Learn about finance even if you have a financial advisor post 1

Investing is long-term so don't worry so much about the bottom line.  Yearly reviews should not be a conversation about % gain/loss in your portfolio they should be about strategy, your goals, and the plan you agreed on.

Switching your strategy constantly is like putting a quarter in a slot machine that doesn't hit and then moving down the row of slot machines doing the same thing.  Your best bet is to stick to one strategy or asset allocation that you believe in and reevaluate over time if you feel you are off track.

The market is unpredictable but the worst thing you can do is try to time it.  Advisor's will tell you to leave your money in the market because even if the market goes down you've hopefully invested in high yielding products and are still collecting dividend and capital gains distributions which will allow you to reinvest more money in downturns.

In downturns wouldn't you want to buy more when the securities you like are cheaper and then see even greater gains when the market turns around (provided the fundamentals on these haven't changed).

2012 and so far 2013 have been great examples of why you should leave your money in just check what percentage the Dow or really the S&P 500 are up now and what they were in 2012.  Quiet rallies will make a huge difference to those portfolio's that stay invested, especially when all the talking heads and doom and gloom experts tell you to get out when they have no idea what will happen like everyone else

There are a lot of great people out there who want to help you so let them. Don't take a back seat but, limit the ways you can sabotage yourself and your gains.


There is a lot on this subject but I will post more later.

Credit vs Debit cards make it work for you

I always pay with a credit card.  I pay off my credit card weekly so I know how much money I really have (this works for me find something that works for you)

I never buy what I can't afford. All these purchases accumulate points which you can put towards yourself later on.

In finance you are always looking to maximize the way you make your money work for you.  With those points I was able to fly for free the past two years. (1 trip a year)

Try not to have too many credit cards you can always raise limits just don't overwhelm yourself with too many cards.

Canceling cards lowers your score

Be careful of store credit cards. You don't want a balance you forgot about lowering your score just so you could save 15% extra on a TV.  It can cost you much more long term.

Go on consumer reports and look for the card that will benefit you most

Call the credit card company and ask them to lower your interest rate.  I did that in college and went from 22% to 1.99% for a year.  You have to call every year or so but, they want your business and you should do your best to pay them the least.

Check your credit score yearly.  You can improve anything and it doesn't take long to change your situation around start today.

Also check your credit rating at the three major ratings agencies.


This is a rich area and I have many posts to come on this topic

Start here

https://www.annualcreditreport.com/cra/index.jsp

Used vs New Cars

A car is a depreciating asset.  That means its value goes down not up over time.

Drive a new car off a lot and it loses 20% of its value instantly (link below).  That is a general statistic but the point is you’re not making money by buying new.

This is my case for used cars:

I recently bought a car.  I was getting so much resistance from friends and co-workers alike.  They said "get a new car", "lease a brand new one over at dealer whatever".  A new car/leasing isn't always a bad idea but you need to make the best decision for you and no one else knows what’s best for you.

If you want a new car get last year’s model.  When I was looking in Oct 2012 I almost bought a 2012 car for 7,000 off the original price because it was the test model from the dealership with 16 miles on it.

Also look for cars that put very few miles on in their first 2-3 years.  You want a car that was used around town not driven 20k miles a year.  Get as close to new as possible without financing.  This can be accomplished by buying a car that is a few years old with a little more miles on it.

Try not to finance a car if at all possible.  At least don't finance a really pricey car.  Buy what you can afford. A lot of people want the really nice car.  Do yourself a favor and wait, make it a long term goal.  If you don't have the money then it's not the right time to own the really nice expensive car yet.

Also New models haven't had time to be reviewed by sources such as consumer reports and unfortunately new does not always mean better.  

My experience ended when I looked at a 2009 52k car that I had returned to after the big sale months and it had come down in price since it wasn't sold.  I was then able to talk the salesman down even further and now I'm still very happy with my purchase.

Always try to negotiate with cars and get a deal.  The price will usually come down.  Look at more than one dealer and don't fall in love with one car.

Investopedia Cars that depreciate in value most 

Diversify how to/What does it really mean

Diversification essentially means don't put all your eggs in one basket.  What does that mean to you and your investments? Are you diversified if you hold more than one security?

The answer is yes and no, you should hold more than one, but you have to be in different industries to really be diversified.

For example IBM and Microsoft are both Tech companies, and Exxon and Chevron are both oil companies (called energy companies in finance).

So pick one of each and make a portfolio in different sectors like: Defense; Pharmaceuticals; Tech: Energy, Industrial, Telecom, and so much more

Diversity protects from sectors going down.  Sometimes the whole market goes down and there are ways to protect yourself in those times too.

Depending on what you want to do allocate your money by %.  Make each holding 5-10% of your total money and no more than 20%.  There are exceptions to every rule be safe and research allocations that will help you achieve your goals while limiting risk.

One good way to start out is pick five solid companies that have a good yield on their dividends and allocate your money evenly among these companies.  Disperse new funds evenly over time between all these positions.

I do not own any companies in this article.

This is a very basic thought on diversifying more posts on this topic coming soon.

Just one article on Diversifying from cbsnews 

A Thought on Treasury Bonds in 2013 and Bonds in General

Treasury bonds are a US Government Bond.  People buy them to have a safer bond that generates income.  They will not generate as much income as a high yield corporate bond but they are less risky to own.

If bond px's (prices) are inversely related to interest rates then if interest rates are at their lowest point in recent history (or close to it) think about selling your bonds for a gain rather than holding on to them and lose out on that extra potential money when bond prices start to fall.  There are other safe investments out there why lose out.  Then if you really want treasuries why not buy back in when the prices come back down. We are not doing Quantitative Easing (or QE) forever (we are on QE3 right now).

When interest rates start to rise fixed income (or all bonds not just treasury bonds) prices should fall.  Just think about another possibility other than buy and hold.

I'm not saying this is the only way nor am I advising you to do this.   I'm just saying think of ways that you can make the most of your investments and consider more options that may be available to you.  

Quant easing

http://en.wikipedia.org/wiki/Quantitative_easing 

Yeild

http://www.investopedia.com/terms/y/yield.asp 

Investopedia explains the inverse relationship between interest rates and bond px's

http://www.investopedia.com/ask/answers/04/031904.asp#axzz2LpVccVNg 

My first Trade

My first trade was back in college I had an account with one of the firms you see on tv for 7-10 dollar trades.

I wanted to really learn and the only way to really learn is to do something or live in that world.  Having skin in the game teaches you lessons you can't learn from the stock market game (the fake money game).  You feel the pain of the losses, the thrill of the gains, and the confusion from a market that does not react logically.

You have to deal with the psychological factors that can really lose you money.  For example taking a loss just to get out of a stock because you are worried about your home, kids, ect.  (never speculate with money you need in the next five years).  Understand the risks and that being down is not always the end of the world and sometimes if you get out as soon as your down the price can come right back up and had you stayed in you would have made money not lost it.  There are risks to holding bad trades too long as well.  Also understand these are the risks of trading not investing.

Back to my trade.  I bought Sirius shares at .69 a share.  I didn't have much money at the time and I wanted to make a profit on the market recovery (this was a little after 2009).  Now a penny stock is not a solid investment this trade was a bet in more ways than one and I'll get to that.  Trading like this is very risky, investing on the other hand is mitigating that risk while also accomplishing goals (longer term goals usually) know the difference.  I bought a couple hundred shares because I heard that Howard Stern had resigned and they had also signed 1 mil new subscribers.  I was hoping that those were signs of hope for a company on the brink of being a pink sheet stock.

The stock shot up and I made a solid profit for my first experience with the stock market I was feeling good.

Don't do what I did I was willing to take a huge risk but at the time I didn't understand how risky that was.  Don't take crazy risks with your money do your research.  Knowing what to do takes time and it will be a work in progress on this blog.

Don't worry like everyone else I've learned the hard way in stocks but you take the good with the bad and don't get discouraged.



(I have not owned Sirius in years this was just to talk about my first experience)

I'm Right.com

The best way to have true conviction is to take your idea to someone or a group that would have a different opinion and if they can't prove that your idea is wrong you might be on to something.

You have to be open minded and not dig your heals in just because its your idea.

The worst thing you can do is look for people who will only praise your idea.  Even if you have a good idea what if you could make it better by entertaining perspectives you never thought of.  Then you will have something that evolves to create a better idea than when you started.

Don't give up on your ideas some of the greatest ideas in our history were those that 1 person believed in.

I was watching a TV show recently where the reporter was talking to a crowd of people and he didn't stop asking his one question until he got the answer he was looking for.  The only problem is that was the right answer for the show, not the right answer or the only answer.  

Constantly think of new ideas and keep improving them.

My case for Apple or against......

Not long ago apple hit a new high of 705.07 and as I mentioned in the Google post very soon after it started to trade where it is today 446.06 today's close

Apple has 137 billion in cash right now (link below).  Some investors have suggested that an increased dividend will be good for the company and the share holders.  I disagree and I will explain.

Apple offered a Dividend which doesn't mean it’s still not a growth stock but, I have to wonder should it be a telling sign.  They didn't offer a dividend over the years because they wanted to reinvest everything and the benefit to the shareholder would be the rise in stock price.  

If the dividend were to rise from it's current point I believe that they are telling us the innovation is over and they won't truly be a growth company anymore.

As mentioned in the Google post Growth stocks in my opinion with too much excitement are bound to have more scrutiny and the slightest miss step could lead to a tumble in price. This was true of Apple, but Google has better prospects as I see constant innovation over the years.  Google also has the ability to enter new markets and become market leaders in a short time just look at Android.

Android took over the market place.  Phones and tablets are cheaper and have great software.  Apple seems to be losing market share on a quarterly basis.  There is too much competition and Apple doesn't have the same immensely high profit margins anymore.  

iOS is starting to become buggy (have an Ipad and 1 Ipod, plus I use iTunes and have had a lot of problems recently.  The software was flawless years ago and I'm wondering why updates seem to be of lesser quality.

Are they out of new ideas, they were innovative and that's what drove growth.  They need new innovation and that iwatch isn’t going to cut it in my opinion.

Just some thoughts you decide.  Remember facts change every day so this is my opinion as of this post what do you think?  Also if the facts change reevaluate your opinions.

(I do not own nor have I ever owned Google or Apple)

These are both stories on the topic of apple and their cash surplus

Apple link - Einhorn strategy

Einhorn part 2

My Goals for this Blog

I don't come from money and I have worked for everything I have.  I want to write a free financial blog because; I believe that it's difficult to make financial decisions without information.  Getting all the information you want can be hard and expensive, plus it can take a while to acquire the right information for you.

My hope is that I can make finance easier to understand and give the best direction I've found through my research and experience. 

I will do my best to present information relevant to every financial goal.

Hopefully you will be inspired to work with a financial advisor or invest on your own.

Feel free to post a question or a comment because I want to start a conversation and write what people feel they need to know more about.

Make the necessary moves in your lives today that will create a better future for you tomorrow.  


I will post 2 times a week at least and I will usually post on the weekend or beginning of the week.  I will try to post more often so keep checking in.