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Money Management Tips

Tuesday, May 16, 2017 posted by Joan
Success Motivational Stones

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There are so many scams that make the headlines that many folks are just plain scared to trust someone else to manage their hard, earned savings. Managing your own money without sufficient training can be a mistake.  Interest rates are so low that it might take a ton of motivational paperweights to improve their yield.  Listen to the commercials on radio and TV which can be tempting, but can you really trust the source?  Listening to friends can also be a mistake.  So, what is the best course to follow?

In my opinion, my money should always be in my name managed by a  money manager.   With Bernie Madoff, the money was controlled by him and he set up accounts for his clients.  If you wanted to get to your money, you had to request it.  I prefer my investments in a large brokerage firm like Fidelity or Charles Schwab.  Anytime I want money, I just write a check.  I view all mail from the brokerage firm to make sure I know what is happening even though I have great faith in my manager.  I don’t wish to spend all my time managing my money.

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Buying A House

Monday, January 6, 2014 posted by Martin
CONGRATS

Congratulations Engraved Stone

If one is buying a new or previously owned home, there is often a difficult decision to be made.  Do I sell my house first before buying a new one or do I buy the new one and then sell my old one?  In prior years, it was typical to obtain a bridge loan and then settle up at the closing of your old home.  These days, bridge loans are hard to find.

There is a risk that if you sell first, the new home could cost you more than you expected.  If you buy first, it could be more difficult to obtain a mortgsge because you have too much debt.  Also, you could be paying for two mortgages at the same time.  That can place extreme pressure on the family budget and create chaos within the family. The only answer I can provide is to do your research before you make the decision.  If it works out for you, place some engraved polished stones on your desk as a reward.

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Future Interest Rates

Saturday, August 10, 2013 posted by Martin
Success Motivational Stone

Success Engraved Stones

No one knows for sure where interest rates will be two years from now, but the majority of professionals seem to think they will be higher.  If they are correct, certain things are likely to follow, and it will affect you and your finances.

As interest rates go higher, the value of bonds and other yield instruments will drop making long term debt investments a losing proposition.  Treasuries, corporate bonds, most preferred stocks and even some utilities will fall in value.  This is distressing because many folks have taken on additional risk to get higher interest rates today.  Don’t worry about certificates of deposit and short term instruments.  If you need cash, you can borrow against them, however plan to ride out the storm and just collect on them when they mature.  If these advisors are correct, you should avoid purchasing long term debt instruments today.  One consideration is to purchase prime large cap dividend payers that have a history of growth and increasing dividends.  Check this out with your financial advisor to find out what is best for you.  If you’re not sure what to do, maybe a good luck stone will help.

 

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Which Is Better a Roth IRA or a Regular IRA?

Saturday, April 27, 2013 posted by Martin
You're A Winner Motivational Stone

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It depends.  The difference between a Roth and a conventional IRA or 401K plan is that a Roth contribution is made after taxes.  The contribution is made with before tax money with a conventional.

Suppose you are 30 years old and will have at least 30 more years to wait until you have access to your conventional IRA.  Also suppose that you contribute $5,000 during the current year.  Now suppose that after 30 years, your $5,000 contribution grows to $25,000.  With a conventional plan, you would be taxed on the full $25,000 investment at the time it is withdrawn.  However, with a Roth plan, the taxes are already paid and 30 years from now, the entire $25,000 is available to you tax free.  So in the first scenario, you might be saving about $1,000 in taxes, but in the second, you might be saving $5,000 in taxes if you were in a 20% tax bracket during both periods.

Because the assumptions change for each of us, there is no correct answer that fits everyone.  It is entirely possible that after 30 years, you could be in a zero tax bracket.  In that case, the conventional plan would be a better decision.  If you are not sure, resist checking pocket stones or weegee boards, and discuss it with your financial advisor.

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Protecting Your Money

Wednesday, April 24, 2013 posted by Martin
feel good engraved stones

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After several years of stagnation, the economy is finally showing signs of improvement.  The growth in the economy is weak because of high unemployment.  However according to Paul Lim of Money Magazine, we are moving in the right direction.  The question he raises is, “How will that affect bond prices?”

With bond yields at historic lows, there is little room for prices to increase, but a substantial risk that bond prices will drop.  The big question is when?  Stocks seem to be rising because corporate earnings are good and bond yields are low.

My recommendation is be cautious.  In graduate school they teach you to borrow when long term rates are low but not to lend long term.  That means to me that I should not buy long term bonds at these prices. Motivational paperweights are better.  Instead, I prefer shorter term maturities of less than 5 years or bond funds that adhere to that strategy.

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