My Investing Notebook
:: Learning from the pros; making decisions on my own. ::
My Investing Notebook
:: Learning from the pros; making decisions on my own. ::
OK, you might have noticed that I stopped updating my stock lists. The main reason for that is that it was becoming painful to update the XML file with the picks (that’s how I stored them). I have not given up on stocks — I don’t think that will ever happen. I’m going to make my picks in this Stas on Investing blog, under the My Buy List category.
Investing in stocks is exciting. Although, I have to tell you that I bought some mutual funds and some ETFs, just to diversify a little more. OK, I’ll tell you which ETF I bought in the list below, as I think it is a good time to buy ETFs. What is an ETF? Exchange Traded Fund, that’s the name. It is basically a mutual fund traded like a stock. Get a little more info on ETFs here. I’ll explain how and where I’m putting my money in a seperate, later entry.
Nokia (NOK) » Communications Equipment: ($13, S&P Rating: 4 stars): I think that it might be a good time to get into buying this wireless equipment leader. This stock got hummered because they missed the analysts’ expectations. However, this is a very good long term play.
Standard & Poor’s Depositary Receipts (SPY) » S&P Index: ($110): I want to diversify my exposure to stocks a little bit. A good way, I think, is to buy an index fund. This ETF is basically the whole S&P index: it’s like owning every stock in the S&P Index. They have a 0.1% fee, which is low when compared to a reasonable 1% mutual fund fee. Index funds beat all of the mutual funds in the long run — that’s a fact.
Humana Inc (HUM) » Insurance: ($15.8; S&P Rating: 5 stars): Managed care company that’s oversold. S&P raised its rating on it from 3 to 5 stars (the highest) and they recommend buying it. It went down a lot.
An article from Bankrate.com. Here are the seven steps outlined:
1. Develop a written financial plan2. Save, save, save3. Live below your means4. Lay off the credit5. Make your money work for you6. Start your own business7. Get professional advice
Seems easy enough, but a lot of us don’t follow these rules. Read the article for more details (each step is eplained in more detail).
Here are the four best indicators for tracking the economy, as recommended by Money magazine.
Follow these indicators and you’ll be as well informed as many professional investors.
Bureau of Labor Statisticts employment report (available bls.gov/ces), which tracks job creation.
The ISM Reports on Business (ism.ws), which take the pulse of the nation痴 industrial and service sectors by surveying executives in fields ranging from agriculture to retailing.
Consumer Confidence Index (conference-board.org), which gives a sense of consumers� willingness to spend and thus spur economic growth.
U.S. Leading Index (also at conference-board.org), a compilation of 10 economic indicators designed to predict how the economy will be behaving three months down the road
According to Bankrate.com gas prices will hit $3 a gallon this coming summer! Wow! You’ve got to be kidding me! Because I have a long commute to work, around an hour each way, I spend easily over $100 per month on gas. (Make that $200 if the price increases — no way!) And I drive a fuel-efficient car — 95′ Honda Accord. Hopefully it doesn’t come to that. But if it does, I’ll be even more sorry for those SUV drivers: they’ll basically get killed.
What’s my advice? Get a fuel-efficient car. Did you know that diesel cars have a 20-30% better fuel economy? (I didn’t.) Also, now they have those hybrid cars which have a great fuel economy. Keep those green cars coming, Detroit!
See the reports on Bankrate.com here.
Are you looking to buy a house? Why pay a 6% commission to a real-estate agent when you can buy directly from the seller? This way of buying is getting more and more popular. I’m listing several best sites that list the houses for sale by owner.
ForSaleByOwner.comGoneHome.comOwners.comPrivateForSale.com
However, if you want to buy direct, you’ll have to do some of the work yourself — not that difficult. But hey, with the ridiculous prices of the houses now, you’ll save $10-15K, not bad.
Too Expensive. Are houses too expensive? I think so, that’s why if I’m not going to come across a great deal, I’ll wait for the houses to go down a little. Housing market is similar to the stock market: after the run-up, it’s due for correction. C’mon, houses are to the point where people no longer can afford them! I think we’ll see some correction within next couple of years. But, after that, they’ll climb again, as they always do.
If you were wondering what it would be like to own rather than to pay your apartment rent, I’ve got a tool that will do the calculations for you: “Rent Versus Own Calculator.” It will only take a little information from you (the obvious: rent, price of the house, mortgage rate, and down payment), and it will spill out the results — like monthly payments, tax savings, overall savings, and more — for you. Pretty neat and it might open your eyes a little bit.
See it for yourself. I’m a little reluctant to buy a house (mainly because of the high prices), but I think if I find a good deal, I must just go ahead and do that. It seems you actually can save a lot by doing that.
This calculator comes from eLoan.com — they have more useful info about loans & stuff.
Note: Even if it is 2004, you can still open an IRA account and contribute for year 2003. You can do it until April 15.
Which one is better?
The maximum amount that you can contribute is the same for both $3,000 for 2003 (plus $500 if you are 50 or over) or your taxable compensation per year, whichever is less. So the contribution limit is not a factor.
And both contributions come from post-tax dollars. So you have already paid taxes on this money.
But when you draw money from a traditional IRA, you are taxed on the earnings on the nondeductible contributions (though you are not taxed on the withdrawal of the contributions, because you already paid taxes on those). Roth earnings, if you meet certain conditions for distributions, such as being over 59-1/2, and having the account for at least five years are not taxed.
This can make a very big difference over the years. If you are going to be leaving the money in the account to earn interest or dividends for a long time, the Roth IRA may be more attractive.
Also, if you expect to be in a higher tax bracket when you plan to draw money out of your IRA than when you originally contribute, the Roth IRA will probably work better for you.
Bankrate (bankrate.com) has some pretty good Frequently Asked Questions answered about a 401(k) account: basic but fundamental. Check it out if you are unsure what to do when you change your job; when you can take a loan on 401(k) — yes, you can; how to allocate money in 401(k); how to diversify; and more.
FAQ about 401(k)sBy Bankrate.com
InvestorGuide.com pulls content from the best financial sites on the Web. News and commentary are posted on the front page, with links to additional news sites. A simple portfolio is provided by Barchart.com, and a drop-down list takes you to a wrap-up of current market activity. Enter a ticker symbol, and you can choose from a list of sources that provide pretty comprehensive research data, linking directly to the appropriate page. If you don’t have a favorite research site and would prefer to sample the best, this is a great place to do it. [Excerpt from Barron's]
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