Saturday, June 25, 2016

The Brexit and what it means for your investment accounts.

The S&P over the last week, notice the sharp decline on Friday
By now I’m sure you’ve already heard about the Brexit.  In a surprising outcome, Britain has voted (not unanimously) to leave the European Union.  In the eyes of the financial world, the U.K. did the unimaginable.  Financial markets hate uncertainty, and this is why global stock markets have taken a small drop in value.  For those keeping track, there was an estimated $830 billion in losses estimated in the United States markets and $2.1 trillion in losses across global markets on Friday, June 24th.  That’s a ton of money lost, for those that decide to sell.  The value of our investment accounts dropped by more than $8,000 in one day! Ouch.

All over the financial news you are going to hear about how “in the red” stocks are.  News outlets are going to use big, scary words like “nose dive, slammed, plummeting, gruesome, catastrophic, blood bath, and meltdown” to describe the market.  The DOW dropped by over 600 points on Friday.  These headline terms are designed to grab attention and cause panic.  This may continue for days, weeks, months, or even years. 

If you’ve been investing for a while, or even if you go back and look at past trends in the stock market, you will notice that stocks are volatile.  Values go up, and values come down.  The best action to take has always been the same: stay the course.  If you’ve watched financial news, you will notice that they always like to exaggerate headlines.  The DOW dropping by 600 points sounds a lot scarier than the fact that a 600 point drop is only a 3.4% drop in value. 

Studies consistently find that the more you trade stocks, the lower your final outcome.  If professional traders can’t get market timing right, how can the average investor?  They can’t.  If you’re in the market for the long run, short-term drops in market value shouldn’t scare you.  In fact, you should be motivated to pick up extra shares while they are on sale.  I don’t know about you, but I feel a lot better investing in the stock market when prices are coming down, than when prices are at their peak highs.  Selling your shares when the market is down only locks in your paper losses and guarantees that you make the biggest mistake when it comes to investing: buying high and selling low. 
 
The S&P over the last 2 years.  It's been a wild ride, but notice how the recent drop looks just like normal volatility.  
We are investing for the long term.  In the long term, stocks go up in value.  In the long term, market timing doesn’t have any significant effects.  If the market continues to drop in value over the next few weeks, there will be great buying opportunities.  For those that haven’t opened up a retirement or investment account, now is a great time to do it.  For those that haven’t increased their 401K contributions, now is as good a time as any.  That being said, I still don’t recommend trying to time the market.  This small dip could be the beginning of a much larger drop.  3% drop is nothing.  I’ll start paying attention when we hit a 20% drop.  Stay the course, but don’t double down. 

There is a great Brexit megathread discussion on Reddit here.
 

You can read about what Vanguard thinks of the Brexit here
There is plenty of good discussion over at Bogleheads including this thread here.

Friday, June 17, 2016

Two free round trip business class tickets to Tokyo on Singapore Airlines


Singapore Airlines A380.  The upper deck is strictly reserved for Business Class
Our son just turned 1 earlier this month!  It is amazing how fast time flies.  Looking back, the first year of being new parents was mostly a blur.  Our son has been such a joy in our lives.

After receiving 100,000 Membership Rewards points from the American Express Platinum card, we both figured that it was time to book our first international family vacation.  We decided to bring our son to visit Japan and Taiwan and choose Singapore Airlines for our long haul flights.  We like Japan because they have the most respectful people in the world and offer many peaceful gardens amongst the bustling cities.  We enjoy visiting Taiwan because my grandmother and many aunts and uncles live there.

The Singapore Airlines KrisFlyer program is very open because it allows 1:1 transfer of points from all major credit card points programs.  You can transfer American Express Membership Rewards, Chase Ultimate Rewards, Citibank ThankYou points and Starwood Preferred Guest Starpoints into the KrisFlyer program.  This makes it pretty easy to quickly accumulate KrisFlyer miles for an award flight.  Singapore Airlines has the reputation for having some of the best service in the skies. 

Singapore Airlines has 3 different categories of award flights: Saver, Standard, and Full.  If you can secure a saver class award, it will cost you the least amount of miles to redeem.  When redeeming miles online, you get a 15% discount in miles.  Singapore Airlines also has very low fees for changing flight routes or dates.

My biggest gripe about the Singapore Airlines mileage program is that unused miles expire after 36 months, regardless of any new activity.  I don’t think any other frequent flyer mileage program has this lame rule.  With other airlines like United and American Airlines, any activity on the account such as earning miles or transferring miles into the account extends the expiration of miles (usually by 18 months).

Since this will be our son’s first long international flight, we wanted to make sure the flight is as comfortable as possible.  He will be around 1 year and 9 months when we make this trip, so he will not be getting his own seat on the plane.  Instead he will be a “lap baby” sharing a seat with one of us.  The flight from Los Angeles to Tokyo takes 11 hours and 45 minutes.  The return flight takes 10 hours and 10 minutes.  We really hope it will be a pleasant flight with our son. 
Singapore Airlines Suites Class
We first tried secure two seats for the amazingly comfortable Suites Class, however all saver priced awards were on waitlist. The price of saver award Suites Class would be 87,500 miles before the 15% discount (only 74,375 miles after online booking discount).  And we didn’t feel comfortable blowing 170,000 miles (144,500 miles after 15% online booking discount) per person each way on the standard awards.


We signed up for the waitlist and hopefully seats open up in the future.  Many flyers report Singapore Airlines waitlist awards seem to randomly become available, sometimes months, weeks or even days before departure of flight.  Once a waitlist flight is available, I believe you have 24 hours to book it.   In order to waitlist a Singapore Airlines award flight, you need to have enough miles in your account.

Since Suites Class was not immediately available, we booked the next best thing: Singapore Airlines Business Class. 


Business Class seating for Singapore Airlines is no joke; it is incredibly nice.   I believe they are the widest Business Class seat of any airline, wider than First Class seats of others.  These Business Class seats have fully flat beds to ensure you get comfortable shut eye on your flight.  You can even reserve your main course up to 24 hours before you depart on your flight.   

Our flight from LAX to NRT Business Saver award cost us a total 131,750 miles and $46.80 for the both of us.


Our return flight from NRT to LAX Business Standard award cost us a total of 195,500 miles and JPY 12,820 ($122.46) for both of us. We are waitlisted for the Business Saver award, so if it opens up, we'll be able to save over 63,000 miles.  I’m not sure why the website displayed the price in Japanese yen when booking but I wanted to save time so I booked the flight right away.

We choose our seats in 11D and 11F, in the forward Business Class cabin with 20 seats for both flights.

If we were to book the same round trip flights in cash, it would have cost $6,673.26!  Since we will be traveling with our son and he will be less than 2 years of age, we will be responsible for paying 10% of the full adult fare cost for his airline ticket.  This should come out to be around $333.66 [(6,673.26/2) x 0.1].  We’re waiting for his passport before booking his ticket.

Since we would probably never pay cash for Business Class flights, I won’t assume that we saved over six thousand dollars on our flight.  
The cost of two adults in economy class would comes out to be $1,693.26.  We are still saving quite a large chunk of cash by redeeming points towards free flights in Singapore Airlines Business Class. 

In summary, we spent a total of 327,250 KrisFlyer miles and $169.26 for two round trip Business Class flights!  This saves us a conservative amount of $1,524 after taxes and fees.  We still need to pay for our son’s flight.  We have plenty of planning to do for the rest of the trip and still need to book round trip tickets to Taiwan. 

We are excited to experience our Singapore Airlines Business Class flights as a family! 

Wednesday, June 1, 2016

May side hustles 2016

The great thing about doing side hustles to generate extra income is that you can hustle on your own terms.  The more hard work, time, and creative effort you put in, the more extra money you can make.  You can hustle as little or as much as you want, whenever you want.  It’s your extra money, and you can choose how you want to spend it.  Instead of focusing on what ideas don’t apply to you, try focusing on different side hustle ideas that you can implement to work for your situation.

Welcome to June, can you believe we are about halfway into 2016?  May has been a very busy and expensive month for us.  
Our son is almost 1 year old - my how time flies!  This first year with him has been both our greatest challenge as well as our greatest joy.  Last week our son picked up a viral cold and then gave both my wife and me acute laryngitis and ear infections.  I had to take 5 days off work because I had lost my voice completely.  Our little man isn’t walking yet, but he’s crawling around quite fast.  It’s fun to see him slowly develop a personality.  He seems to be quite the jokester.  Raising a child is one of most difficult tasks.  Luckily, we have received tons of hand me downs including clothing and toys.  We pretty much just need to buy food and diapers for the little guy.  Raising our son hasn't put much of a dent in our finances.  Day care in our area is very inexpensive ($130 a week).  The biggest cost involved is actually just taking up more of our time to entertain him - which we love doing.

Sometimes we laugh at how it’s possible for people to have more than one child.   

We recently had the exterior wood of our home replaced with stucco and repainted ($8,425).  Thankfully we won’t need to do any more painting for at least another 8-10 years.  Stucco material is very durable and should last for a long time.  
Before
After
We’ve also upgraded some lights in our home to LED energy efficient lighting ($563.72).  These lights should last us over 10 years and continue to keep our electricity costs low.  In addition, we purchased a new couch ($900) since our old one was falling apart.  This couch should last a long time since it’s very durable.  We still have more upgrades we’re looking forward to doing in the future.  Oh the joys of home ownership!  Owning a home is definitely not an investment – more like a money pit.

Here’s our monthly summary of side income that we have generated in the previous month of May.

Cash back
On 5.1, I received a PayPal deposit of $36.49 from Mr. Rebates cashback shopping portal. Mr. Rebates is my main go to shopping portal for cash back on purchases made online.
On 5.11, I received a $100 statement credit on my AMEX Gold card from AMEX Offers ($100 cash back after spending over $500 with Delta Airlines – I booked two round trip flights for my in-laws to come visit from Portland)
On 5.14, I received $200 in statement credits on my AMEX Platinum card by using the AMEX Platinum airline fee credit to buy $200 worth of Amazon gift cards.
On 5.28, I received a $100 statement credit on my AMEX Platinum card by getting $100 reimbursed after paying for Global Entry ($100 value benefit of the AMEX Platinum card)

Search and Win
On 5.9, I received a $5 Amazon gift card from Swagbucks (500 points = $5 Amazon gift card)      

Paid surveys
On 5.2, I received $5 Amazon gift card from Pinecone Research. 
On 5.16, I received $5 Amazon gift card from Pinecone Research.

Side Job
On 5.18, I received a check for $250 for consultation fees

Rental Income
On 5.1, we received a net profit of $430 from our rental property.
On 5.1, I received a check for $600 from our temporary housemate.

Miscellaneous Income
On 5.10, my wife sold an old Wii game on Amazon and made a profit of $37.35, after taking into account fees and shipping costs.

Monthly Totals:
Our side hustles continued to bring in extra income for us in May.
We received $436.49 worth of cash back
We earned a $5 Amazon gift card from Swagbucks
I earned $10 worth of Amazon gift cards from Pinecone Research
I earned $250 from consulting work on the side
We earned $1,030 from rental income
My wife earned $37.35 from Amazon sale

All of this totals $1,768.84 from our side hustles for the month of MayThis hasn't been the most productive month, but the money keeps coming in. Side hustle income helps us feel less guilty about bigger expenses.  Have you been hustling? 
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