May 2006
You are currently browsing the articles from General Finance written in the month of May 2006.
Being a wise investor takes a little bit of knowledge and some discipline.
In the late 1990s the technology and internet stocks were hot and that was a trend, but all trends must end and the internet bubble burst on March of 2000. From this you can see that certain industry sectors can be hot and cold as well just as capitalization (e.g. small cap and large caps) trend up and down.
One criteria you can examine is P/E ratios. When P/Es are low many, not all, believe this is a prime time to begin investing. For example, large cap stocks right now are at very low PEs and small cap stocks are at a very high level of PEs. Many, not all, are dumping their small-caps and getting into large caps. Now this does not necessarily make it true until the shoe drops and you can see that a trend is occurring, but market timing is impossible. Do some homework on some indexes like the Russell 2000 or the S&P 500 and find out if this is true or just buzz. Now remember a long-term investor needs to be exposed to diversified investments so unless you are a gambler you should not exit a low-trending industry sector of capitalization. But if you believe a trend is happening or about to you might want to weight your portfolio heavier on what you think will trend up and go lighter on what industry sectors, capitalizations, etc. you think might go down–while remaining diversified.
Written by mike on May 31st, 2006 with 2 comments.
Read more articles on Investing.
When browsing for mutual funds you should order or print out their prospectus before buying. Legally they must provide this information to you and when you receive it the prospectus will provide you with a wealth of information. Some you may understand and some you may not. If you want more information call the mutual fund’s toll-free number to get the help from a customer service assistant. Don’t be shy, this is a great way to get some free lessons on mutual funds and how they work as well as that individual fund.
Written by mike on May 30th, 2006 with no comments.
Read more articles on Investing.
If you have some winner stocks in your portfolio and you are thinking about selling the stock, but then think of the tax hit you will take and think again about it. By selling your stock you never have to worry about paying taxes on those gains on that stock, plus you can take the deduction on the full value of your stock’s shares. Click here for more information on donating stocks.
Written by mike on May 29th, 2006 with 1 comment.
Read more articles on Household and Investing and Stocks.
Yes, if you rent an apartment you need insurance because the contents of your apartment will not be insured otherwise. So you need to make sure that you have renter’s insurance if you have possessions that have significant worth to you.
Obviously, if you own a home you need to have home owner’s insurance and make sure it includes replacement-cost coverage, not default coverage which is called actual cash value. It will cost you approximately 10% more for replacement-cost coverage, but in the end it is worth it.
Written by mike on May 29th, 2006 with 1 comment.
Read more articles on Household and Insurance and Real Estate and Uncategorized.
If your credit card has a yearly fee ask for it to be waived and if they refuse say that you are prepared to take you business elsewhere (make sure to have that plan because typically you do not want to close credit card accounts because it lowers your credit score).
You can do the same with credit cards interest rates. Look online for average rates and if you are armed with a good credit score in hand and a comparison to national rates you can often get your rate lowered.
Just be prepared and have a plan before calling and asking for a fee to be waived or a lowering of your credit card interest rate. Most people never even ask.
Written by mike on May 29th, 2006 with 1 comment.
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Every autumn you need to think about loss harvesting in your non-retirement taxable investment accounts. You can use up to $3,000 per tax year as losses to offset capital gains and this can make a bad invesment into a tax break.
Now if you lost $9,000 on taxable investments in a year you can take up to $3,000 of that and use it over three tax years. Therefore, a really bad investment can help you out for several tax years.
If you still like the investment you lost money in remember to follow the thirty-day wash rule because otherwise use cannot use the tax benefits of that loss.
Written by mike on May 29th, 2006 with no comments.
Read more articles on Investing and Taxes.
At least once a year you need to rebalance your investment portfolio because certain investments might be doing extremely well or bad and it will through off the weights you have allocated to each category (e.g. international, small-cap, large-cap, mid-cap, bonds, etc). By doing this you are forcing yourself to sell high and buy low at the same time keeping your portfolio with the correct weights.
Written by mike on May 29th, 2006 with 1 comment.
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If your job offers a Flexible Spending Account you should take advantage of it. It lowers your taxable income and is withdrawn directly from your paycheck and you use it to pay for a wide range of medical expenses. You can save around 30% on the amount you take out for the Flexible Spending Account. The limit is $5,000 and sign up is usually the autumn prior to the calendar year the money will be used.
Written by mike on May 29th, 2006 with 1 comment.
Read more articles on Household and Taxes.
Rule #1 of investing in a 401k is to invest at least up to the level your company matches because it is free money. So if your company matches dollar for dollar up to a 5% contribution and you contribute that 5% of your salary (e.g. 5% of 100,000=$5,000). In that example you would have an extra $5,000 in your 401k at that company.
Caveats:
- Your company might not vest 100% of that matched funds to you right away. They might have a schedule of tenure you must hit before you can be the outright owner of the money the company matched.
- Your company might provide stock as a match. Be careful: you must diversify your portfolio or you could be another victim of an Enron situation where many employees had all of their 401k investment in Enron stock and lost their retirement money as the stock price plunged.
After you have hit the company match level and you want to put more towards retirement you should take the excess and open a Roth IRA. Here you will have endless choices of what to invest your money in and it will be after-tax investments with the ability to withdrawal contributions (not profits) tax-free at any time.
Written by mike on May 29th, 2006 with 1 comment.
Read more articles on Investing and Retirement.
A sad but true fact of life is that more and more things depend on what your credit score is. From the loan rate you get to whether you get a job or not can depend on this number. Experian, TransUnion and Equifax are the three credit reporting agencies. By law you are now allowed to access your credit report(they charge for you to access your score) from Equifax, TransUnion and Experian. You can go to www.annualcreditreport.com during a calendar year and get each of the reports. So because you can get all three, stagger months between accessing each and get a different company’s report each of the three times.
Once you get the report you need to examine it carefully to confirm there are no mistakes on it (mistakes are not unusual). Then you will have to pay to access your score. The scoring system has changed recently, but not all are accepting those changes. Click here to get an idea of what your score means.
Written by mike on May 28th, 2006 with 1 comment.
Read more articles on Household.
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