Turn down the NOISE aka TV call it what you will

People are on TV because they make good television, not because they make the best advice for you personally.  That doesn't mean there aren't credible sources or you can't learn something.  What I mean is that you have to understand your finances or the markets enough to know when something is or isn't relevant to you.

Here's an example from 2011

Dow 3000

In this article US author/economist Harry Dent says that the Dow will crash to 3000 in 2013.  Right now the Dow is at 14578.54 as of Thursday's close.  That is a monumental crash greater than that of 2008.  What I'm pointing out here is that he was on CNBC, but you shouldn't take him seriously because crazy claims should just be acknowledged as crazy claims

Conversely this next article has a crazy claim in the positive direction and should be treated as a crazy claim. By the way the book now sells for pennies on Amazon.  Watch out for anything too positive or too negative.
Dow 36000

People who should be taken seriously are those that understand and explain that no one knows what will happen tomorrow or the next day, and they advocate for good financial plans that don't involve trying to time the market.

So turn off your TV.  Investing is long term so don't let today's headlines ruin tomorrow's success.

Having children/returning to work

Here's a statement that I've heard couples say after having 1 or 2 children

"Day care is so expensive. We only make an extra hundred or two a month whats the point in working if I could just stay home with the kids".

Like investing let's think long term here.  Salaries increase overtime and promotions are given as long as you stay in the workforce.  Your situation can change drastically in a couple years.  By the time your children reach college age you could have a solid career and two incomes.

Another idea to consider is kids learn by watching their parents, and seeing both parents going to work can have positive effects on the ways a young man or woman perceives the world.

Another option to stay in the work force and still have more time with your kids is a flexible work arrangement   That is creating better/ less hours for yourself so that you can spend more time with your children at a young age and return to work full time once they are old enough.  The benefit is that you keep building work experience and you have a place to go to when you wish to be a full time employee again.



Let me end by saying there is nothing wrong with being a stay home parent.  I was lucky enough to have my mom stay home.  I wrote this post because as much as she loved being with my brother and I 24/7, she wished that she had done something like the flexible work arrangement so that it would have been easier to return to the workforce once we were older.

You are valuable and intelligent don't let a gap in your resume hold you back.

Retirement Calculator

It's not a bad idea to take 15 mins to see a rough estimate of what your IRA could be in 20-30 years based on what you start doing today.

You shouldn't need to sign up just press start.

This should give a better estimate than say an app on your phone

https://www3.troweprice.com/ric/ricweb/public/ric.do

Time Value of Money Calculation Help

Here is a website that I used all throughout college to help me solve equations.  Even if you aren't calculating equations for school or work this site can help you evaluate what you really might pay on a loan or mortgage.

Just pick the calculator you are using and the calculation you want to do and start the tutorial.

http://www.tvmcalcs.com/

Quick Higher Education Thought of the day

The market is flooded with Bachelor's degree's.  Now to separate yourself you need an MBA.  What happens after the job market is saturated with masters degrees?  Moving forward what metric will allow society to measure value in a person?

Will we shift to designations or other technical certifications? Or move away from conventional schools of thought and see a new wave of ideas?

Maybe apprenticeships will become an option?

Who really knows but I think you can only be in school so long and every job requires it's own set of skills that you can only learn from doing that job.  Hopefully the change will be proactive instead of reactive



Anyone have any thoughts on this?

1 Share of coke worth millions/Reinvested dividends

The following is about the power of reinvested dividends

Dividends are paid in the form of cash or more shares to shareholders of a company

To reinvest your dividends means to take all dividends and then use them to buy more shares and over time you greatly increase the amount of shares you own. More shares = more dividends = more shares and so on.  All this is accomplished without putting any more money in unless you want to add outside funds anyway.

I recommend adding more funds over time through a payment plan it could even be as little as $50 per month. 

The article referenced below explains that 1 share of coke (Ticker KO) if purchased in 1919 at $40 with all dividends reinvested would be worth 9.8 million in 2012.

There are plenty of ways to achieve your goals in finance.  Patient investing can pay off if done right.

These are my thoughts and opinions you have to find what works best for you.


Link to the article

http://www.dailyfinance.com/2012/08/14/coca-cola-stock-share-worth-millions/

I have never owed Coke stock

The Dow hitting new highs isn't so special and here's why

I've mentioned QE 3 briefly in another post, but what does that really mean.  The purpose of QE or Quantitative Easing is to:

Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the national economy when standard monetary policy has become ineffective.^[1][2] A central bank implements quantitative easing by buying financial assets from commercial banks and other private institutions, thus creating money and injecting a pre-determined quantity of money into the economy. This is distinguished from the more usual policy of buying or selling government bonds to change money supply, in order to keep market interest rates at a specified target value. (This is the definition from wikipedia full link below)

Essentially QE creates an artificial view of the economy and the markets in hopes that while QE goes on the actual market and economy catch up.  This floods the system with easy money and hopefully lowers unemployment by spurring job growth.  Underemployment should be a bigger concern, but that post will come later.

QE3 is different because there is no pre-determined quantity of money.  As Ben Bernanke said QE3 is indefinite until unemployment is under 6.5%.  (Forbes link to this is second one down)

One big drawback that people are concerned with in the near future is rapid inflation.  Regardless of the fact that it's good or bad for the economy is irrelevant because it's here to stay for now.  This should not affect your investing really because investing is long term and if you invest right market fluctuations in the short term will not be a factor in the long term.

A great Q&A about QE in the WSJ read this if you are only going to read one article 

Quant Easing of 85 billion per month until unemployment is under 6.5%

Quantitative Easing (QE) Wikipedia

The markets and QE 3  

Trading : My thoughts for someone new to the markets

Trading is risky and the amateur investor should limit the amount of money they commit to it.

No one knows what's going to happen tomorrow or any day for that matter.  Also it may sound exciting but few people consistently make money over a long period of time when only trading.

I'm not saying don’t trade at all. But if you are willing to risk your money, put a small amount of your funds (5-10% max) in a separate account. Use this as your "play" money and allow yourself to take risks with it. Don't add to that account even if you are doing well and the market is going up.  You really want to see how trading is in good and bad times.  The rest of your money should be put in something long term depending on your age, goals, and family situation.  (more in depth posts coming soon)

No one hits home runs all the time and you shouldn't only look for them.

Quick Quote - from the richest man in the world

When there is a crisis, that’s when some are interested in getting out and that’s when we are interested in getting in. Carlos Slim Helu - richest man in the world

Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful. -Warren Buffet - one of the wealthiest men alive.  Buffet quotes

Basically what this means is be careful when everyone feels like nothing could go wrong and when times look like they are only going to get worse think about buying more of what you like provided those purchases are solid investments and the fundamentals haven't changed.

Futures

A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. (investopedia.com)

Futures can be used either to hedge or to speculate on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and reduce risk (hedge). On the other hand, anybody could speculate on the price movement of corn by going long or short using futures. (investopedia.com)



This is a very basic description of futures and in my opinion unless you are an experienced investor that is willing to take large risks don't trade futures.  This post is mainly used as a reference point for other posts.

http://www.investopedia.com/terms/f/futures.asp 

How I Earned My First Financial Job/How I started Networking

I was a bartender towards the end of college. It was great because for someone my age I was making a good amount of money while only working 3-4 days a week. I decided in my senior year that I really wanted to look for a financial job, but the market was still rough from 2008. I moved from a bar that allowed me to earn a good amount of money to one that was mediocre in terms of my financial compensation. This worked for me because the networking opportunities outweighed the money.

The new bar was an upscale bar filled with business people. I didn't have a financial network nor did my family, and so I created one on my own.  I met many individuals across the industry, and after some time and a lot of networking someone took the time to pass my resume along to their HR department.

Lastly when I was at the bar I made business cards on VistaPrint.com so that I would stand out in someone’s mind.

It is better to get someone else's information so you can follow up but at least the business card is something to remind people to call you.

Sometimes just saying hello can lead to something special.

I will post a topic on networking soon and go into more detail on what I did to build meaningful relationships. 

Capitalism A Love Story - Michael Moore

Before I begin I am not advocating for Michael Moore's opinions or Wall Street's in this post.


Michael Moore made a film called Capitalism A Love Story.  In two scenes he sits with a former VP of Lehman Brothers and Harvard Professor.  He then asks them what a derivative is and neither can explain.  He then concludes that "the complex system and terminology are merely there to confuse and "get away with murder", and Wall Street is just "an insane casino." (wikipedia/capitalism a love story).   After speaking with two people have you ever said now I am completely informed on a topic.

With this outlook you don't change the world or help people.  Finance and Wall Street aren't going away and remember there are plenty more people that want to help you and do a good job at it.  Don't condemn the system due to a few bad apples that unfortunately had enough control to do the damage we've seen.

Derivatives have been around since the 18th century and one of the oldest derivatives is rice futures.  Derivatives can be used to hedge risk as well as speculate.

There are many reasons why 2008 was so bad and why we are still feeling the effects today.  Derivatives as a whole aren't the sole reason for this.  Yes there were very complex derivatives used but greed really drove the US into the situation we are in today.

More on Derivatives soon



Futures

You can still read books without opening one

We have many responsibilities and it's hard to make time to do things that we don't necessarily enjoy.

For example reading a financial book

I know i'ts hard for me to find time to read anything after working, working out, cooking dinner, studying, ect.

I've found that buying audio books or using a site like audible.com can allow me to keep up with my schedule and my desire to learn.

Also its important to read more than just financial books.  Remember to keep your imagination stimulated with something other than your financial or work related interests

Peter Lynch once said in one up on Wall Street that his classes in fine arts taught him much more about the world and how he would invest than his business/financial classes.

Teach yourself to think for yourself.

Your imagination is everything stay inspired.

Ted Talk: Intelligence is Diverse: Rethink Education

Really interesting video

Ted Talk: Ken Robinson says schools kill creativity

http://www.ted.com/talks/ken_robinson_says_schools_kill_creativity.html

Take Away in Financial Terms: Rethink your approach and educate yourself on finance and you will most likely give yourself and your family a better life then you ever imagined.

My goal for this blog it to help readers see that anything is possible. Dreams don't have to leave you in debt, and you can give yourself options no matter what your passions are.


Never give up on what makes you special. Stay inspired.

Trading vs Investing : making the case for investing

I started trading with very little money in college.  I used most of my savings account to trade.  I don't recommend that at all.   I made some money in the beginning, but over time I learned that trading is very risky and investing is a better approach for long term results.

Trading is more like gambling, because no one knows what will happen in the short term and the market does not always act logically.  

Investing is long term and uses risk management, diversifying, and dividend strategies to provide good returns while limiting losses.  No one can time the market, be smart and create an investment plan.  (stick with this blog and we'll cover it or look at some strategies on-line)

Also once that plan is in place set up a payment schedule to constantly send funds into your investing account so that you are always adding to your investments that accrue dividends and capital gains over time.  As I said in the beginning, investing takes time but you would be amazed what you can accomplish with a solid and patient strategy.


There is so much to cover on every subject I have to make multiple posts to really cover it in depth without making the posts unreadable.  Check back for more on this subject.


My Coke Reinvested Dividends post gives an example of what can happen if you make your money work for you.

30 Body weight squats changed my life

Ok so my life wasn't changed but it was drastically improved.


It's amazing what little changes to our daily routine we can make that take very little time, but end up changing the way we think, feel, and interact with our environment.

I started doing 30 body squats in the morning as soon as I got up about a month ago.  Now not only do I wake up quicker.  I feel energetic all day and I've gone from 3 cups of coffee a day to just 1/2 a cup.

Keep an open mind and try new things, the outcome may surprise you.

Bring a calculator/cell phone with you to the grocery store

If you are trying to stay on a budget a great way to do it is to add up what you are buying as you go.

You will instantly know if you really wanted those extra items instead of feeling stuck at the register like most people do and just by the items.

Also you can give the people at the register the items you don't want.




Simple things can save you money

Look for a post all about costco soon