Wednesday, May 28, 2008

Free $25

E-Trade Bank is offering a $25 bonus when you open up a complete savings account by the end of May, so you only have a few days left. On the site is says that they will credit your account with the $25 within 30 days after you open the account. No fees, $1 minimum.

Its currently paying 3.15%, which is better than your local bank, and competitive if not better than the other online banks.

Here is the link to the $25

Tuesday, May 27, 2008

Yahoo Finance - Housing

US home prices drop at sharpest rate in 20 years

By J.W. Elphinstone, AP Business Writer

Widely watched housing index says home prices fell at steepest rate in 20 years in 1st quarter

NEW YORK (AP) -- U.S. home prices dropped at the sharpest rate in two decades during the first quarter, a closely watched index showed Tuesday, a somber indication that the housing slump continues to deepen.

Standard & Poor's/Case-Shiller said its national home price index fell 14.1 percent in the first quarter compared with a year earlier, the lowest since its inception in 1988. The quarterly index covers all nine U.S. Census divisions.

The narrower indices also set record declines. The 20-city index tumbled 14.4 percent during the quarter, the lowest since that index was started in 2001. The 10-city index plunged 15.3 percent, a record in its 20-year history.

"There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path," said David Blitzer, chairman of S&P's index committee.
Nineteen of the 20 metro areas reported annual declines, with 15 of them posting record lows. Six metro areas lost more than 20 percent.

Las Vegas had the worst quarterly performance, falling 25.9 percent, followed by Miami and Phoenix. Only Charlotte, N.C., stayed above water, gaining less than 1 percent over the previous year.

Friday, May 23, 2008

Retirement Planning

Here's a quick and dirty way to plan for retirement....

At the beginning of the year, figure out how much money you want to put away for retirement, say $9,000 a year. Look into your companies 401k plan, and if they have a match, take advantage of it, and max out your "free money" from them. For example, if you company matches the first 5% you put into the 401k at 100%, then that is 100% risk free gains. So, ideally what you would want to do it max out your free money from your employer, for our example, we'll say your employer matches the first 3% of what you put into your 401k. Now lets assume your salary is $50,000/year, so then you ll put $1500 away into your 401k plan through your employer, as you put that away, they hand you (into the 401k plan) another $1500...you can not beat that risk free return in the open market!

So now (not including the match) you are $7500 away from your goal of putting $9000 away for retirement in the current year. 401k's can be limited to that amount of funds the offer and the investment you can invest in through them, but by putting money into them you get the match and you reduce your tax liability by the amount you put away. 401k's are also taxable when you take the money out down the line, SO, next you would want to max out your Roth IRA.

A Roth IRA is a retirement account that the money can grow tax free, and you can take out your contributions anytime you want without any tax implications. You can invest in any type of security in a Roth IRA (stocks, bonds, mutual funds, etc...) so that is a huge advantage from the limited funds you'd be able to invest in through the 401k. The limit this year if $5000 for those accounts, so you will want to put $5000 into the Roth IRA throughout the year...that leaves you with $2500 to still put away during the year to reach your goal.

Go back to your 401k and up your contribution's there to cover the other $2500 that you need, and that way you have put away your goal of $9000 towards retirement and it is all growing tax free! The way I described takes advantage of the benefits your company offers, and the benefits that the government is giving you with the Roth IRA's.

Any questions on anything, let me know and I can clarify anything.

Thursday, May 22, 2008

Tuesday, May 20, 2008

KISS

Keep It Simple Stupid



This is a phrase that can relate to many aspects of life and business, but for my purposes, and the purposes of reaching out to young adults fresh out of school, in school, or people of any age, I am going to talk about banking.


Its a 5 Step Process....


1)Primary Checking - Everything is deposited into this account, then from this account you determine where it is going to go to...I suggest go to your local bank and get a totally free checking account, no minimums, no fees, no interest earning (the amount of interest earned on this account will be so minimal it wont matter anyways). But this is your first layer of banking, you'll want a brick and mortar bank that you can go to the branches and deposit anything from pay checks, to loose change. Anyways, in summation, any money you earn goes right into this account.

2) ST Savings - This can be at the brick and mortar bank too if you want, this is more for peace of mind, when you do your monthly or weekly budget you should be putting away the money you need into this account. So pretty much, if you know that your cell phone bill will be $80, each week you get paid, transfer $20 into this account so that at the end of the month when its due that money is already there for you. Also, another example...if your car payment is $200 a month, you know every week to put $50 into that savings account so that at the end of the month you have the money put to the side for the payment.

3) LT Savings - Open this account at an online bank because they pay much better interest rates, and the goal would be to get the dollar value in this account high. Once you know your fixed expenses, and you know how much you want to spend, you then will transfer the rest (I prefer to budget for savings, so that its not "whatever is left over", savings should be a fixed expenses! Anyways, this is money that you want to save for big ticket items, or just to put away for a long period of time and you do not plan on spending it(new car, 3-6 month buffer for a worst case scenario, new TV). I recommend using ING Direct, I know that their are other ones out there, but I like ING because you can set up as many sub accounts as you would like and have it all under one log in number. You could have an account for each big ticket item that you want, or each event you are saving for, this way the money is already earmarked for something.

4) Brokerage Account - This is for money that you wont need for any of the circumstances shown above. Again, I prefer to budget for this, so I would want you to work this into your budget of how much money you want to go into this account each month. But all in all this account if for money that you wont be needing. Here you can go ahead and purchase stocks (if your young, you should be purchasing stocks), index funds, ETF's, or mutual funds.

5) IRA - This should be the final stage of your financial situations. A retirement account...this also should be budgeted for, exactly how much money you want to put into here each month. Roth IRA's are probably the most popular to open for a young person, but an Individual IRA may be one you want to open too (posts regarding the IRA types to come later). This account is tax free, whatever dividends you earn from investing in here (its just like a brokerage account) are not taxable at the time. If you sell a stock and make a $5000 gain, it is not taxable in that year. Adversely, if you lose $5000 on an investment, you cant write it off as you normally capital losses. Again, I will post more details regarding the retirement accounts and the options you have soon, that will make more sense of those rules and the tax consequences behind IRAs.

If you keep it simple like above, and make sure all the money moves from 1 to 5, and not in any other direction (except 2 to 1, to pay off the large expenses you were putting money away for) you will be on the road to be financially fit. Too many bank accounts at different banks, can cause you to forget about them, and start accruing bank fees, one bank fee can wipe out a good amount of your interest earned for the year.

Oil races past $129 a barrel to record

Oil prices surged to a new trading record above $129 a barrel Tuesday amid continuing concern about global supply.

U.S. light crude for June delivery reached $129.31 a barrel in electronic trading, surpassing the previous intraday mark of $127.82 hit Friday as it smashed through the $128 barrier in a matter of minutes. At 9:22 a.m. ET, the contract was up $1.95 at $129.

Nauman Barakat an energy trader at Macquarie Futures, the trading arm of Macquarie investment bank, said the surge was led by distillates, which jumped 10 cents a gallon in early morning trade.

Barakat said he'd seen no news that would have caused the jump, but noted how strong demand for distillates, which are used to make diesel fuel and heating oil, has been pushing up the price for those fuels in recent weeks.

Oil closed above $127 for the first time Monday. The rally came after Algerian Energy Minister Chakib Khelil, the current president of the Organization of Petroleum Exporting Countries, was quoted by a government newspaper as saying OPEC would not increase its output during the U.S. summer driving season.

Close to the record

OPEC's next meeting is scheduled for Sept. 9.

Concern about supply has recently become the primary driver of the market, replacing earlier worries about a weakening dollar, and not even Saudi Arabia's promise last week of an additional 300,000 barrels of crude a day could alleviate those new concerns.

Despite that promise from the world's leading oil producer and the U.S. move to temporarily stop filling government stockpiles, prices have shown no indication of stopping their record run.
Through Monday's close, the front-month contract has hit nine trading or closing records in 11 sessions.

In other price-supportive news ahead of the U.S. driving season, independent refiner Holly Corp. said a key unit at its New Mexico refinery was shut down for repairs, cutting estimated May gasoline production by as much as 756,000 gallons per day. The shutdown occurred while the fluid catalytic cracking unit was being brought back online from a previous shutdown May 7.
The refinery in Artesia, N.M., is Holly's largest.

As oil prices reach new heights, so have gasoline and diesel costs.

"Average gasoline prices in the U.S. rose for an eighth straight week and for the fifteenth time this year, up 1.8% or 6.9 cents to a record $3.791 a gallon (3.8 liters)," noted Stephen Schork in his Schork Report. "Gasoline at the pump is averaging 28 1/2% above last year's pace.
"Meanwhile, average diesel prices are up by 43% or $1.134 a gallon. As of Monday prices rose 3.7% to a $4.497 per gallon average!"

Drivers in some parts of the U.S. are paying considerably more, however. Gas pump prices in parts of California have been stuck above $4 a gallon for weeks now.

Sunday, May 4, 2008

Interesting Article from Fool.com

Are You Leaving Millions on the Table?

http://www.fool.com/investing/value/2008/05/02/are-you-leaving-millions-on-the-table.aspx

Chuck Saletta
May 2, 2008

Investing in stocks is not for the faint of heart. Honestly.

Did you know, for example, that there's a respected tool called the Ulcer Index? It's a technical way of calculating an investor's risk. The very existence of an Ulcer Index should make it clear that investments rarely go in a straight, steady, upward line.

That has been crystal clear these past few months, with stocks vacillating between recession-fueled panic and bailout-supported euphoria. Checking your stocks in this environment may well be a recipe for an ulcer.

Of course, that also makes now the perfect time to refocus your investment strategy on its long-term potential.

Put time on your side
Where can you find significant long-term potential? In dividends. Though quite often maligned, ignored, and otherwise misunderstood, they really do make all the difference over time -- because the big benefit those dividends bring to the table is that they can be reinvested.

In his book The Future for Investors, Wharton Business School Professor Jeremy Siegel studied the entire history of the Standard & Poor's 500 index. Among his most important conclusions was this: "Dividends matter a lot. Reinvesting dividends is the critical factor giving the edge to most winning stocks in the long run."

Why? Because in essence, you take the cash thrown off by your investments and turn around and buy more shares with it. When you're just starting out, the $20 to $40 or so you might expect to receive each year on each $1,000 investment may not seem like much. Over time, though, all those little dribs and drabs add up to quite a tidy sum.

How tidy?
Say you sock away $5,000 every year for the next 40 years, and invest it in a collection of dividend-paying stocks that yield an average of 3%. Let's further suppose that this collection of stalwart companies combines to return 4% per year (on average) for the duration of your investment.

Should you stick those stocks in a tax-sheltered IRA and reinvest the dividends? Or put them in a regular account where you can keep and spend the dividends?

The choice over what to do with $150 may seem nearly meaningless in the first year or so, but as this chart shows, your account will grow quite a bit faster if you let those dividends compound on your behalf:

Year

Take as Cash

Reinvest

Difference

1

$5,200

$5,350

$150

5

$28,165

$30,766

$2,602

10

$62,432

$73,918

$11,486

15

$104,123

$134,440

$30,318

20

$154,846

$219,326

$64,480

25

$216,559

$338,382

$121,824

30

$291,642

$505,365

$213,724

35

$382,992

$739,567

$356,576

40

$494,133

$1,068,048

$573,915

Year-end balances. Assumes each investment is made at the beginning of each year.

Wouldn't you rather forgo spending the $150 up front and instead pocket an extra $574,000 at the end of the line?

Is that realistic?
It's quite an accomplishment for a company to both provide a significant dividend and grow that payment at a decent clip for decades on end. However, it has been done. The following handful of firms, for instance:

  • Carry at least a 3% yield.
  • Have paid higher dividends every year in each of the last 10 years.
  • Have increased their dividends over the past decade by a better-than-8% annualized rate.

Company

Recent
Yield

10-Year
Annualized
Dividend
Growth

Allstate (NYSE: ALL)

3.3%

11.7%

CBL & Associates (NYSE: CBL)

9%

8.9%

General Electric (NYSE: GE)

3.8%

12%

General Growth Properties (NYSE: GGP)

4.9%

12.4%

Kinder Morgan Energy Partners (NYSE: KMP)

6.6%

12.6%

Eli Lilly (NYSE: LLY)

3.6%

8.9%

Pfizer (NYSE: PFE)

6.4%

17.6%

Foolish conclusion
Yes, a decade is hardly 40 years, but as you look for new investments in this rocky market, remember that strong dividends and strong growth can combine to create an unbeatable long-term investment.

Our Motley Fool Income Investor service is beating the market by more than six percentage points by owning companies that behave like those described. What's more, the average pick now has a yield of more than 5%.

You can see our entire lineup of dividend stocks for free with a 30-day trial.

At the time of publication, Fool contributor Chuck Saletta owned shares of General Electric and of Kinder Morgan Management, a related company to Kinder Morgan Energy Partners. At the time of publication, Chuck's wife owned shares of General Growth Properties. Eli Lilly and Pfizer are Income Investor recommendations. Pfizer is also an Inside Value selection. The Fool has a disclosure policy.