Investing

Some Thoughts on Assets, Liabilities, and “Free” Spending

Right at the start of my professional career, an old friend of mine sat down with me and gave me some advice that I didn’t pay much attention to at the time, to my regret. I thought enough about it to jot it down in my journal a couple times during the late summer of …

Some Advice for Investing in Collectibles

Right now, I have a collection of sports cards and other trading cards that is easily valued at $10,000 – and, depending on how sales went, it could add up to as much as $20,000. In fact, if I had not sold off a large number of my cards when we were first in financial …

Making Sure Money Advice Makes Sense

A few days ago, a reader wrote to me stating that he had opened up a $10,000 CD for 18 months, whittling his checking account down to $2,000 while his savings was practically nonexistent. He asked me for advice on what to do next. I suggested to him that he just keep the CD for …

Categories: Investing

Credit Card Debt Getting You Down?

This article first appeared on U.S. News and World Report Money. Personal finance writers, whether on the internet, in magazines, in books, or elsewhere, are usually very strong advocates of investing. There’s good reason for that, of course: assuming that you’re in a financially stable position, investing in things such as the stock market or …

My Thoughts on Bitcoin (and Other Digital Currency)

Over the last year, quite a few readers have written in asking me for my take on Bitcoin and, lately, other digital currency such as Litecoin. As I often do when I get many emails on the same topic, I thought I would sum up my take on the issue in a single post so …

Categories: Investing

Selling Stocks at an All Time Market High?

By almost every measure, the stock market in the United States has hit several all-time highs over the last few weeks. This has led several Simple Dollar readers to write in and ask whether or not selling stocks now is a good decision or not. Tom, for example, writes: “With stocks being so high I …

Categories: Investing, Retirement

When Should I Invest?

One of the biggest fears that people have when they begin investing is that they’re going to make a “dumb” choice and not get the best investment returns that they could get. They fret and worry about this fund or that fund or buying real estate or buying bonds and that fret and worry and …

Five Simple Steps for Comparing Investments

One of the most challenging parts of signing up for a 401(k) plan or opening a Roth IRA is deciding which investment to put your money into. There can be dozens of options within your 401(k) plan and many, many more within a Roth IRA. Of course, there are lots of possible questions to ask …

The Basics of a Mutual Fund

Following my article on what a Roth IRA is from last week, Karen wrote in asking a good related question: “Can you help explain mutual funds? Are they a good investment – better than IRA’s or 401K’s? I realize they may be risky but can you put money into them – watch the money grow …

Are 401(k) Plans a Fraud?

Over the last two weeks, quite a few readers have passed along a link to Helaine Olen’s article at Salon entitled 401(k)s are a sham: Duped by a DIY retirement dream, the elderly now face staggeringly low living standards and have asked for my thoughts on it. Are 401(k) plans really a scam? I think …

Categories: Investing, Retirement

The Economic Bogeyman

The economy is in the doldrums. We’re in a “lost decade.” The latest jobs report is terrible. The investment you have will never see the same returns again. You need to invest in gold to have your savings survive. No, wait, silver. No, wait, natural gas. There’s always an economic bogeyman out there. There’s always …

Looking at Frugal Living as an Investment

As we’ve discussed before, an average American family with two children – a seven year old and a ten year old – spends $1,252 a month on food according to the USDA’s liberal food plan. If that family adopted just a few frugal living practices and were able to switch their food spending to the …

Categories: Frugality, Investing

Applying Warren Buffett’s 7% Figure to Your Retirement

A few weeks ago, I discussed a Bloomberg article about Warren Buffett’s projections for the stock market over the long term. Here’s a refresher on what Buffett said: “The economy, as measured by gross domestic product, can be expected to grow at an annual rate of about 3 percent over the long term, and inflation …

Categories: Investing, Retirement

Is Every Purchase Merely an Investment?

I’m going to use a long example of a car purchase to start off this post. Bear with me through it. Let’s say, for calculation’s sake, that a car has a life span of 200,000 miles before the maintenance issues catch up with it. For the last 40,000 miles of that drive, the reliability of …

Categories: Frugality, Investing

Average Stock Market Return: Where Does 7% Come From?

Whenever I talk about investing in stocks, I usually suggest that you can earn a 7% annual return on average. That percentage is based on a few assumptions. First, I’m assuming that you’re investing for longer than ten years. That’s because in a given year, the stock market is very volatile. Some years see an …

Categories: Investing

Is This Everything You Need To Know About Financial Planning?

Here’s an interesting article I discovered over at the Vanguard site about the basics of retirement planning. In it, the article quotes a section of Scott Adams’ 2002 book Dilbert and the Way of the Weasel: Everything you need to know about financial planning Make a will. Pay off your credit cards. Get term life …

Categories: Investing, Retirement

Could Cyprus Happen Here? What Can We Do?

Several readers have sent me rather concerned emails over the past week over the banking situation in Cyprus, where the government, facing a deep financial emergency, essentially took money from every bank account in the country, anywhere from 6.7% to 9.9% depending on the size of your balance. Here’s a detailed description of what happened …

The Investment Trinity

Every investment you make requires you to balance three different factors. The first factor is risk. How likely is it that you’re going to get the return you expect over the next year, or the next five years? Generally, lower risk is better. The second factor is liquidity. How easy is it for you to …

Categories: Investing

How Does Inflation Affect a Mortgage?

Karen writes in: My brother has argued with me that I shouldn’t make any extra payments on our mortgage because we’re losing money over the long term by making early payments. He says that with inflation at 3% and our money able to earn 1% at minimum in a savings account and more if we …

Categories: Investing