated pool would reduce the effect of the pool on buyers but not completely eliminate it.
2. Additions.  More specifically, poorly planned additions.  It may look great from the inside and add lots of living space, but how does it look from the outside?  Does the house suddenly look like a half unearthed dinosaur?
3. Trendy finishes.  Think avacado appliances.  And Stainless steel as well appearantly.  Today’s hot trends may be tomorrow’s avacado.  Being able to spot the trends and find one that isn’t going to go the way of the avacado appliances will help significantly.
4. Jacuzzi Tubs.  You may think it a necessity, but potential homeowners may see it as a luxury and not want to pay the premium for that luxury.

I can only see these being problems in a market that has lots and lots of selection.  In smaller markets, some of these things may be overlooked out of necessity and lack of choice.  In bigger markets, buyers have the luxury of being a little more selective as they probably can go a couple of blocks down the road and find another house just like yours.

Technorati Tags: house, housing, housing market, renovations, house renovations, additions, swimming pool

As a non-active stock investor (meaning I have a few that I’ve had for over a year and my retirement accounts, but I don’t actively trade now.) it’s been a little while since I had a full gamut of stocks to choose from.  I’m curious though.  How do those of you who actively buy stocks pick those stocks?

When I still had my buyandhold.com account, I used the Kiplinger stock finder to weed stocks down to a bearable number and then had a spreadsheet with a custom formula to decide from there.  I can’t remember off hand what exactly the formula took into effect except that it only worked well for dividend paying stocks.  I’m a fairly big believer in dividend paying stocks.  I feel they perform better on the long term.

I’ve heard of some people exclusively buying stock in companies whose products they use regularly and I must admit I’ve selected a few companies that way.  I’ve also bought stock through employee stock purchase plans as well.  Neither of those has turned out well for me.  Dividend paying stocks have nearly always done well for me, however.

So, how do you do it?  Roll Dice?  Wheel of fortune like wheel?  Random number generator?  Or do you have something more scientific?

Technorati Tags: stocks, stock picker, dividend, dividend stock, dividend yield

For as long as any of us will be able to remember Gold has been touted as the safest of the safe investments.  Everybody wants Gold.  The price of Gold doesn’t directly depend on the GNP of an particular country like the dollar does.  It’s a rare metal without investment tarnish.

Now, with the ongoing international problems in the Middle East and the rising cost of oil, Gold has enjoyed a returned luster as an excellent investment vehicle.

Gold futures for December delivery rose $13.10, or 2.1 percent, to $634.80 an ounce at 11:13 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage gain since July 19.

It doesn’t look like the Middle East is going to calm down anytime soon, so should we be buying up the gold?  With gold at $634.80 an ounce, is it smart?  It’s up nearly $200 an ounce since this time last year and could go up some, but where is the peak?  Historically, I don’t believe gold has ever really had a crash.  It would seem to have mainained it’s value at the least.  Anyone have any better knowledge on the subject that they would care to share in the comments?

We covered Goldmoney.com, a website that lets you buy fractions of ounces of gold in a form of a savings account earlier this year in our post “Make your Money Golden“.

Technorati Tags: Gold, Gold futures, invest, investment, gold invest, golden

Like many small time investors, I keep a stock ticker on my desktop sidebar.  Today, I happened to look up to see that one of my investments, RAI (Reynolds American Inc.), price had dropped significantly from where it had been.  Obviously, I began looking into the matter.  I don’t plan on selling anytime soon, but a major drop is always a curiosity.

Turns out I was in for even more of a surprise than I thought.  The stock split!  It’s only a 2-for-1 split, but that means I have double the shares that I had before.  Add to that a dividend increase and it makes for some very happy news.

Technorati Tags: RAI, Reynolds American, Stock, Split, dividend

When I saw the post by Amanda at Young and Broke, I just couldn’t help but jump on the meme.  Who hasn’t thought about what they would do with a million dollars?

So, here goes:

Starting money: 1,000,000.00

Student Loans(wife and I): ~82,000

=  918,000

Current mortgage: ~42,000

=  876,000

Credit cards: ~11,000

= 865,000

Car Loans: ~ 13,000

= 852,000

Misc debt: ~ 12,000

= 840,000

New house: ~ 200,000

= 640,000

College savings for son: 100,000

= 540,000

College savings for future children: 250,000 (if no more children, this becomes investing/fun money)

= 290,000

fun money: 50,000 (vacations, fun toys, etc…)

=240,000

Invest the rest.  Once the debt is paid off, the rest is really gravy.  Potentially, the rest could be invested and given a nice enough return on investment, could become income for one or both of us to quit our jobs.  At 5%, the return on a cool mil would very nearly replace our current incomes.

Ah, dreams.  What would you do with $1,000,000?

Technorati Tags: million, what would you do with a million dollars, investment

Stock pricing on Amazon shares dropped significantly recently.  The reason?  Amazon announced that they would not be as profitable this year as they had hoped.

Annual operating profit will be $310 million to $440 million, the Seattle-based retailer said in a statement yesterday. In April, the company projected profit of as much as $520 million.

This has to be one of the silliest parts of the stock market.  The markets reaction to Amazon’s announcement and announcements of similar nature by other companies basically amounts to a knee-jerk reaction.  The company is not in a poor financial state.  They are still estimating profits in the 300-400 Million range.  Yep, I said Million.

On the other hand, now AMZN is at a 52 week low.  Perhaps the time is right to buy up some stock in a profitable company that shows no signs of slipping very far.

Are there any stock guru’s out there that have a valid argument why I’m wrong?

Technorati Tags: stocks, amazon, profit, AMZN

This is the final article of a three part series on the book by David Bach “The Automatic Millionaire.”  In the first part, we discussed the “Latte Factor” and how to find the money to begin.  We followed that up in the second part with the essentials of making your finances automatic.  In this part, we’ll discuss a few of the finer points of the Automatic Millionaire plan.

Mortgage Miracle:

One of the best asset’s an Automatic Millionaire can have is his/her home.  Instead of throwing away mounds of cash on rent, you can be putting money into your home.  Some think of a home as a poor investment, but there are not many other investments that have exceeded a 10% growth in recent years.

David gives us a simple and easy way to not only own our own home, but to do it sooner.  He introduces the concept of every other week mortgage payments.  The math on this is simple.  If you’re making monthly payments on a mortgage, you make 12 payments.  If you begin making half of your payment every other week, you will have made 26 payments.  26 half payments amount to 13 regular payments.  You will have paid one extra payment in a year.  It may not sound like much, but if that extra payment goes to principal, it could mean a savings of over $100,000 on your mortgage.  Consider a $200,000 mortgage.  If you pay it off as the bank expects you to, it will take you 30 years to own the house outright.  The average homeowner in the U.S. only lives in any one home for 10 years.  Another interesting fact is that for the first 10 years, nearly every payment you make to your mortgage is almost entirely interest.   If you only live in your home for 10 years, you will have built up almost no equity.  If you cannot afford to make that extra payment, David suggests adding 10% to your payment each month.  Doing so will end up at nearly the same place.  Following this plan could pay off a 30 year mortgage in as little as 7 years.

Tithe:

When most of us think of Millionaire’s, we don’t necessarily think of giving money away.  But David points out that a vast majority of the millionaires throughout history have been dedicated tithers.  Not necessarily to a church, but to some non-profit charity.

Debt Reduction:

If you’re in debt, maxing out your 401(k) might not be the best idea.  Save as much as possible to your retirement plan, but make sure and start paying as much as you can to your debt.  And make it Automatic!  When you get rid of your debt, you can make even larger contributions to your retirement than you already are.

I don’t want to cover every point that David makes in “The Automatic Millionaire” because I really think that if you’re interested, you should pick up a copy.  Read it through.  Maybe do it again.  Learn the methods that David teaches and begin applying them immediately.  The sooner you get on the Automatic road, the richer you will be.  It’s not an instant thing and  you’ll have to work at it, but it will all be worth it in the end.

Pick up a copy of “The Automatic Millionaire” at Amazon.

Technorati Tags: the automatic millionaire, automatic millionaire, david bach