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|Friday, September 7th, 2012|
Up front financing
I just thought I would post a short note advising interested parties on how banks and insurance companies make a little extra profit off their customers. I was the CFO of a bank and the controller of an insurance company's treasury at some point in my past after all :)
Today I paid the annual premium on our car insurance. They had me set up for monthly installments with a 3% "financing fee" up front. While 3% is still more than I can earn on most guaranteed deposits it seems an attractive rate for financing. what I did when I got the bill I immediately paid them up front without the servicing fee.
I'm not doing a discounted model but quite simply the balance is a declining balance throughout the year as payments are made. The average balance outstanding is actually half that, and the service charge represents a real interest rate closer to 6%! Be aware that if you can afford to pay it off up front that represents a decent saving. Example on a $1,200 policy, 36$ financing charge, monthly payments 103$, average balance sans service charge 600$ and $36 represents 6% (this is simplistic but makes the point. you could use a compound interest model but at these interest rates it wouldn't make a huge difference.
Most of them take charge cards - I use a cash back card, my savings are even greater. I think I am at a tier where I am getting somewhere between 1-2%.
With banks we used to use a similar logic when selling you creditor insurance. You take it out on your loan or mortgage based on the amount of the loan or mortgage and it pays off your mortgage if something happens to you. We then charge you the same premium despite the fact that your loan balance is declining, so the cost of your premium rises over time. Why if you are in good health, you should look at separate lower cost term insurance to cover the balance.
Looking at charges or fees that are done up front of a transaction can result in significant savings over time.
|Thursday, April 21st, 2011|
thoughts on commodities funds?
I was talking with my financial advisor today, and mentioned that I'm looking to change some asset allocations in my portfolio. I want to move some money from a mixed mid-cap/large-cap fund into a commodities based fund. He's getting me some info and I have an appointment with him on Monday to go over the details. But wondering if anyone else has had good information or returns on commodities ETF's? I'm not looking to go into a solid gold or precious metals fund....but want to diversify into a fund that has some oil, precious metals, cotton, and other comm's in it.
What say anyone? Any input?
|Thursday, February 10th, 2011|
X-Posted from my personal journal. Also, I'm currently on hold (nearly 30 minutes now) with the IRS. So I'll update this post if they answer my questions.
I need help with my tax. It is a very simple question but when I go to look up the answer, I am taken to various publications and instructions.
Back in 1992 I put $500 into a Roth IRA. Last year I cashed it out at $806. Ok, so it says on my bank statement that $806 is subject to interest even though the original $500 was my own money, already taxed. Is that correct or is only the $306 subject to income taxes.
Also, I know I need to pay a 10% penalty most likely on it, but again, I don't know whether the penalty applies to the entire $806 or just on the money I made on it, $306. I've tried looking up the answer on the publications and forms I get sent to but there are so many rules about Roth IRAs and there is every other kind of retirement information in the mix too that is extremely confusing. They give so many examples of this and that except for something simple.
I just need to know the two pieces of information I listed above and extra credit if you can tell me the forms I need to file and stuff. So far I see Pub. 8606 and 5329 but they don't seem to really apply to a simple situation.
|Thursday, September 23rd, 2010|
This might be ~*old news*~ to a lot of you, but a friend just introduced me to this site yesterday:
It seems like a really user-friendly, beginner-friendly site to start learning the basics of stock investing, and it has a fantasy portfolio game too.
Just wanted to share it with you all! Maybe you can pass it along to your friends and family who need some more financial knowledge :D
|Wednesday, August 4th, 2010|
The mythical mortgage - learning to budget
Consider creating a savings vehicle I call the "Mythical Mortgage". This works for people who may not be ready to buy quite yet for various reasons (down payment, job concerns etc)or who have difficulty saving.
Many people don't actually budget to affordable mortgages or wait until they have one to start "scrimping" to pay it off - they only become frugal when burdened with onerous debt.
You can put it in any savings vehicle.
The premise is easy. Determine what size of mortgage you think you can afford and make your monthly payments like a bill. You would have to reduce your payment by the amount you pay in rent but add the amount you would have to pay in property taxes and things like homeowner association fees or condo fees to get a true picture of your mortgage costs.
The upside is you actually have a "mortgage" that pays you interest, you've created forced savings, and you actually find how difficult it is to carry a mortgage when you have something unforeseen (dental costs, car failure). Note you have to treat it like a real mortgage - making decisions like having to delay a vacation or a purchase to meet your payment. If you find you can't afford the mortgage payment you qualify for, well you've learned a valuable lesson that doesn't cost you your home. Note that it doesn't give you the full range of the unexpected - on my first house the furnace failed in the first year and the roof needed an upgrade so carrying it was even more difficult.
(Another similar vehicle is one a friend created. For decades anytime he was offered an extended warranty for anything he would decline it and put the premium amount in a separate account he used for repairs and maintenance. He found it built up to the point all his repair costs were covered. In fact it built up to the point where he pulled money from the account to buy a new car when he retired.)
|Friday, May 28th, 2010|
Spice and Wolf
Anyone seen or read the novel and anime series Spice and Wolf
...the plot [focuses] on economics, trade, and peddling rather than the typical staples of fantasy such as swords and magic.
Seems like it would be of interest to those in this group. :-)
|Monday, May 24th, 2010|
Some Vanguard investors are more equal than others
If you're a Vanguard investor, you might know that those with significant amounts invested
are provided additional services, and incur fewer fees on certain transactions. But did you know that people with higher account balances also get phone service from better-trained customer representatives? Or that the published rules might be broken depending on how much you have with them - or how much they thought they could get out of you?
This interesting complaint
from 2004 that I just stumbled across covers the experience of one disgruntled support representative at Vanguard. The differences between regular and higher-level investors (including the undisclosed "Plus" levels for those believed to have assets outside Vanguard) start on page 5, though the rest make interesting reading as well.
Has Vanguard changed their business practices since then? Probably, at least in part. But I suspect the concept of targeted support for higher net worth investors, including those with external funds, is par for the course (Fidelity's managed portfolios
have their own issues
). After all, it makes sense to focus on customers that bring in the money. And while they don't help you reach Voyager or Flagship status, external accounts are probably considered when making a decision about your value to the company.
Of course, you might see this as a good thing . . . just be prepared for a few cold-calls.
In related news, you can now get commission-free Vanguard EFTs
|Wednesday, May 19th, 2010|
Another thought on investing
This was supposed to just be a comment to wolfgrowl
's post but it got a bit off on a tangent so I just made my own post about it.
The most common misconception with investing is to balance your portfolio. My 401(k) has automatic balancing and I've seen it in action and it is total garbage. Most 401(k) stocks go up and down just about the same percentage so much of the balancing has like 90% "spread out" in the volatile stocks while only 10% remains in the sweep account (stable fund). First of all, this is lazy and ironically very unbalanced.
Every 90 days or whatever your minimum wait time is, you need to look at what the best mathematical choice is for each quarter. Take the time to look at past performance and news regarding your portfolio stocks. Make the best informed selection to move your money or not to move it. International funds are dropping. When this trend is tapering off then dump into it. When the upward trend starts to taper off then go back to the sweep account or stable fund. I know this sounds like day trading and it practically is, just on a quarterly basis, but I've nearly doubled my money in 2 years. So forget 2%/yr increases. How's 50%/yr sound?
I say quarterly but I do mean whatever your prospectuses allows for. In my Oakmark fund I have to leave it there for 90 days or get hit with a 2% admin fee. I've heard that many funds are 30 days so in that case I would review it in 30 days.
|Thursday, May 6th, 2010|
What the heck just happened?!?
*goes back to listening to Bloomberg Radio*
|Wednesday, May 5th, 2010|
Greece's loss is your gain
This post is a couple days late but the country of Greece is having some big economic downturn. This has already affected international stocks so if you have anything in your high risk, you might want to put it in your safe fund until this blows over. When it does blow over, start dumping into it because it is sure to go down quite a bit more. I use OAKIX (Oakmark International) but most Int. funds mimic about the same trend percentage.
|Wednesday, March 31st, 2010|
Information on financial plans?
Hi everyone! I'm glad I found this community off of greenreaper
's profile. I've been wanting to learn more about financial things for a while, but it's hard to feel comfortable asking such things in a community full of strangers...and, as we all know, there are no strangers in the furry community! :)
Anyway, I wanted to ask: what are some good resources for learning how to manage your money well? I don't particularly trust random sites that I find on Google, because I assume that they usually have some sort of ulterior motive or are a pyramid scheme or want me to sign up for some sort of real estate training ;) But I want to learn more about investing/money markets/fiscal responsibility/whatever from reliable, trustworthy sources. Bonus if the source is a woman, because, speaking as a woman, we sometimes have different outlooks on money than men (gender socialization and all that).
As background, I'm working on my masters in sociology right now, and plan to get my PhD and become either a professor (pretty good money) or a private sector researcher (awesome money). My mate has a masters in computer science and works as a lecturer (mediocre money) but may go into the private sector when we move out of our current area.
I want to learn how to do that thing that rich people know how to do--you know, turning money into more money. Please share your suggestions on how to learn about doing this! Thanks everyone ♥ Current Mood: curious
|Tuesday, March 16th, 2010|
Want to have your pie and eat it too?
A useful tidbit of information for U.S. individual retirement account holders who might draw on them before 59 1/2:
The IRS imposes a 10% penalty on early withdrawals from IRAs, for which there are only a few exceptions. One way to get around that are so-called "substantially equal periodic payments
" mentioned in rule 72(t) - the idea being that it's OK to withdraw funds as long as you won't deplete the account before you are expected to die.
The IRS felt anyone who took such a distribution and
made another exceptional distribution from the same account in the same year was breaking the rules, even if it was for an otherwise permitted reason. However, the tax court disagreed
, ruling you can start drawing from these funds before 59 1/2 and also
take out lump sums for higher educational or medical purposes (including insurance, if you're unemployed).
Of course, it's best to avoid touching your IRAs (and 401(k)/403(b)s, which can be rolled over into IRAs) as long as possible, because they're free from tax on capital gains and dividends, increasing the benefit of compounding. It's also a good idea to designate one account for regular withdrawals and another for potential emergencies.
Still, if you're concerned about putting money in
because of uncertainty over exactly when you'll wish to start drawing it out
, at least you can be sure there's a way to do so early while also accounting for medical or educational needs. Current Mood: curious
|Thursday, March 11th, 2010|
Does anybody use E Trade? and if so, do you like it or dislike it and why?
|Sunday, March 7th, 2010|
Life after work?
Presumably, most of you have a plan to be financially independent at some point. (If not, now would be an excellent time to make one!)
But what are you going to do
when you get there? Will you travel? Take up new hobbies? Serve or found a charity? Start a new business?
What are your intentions, once "work" is done — and when will that be? Current Mood: curious
|Saturday, February 27th, 2010|
GPT, PTC, and Bux
Has anyone had any experience with Pay-To-Click sites? I was on a few of them, strictly for the daily clicks because they were simple to do and didn't generate any junk mail or anything. Well, the site I was on had their daily clicks pulled because the advertisers weren't satisfied with the traffic. There is still one site though I'm on that is getting me currently about $60/month profit with really no effort and if I stay on my current schedule, it should be up to near $300/month profit within 20 more weeks. But even still, I miss the daily pay-to-clicks. That alone was getting me about $30/month so if anyone knows a GPT site that still has them, I will gladly be your referral for it.
|Friday, February 26th, 2010|
How common are CC transaction surcharges?
As some of you may know, I do a bit of traveling around North America. I've been very surprised recently to see gasoline stations in California post one price for cash transactions, and another (often much higher) for credit card users. I haven't seen this happen in Washington or Oregon, and have only seen it once in Canada. Yet in California, it seems to be everywhere!
Five years ago I phoned Mastercard about this, and was told that their merchant agreement prohibited companies for charging more for CC transactions than for cash. However, looking at both MC's and VISA's website, both now state that merchants may offer a cash discount. As someone who prefers to pay by credit card (to avoid carrying lots of cash, and for easier record-keeping), I don't like being gouged by higher fees. I realize that the merchants want to pass along the CC fees to the user, but cash isn't "free" to them -- they have to have secure vaults, armored trucks, counterfeit risks, robbery risks etc. for cash, which might end up costing them as much as the CC surcharges.
So, why do they charge so much extra for credit cards, and how common is this around the continent and around the world?
|Saturday, January 2nd, 2010|
Lost Decade, But Not For Everyone
|Stock Index||12/31/1999||12/31/2009||% change|
|Nikkei 225||18934.34||10546.44|| -44.30%|
|Paris CAC 40||5958.32||3936.33|| -33.94%|
|FTSE 100||6390.20||5412.88|| -15.29%|
|Frankfurt DAX||5409.33||5957.43|| +10.13%|
|Zurich SPI||5022.86||5626.40|| +12.02%|
|Russel 2000||504.75||625.39|| +23.90%|
|Hang Seng||16962.10||21872.50|| +28.95%|
|Toronto TSE 300/TSX-Comp||8413.75||11746.11|| +39.61%|
|Sydney All Ordinaries||3152.50||4882.70|| +54.88%|
|Tuesday, October 27th, 2009|
So far my small and modest portfolio includes a mixture of shares and investment funds. On the funds side, they're all targeted toward capital growth, with my aim being to stick with them for the long term.
I'm thinking of adding a fund that is focussed on dividend income, and am wondering what the groups opinion / experience in this area is? Is it worthwhile doing? Should I be suspicious of funds with particularly high yield? Is there something specific I should look for in this sort of fund?
Many thanks in advance for your advice!
|Wednesday, October 7th, 2009|
Just checking to see if anyone here uses technical analysis in screening stock. The concept has intrigued me, and I have been doing more and more research on the topic. I just made my first trade today using such a strategy. I'll have to post my results in the future. We'll see in a few months.
|Saturday, September 26th, 2009|
Rolling over a 403b? Good idea?
Ok, I have a question for you guys...
I currently have a 403b with Fidelity through work but I'm going to be moving and returning to school (again) before too long and I'm wondering what I should do with it. Currently I like to think that my investments are fairly sound in this, but I'm not sure how to handle it in the future and I can't help but think that I may be better off rolling the money into an IRA or something similar. Would there be any penalty for moving my funds into a Roth IRA?
I'm wondering because I'm pretty certain I won't be doing heavy investing while I'm in graduate school and I figure having my money tax sheltered (i.e. in a Roth IRA) would be a better choice than leaving it in a 403b.
Also, anyone have any general investing advice I could benefit from?