Invest and Hold

“The stock market is presenting you with one of the great buying opportunities of your lifetime – perhaps the greatest. Stop trying to pick the bottom.”

That’s what 41-year market veteran Steve Leuthold, of the Leuthold Group, just told his clients.   In order words,  INVEST, don’t DIVEST!

If you feel that you don’t have either the inclination nor the patience to research and cherry-pick choice stocks,  then why not set aside some funds to invest in index funds?    Remember,  you don’t need to get the timing exactly right.  It’s time to buy for the next decade.  =)

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Warren Buffett says: Today my money and my mouth both say equities

The New York Times has published a very interested Op-Ed article from Berkshire Hathaway’s Warren Buffet in which he declared Buy American.  I Am.  View the article in its entirety by clicking here

He is following this simple rule:  “Be fearful when others are greedy, and be greedy when others are fearful.”   Skittish investors are dumping stock for many sound companies with little consideration for their long-term fundamental business prospects.  Rather than follow the herd, now is the time to hunt for bargains.  “Bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price”.    He could very well be talking about any country in the world.  

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Midweek Reading & Freebies

 Here are some great articles from here and around the world.

FOR FAMILIES

 

  • Anatomy of a Marriage (BusinessWorld)
  • 10 Secrets To Help Your Children Handle This Financial Crisis (iVillage).  Key takeaway:  Reduce stress as a family.  “Whatever happens,  we’re together.  When all is said and done that really is what matters most.”
  • The Next Meltdown: Credit-Card Debt (BusinessWeek)
  • The New Age of Frugality (BusinessWeek):  “I can’t help the economy…I’ve got to help myself”.

FOR INVESTORS

  • Those With a Sense of History May Find It’s Time to Invest (NYTimes).  Key takeaway:  “Investors with a stomach for risk and a long time horizon should consider following Warren Buffet….we will perceive this (time) as being a great value-buying opportunity… the most important securities are being given away”.
  • Wall Street’s Big Bounce: Don’t Start Cheering Yet (Time).  “Wild swings to the upside may feel great, but they’re still wild swings”. 

ABOUT THE CRISIS

  • The Next Meltdown: Credit-Card Debt (BusinessWeek)
  • Poor Countries Face A Different Kind of Crisis (Time).  “In many developing countries, the most urgent crisis is not what is happening in financial markets but what has happened in commodity markets.”

FOR YOU AND ME 

  • Live Frugal, Stop Complaining, and Be Happy (RatherBeShopping).
  • Your Happiness Project:  Don’t Follow the Stock Market too closely (TheHappinessProject)
  • Great Tips For Bargain Christmas Gift Giving (from the Gift Therapist)
  • Strategies to Deal with Unhappy Events (TheHappinessProject)
  • Seth Godin asks Is Effort a Myth? (SethGodin)  “While luck may be more appealing than effort, you don’t get to choose luck. Effort, on the other hand, is totally available, all the time.”

and finally…. 

FREEBIES!!!!

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Warren Buffet Talks Business

Warren Buffett,  often called “The Oracle of Omaha”.  His letters to Berkshire Hathaway sharesholders have become the stuff of legends – compiled into business books and taught at business schools around the country.  If you want to become a better investor, and understand the market as a whole, do get the updated version of The Essays of Warren Buffett: Lessons for Corporate America.   

Here’s a rare 56-minute video of a lecture made at the University of North Carolina.  Do watch it and learn more about his value investing philosophy.

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Today’s economy and YOUR money – what you should know

The recent (near) meltdown in the world’s financial markets have stirred up feelings of uncertainty and quite a great deal of panic.  It is difficult to connect what is happening at the macro level where the gods play to the micro level where we ants scurry.  What is important is to distill the noise down to the bare minimum:  a job which Ramit Sethi did so well (albeit a bit abruptly):

Key takeaway points:  Worry about the REAL risk.  Worry about not saving enough,  overspending on fluff, and not properly diversifying assets.  Don’t place ALL your bets on one “sure” thing.  If it’s only one,  then it definitely is not “sure”.

Now before you panic and unload all your equity investments because of fears the market will tank further,  ask yourself the ff:

1.  Why do you really want to sell?
2.  When do you need the money?

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Saving and Investing: Michael Fischer makes the complex, simpler

I was surfing through youtube the other day and came across the savingandinvesting channel of Michael Fischer.  A former Goldman and Sachs man,  Michael has made financial literacy his personal advocacy and seeks to demystify various financial concepts for the man on the street. 

He writes: 
“This subject is not about greed, short-cuts, opinions or speculation – it is about being informed, and about being rewarded for participating in our financial system in order to provide better lives for ourselves and others that we care about.”

View one video a day and increase your financial knowledge bank.

Other key links:
The Website:  http://www.savingandinvesting.com
The Book:  Saving and Investing: Financial Knowledge and Financial Literacy that Everyone Needs and Deserves to Have!

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Get a Free Copy of 10 Mistakes Every Investor Makes and How to Avoid them

Ryan of In the Money is offering a free copy of his special report: 10 Mistakes Every Investor Makes and How to Avoid Them to all subscribers to his newletter.  Click on this link for more details.

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Timeshare: Asset or Liability?

vacation1.jpg

“Congratulations, you have won a free stay at _____.  Please come to our office at ____ to collect your voucher.  We would like to introduce our exciting new travel offers through a short presentation. No obligation to buy.”

How many times has this happened to you?  The come-on many vary but the intent is the same – at the end of 60 minutes, you will purchase a vacation timeshare.  Depending on the audience, the hook may also vary – international vacations on the cheap ; potential money-making investment etc.  The presentations are glitzy and there is quite a bit of time pressure to commit.  I have to admit, I was very attracted to the idea to being able to go to Boracay / Bohol every year.   But when I asked myself “Is this a good investment?” the answer at the time was no. 

Today’s paper had this headline:  “Timeshare owners see assets turn into never-ending liabilities”.

Some take-aways:

  1. Many buyers believe that owning a timeshare is like owning real estate which many hope will increase in value.  Wrong!  They do not have ownership of the underlying property but rather the right to use it.  Timeshare is a prepaid vacation, not an investment.
  2. The timeshare resale market is a buyer’s market.  Sellers are lucky to get 10% of the original price.   Case in point: Go to Ebay.  Timeshares are routinely offered at a starting bid price of 1 cent.  Some people are even trying to give their timeshares away in order to get out from paying the annual maintenance fee. 
  3. Research the places being offered for timesharing.  If some cases, they are located away from the “happening” places so you might actually have to spend more on transportation.

So is ownership in a timeshare a good investment?  I’d have to give a qualified yes.  With a bit of patience and prudent research, you can get great bargains.

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Rules to Grow Rich By

I got these tips from CNN”s Money e-magazine. It’s a very useful guide for most of our financial questions.

 

 

Home

  1. For return on investment, the best home renovation is to upgrade an old bathroom. Kitchens come in second. It’s worth refinancing your mortgage when you can cut your interest rate by at least one point.
  2. Spend no more than 2½ times your income on a home. For a down payment, it’s best to come up with at least 20%.
  3. Your total housing payments should not exceed 28% of your gross income. Total debt payments should come in under 36%.
  4. Never hire an electrician or plumber who is going door to door.

Invest

  1. To figure out what percentage of your money should be in stocks, subtract your age from 120.
  2. Invest no more than 10% of your portfolio in your company stock–or any single company’s stock, for that matter.
  3. Aim to build a retirement nest egg that is 25 times the annual investment income you need.
  4. If you don’t understand how an investment works, don’t buy it.

 

 

Plan

  1. If you’re not saving 10% of your salary, you aren’t saving enough.
  2. Keep three months’ worth of living expenses in a bank savings account or a money-market fund for emergencies. If you have kids or rely on one income, make it six months’.
  3. Aim to accumulate enough money to pay for a third of your kids’ college costs. You can borrow the rest or cover it from your income.
  4. You need enough life insurance to replace at least five years of your salary–as much as 10 years if you have several young children or significant debts.
  5. When you buy insurance, choose the highest deductible you can afford. It’s the easiest way to lower your premium.
  6. The best credit card is a no-fee rewards card that you pay in full every month. But if you carry a balance, high interest rates will wipe out the benefits.
  7. The best way to improve your credit score is to pay bills on time and to borrow no more than 30% of your available credit.
  8. Anyone who calls or e-mails you asking for your Social Security number or information about your bank or credit-card account is a scam artist.

Spend

  1. The best way to save money on a car is to buy a late-model used car and drive it until it’s junk. A car loses 30% of its value in the first year.
  2. Lease a new car or truck only if you plan to replace it within two or three years.
  3. Resist the urge to buy the latest computer or other gadget as soon as it comes out. Wait three months and the price will be lower.
  4. Buy airline tickets early because the cheapest fares are snapped up first. Most seats go on sale 11 months in advance.
  5. Don’t redeem frequent-flier miles unless you can get more than a dollar’s worth of air fare or other stuff for every 100 miles you spend.
  6. When you shop for electronics, don’t pay for an extended warranty. One exception: It’s a laptop and the warranty is from the manufacturer.

 

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Invest in Someone Else

In one of the sites I regulary visit, there was a post about the 5 Investments Everyone Should Make. All of the suggestions were non-traditional: “your name” domain; exercise; something you’ve always wanted to try and time to think.It was the last item that caught my attention.

Invest in someone else. And by that, it doesn’t necessarily mean family. Be a mentor. Share your hard-learned lessons with someone else. Help them become a better person so that they too can mentor another person in the future.

Think of it as a long-term Pay It Forward.