Author Archives: MoneyWalks - Page 2

Fundamental Analysis Investment Strategy

Posted by on March 7, 2012 No comments

I’ve not done a lot of playing with the stock market, but I have done a bit of research and have a basic understanding of stock market strategy. Today we’re going to look at the most common marketing strategy, usually referred to as fundamental analysis. Fundamental analysis  focuses on the company that you are investing in and requires you, as an investor, to ask a certain set of questions about a company’s stock values. You then use the answers to determine if the cost of purchasing the stock is worth the future investment in that stock.

Now, finding this out can be difficult. Some of the questions that an investor may ask when using this approach may include:
- What’s the company’s current financial situation?
- Does the company have a strong future ahead of it or are there “red flags” that may cause the company to falter?
- How long do I plan on investing in the company? If the company may struggle in 5 or 6 years (because of the “red flags” you find with the question above), is that an acceptable amount of time for you to invest, or are you looking for a longer-term investment?
- How much has the company grown over the past year? 5 years? Decade?
- What’s the cash flow look like?
- Is the company involved in a hearing or cases based on their goods and services? Could that be a threat to quality and/or reliability?

At this point, people who use fundamental analysis may use an Excel sheet to play with numbers. If I were to become more involved in the stock market, I would use fundamental analysis purely because it deals with a lot of numbers. I love numbers, and messing around with them, and I feel that quantitative data is more definitive and tangible. But, that’s just me! I really should have become a researcher. Anyway, at this point, people who swear by this strategy start. There are different formulas and estimates that people use (usually using the net value of the company, the average increase in stock, and all of that sort of thing) in order to predict how well their stocks will grow in the future.

Fundamental analysis is great to use for long-term investing, but at the same time, there is a bit of a risk. What if you’re wrong? I know that’s a really pessimistic way to look at it, but if you’re going for the long haul, you really do need to be careful. There have been bankruptcies and such that investors may not have seen if they weren’t paying attention. The most important part of any investment strategy is follow-up. Keep an eye on the companies that you invest in. In an economy like the one we live in now, anything’s possible, so make sure that you aren’t blindsided and be on top of your investments. Like I said, fundamental analysis is the most common investment strategy, so it has to be working for those who use it, right?

Have a great week, and we’ll see you here next week, on our new posting day, Tuesday!

Is Consumerism Making Us Unhealthy?

Posted by on February 24, 2012 1 comment

Consumerism

I’ve never needed much. I grew up in a home where we didn’t have much of anything until I was in my mid-teens. I was 15, that was the year that my stepdad got a job with the United States Postal Service and my mom became a receptionist at a dentist’s office. Even though that should have helped our situation, consumerism took over my family’s mindset. They became tens of thousands of dollars in debt because they went crazy with their financial freedom. It caused a lot of arguments and stressed everyone in the house out.

Needless to say, I’m not a huge fan of consumerism.

Here are some things that studies have shown to be an issue in the United States and how they can affect our health.

- Ungratefulness. Ungratefulness is a direct result of consumerism. We have this constant feeling of “I don’t have enough” and become incredibly unhappy. It’s been speculated that ungratefulness is a major factor in disorders such as anxiety and depression.

- Obesity. There’s two reasons that consumerism can play a role in obesity. First, consumerism can result in extra work hours, which results in eating out more, bringing home fast food, or making those quick meals that are in your freezer. Also, stress plays a huge factor in obesity; it can slow down your metabolism or make you want to overeat. Both of these factors probably have played a huge role in the fact that obesity has become a sort of epidemic in our country.

- Stress. Hey look, the one thing I mentioned in both of the above. Stress! Stress in general isn’t good for us. Anxiety, depression, and other stress-induced disorders are rising in both severity and frequency. More and more people are on antidepressants and anti-anxiety medications, and a record number of people are seeking mental health services. Stress is killing us in a lot of different ways, and the pressure that a consumerist mindset puts on us doesn’t help the situation any.

- Addictions. Another result of stress (which can be rooted in consumerism) is that people will seek out relief. Addictions can be formed because of this, whether the addiction is to food, drugs, alcohol, or whatever other unhealthy indulgence can occur.

- Family Stability. As I mentioned in my story above, family stability can be threatened by consumerism. Jealousy, stress (always stress), and living beyond the means of the family budget can affect morale and unity within the family unit. Is it any wonder that the nuclear family has been suffering for the past 30 years?

If you are struggling with any of these things, there are resources available out there. Please don’t be afraid to reach out to your community, friends, family, or local agencies in order to get the assistance you need to get past these things.

How else can consumerism affect our health? Do you think what studies are saying is legit, or is it a bunch of hogwash? Have a great weekend, and we’ll see you here next week!

The Case for Credit Unions

Posted by on February 17, 2012 No comments

BankI used to use a bank until I was in college. My university was a member of a statewide credit union, and, with that, I was eligible to become a member of it as well. Since then, I haven’t looked back. A lot of people are curious as to which financial institution they should put their money in; we’re going to look at that a bit today.

Let’s define things and then talk about how they’re different. First up, banks.

Bank-  “an organization, usually a corporation, chartered by a state or federal government, which does most or all of the following: receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor’s checks; and issues drafts and cashier’s checks.”

Credit union- “non-profit financial institution that is owned and operated entirely by its members. Credit unions provide financial services for their members, including savings and lending. Large organizations and companies may organize credit unions for their members and employees, respectively. To join a credit union, a person must ordinarily belong to a participating organization, such as a college alumni association or labor union. When a person deposits money in a credit union, he/she becomes a member of the union because the deposit is considered partial ownership in the credit union.” (Definitions provided by investorwords.com)

There’s something I want you to see in the definition of a credit union that is vital for understanding the differences between the two: non-profit. Credit unions are not out for themselves; they don’t consider the people who they serve as customers; instead, they’re members of the union. In order to be part of a credit union, you have to be a part of whatever they serve. Some are community based, like mine. Others are based on unions, organizations (like the one for my university) and other common groups of people.

Banks have an issue with credit unions, claiming they have an “unfair advantage” and that they take business away from them. Most credit unions offer more fair rates, less fees, and more personalization than banks.  Since the Credit Union Act of 1934, banks have lobbied to the government for the credit unions to be restricted or eliminated, to no avail.

Credit unions were at a disadvantage to banks because they didn’t offer as many services as their counterparts.  Recently, many credit unions have begun to offer more services that help them to compete with banks more readily. Banks usually are more apt to offer credit cards, because of the costs involved. Banks have more revenue, because of being for-profit, so credit cards and other things that have a higher start-up cost may be more readily available at banks than credit unions.

The locality that credit unions offer is both an advantage and disadvantage, so if you are someone who travels a lot, you may want to consider a bank with a national chain instead. Some credit unions have decided to thwart this a bit by offering to credit a certain amount of ATM fees a month. Also, many convenience stores (Sheetz, Wawa) now offer surcharge-free ATMs. These two things help thwart the costs that used to accrue because of the locality.

Which should you get? As you can probably tell by this post, I’m a fan of credit unions. But, make sure to check out the credit  unions and banks in your area to make sure that you’re putting your money where it will grow and be safe and secure. Have a great week!

 

Fact or Fiction: “Good” Debt?

Posted by on February 10, 2012 No comments

Good DebtDebt stinks. I was in credit card debt through college; I paid it off, but then I had all of the debt that I graduated with. Well, still have. Can’t say I had it when I’m still paying it off, can I? Anyway, there are some economists and financial advisers who will tell you that some debt, like student debt, is good debt. “Good” debt is debt that helps you build your credit with little to no risk involved. Let’s look at a few of those types of debt and analyze if they really are good debt in our current economy.

Student Loans- The most obvious of debts that can be considered “good.” You take out money, you get an education which is supposed to assist in getting you a good job with decent pay. But, is this really how it is nowadays? It’s becoming harder and harder for college graduates to get jobs, and many of them have to move back home after they graduate. On the other hand, Income-based repayment and other government programs help recent grads when they’re trying to get on their feet. So, is a student loan good debt? I think it depends.

Home mortgages- Homes can be a liability, because, like cars, they can deprecate quickly.  In many cases, this isn’t an issues, especially if you take care of your home and make necessary upgrades. That being said, home mortgages, especially if the home is cared for properly, can be good debt. On the other hand, foreclosures are incredibly common right now. If you can’t afford it, don’t get it, even if the interest rate seems great.

Small business loans- This one is almost as obvious as the student loans. Sure, any loan is a risk, and starting a small business can be a huge risk, but overall, the intent is that it brings you a profit later on. Due to the state of the economy, it’s a toss up whether or not you should take the risk right now. On the other hand, movements like “small business Saturday” (the day after Black Friday) support the small businessperson, and people are more apt to go to small businesses for what they need because they may know the people who own the business. Weigh out your pros and cons before you make a decision about starting your own business.  Will you be financially stable even if it falls through?

I ask these questions about “good” debt because our economy is still unstable. If you are going to take out any of these loans, make sure to sit down and talk about it with family, friends, and a financial adviser. In a poor economy like the one we’re currently in, the last thing that anyone needs is to declare bankruptcy. Have a great weekend, and we’ll see you here next week!

Taxes for Temps

Posted by on February 3, 2012 1 comment

taxIt’s ski season, and a lot of people end up being seasonal or temporary employees during this time of year. I have several friends and acquaintances that work at the local ski resort. They sell snacks, teach classes, or run ski lifts. Summertime’s the same way; when I was growing up, I worked as an attendant at a pool. I sold snacks, cleaned toilets, and checked people in to the pool area. It wasn’t necessarily the best job, but hey, I got some cash in my pocket and in the bank!

It’s also tax season, and taxes as a seasonal or temporary employee can be very different depending on your circumstances. Some people who work for a period of time are considered seasonal employees; others are independent contractors. Both of these have different processes that they must go through while filing their taxes. This is important to know because you may have to calculate the taxes that are being taken out yourself.

Some jobs are classified as temporary jobs so that employers do not have to pay benefits. One of the most popular is waitressing.  Did you know that your tips are part of your taxable income? Because of this, it’s important to keep track of them. Larger companies and chains usually have some sort of system; mom-and-pop restaurants may not. If so, take the time every day to fill out some sort of ledger or spreadsheet to keep track of the tips you make.

There’s another thing that a lot of people may not realize when they work a temporary job: You may not have to file taxes. If you’re an independent contractor that makes less than $400, you don’t have to file. If you are actually employed and receive a W2, you are not required to file until you make at least $8,750. But, honestly, you should file, because you will probably get every penny of your federal taxes back. Throughout high school and college, this was the case for me. I did usually have to pay into my state taxes, but I almost always got all that I paid in back into my pocket during tax time.

Unfortunately, by doing this, I was giving the government an interest-free loan for a few hundred dollars. Had I filed differently, I would have gotten more of my money into my pocket throughout the whole year and not given the government that loan. No matter what kind of employee you are, temporary or full-time, make sure that you are filing correctly on your forms so that the government isn’t getting hundreds or even thousands of dollars from you as a loan for no good reason. That’s what bonds are for.

So, enjoy your temporary employment, whether you’re stocking shelves, taking on the slopes, or selling snacks at the snack bar. And don’t stress too much about those taxes; if you really need help, always consider going to a tax professional or company that can assist you. Have a great week, and we’ll see you here next week!

End-of-Life Financial Preparedness

Posted by on January 28, 2012 No comments

will and testamentWe don’t like to think about what will happen when we’re gone. But, we need to think about it so that our family members aren’t burdened after our passing. Today, we’re going to look at some of the things you should consider in end-of-life preparedness.

What should be in my will?

-          Your executor. This is the person that you choose to take care of what happens in the will. usually a spouse or other family member. In some cases, it may be a close friend, especially if you are estranged from your family, are unmarried, or have no immediate family still living.

-          The rights your executor has. Now, to some people this seems obvious. But you must give specific rights to your executor to manage your property and to pay off your debts, or they will have to deal with the court system in order to do so.

-          The distribution of your property and finances. Now, this is difficult for some people.

-          Where your children and pets are to go. This may seem silly, but it has caused a lot of issues in the past. What if there is a divorce situation, and there’s a stepparent? They won’t necessarily be the person who gets custody of the child. Pets are also another important thing to put in your will, for similar reasons. Yes, I know it’s ridiculous, but some people are crazy when it comes to animals. I have friends, a married couple, who now own the dog that belonged to the husband’s brother, after the dog jumping between people because his will said nothing about the dog.

Another thing that people frequently overlook is retirement funds. If you have a 401k or other retirement fund, you should make sure that you have it indicated in the paperwork where those funds are to go upon your passing.

Life insurance is vital, and you need to have things straight with it.  Too many people take out too little insurance, leaving your family with extra expenses that they may not be able to afford. The average cost of a funeral and burial ranges anywhere from $5,000 to over $10,000, depending on factors like:

- The funeral home
- Technicalities of the service, including who conducts your service and what type of service it is.
- cremation or burial

On another note, unrelated to finances. Make sure that your wishes for these events are clearly stated in your will as well, instead of your loved ones playing a guessing game when you pass.

One of the biggest tips I have to give you about preparing for tragedy is to keep all of your financial paperwork in order.  Let people know your accounts, keep them organized in a file cabinet or something similar. It will make things a lot easier for your grieving family members if they know where your information is.

Death is not comfortable to talk about, but its important to look ahead and think about if you want to make sure your family isn’t struggling more during their time of grief.

4 Often-Overlooked Retirement Facts

Posted by on January 21, 2012 No comments

Retirement may seem a long way off for some of you. It sure feels that way to me sometimes, considering I’m 26 and the retirement age is estimated to be around 70 when I get to that point. Ouch. So why in the world should someone my age be thinking about retirement now? Well, in short, because if someone like me starts now, I’ll be in a much better position financially when it comes to the point of actually retiring.

Today, we’re going to look at 4 facts about retirement that are often overlooked when planning for the future.

1. Extra retirement plans. 401k’s and IRA’s are not the only retirement plans out there. There are several others, including these two:

-419e plans- A plan where your employer can offer insurance that you can use after you retire.
- 457f plans- an employer assists the employee by essentially paying for some of all of the taxes the employee would have to pay on their IRA or 401k contributions.

2. You can collect social security while working. People on disability do this too; you can still work part time and collect on your social security benefits. They just won’t be as much as they would be if you were not working at all. Don’t strain yourself in retirement; if you need to keep working a little to make ends meet, you won’t lose those benefits you worked so hard for.

3. You can’t hold your standard of living. As much as you want to believe that the opposite is true, it really isn’t. Most people who have a middle-class income have to reduce their standard of living by 50 percent or more when they retire. That is a significant change; imagine only being able to pay for half of the things that you pay for now. Add in the fun numbers of inflation and the change in costs for pretty much everything, and you probably aren’t saving enough in order to live the same life that you are now.

4. Couples who don’t have a set plan by their mid-thirties are at the highest risk for a financially difficult retirement. This sounds like a really random statistic, and it kind of us. But the people who suffer the most are the people who have to support others. If you are in this category, now is the time to figure out what needs to be done in your retirement. Medical costs, end-of-life costs, and other things are more expensive when there are two of you, and burdening your family with it is both unfair and unnecessary. Find a financial adviser and make a plan.

Retirement. It’s never too early to think ahead. It’s never too early to make sure  that your retirement is enjoyable for you and your loved ones. So, save up, do your research, meet with an adviser, and get yourself on the road to financial freedom during your retirement. Have a great week, and we’ll see you here next week.

Brr! How to take the Chill out of Heating Costs

Posted by on January 14, 2012 1 comment

Today, I’m sitting in my apartment with a robe and slippers on and watching the protective cover on my moped fly around. It’s really windy today! Finally, after a few months of what should have been winter, we finally actually have winter! This is a happy occasion for students… adults, not so much. We’re cold, and now we have to worry about heating costs.

Luckily, my heat is included in my monthly rent. But what if you don’t have that luxury? Today, we’re going to look at some things that you can do in order to take that chill out of your heating costs, whether you live in a 1 bedroom apartment like I do, or have a two story home.

First, make sure that everything in your home is up-to-date. Shingles on the roof, insulation in the walls, whatever it is that needs to be updated in order to keep the heat in and the cold out, do it. It may feel like a financial burden at first, but in the long run, it could save you more than you’re spending for it.

Another thing to consider when getting ready for the winter time cold is doing those extra things that can help keep heat in your home. Put down your storm windows, put that plastic covering over your windows, and put draft dodgers in front of your doors. Keep that cold out!

One bad habit that I have is the fact that I will adjust the heat up and down according to how cold it is. Don’t do that! If it warms up for a couple days, keep it at the heat you had it; the heater takes a lot more energy when trying to catch up quickly then it does to maintain a specific temperature. So, don’t follow my bad example; keep the heat at 68 or 70. It’s okay to turn it up and down 2 degrees, but 4 or 6 can increase those costs by 10 to 25 percent.

Another thing to watch out for is how open your house is. I have a four bedroom apartment where, if I have all of the doors open, it’s essentially a big open box. It’s hard to heat a big open box efficiently. So, I close some of my doors during the winter. It helps keep each individual part of the house warmer while using less energy.

If you own your home, look at the type of heat that you have and consider switching if you are able to. Some types (heating oil especially) are more expensive than others.

Finally, I always jokingly say that you can always put more clothes on. It’s cold, put a sweater on, use an extra blanket, wear slippers. You don’t necessarily have to use your heating for all of your warmth, use the other things that you already have in your home.

So, stay warm, it’s cold out there! Bundle up, enjoy the warmth of your home, and have a great weekend in this arctic chill!

 

3 Sets of Silly Mistakes we Make with Taxes and Tax Returns

Posted by on January 6, 2012 No comments

The last two years, I’ve been doing my taxes myself. This year will be no different. There are certainly risks in doing your own taxes, so if you don’t understand the laws, you should get someone to look at your return before sending it out.

When people are unsure and send anyway, they make some really big mistakes. Other people make mistakes when they get their returns. Here are three sets of silly mistakes that people sometimes make when doing their own taxes.

Three mistakes we make when we file.

1. Filing the wrong status. What matters? Your marital status as of December 31st. It doesn’t matter if you just got married on December 10th, if you’re married on December 31st, that’s your filing status. If you do this incorrectly, you risk losing child tax credits and other family-based deductions that you would otherwise have.

2. Not reporting certain incomes. Waitressing tips, casino winnings over $1000, and anything paid “under the table” or via freelancing needs to be reported and taxes paid on. The fines and fees for not doing this, no matter how small the error, are immense. Don’t risk it.

3. Social security numbers. I was in college twice. I know my social security number by heart. But, nowadays, this isn’t as commonplace as it used to be. Make sure that you write it neatly if you’re still doing your taxes by hand. If you aren’t 100% sure about your dependent’s social security number, ask them or find their card. It’s not worth the pain it is to refile.

Two silly things we do with our tax return

1. Spend instead of invest. Some people have a plan for their tax return, and that’s good, but you should also invest a bit of it as well. That money is money of yours that the government borrowed for the year, meaning that they got interest that you should have gotten. So, why not work to get some of that interest back?

2. Furthering debt instead of paying debt down. How is this possible? Well, some people use their return to make big purchases that they have to take out loans and/or use credit in order to make. Don’t do this! You should consider paying down your debt instead.

One thing we don’t do enough

1. Get organized beforehand. Too many people (myself included) wait until tax season to finally get all of their receipts and pay stubs together. Even if your system of organization involves throwing all of your stuff into a shoebox and dealing with it at the beginning of the year, that’s better than having to tear your house apart for that one medical receipt that you really want to claim.

So, avoid making these tax mistakes this coming year. Start throwing your stuff together for next year. Your plan for your tax return should include some investments. And most of all, check everything before you hit that submit button. Have a great week!

Three Tips to help you Save on Car Insurance

Posted by on December 30, 2011 No comments

Back in September, I went on a trip  for two weeks with my sister. We didn’t have much internet access, and during our trip, I remembered something incredibly important that I had failed to do before we left. I forgot to pay for my car insurance.

Bummer! Because of this silly mistake, I lost the loyalty discount that I had with my insurance company. Luckily, that was one of several ways that I had saved money on my car insurance over the past few years. Today, I’m going to share with you three other ways that I save big bucks on my car insurance every year.

1. Maximize your insurance’s safe driving programs. First off, you need to be  a safe driver in order to get the best discounts available. Being a safe driver isn’t only accomplished by avoiding tickets and accidents nowadays. Many insurance companies will give discounts if you take classes for safe driving, which is always worth the time you invest in it. Some insurance companies have started utilizing technologies that can track how you drive. These technologies keep track of how quickly you start and stop, how fast you drive, and other various things that could potentially be unsafe to you and those around you. Then, the insurance company receives that information and keeps track of it, which helps the insurance company determine what kinds of discounts to give you.

2. Consider carpools. Or walking, because walking is good for you. What do carpooling and walking have to do with saving money? Car insurance companies will ask you how many miles are on your vehicle every time you renew. The reason? So that they can evaluate how much you drive. The more you drive, the more chance you have of having an accident. They won’t charge you extra if you drive more than the national average (10,000 to 12,000 miles a year), but if you drive significantly less than the average, you may get a nice reduction. So, instead of driving everywhere, consider carpooling, walking, and/or public transportation.

3. Pay for several months at a time.  I always pay for my car insurance several months at a time. Many car insurance providers offer a discount for people who pay for 3, 6, or 12 months at a time. My insurance provider offers a large discount for paying 6 months at a time that is essentially paying for four months and getting the other two for free. Sometimes it’s difficult to pay that much at a time, but if you can swing it, do so!

So, as we get to the end of the year, maybe it’s time to reevaluate your car insurance. Is your premium at the price you want it to be? Is there anything you can do during the new year that can help you reduce your insurance premiums? Car insurance is a significant part of your budget, so why shouldn’t you get the most for your money? Have a great week and a happy new year!