How is Investing and Owning a Small Business Related?
When I first created and named this blog, my wife asked me the question “How is investing and entrepreneurship related?” She didn’t see the connection. Perhaps my audience doesn’t either, and I’ll explain. They are very much interrelated.
With index funds, you are investing a bucket of companies that match specific criteria. For example, the S&P 500 is a very common index. To the average observer, the S&P 500 looks like a mystical black box, and in a way it is. The issue is it’s hard to relate to a specific company within the index. There is nothing wrong with index investing, and I believe it’s an easy way to invest and beat 80% of the active mutual fund managers in the process. It’s a very passive process and you are betting that the pool will do better over time. What makes index investing great, can also lead to just average performance. For the purpose of this article I won’t talk about proper asset allocation, but that is one method to help improve passive investing.
Read More »Ginnie Mae Investing
CD and money market accounts currently offer dismal returns. What is an investor to do get higher returns, yet not drastically increase risk? As I mentioned in my 4% Rule to Investing, Ginnie Maes are a good possible alternative. Who is Ginnie and does she have anything to do with Fannie and Freddie? Ginnie Mae, otherwise known as the Government National Mortgage Association, is a U.S. government-owned corporation within the Department of Housing and Urban Development (HUD). Ginnie Mae provides guarantees on mortgage-backed securities (MBS) backed by federally insured or guaranteed loans, mainly loans issued by the Federal Housing Administration, Department of Veterans Affairs, Rural Housing Service, and Office of Public and Indian Housing. Ginnie Mae securities are the only MBS that are guaranteed by the United States government. Ginnie Mae, which extracts fees for guaranteeing mortgage investors are repaid, is a smaller and more conservative player in the mortgage market than Fannie Mae and Freddie Mac were.
Weekend Reading for February 28, 2010
What I’m reading this weekend:
- The Right Way To Squirrel Money From the Taxman – WSJ : Our government is nuts. in 2011 it will become even more important to control and minimize your taxes.
- Even the Smart Guys Don’t Always Get it Right – WSJ: Not so sure this article applies to small investors and speculative trades applies to the big boys.
- General Motors Is Back! – Barron’s : Not sure if I would invest or buy a GM ever! The bond holders got screwed royally (after years of case law), and the unions got a much better deal. Based upon the comments on Barron’s, I don’t seem to be alone. I would buy a Ford first, not only because of this, but they appear to have their act together.
- Bullish on Bullion – Barron’s : Interesting history of gold for the past 10 years, though “past returns do not guarantee future results” Gold isn’t going up, it’s the currencies that are going down.
- Steve Jobs says Apple must ‘think big’ with $40 billion in cash – AppleInsider : While I agree Apple should have a large chest of money, but $40 billion?? If they aren’t buying another large company (history has shown they only buy small companies) then they should do a dividend or stock buy back.
- Using Probability to Set the Size of An Emergency Fund – The Oblivious Investor : Great analysis on needing an emergency fund. One thing I’ve found, once you have a certain amount of savings, a specific emergency fund becomes less needed.
Is Owning a Toyota Risky??
I’ve seen a few posts that have discussed buying Toyota cars and their stock (here, here and here). Are Toyota’s safe? Should you go get extra life insurance to protect your family from your untimely drive? I thought I would add my own angle to this story not mentioned anywhere else.
As I mentioned previously, we are in the market for a new car this year. We are expecting our third child in June. The existing 2000 Toyota Camry Solara won’t cut it because it’s a two-door coupe! Imagine the problems we already have getting our existing two children into this car. A third child will turn it into a clown-car! So we desperately need to buy a new car this year.
Read More »Are You Saving Too Much?
Let me first state, I have no issues about living frugal. My wife and I aren’t big spenders. I typically don’t wear expensive clothes. I have one expensive watch (which ironically I rarely wear). I don’t go shopping that often, and nor do I like to shop. Our cars are nothing fancy. We own a 2007 Honda Odyssey, and a 2000 Toyota Camry Solara. To give an idea of our buying habits, we are looking for a new car this year. Like the book “Stop Acting Rich” I just reviewed, mentions the most popular car among millionaires is the Toyota Avalon. Assuming that car will be able to stop, that just so happens to be on our short list of cars we are looking to purchase.
Read More »Do You Value Your Time Or Your Money More?
A guest post by Erica Douglass, on Get Rich Slowly has caused a great stir in the personal finance blogosphere. I’m sure readers were expecting the typical post of how to save more money by skipping that extra latte from Starbucks. Instead they got more than what they paid for (which was nothing). After all, most personal finance blogs discuss the same mundane things you might see discussed with “The Oracle of Berkeley” – Suze Orman. It’s the typical mantra – get out of debt, live frugally, make sure you save, and have an emergency fund. You get the idea. It’s the basic stuff that should have been taught in school, but wasn’t. What if you have all done all of the right things, what’s next? Is it possible (gasp) that people have followed their good advice (with some bad) and now past that point? This was one of the reasons I created the blog. Most of the personal finance blogs discuss the same things, but rehashed a different way. After all, personal finance is not rocket science. Spend less than you earn, and invest the difference. Erica’s guest post is somewhat out the box, and discusses what seems to be a taboo subject to most. Assuming you have some level of financial success, how can you start using this to your advantage? Her post discusses outsourcing tasks to others. I think the people objecting to her post, more than likely are employees, and never owned a business. I saw posts more or less stating, is she too lazy to do the “common man” tasks herself? In addition, how dare she hire someone outside of the US. After all, there are good people unemployed in the United States.
“Stop Acting Rich” by Thomas J. Stanley – Book Review
So you want to become wealthy? Have you ever wondered how others who have started with nothing, retire with a high net worth (over $1 million in assets). The best way is to study your prey – do what they do and you’ll reap the same rewards. Thomas Stanley has been doing just that for over 20 years. With his influential book “The Millionaire Next Door“, he discussed in depth what is the typical life of a millionaire. It’s an eye-opening book that goes against many misconceptions. In my opinion this book forever changed the way I think about being wealthy. Thomas has spent many years of researching, interviewing, and gathering statistical analysis about the subject. In continuation of his previous books, Thomas Stanley just released “Stop Acting Rich and Start Living Like a Real Millionaire“. The evidence he presents, goes against the grain of what we typically see in the media, and what most people assume how the wealthy live. After reading his previous work, I just had to read this latest book. I’ll review and discuss some interesting information I found.
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Hey all I’ve created a Facebook Fan Page. It’s another way to interact with the Investor Junkie community, and also get your friends involved. Join today!
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