Tuesday, June 25, 2013

From "Me" to "We"

Marriage is the union of two lives… and two bank accounts?
I’ve talked with many different married couples and have heard varying opinions on having a joint account.  Most of the responses I’ve heard sound like the following:

 “We keep everything separate.  I have my own account and my wife has her own account.  As long as we split most of the bills 50/50, she can do whatever she wants with her money and I can do whatever I want with my money.”

“I don’t trust my husband with access to my bank account.  If he can’t control his own credit card spending, there is no way that I am going to let him touch my money.”

“I believe in having 3 main accounts: mine, yours, and ours.  This allows us to equally contribute to our shared living expenses such as rent, groceries, and bills.  We should take individual responsibility for our own money.”

What is your attitude towards having one joint account in a marriage? 

Wednesday, June 19, 2013

New bonus for Chase Ink cards and Freedom activation

Well folks, this is going to be a big week for Chase.  If you haven’t already heard (since it’s already been mentioned on almost every hot deal or frequent flyer blog / forum), Chase has increased the sign-up bonus for the Chase Ink cards for national small business week.

From June 16 to June 22, you can now earn an additional 10,000 points for Ink Plus and Ink Bold credit card signups for a total of 60,000 bonus points (after spending $5,000 in 3 months).  
Chase is also increasing the sign up bonus for the Ink Cash and Ink Classic cards, which are now 25K bonus points instead of the normal 20K bonus points.  While these cards have no annual fee I recommend applying for the Ink Bold or Ink Plus to take advantage of the first year free and much larger sign up bonus.  You can always downgrade your card into one of the no fee Ink cards later.

Sunday, June 16, 2013

Investing Primer: choosing your investments

This is the last post in my investing series.  The other posts are here:

Today I will talk about getting started with choosing your investments.  

“I want to do more research on investing before I jump in.”

Learning about investing is important before taking the plunge and opening your first investment account.  With so many different ways to invest, it is easy to get overwhelmed to the point of doing nothing.  

What I’ve found is that the more you learn about investing, the more you realize how little you know.  You will never learn everything; it’s too complicated.  That’s why I suggest learning the basics before getting started.  Over thinking things will lead to paralysis, and not doing anything.  
As it turns out, simple investments usually end up producing better consistent returns than complicated investments. 

Friday, June 14, 2013

Investing Primer: market timing

This is the seventh post in my investing series: 

"October.  This is one of the peculiarly dangerous months to speculate stocks in.  The others are July, January, September, April, November, May, March, June, December, August and February."
                                                                                    - Mark Twain
It’s easy to look at the ups and downs of the stock market and think:
I can buy stocks when they are cheapest, just before prices shoot up.
I can sell stocks at their peak, just before prices come crashing down.

Wednesday, June 12, 2013

Investing Primer: Tax Efficiency

“In this world nothing can be said to be certain, except death and taxes.” 
                                                                 - Benjamin Franklin
This is the sixth post in my investing series: 

Some investments are more tax efficient than others, which means you have less tax to pay.  And the less taxes you pay, the more money you get to keep.  Armed with this information, you can organize your investment portfolio in a way that minimizes taxes.

Tax Advantaged Accounts  
Many investors saving for retirement should start by contributing to tax advantaged accounts such as 401ks and IRAs.  These tax-advantaged accounts allow your investments to compound and grow without taxes taken out each year.  For 2013, if you're under 50, you can contribute a maximum of $5,500 in your Traditional or Roth IRA and $17,500 in your 401k or 403b accounts.  That’s $23,000 in tax advantaged investments per year!

Monday, June 10, 2013

Investing Primer: minimizing costs

This is the fifth post in my investing series: 

Part 1: save, save, save
Part 2: stocks and bonds
Part 3: risk, asset allocation, diversification
Part 4: 
mutual funds and ETFs

Today I will talk about minimizing costs when investing.   

Expense Ratios
Every fund has management fees, which are used by the investment firm for daily operation of the fund.  These fees are called expense ratios, and they represent a percentage of the assets in your fund. 

Let's say your fund has an expense ratio of 0.5%.  This means that 0.5% of your fund's total assets will be used by your investment firm to cover their expenses.  
The expense ratio lowers your return because it is taken out of your fund's assets.  For every $10,000 you have invested, the firm is keeping $50.  This may not sound like a lot, but the costs really add up over time. 

This figure shows that if you choose a fund with an expense ratio that is 1% less than a more expensive fund that performs the same, you can save up to several hundred thousand dollars over a 30 year period of compounding.  1% in extra fees may reduce your available retirement funds by 10 years.

Friday, June 7, 2013

Investing Primer: mutual funds and ETFs

This is the fourth post in my investing series.  You can find my other posts on investing here:
Today I will be talking about mutual funds and exchange traded funds (ETFs). 
Vanguard Total Stock Market Index Fund (VTSMX)
Mutual Funds
Mutual funds pool money from many investors to buy securities, which can be stocks, bonds, real estate, and other investments. 
When you buy a share of a mutual fund, you actually own a small fractional component of the underlying pool of securities within the fund.  Each mutual fund has a fund manager who chooses which stocks or bonds to purchase. 
You must purchase a mutual fund during a market trading day between trading hours.  The New York stock exchange runs Monday through Friday 9:30am to 4:00pm ET and observes most major holidays.  When you purchase a mutual fund, your order does not get fulfilled until the end of the trading day.  This is because stocks and bonds can be bought and sold throughout the day with continuously changing prices.  The net asset value (NAV), or price of the mutual fund, is not determined until after the market trading day closes.  The NAV is the average price per share of all the stocks or bonds within the fund. 

Wednesday, June 5, 2013

Investing Primer: Risk, Asset Allocation, Diversification

This is my third post in my investment series.  The first post is about saving and the second post is about stocks and bonds.
Today I will talk about risk, asset allocation, and diversification.

As I discussed in my previous post on stocks versus bonds, you need to take some stock market risk in order to get the larger returns necessary to provide you with a comfortable retirement.

With investing, the more risky an investment is, the more rewarding it may be.  When investing for retirement or for other reasons, we want preserve the original amount we invest (principal) and we also want to see some nice returns (gains) as well. 

Sunday, June 2, 2013

Investment Primer: stocks and bonds

This is the second post in my investment series.  The first post is about saving to invest and can be found here

Most investments fall into one of these three main asset classes:  stable value investments (cash), stocks (equity), or bonds (fixed income).

Stable Value Investments (Cash)
These include Money Market accounts, Certificates of Deposit (CDs), and U.S. Treasury Bills.  These are essentially loans to a financial institution which pay you interest on your money.  Stable value investments are generally very safe, have little to no risk, and generally earn very little return compared with other investments.

Today I will be talking mostly about stocks and bonds.

Stocks (Equity)
Stocks represent an ownership interest in a corporation.  When you buy stock in a corporation, you buy fractional shares (ownership) in that company.  Corporations use money from your stock purchase to fund their business.  As a partial owner of the company, you share in both the company’s profits and losses.  When a company profits or loses money, the value of your stock share increases or decreases. 

Saturday, June 1, 2013

Investing Primer: save, save, save

This next series of posts will be on Investing.  But before you can begin to invest, you need to start saving money.  After all, you can’t invest money if you don’t have any saved up.  Saving is the key to wealth: the more you save and invest, the sooner you can achieve your financial goals
It’s not just about how much income you make; it’s about how much money you keep.  

Saving more offers multiple benefits:
  • Having more money to invest for long-term growth
  • Living on fewer expenses now will permanently reduce your living costs in the future
  • Protection from financial emergencies 
  • When the stock market is down, you can pick up more shares when they are “on sale” instead of selling your investments at the worst time possible (when stock share values are low)
If you are spending everything that you earn, you have zero net worth and are adding nothing to your wealth.  
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