Investor Junkie
My Business and Financial Freedom Journey

Obama Educates His Children About Finance

The AFP and ABC News have a puff piece about Obama eyes babysitting duties for daughters.   Implying somehow Obama still lives a regular life now that he’s president.  While I commend that he is trying to educate his children on how to manage money, I also find it ironic based upon his government spending policies.  It’s kind of like asking a drunk about how to quit drinking.  So I’m in full compliance with FinReg, I believe Obama’s monetary policy is Jimmy Carter part deux.  So take my opinion as somewhat biased.

I too think it’s important to teach children about money, and not rely on our public education system for any insight.  During the interview on how the financial reform law will help the general public, the topic wandered into the financial education of his children.

How Wealthy Are You?

Being wealthy can be defined in many ways. The Merriam-Webster dictionary defines wealthy as:

1 : having wealth : very affluent
2 : characterized by abundance : ample

This definition of course is very vague.   What exactly is “very affluent”? Being a numbers guy, I like specifics and like to measure things like wealth.

Economic Forecast for 2010 and 2011

I normally don’t make outright predictions on this blog, but Sam from Financial Samurai challenged me in his latest blog post.  I’m always up for a challenge, so I’ll take a stab at it.  Please come and revisit this blog post at the end of 2011.  The purpose of the Investor Junkie blog has always been about making good investment decisions.  The goal is to help you and I become better investors.  Topics discussed in this blog I’ve thought should contain mostly timeless information, and apply regardless of market conditions.  I recommend at least 80% of your equities portfolio should be low cost, tax efficient and indexed based investments.  If you feel you can outperform the market, do so with no more than 20% of your assets. When the market zigs one way, you zag the other way. That way if you are wrong, you didn’t bet the farm.  Adjustments in your asset allocation strategy also make sense when investing this way.  This doesn’t mean 100 equities and 0% bond allocation.  This means making adjustments within say your equities and increasing your exposure to emerging markets.

By making smaller calculated bets, that can be somewhat speculative, you might be able to come out ahead.  A proper asset allocation in my opinion is the most important thing to ensure investment success. As I have mentioned in the past, any predictions about the future are like football color commentary.   While the assessments might be correct, it’s sometimes easier to make predictions when you have no skin in the game.

Fidelity Investment Rewards Visa Card Review

We here at the Investor Junkie household have multiple accounts with Fidelity and is the primary account for our taxable investments.  In addition, our low interest “fixed” rate credit cards suddenly skyrocketed to over 9% and now a variable rate. It was time for a new credit card strategy, because low interest rate credit cards are going the way of the do-do bird.  We primarily used the cards for their points anyways, and after thinking about it, %1 return wasn’t such a hot deal.

Leave Investing To The Professionals

This interesting guest post is by Mr. Credit Card. While I (Investor Junkie) may not completely agree with his position, it’s a more common notion to let investment professionals perform the stock picking for you via actively managed funds.

I used to work in the financial industry and I can tell you that I know how difficult investing is. However, many folks are passionate about investing and most spend lots of time doing research and analysis. But in my opinion, unless you are a professional and paid to actually manage money, you are better off spending your time with other pursuits. In this post, I am going to list down the reasons why it is so difficult to actually to succeed as an amateur investor.

Monitoring Your Financial Independence

When driving from your home to a location you’ve never been before, how do you get there?  In today’s world, you plug the address in your car’s navigation system, and based upon the parameters you select, it will tell you how to get there.   More fancy GPS systems also have available:

• The estimated time of arrival.  This is based upon the route chosen, speed limits on the roads to travel, and your previous average speed.
• Possible alternative methods to get to your destination (the super fancy ones have real time traffic info)
• The ability to stop at points of interest (i.e. gas station)

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.

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.