Wednesday, October 31, 2007

Thanks Ben for the Fish!

One of my favorite books is the Hitchhiker's Guide to the Galaxy series. I know, I'm a geek. Anyways in one of the books, the dolphins, who are in fact aliens from outer space, leave a farewell note to the humans saying "So long and thanks for all the fish".

Today the Fed Central bank lowered the rate by 25 basis points. And the US market rose in spite of high oil prices and ongoing housing slowdown.

So I checked my 401k and it gained $2,093.82 today. So I want to say "Thanks Ben Bernanke for the fish!"

Google GaGa - $700 Milestone

Google hit $700 today, a milestone. There are people kicking themselves for not buying GOOG. For me, I know my risk tolerance, and I prefer investing in the stock market via mutual funds, ETFs, or indices.

Stocks zooming to the stratosphere are good for headline news and dinner party bragging. But I prefer boring mutual funds, ETFs and indexes like the S&P500. It's like the story of the Hare and the Tortoise. Over the long run, I've learned that I just need to grow my investments at the market rate. Don't need to find the next Microsoft, or Google, or Wall street darling.
The important thing is to stay invested over the very long term.

For my financial health, I follow these guidelines
1. Dollar cost average. I participate in the 401k plan at work and it invests bi-monthly. This gives me an average price for the securities I buy. Another nice thing, is I don't even miss it because it gets automatically deducted from every paycheck.

2. Don't be too greedy - Don't put all your eggs in one basket. So even though you work at a great company (GOOG?) and the stock is shooting up, don't be greedy. Invest your 401k in mutual funds, indexes, or ETF, don't put it all in the company stock where you work. All it takes is a financial implosion like Enron and all your retirement hopes blow up. Or maybe some scandal like backdating, and poof!, your portfolio got a free buzzcut!

Ask yourself, if GOOG is unstoppable, why do the founders consistently sell x number of shares every quarter? Because they are smart, and they know the importance of diversification. So don't put all your investments in individual companies. Learn from the dotcom bust. (Some people thought buying MSFT, SUNW, CSCO, GE and a few more was enough diversification... duh!)

3. Use other people's brains. I don't have time to research a bazillion companies, especially if they are overseas if I want to invest in Asia, EMEA, or BRIC. If you can't find an index or ETF for that segment you are interested, then find a no-load mutual fund that invests in that segment that has a proven 5 year track record. Let those guys worry about what to buy. is a good place to start.

4. Spread it Out. Don't just invest in US large cap stocks. Putting money in an S&P500 index is a good start. But remember to also put some money in other "baskets" to spread the risk. Put some in small cap funds, mid cap funds, international funds, and emerging markets.

Check Morningstar to see if the international fund is just invested in large caps, or maybe just invested in a specific countries like Japan, Korea, UK, France. You should look into emerging markets too such as funds that invest in BRIC, or other smaller asian or eastern european countries.

5. Don't forget Land. Don't forget to also have some exposure to real-estate investment. Either by buying properties like a house. Or invest in REITs.

6. Take Calculated Risks. Don't be too risk averse. I know someone who is too scared and invested in CD's, money market funds, and Treasuries. You may feel safe, but you are forgetting your exposure to inflation. During WW2, a loaf of bread was 50 cents, and a car cost about $1000. So you need to be invested long term in the stock market, in order for your money to have growth and sustain buying power.

7. Gamble with Money You can Afford to Lose. For some people, they have a need to gamble, maybe by buying penny stocks, or following a hot tip. Or buying multiple real estate properties like Casey Serin. If you have that itch that needs to be scratch, then take out a small amount and use it as your "CRAZY" money. After you lose that money, hopefully you will learn some valuable lesson about risk.

8. Adjust SLOWLY Over Time. I've found that as I mature, and learn more about investing, I've needed to adjust the baskets where I have invested. So for example, if you have a starting portfolio looking like this.
50% Large cap index
20% International index
20% Mid cap index
10% Bonds

Review the performance, and adjust accordingly. Maybe you are too conservative, or you want more exposure to emerging markets. Don't make drastic changes. Just slowly tweak and move sums across baskets. MAKE SURE THERE ARE NO PENALTIES. Some funds have penalties if you are invested less than 90 days or whatever time frame.

How about you? What guidelines have helped you learn real-world financial lessons?

Disclaimer. I am not a financial professional. This blog is just for entertainment purposes. I'm just a working stiff with some investments in 401ks, roth IRAs, and a mortgage. You should contact an investment professional before making investment actions.

Tuesday, October 30, 2007

Popular Blogs with Gazillion Readers

Found this link to Personal Finance Graduating Class of 2007

It list's a good number of blogs that are making money and have lots of readers. Good to see that there's some who have made a good chunk of change from blogging.

Congratulations to the top DAWGS!!!
  1. The Simple Dollar
  2. PFblog
  3. Iwillteachyoutoberich
  4. GetRichSlowly
  5. MyMoneyBlog
  6. Wisebread
  7. FiveCentNickel
  8. Bargaineering
  9. Consumerismcommentary
  10. FreeMoneyFinance
  11. AllFinancialMatters
  12. PFAdvice

Monday, October 29, 2007

Spending Habits of Various People

"Talk is cheap" is the well known adage. To see what people really value, look at what they spend their money on.

For me, I enjoy eating, so I like going out to eat on the weekends. I guess that's my weakness. Sushi, Thai, Chinese, In-N-Out burgers (double-double with animal-style fries). But I also put my retirement as high priority, so I max out my 401k every year.

Other people like watching TV, so one friend got a 3 thousand dollar 45-inch Sony LCD HDTV. He's also a gadget freak, so he has the iphone, appletv, ipod, macbook, etc.
Another friend got a 60 inch Sony HDTV.

Another person I know likes to go to the movies, so he goes every weekend to catch the latest flick.

Another person got a boob job. Quite a pricey augmentation too I heard.

Yet another person is very fitness-oriented, so he buys expensive gear and clothes from REI.

Another friend I know is a photography nut, so he has about 20k in photography gear. And a bimmer, which he doesn't drive.

Last saturday, someone was sharing that their uncle has a Land Rover, but it's so expensive to run. It guzzles seven gallons per mile, so it stays parked most of the time.

Another person I know doesn't have a lot of expensive "things", but he has travelled all over the world. Australia, Israel, Jordan, Brazil, Chile, Easter Island, London, Paris, Alaska.

What do you spend your money on?

Wednesday, October 24, 2007


Hooray the panasonic microwave is fixed! The box is ready for pick up.

Audio Trips

I have a 40 minute commute, so I borrow CDs from the library, specifically audio books. I like to get historical books, and I get a lot of interesting trivia. Among my favorites are Anne Frank's diary.

I'm currrently listening to "The Osama Bin Laden I Know", in which a journalist has put together stories about America's most Wanted. The author has strictly limited the stories to be either from family members and known friends of OBL, or various jihadists who have known OBL.

Among the interesting tidbits.
- OBL's father died from a plane crash when OBL was 10 years old.
- OBL's father made a fortune with his construction company in Saudi Arabia.
- OBL has many brothers and sisters, around 50 or so.
- His eldest step-brother, Salim, took over the business when his father died. His brother liked disco's and they would take trips to Europe. One time, they were staying at a bed and breakfast. The bnb owner said they had suitcases full of white shirts from designers, and they would use them only once. They also parked their Limo illegally, the bnb owner said they did not care about the daily fine because they had so much money.
- OBL started getting involved in jihad by funding NGO-like services in Pakistan and Afghanistan. He went there when the Russians invaded Afghanistan. Many eyewitnesses said OBL was a soft spoken guy who was not very impressive. But he was very religious and very dedicated to Islam.

The audio book consists of about 12 cd's so I'm slowly going thru them... stay tuned.

Tuesday, October 23, 2007

Eggstra Large

I was talking to my cousin K this weekend. He works for their family business and he just came back from a convention in Ohio. I was interested in the story of their successful business. He told me about 10 years ago, they had a small construction business, and my uncle felt that the business was not as profitable. So they looked into the egg business.
One reason they chose eggs was because they can easily build the hen houses. They really had no idea how to run an egg business. They kept at it and pretty soon they also got into selling chickens. Then after that they also went into selling pork.
Another thing was they never stopped looking for ways to improve the business. His brothers would come and find out about the new feed formulas for the chickens. They get better equipment to incubate the eggs. They even look at the optimum altitude for the egg farms.
They had the management know-how to grow past the "family business" stage. There are many family businesses that want to keep tight control and never let "outsiders" into the executive level. They have many loyal employees who have climbed the ranks over the years. And they also recognize the need to hire outside the company to get the right person. He says they hired one guy from Australia to manage one of their businesses. Nowadays my cousin is on the board of directors and does not handle the day-to-day operations anymore.
Today they are now the number 2 chicken company in the country X. He says they sell about 130 Million chickens a year. Even though they are very successful, they are still grounded. They do not spend extravagantly, and still very nice people.

Monday, October 22, 2007

Don't Throw Away Receipts

Our microwave died last week. We only bought this in Feb 07. This was a bit surprising since it was a $150 microwave. Luckily we kept the receipt. So it was easy to get it serviced. There was even a local Panasonic authorized service center nearby. They'll call me when it's fixed.

So this reinforces the need to keep receipts for all major purchases. If I threw the receipt away, I will probably have a doorstop.

Another good thing is I bought it using my AMEX card, so AMEX will double the warranty to 2 years. And I feel I may be needing it.

Losing something makes you appreciate it more. A microwave is indeed a very convenient appliance. I was just thinking about the speed and convenience this box provides. It saves time, and you can leave it unattended to heat your food. When our microwave died, I immediately had to go and get a replacement. It goes to show how useful I think it is.

Friday, October 19, 2007

Stop Paying Taxes ... Like the Amish

Well, well, you learn something new everyday. Found this series of articles on Slate focusing on laws and how they are selectively applied. Did you know that the Amish do not pay Social Security taxes?

Anyone want to try this? I would think I can make more money investing the money today myself, and I promise not to accept SS payments when I retire.

Net Worth Confidential

It's interesting to compare one's situation with others. And many pf bloggers have a running total of their net worth. People in our society are open about sharing many intimate details about sex, crime, addictions, yet somehow we are shy about letting people know about our financial situation.

As background, I'm in my late 30's and married. Been saving and putting money away since I started my first full-time job about 10 years ago. I think compared to the average American we are on a good track record.

So I'm not ready to give my full net worth details yet. We have several 401ks and roth Iras and also equity in in our house. So far so good. Our only debt is our mortgage, and a car loan.

Pyramids of Gold?

I came across this article on Yahoo Finance about annoying networkers. Made me think of the several people in my life who have tried various get-rich-quick schemes. "Sign up early" and get rich recruiting people to sign up after you!!!

I'm glad I did not fall for those.

My relative tried selling Tupperware, scrapbooking, perfumes. As you know these companies urge you to have parties where you invite friends/relatives/coworkers... then try to sell them stuff. I'm not that comfortable with selling direct, so these businesses never attracted me.

Another relative tried Nu Skin, Shaklee. Still no success in that after putting in a lot of effort and money.

Another friend tried Amway. Another friend signed up selling board games...

An acquaintance I know got out of the military and started selling vitamins. The claim that the gel capsules are better for absorption. And she convince another friend to sign up.

I'm glad I didn't sign up to these things. It's not my style to approach people and sell things. I've always considered myself a realist, and street smart. I'm going to grow my investment via my 401k instead and use the magic of compounding returns.

What about you? anyone have stories of multi-level marketing schemes and pyramids?

Don't Panic!

The US market is down big today. The Dow is down by over 200 plus points. Lots of bad news this week making everyone jittery.
- Bomb blast in Pakistan kills 100 people in Bhutto procession.
- Turkey continues to saber rattle. Saying they will send troops into northern Iraq to fight Kurdish separatists.
- Oil hits $90/barrel record high this week
- Bank of America reports lower profit due to exposure to subprime and bad investment banking moves.

So what to do? Sell your mutual funds and stocks? From my experience, DONT PANIC!

It's not a good idea to make drastic BUY or SELL moves during turbulent days. Just review your holdings, and review why you hold these investments. If you are investing for the very long term, ie for your retirement 10,20, 30 years away, then stay calm.

Are you diversified?
Are you too concentrated, and have huge sums in a single company stock? Then consider the fate of Enron employees. Learn from history and don't repeat it.
Are you too arrogant? Do you think that you know more about making money in stocks than Buffet, and those professionals in Wall Street?

It's not good to be trading when you are agitated. As long as you are diversified and your investments are not concentrated, then it should be fine.

Thursday, October 18, 2007

Save Money, Ubuntu is free

Ubuntu has just released the latest version of their operating system today. For novices, Ubuntu is a flavor of Linux from Canonical. They are a competitor to Windows and Mac OS. Ubuntu strives to make Linux easy to install and use - PLUS they are free to download and install. They let users try the software first via booting off the CD, and if you like it, you can install it.

I tried their last Feisty fawn release, looks like I'll give this version a try too.

For users who just browse the net, Ubuntu comes with Firefox, which is my favorite browser.

Debt in Suburbia

Money magazine talked to 3 couples in suburbia on how much they make and how much they save for retirement. They are mostly in their late 30's and they have 401ks. They talk about the peer pressure of keeping up with the neighbors with cars, vacations, toys.

Their stories remind me of the tale of the ant and the grasshopper. The grasshopper is happily spending his summers enjoying, and not saving for the future, but the ant works hard and saves food for the coming winter. I think the Wrights have a good start to saving for a comfortable retirement.

Wednesday, October 17, 2007

Lessons for My Daughter on SAVING

When I was very young, my parents opened a savings account for me at a nearby bank. I guess I was taught early to save. Now that I'm an adult, I know that just putting money in the bank is not enough because inflation is going to eat away the earning power of your money.

As a parent, I hope to teach my daughter how to handle her money well. We're the adults now. So we've started talking to her about money. Of course make sure you explain things appropriate to their intellect. For example, I tell my 4 year old daughter that we can't buy everything she wants in the toy store. We tell her we have to save money for the next trip to see Mickey at Disney. She's beginning to think about money at an early age.

Saving money in a bank is not enough because most big banks just give really puny interest rate -- around 1% or less. It's crazy!! Don't be a sucker- make your money work harder. Savings accounts are good for parking your money that you need very soon. If you need the money within 1 year, keep it in a savings account. 2 years? yes. Don't risk money you cannot afford to lose.

Need the money 3, 4, or 5 years away? Let's think about that.

Instead of just a POSA, plain-old-savings-account, you should at least look into opening an account at a reputable online bank. These online banks offer much higher rates, almost 5%. That's because the online banks have few employees, no pensions, and no leases to pay. So they pass the savings to you. ING Direct is one bank to park your savings into. Avoid POSA's.

Living Trust For Dummies.

We recently got our act together to get a Living Trust. A living trust helps to smooth the process should the unexpected happen. Aside from the living trust, we are also doing our will, and power of attorney documents set up. We have a young child, so it's good to have a plan in case we both accidentally die. Many people prefer not to talk about dying, but we decided to be proactive and do something about it.
Here is a link that explains what is a living trust.

About This Blog

Welcome to Yet Another Money Blog. Yes, there are gazillion people blogging about money and how they save money, spend money, pay debts. Here is my blog focusing on money as well.

I hope to share my successes, failures, and experiences handling money. I have a house mortgage, a 401k, a Roth Ira, stock options so I hope to share what worked for me.
I'm not saying I have everything figured out, but I'm saving for my future retirement and saving monthly for that future goal of getting out of the rat race.

Join me for my travels with money.