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5 self-made female billionaires

September 23rd, 2010 at 06:01 am

For some reason, I found this article interesting, not so much because they are women (though more power to you ladies), but because of the wide variety of pursuits that lead to their wealth. I mean, think about it:

One of them runs a day time talk show.
One of them opened a bunch of clothing stores.
One of them is a real estate developer in China.
One of them is in marketing for a hugely successful dot com.
One of them is an author of a highly popular book series.

So, let's deconstruct this down one more step and examine their activities. What do they actually DO to make their billions?

One of them hosts a television show.
One of them sell clothes.
One of them develop real estate.
One of them does marketing for a website.
One of them write.

Let's go down one more step to the quintessential activity:


Broken down to this level, I think there's an emerging common theme. Basically, you want to connect and sell products and services to a large group of people. Connect and sell.

So, how does any of that translate to me? Sadly, I'm not a great communicator I don't think. And yet, I would like to think that this blog, for example, has a pretty decent reach as far as personal blogs go. So, some way, some how, even a guy like me can "connect" if I persist long enough....

But what about the sell part? I guess that's my biggest stumbling block. I have no idea what I could or would even want to offer to the general populace. The advice not to trade stocks? Big Grin I have no idea.

Well, it's amusing to contemplate anyways. What do you think? Either way, hope you enjoyed the article.

Canceled DSL

September 21st, 2010 at 08:27 am

I've been dragging my lazy feet canceling my home DSL, but partly because I wanted to make sure this 4G hot spot idea I've blogged about was going to work.

Good news! So far so good. Luckily, my coverage at home is OK, even if the speed is not as fast or reliable as DSL. And anyway, it's also $10 a month cheaper.

On the go, my coverage is, well, honestly it's spotty. However, the fact that I can even get 4G internet on the go is just gravy, and I am also doing it without having a cellphone bill.

And with that, I finally canceled my home DSL. I love lowering my monthly bills!

All-in covered calls

September 20th, 2010 at 08:45 am

Today is the day my option contracts expire, and I can write more.

Again, my entire trading strategy right now is that I have no idea what the market is going to do for the next month, so I might as well be a vendor and just sell contracts instead of attempting to speculate in the market.

However, that is not to say that being a seller is dull, and I walked away with some interesting observations from the past 30 days.

First, there was a stock position that did very well, and that got Assigned at the last minute (that is, I had to sell my stocks to him at our agreed price). Congrats to whoever it is for your huge relative gains. In any case, now I know what it looks like when my stocks have been sold.

Second, there was another stock position that was essentially flat. In this case, the covered calls worked out perfectly, because I already made money on a flat-performing stock. Not surprisingly, it did not get Assigned so I get to sell some more contracts on it.

My third and final stock position was absolutely atrocious. Atrocious! Even so, I can still write contracts on them, albeit for a lower premium. Despite the paper drop, I am surprised that I can still squeeze out $200 this month on this position!

In all, I'm very pleased with this type of trading, even though, yes, it's still chock full of risks. Again though, I'm in no rush, so baby steps still.

Plastic island

September 15th, 2010 at 06:47 pm

I think I may have blogged about this in the past, but basically, there's this guy who has built himself a floating island out of discarded plastic bottles.

I've stumbled across a more recent video of him, this time in much more detail, and it appears that he's made some major additions since I last saw it!

Check it out!


September 13th, 2010 at 12:24 pm

Here's an interesting article on the origins of common financial sayings.

Internet switch

September 13th, 2010 at 07:47 am

In a typical household, it's normal to have a landline phone, cellphones, cable, and internet.

For some time now, I've managed to consolidate all of my phone needs into one Tracfone, for an average of about $5 a month. I've been very happy with that, and for some time now, I've been looking for ways to do the same with my internet.

Unfortunately, while I rarely use a phone at all, I am a complete internet junkie. In my own defense however, I do not have cable or even Netflix. So, my only source of entertainment centers around being online somehow.

Recently, I've been experimenting with a mobile 4G hot spot device from clear.com. It is unlimited 4G data for $40 a month, my home and most areas near work have coverage, and the speeds can rival my DSL, which I am currently paying $50 a month. Best of all, because the device is portable, it means that my iPod Touch has data access similar to an iPhone, except with 4G speeds!

In other words, for the price of shaving $10 a month off my internet bill, I also gain mobility with it! A typical iPhone alone would cost a minimum of about $55 a month. Home broadband would be a separate bill. However, with this one device, I am able to do it all for just $40 a month! Combined with the Tracfone, all of my household bills are only $45 a month (not including gas, electric, and water bills).

There is one minor downside: I now carry three devices on my belt: The cellphone, iPod Touch, and now, the hot spot device. I feel like Batman. Big Grin

Need to want less

September 10th, 2010 at 07:32 am

Stumbled across a really cool website about Want versus Need.

My friends bug me sometimes

September 8th, 2010 at 06:37 am

So, a friend of mine is really itching to get into stock trading. Even though he's in a lot of debt and being garnished by the IRS, he wants to use like $2000 of his student loan money (at more than 6% interest) for it.

I told him about the risks, but he was like, "It's worth it. Gotta start somewhere." But I'm like, "Are you sure about this? Because the numbers don't make any sense." His response was, "Numbers never make any sense BA! They're subject to interpretation!"

Oh really? Playing with the stock market using borrowed money you need to live off of within 3 to 6 months, and at 6% interest is somehow subjective? And why so defensive? I'm just trying to be a friend and warn him of the dangers involved.

You guys know that for literally years, all I did was pay off my student loans. No stock trading here. And even now, I do not trade on margin (loans) whereas that's exactly what he plans to do. Also, he needs this money within 3 to 6 months, whereas I don't trade with any money that I need anytime soon.

I mean, it's just such a bad idea that even I would not have done it. I do wonder why he is so dead set on it? Is it ego? I know he's used me before as a source of information, and then passed it off as his own to try to impress beer buddies and women with it.

I do have to admit that I am partially to blame. He's a friend that I've been talking about all my stock and options trading to. So, clearly, I embedded the idea in him somehow. BUT, I had no idea he would decide to be so reckless about it. That's the last thing you want to do because the activity itself is dangerous enough as it is.

But I guess what really bugged me about all this is that he was being rude to me about it, even though I'm just trying to help as a friend. Whatever. I didn't tell him all this though. Instead, I just said that if he feels that strongly about it, then just open a Scottrade account, and buy his stocks there.

I don't think I want to hang out with him for a while though. That and a lot of other stuff makes him really stressful for me to be around him.

Last batch

September 1st, 2010 at 06:47 am

I just finished selling the last batch of call contracts available for me. After fees, it's another $280 I pocketed, pushing the income total up to above $1000. So, despite the fact that I'm a newbie in options trading, I think it's very realistic to generate $1000 a month in contract income this way.

Of course, risks and potential losses aside, most of this occur within my retirement accounts, so it's not like I can actually use it for anything.

I'm already fine-tuning the strategy as we speak, and I think I would like to get out of individual stocks completely. Maybe. The option is always there, of course, but I think I can use this strategy just fine with nothing but SPY (US stock market ETF). The volumes are gloriously high, and contract intervals are much shorter (which isn't necessary, but it does give me greater flexibility).

Yeah, in other words, I'm basically done trying to speculate on the market. I'll let others do that. I'm content with just being a "loan shark", and despite the name "options trading", holding SPY and selling contracts on them is actually very conservative and safe (as far as trading goes).

More covered calls

August 30th, 2010 at 10:49 am

This month's stock market has been tough. My stocks have slipped rather substantially at this point, so I guess it's good timing to make some income off of them.

With the market slip, I bought some more stock and sold more covered calls, pocketing another $380. I think the total of contract premiums I've made is up to... almost $800? They're all set to expire on September 18th, so I can sell another round of contracts then.

I've also been fine-tuning the strategy, to focus more on earning the premiums over trying to win the market somehow. Less speculation and more guaranteed income.

While covered calls still have the same downside risk as regular stocks, at least you're also propped up a bit with the contract income. The real downside, I think, is giving up on the upside potential. However, I don't see how this is a problem because, again, I'm trying to reduce speculation, and exchanging it for guaranteed income. Despite that, even covered calls have the ability to return 10% to 30% in annual gains, depending on your trading abilities and market conditions. Good enough for me.

I'm also reading up on cash-covered shorted puts. It's the cousin of covered calls where you sell put contracts (to buy their stocks at a set price), again, for a fee premium. But in theory, I could do absolutely nothing more than covered calls, and still do just fine. But adding more and more of these strategies ultimately gives me more trading flexibility, regardless of the market direction.

Flower breeding game

August 26th, 2010 at 03:28 pm

This doesn't have anything to do with finance, but I thought some of you might get a kick out of this flower breeding game. There are no winning or losing with this game, just whatever you feel like doing. Enjoy.

Networth Aug 2010

August 26th, 2010 at 07:30 am

It's that time of the month again! My net worth posted a very modest increase this month. Only 1.33%. For a while, it was actually behind too.

What happened? The stock market hasn't been all that kind this month, and you know, I'm kind of amazed at just how much influence the stock market has on my net worth these days.

It got me wondering what my basic asset allocation is, and... it's 65% stocks/options, 35% cash/bonds. Hmm. I thought my asset allocation might be off somehow, but it's actually fairly on target. That percentage is also when I am bought into stocks. Otherwise, my cash/bonds percentage would be much higher.

So, despite my relatively risky hobby of stock trading, I don't feel like I am taking too much risks. When I do trade stocks, I typically stick with quality company names, and on top of that, now I am adding covered calls to sort of buffer against market volatility, and at the same time, converting the stocks to be more of a passive income generator. As far as stock trading goes, I'm actually very conservative.

Still though, the month has essentially been a disappointment... as the blog subtitle says, it could be worse. A lot worse! Gotta celebrate the little things in life.

Bought more SNDK

August 25th, 2010 at 01:25 pm

Today's market started out rather low, and I decided to buy more SNDK, and then make some more covered calls with it.

You know, I really like this covered calls option. This way, you're not entirely at the mercy of the stock market. You make decent (immediate) income selling contracts that although locks you into a price you are obligated to sell, you are nevertheless selling at a profit. And you can also adjust how much passive income versus market volatility you want to depend on for your money.

For example, I just made an additional $200 (for a total of $300) just for selling contracts that, even if it's exercised, would allow me to sell my stocks at a pretty substantial profit (15%+).

Now you're probably saying, "Wait, where's the downside?" The downside is that you're still at the mercy of the stock market, and there is still a risk of losing money. There is also the "risk" of capping your gains, but I'm not greedy, and it's 15%+ profit. The real risk is that your stocks can still lose a lot of value, to a point that it erases both the market value as well as contract premiums that you make.

But hey, nobody said this was a free lunch. I mean if I want a lot more guarantee, then I might as well buy bonds instead.

Believe it or not, but covered calls actually cushions me from a straight up stock trade. Geez, I don't know why I haven't done this sooner.

My first options trade

August 24th, 2010 at 07:16 am

I just checked my account and saw my dividend payout for Best Buy stocks I bought earlier. I lost a little bit of money on that trade, but the dividend helped even things out.

Also, I just saw Sandisk drop substantially today. This company is pretty solid and has great growth prospects. I don't know why it's falling by that much, but I bought some up.

My stock trading is evolving more and more, and right now, it's at a point where I am more passive than I am speculative.

I mean, yes, who am I kidding? Stock trading is still a speculative activity, but it's quite tame compared to my fast trading BP days not too long ago. Here's all I do right now: I keep an eye out for great companies that are selling at a great discount. When I see one, I analyze the company financials and stock technicals. If it still looks good, I buy it, set it (with a reasonable limit sell) and forget it. That's it. Easy peasy.

I've also experimented with some covered calls for the first time. Ironically enough, I haven't gotten around to them until now. I don't know why. It's a great way to add an extra layer of income generation, especially in a flat market (which is what we appear to be in).

I guess the thing is, I still don't have a firm grasp of the options market just yet. And frankly, this is something I just don't want to rush into, even with covered calls. That's also why I'm sticking only with covered calls right now.

But I did it with the Sandisk stocks that I just bought. The options symbol took a little bit for me to get it just right, but when I did, the transaction went right through. I earned a tiny profit from selling the contracts (the commission fee for the sell is still the same), and we'll see if anyone exercises the contract.

Edit: Just wanted to add some details to this trade (for anyone curious and for my own reference). The contracts are $45 calls that expires on Sept 10th. Right now, my SNDK stocks is showing a $100 paper profit, and I locked in an extra $100 from selling the contracts.

It is unlikely, but always possible, that the contracts could be exercised, but the upside is that at least I will be selling at a price I want. If not, I can keep writing contracts on them and make more income.

Also, writing covered calls means that my gains will always be capped at $45 in this case, but that's not a huge deal to me considering that that would be a very profitable sell, and I still made income on the contracts. In any case though, that's the risk, although it's worth explicitly noting that writing these calls actually LOWERED my overall loss potential than just sitting on the stocks.

So, yeah, I think I can really get used to this. Still, one baby step at a time. In the future though, I think I will write contracts with longer expiration dates, so I can earn more on them, but also so I can sort of go back to my "set it and forget it" attitude. So, yeah, this appears to be a great replacement for limit sells or trailing stops that I've been using.

On love and money

August 23rd, 2010 at 06:04 am

Now, here are two words that can provide an endless well of interesting conversations.

I was reading this rather interesting article that states that while frugality may be an admirable trait, to the general population, it's still viewed mostly as either boring or even stingy. Well, there goes my chances. Big Grin

What I find particularly interesting is that money used to play a much more prominent role in marriage prospects in the yesteryear. According to the article, an old ad from the 1860s reads, "A young lady, rather good looking, and of good address, desires the acquaintance of a gentleman of wealth (none other need apply), with a view to matrimony." The article ruminates, "Several generations back, personal ads could not have been more explicit about finances, since everyone knew that women generally had no income and a marriage involving a man of means was the only way to live comfortably."

As a result, financial fitness was once seen as a very important trait in men, and the ads from men back then blatantly reflected that. "'There was this idea that men were very frugal,' said Ms. Epstein, 33, who posts copies of some of the ads she’s dug up at advertisingforlove.com. 'You were going to work hard and save your money, and then by doing so, you would be able to support a wife in comfort.'"

Whatever happened to the good ole days. Big Grin Actually, I shouldn't say that because I probably would not be able to compete in the sense that I don't make a lot of money right now. But I digress....

Either way, the article continues on with what I thought was a refreshingly direct shot at the truth about love and money. "'Frugality may or may not have anything to do with how much he loves you,' said BJ Gallagher, 61, an experienced online dater and author of several self-help books for women. 'But for a lot of women, love looks like 'Take care of me and give me things.''" Now, I'm not saying that generalizations like this will conveniently apply to every woman today, but I think there is quite a bit of truth to that statement. In the end, we all still want a sense of stability and comfort. Even as a guy, I do too (though, I am expected to make the money to provide, not be provided for).

Or, maybe she's wrong, or that there's more to this? What do you think, you ladies, rather good looking, and of good address? Big Grin

The man who lives without money

August 19th, 2010 at 09:31 am

Just came across this interesting article.

I have mixed feelings about this. To me, money is just a representation of value. He has a laptop, for example, and it doesn't matter to me if he worked for the laptop in a barter, or if he worked for money, and then bought the laptop. The result is the same. So, why avoid money?

On the other hand, I do admire the fact that he not only tries, but actually enjoys a very simple form of living. Even if we don't strive to live without money, there are some useful tips that I think we can learn from his experiences. He also has a forum that I am reading through right now. Looks interesting.

Chuck Norris

August 18th, 2010 at 08:29 am

I just read some heady but funny Chuck Norris internet jokes from elsewhere and I thought I'd share it here as well:

* Chuck Norris doesn’t hedge. He waits.

* Chuck Norris trades on fear and greed simultaneously.

* Chuck Norris charges the Bank of England a penalty rate for borrowing – And guarantees its deposits.

* Chuck Norris gets ALL of his funding from the asset-backed commercial paper market.

* Chuck Norris thinks Credit Crunch is a breakfast cereal.

* Chuck Norris subprime collateralized debt obligations still trade at 100 percent of face value.

* When Chuck Norris makes you a price, it isn't an offer; it's an obligation to buy.

Bonus: Funny comic on a self-sustaining home.

Cooking for Dummies

August 17th, 2010 at 10:41 am

When it comes to cooking, I think I'm a bit of a quack. But that isn't to say this awkward little duckling does not dream of being a culinary swan some day. Ah, but every great adventure starts with a single waddle, and it may look something like this LifeHacker article here.

Most of you may have yawned at the article for its remedial, Hooked-on-Phonics-like content, but to me, it's still something of a revelation. For example, did you know you can also cook things other than rice in a rice cooker? Actually, I knew that too because I've seen my mom do it with hers, but it never occurred to me that perhaps I could do that too! It was as though it's some kind of Asian dark arts that I am not suppose to speak of or fathom.

Well, I'm pumped! And seriously, doesn't that picture look delicious?

By the way, does anyone use a rice cooker for their cooking? Does anyone know what's the difference between the rice cooker and the crock pot? Also, since I already have a crock pot, is it worth buying a rice cooker or is that redundant?

Risk tolerance quiz

August 17th, 2010 at 06:26 am

This seems like an actually useful quiz!

Based on that, I found out that I have a fairly high risk capacity (33) but a moderate risk tolerance (24).

For someone like me, the risk tolerance sounds about right. I've noticed that I'm starting to be a bit more conservative as time goes by. Again, it's most likely because I'm anticipating to lose my current job soon, but I think it's also because I'm starting to get older.

Now, risk capacity is what I'm slightly concerned about. However, the suggested asset allocation is 80% equities, 20% fixed income, and this is what I would have if I had went all-in on my stock trades anyways. Otherwise, I would be in more % cash.

Here's a quick explanation of the difference between risk tolerance and risk capacity.

Anyways, how did you do on the quiz?

Bonus: Amusing currency picture.

Wisdom teeth

August 16th, 2010 at 11:37 am

Hey gang, I need some opinions on this if you know anything about this subject.

As you can imagine, my wisdom teeth are impacted? I think that's the term. It looks like the erupted one in the pictures below, except that it's has also completely surfaced through the gums.

Anyways, the dentist is saying that I need to get them out sooner rather than later, but it doesn't have to be right away. It could be a 5 year project if I want.

Now, another thing about my teeth is that I've already had a molar removed a while back, so there is now a gap in my lower jaw. I know that if I were to leave them alone, they would slowly slide out and mis-align, but with a gap there, at least the teeth shouldn't crowd too much and cause pain? I don't know.

What I do know is that I don't think I really care THAT much about having perfect teeth. I just want my teeth to not hurt, and then I don't want to over-pay for any unnecessary dental work.

So, my question is, do any of you know if this is truly necessary, or is this something that the dentist is telling me to help pay for his boat?

Spend Secret

August 13th, 2010 at 06:27 am

The Wall Street Journal has an interesting article called "Are you a Secret Spender?" Among the signs of being a Secret Spender, my favorite one is "sneaking out and bought an item in the middle of the night". Exactly what can be bought by sneaking out in the middle of the night? Big Grin

"Pssst. Over here. You like baby wipes? Yeah? You want some baby wipes? I got just the thing. Please come over to my car trunk and peruse the merchandise."

All joking aside, I confess that I too was a Secret Spender once, back when I was married. I bought a rifle without my ex's knowledge or consent. I did that because we were so bad with money that, I figured that was the only way I was going to able to "keep" anything for myself. Otherwise, I felt like I was grinding everyday simply to fulfill her shopping list of wishes and demands, with nothing to show for myself.

Now, normally, one would think that she would be upset, but it turned out that she was not. Well, not terribly. She too was a spender, and instead, basically couldn't understand why I spent our money on that when we could've spent it on something else we can both enjoy instead. Yeah, such as it is when you put two spenders together....

But those were my deep, dark days. So, now that I told you mine, anybody want to fess up to their secret spendings? Big Grin

My kingdom for a toilet!

August 12th, 2010 at 01:12 pm

I was perusing vandwellers.org earlier. The website has a gaudy color scheme that makes it hard to read, but I have to tell you, the content there is fascinating nonetheless.

Reading it, it occurred to me that the only technical obstacle between temporary and permanent living appears to be... a toilet! Everything else, you can find a solution around it.

There are a couple of options available, but none of them are very good:

For one, you can install RV toilets, but you still have to dispose of your own "dark water".

The alternative is to have access to public restroom facilities somehow, like using the bathroom at work, at a park, or having a gym membership. I think this is the most realistic, though imagine having to drive to the gym every time you need to take a dump.

Lastly, you can just "rough it" in the woods somewhere... but that's most likely illegal. Big Grin

Anyways, that's my crazy observation for the day. That in the end, the majority of our housing cost actually goes into buying a connection to the municipal sewer system. Otherwise, a huge world of interesting and inexpensive alternative dwelling (not just RVs) open up to you.

My failed experiment

August 11th, 2010 at 06:23 am

Many of you know that I use a PDA to track my spending and budget, but because PDAs are generally expensive and bulky devices, I've tried to operate without one. And that's what I've been doing for the past... six weeks I think.

Although I've learned that I can operate just fine without one, I also currently have no idea what my exact spending is nor where I stand on my budget. For example, I can't tell you how much I've spent so far on food this past 5 days, whereas I used to be able to tell you down to the last cent. I also can't tell you how much is budgeted so far to buy more cellphone minutes. And until I log on to my online account, I don't know exactly how much is on my credit card.

Luckily, I am still living below my means, and I still check my bank accounts daily, bills weekly, and net worth monthly. So, I know I can do just fine without the PDA. But without it, I've lost a sense of precision that I sorely miss.

I am still hopeful that I can find something equally powerful and effective for me some day, minus the bulk and the expense. (By the way, anybody have any good recommendations?) But for now, I've decided to go back to my PDA.

Even the best....

August 10th, 2010 at 06:14 am

According to this article, Goldman has suffered a 10 day trading loss. This, after last quarter's shockingly perfect trading, raking in as much as $25 per day.

Er, now that I think about it, I'm not sure why I'm blogging this. I doubt anyone here would even be interested in a news tidbit like this. Big Grin

But a lot of people DO guy Goldman stocks simply because of how good they are, and yet, it still pays to diversify because news articles like this reminds all of us that even the best... can't be perfect.

- - -

On a completely separate note, Rick Ferri reveals his hand!

34% Vanguard Total Stock Market ETF (VTI)
10% S&P SmallCap 600 Value Index Fund (IJS)
5% Ultra-Small Company Market (BRSIX)
8% Vanguard REIT ETF (VNQ)

6.5% Vanguard Pacific ETF (VPL)
6.5% Vanguard European ETF (VGK)
5% DFA International Small Cap Value
5% DFA Emerging Markets Core

12% Vanguard Total Bond Market Index(VBMFX)
4% Vanguard Inflation-Protected Securities(VIPSX)
4% Vanguard High-Yield Corporate Fund(VWEHX)

Cheap condos

August 4th, 2010 at 06:03 am

Wow, check out this cheap Miami Florida condo. Amazing price, especially for 1.5 baths. More than workable for a single guy like me. I wonder what the catch is? The place itself is likely to be unremarkable, but the location sounds great.

RIP Mr. Albrecht

August 2nd, 2010 at 07:22 am

In case someone doesn't know what Aldi is, it's a German supermarket chain that stands for "Albrecht's Discount". Considered to be the father of discount grocery stores, Aldi today span the globe with more than 4000 stores offering discount foods for all.

Anyways, I just found out that one of the founders, Theo Albrecht, has passed away a couple of days ago. I admit I don't go to Aldi that often because of my driving distance to one, but I admire any man who has made success out of nothing through thrift. He may be gone, but his great legacy will endure, and many of us will still benefit from it.

Interestingly enough, I didn't know that Aldi also owns Trader Joe's. There's one in town as well, but I've never gone to it. I just might do that one day, just to see what that's like.

Image problems

July 30th, 2010 at 07:04 am

Are you starting to get as frustrated as I am about not being able to post pictures in your blogs? I don't blame the admins for this, of course. They've worked hard and things happen. I'm also quite certain that they're aware of the issue and are working on it.

That being said, we need an interim solution, and I would like to introduce one here:

See that picture? Here's how I got it working.

1. Go to: http://www.imgur.com

2. Upload your pictures there.

3. After your upload, copy the DIRECT LINK URL located in the upper left hand portion of the web page. It's very important that you don't lose this link! Copy and paste it in advance to a text file on your computer if you have to.

4. In your blog entry, use the IMG and /IMG tag, but with square brackets of course, and place the direct link URL in between the tags.

5. Test your entry. Although I have yet to have any serious problems with IMGUR, I can't guarantee that they will work each and every time.

IMGUR is more like a volunteer site, so in exchange for being free and easy to use, I don't expect them to work all the time, even though they've been pretty good so far. Also, the images may not stay long. Perhaps 30 days at most?

On limits and nature

July 29th, 2010 at 01:03 pm

Sooo... did I just hear that right? That the FDIC and NCUA's $250k limit is going to be permanent? If so, that's great news that we can all rejoice in!

On a separate note, there's something cool about a Crocodile Dundee look-alike that can forage for his own salad in the wild, and eat it with chopsticks he himself has made.

Networth and visit

July 29th, 2010 at 07:44 am

Well, it's that time of the month again. Big Grin So, I just updated my net worth, and I have to say I was cringing because I knew it wasn't going to be pretty this month either. Turns out, I went up 2%, so I guess I'm sort of back on track at least? Otherwise, nothing particularly interesting to report here.

In other news, a fellow SAer decided to come down and visit me and the town I live in. She and her family were thinking about moving down near where I live. I didn't get explicit permission to reveal who it is, but I'm sure if she wanted it to be known, she will.

In any case, they were a nice family of 5 with 3 fairly grown kids. Truth to tell, I thought I may not be all that interesting to them seeing as how I am a stranger, but they turned out to be fun to hang out with and I at least had a nice time.

In particular, they seemed to have enjoyed Golden Corral. Me too, as they're running a BBQ special this month. Big Grin Actually, I wanted to take them to a nicer BBQ place, but as it turns out, that place is closed!

But anyways, that's the first time I've ever met anyone in real life from SA. I guess it's interesting to be able to attach faces and lives to people behind the names you see on the computer screen.

The Risks of TDFs

July 28th, 2010 at 08:31 am

I was reading this article, The Risks of Target-Date Funds, and thought it would be worth writing about. I'm going to assume that readers already know what they are (which also goes under the name of Freedom funds, Lifecycle funds and Target Retirement funds).

First, I just want to say that I am a big fan of them. They are particularly good for average, passive investors looking for a way to "set it and forget it" for their retirement investments. In fact, my entire 401(k) is just one of these funds right now.

That said, nothing in life is without risk, and these funds are no exception. The article linked here is one such reminder of that.

The only thing I would say about the article is that they're pointing out the end of 2008 as an example of how TDFs have failed investors who were nearing retirement by having too much % equity. To which, I do have some rebuttals:

1. Retirement investing does not end at retirement. Hopefully, you'll still have 30 more good years ahead of you, so even if you have taken a hit back in 2008, there is still time to recover and grow even more.

2. Even 100% fixed income investments comes with its own risk, such as inflation risk and longevity risk. Suitability of asset allocation depends on the size of your nest egg and risk tolerance.

3. Prior to 2008, most of these TDFs were criticized for being too conservative and not matching the gains from more aggressive funds. This was an incorrect perception back then, as the point isn't so much to increase gain, but more to decrease risk in my opinion. But it's hard to be reminded of risks during the good times. Not surprisingly, more aggressive funds fell out of favor after 2008, but TDFs also took a hit for being too aggressive as well.

4. After 2008, most target funds (or at least Vanguard funds that I am aware of) have been tweaked to become more conservative. So, it's important to keep in mind that today's 5-year horizon TDFs is not the same as the pre-2008 5-year horizon TDFs for example.

But regardless of the details in this debate, I nevertheless agree that we should always be ever-vigilant of our money. In the era of Toyota and Honda safety recalls, even the best can falter, and it's up to us to be aware of these issues.

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