Tag Archives: finance

Online Stock Tips? Buyer Beware.

There was an article in the Wall Street Journal on February 4, 2009  about new social networking services that allow users to share investing and trading tips. It is a great way for like minded people to build a community and share ideas. In many ways the idea is not new – we have seen chat rooms, message boards, and the like before. However, these sites operate more like Twitter where messages are limited or truncated to a preset number of characters and people only build ‘followings’ only if they have something of value to say. The idea definitely is progressive and timely as many people are seeking ways to build or rebuild wealth in a deepening recession.

But buyer beware! There are a few things to keep in mind or questions you ask yourself before you throw your money into any investment based on the advice of someone – especially someone you don’t know.

No one knows where this market is headed – let alone any individual stock. The current financial crisis is evidence that not even the pros on Wall Street have a handle on the markets. This could be one of the riskiest times to put your money into the unknown.

Speaking of unknowns, who is providing the information on the stock? What is the track record of this individual? I always seek advice from someone who has been successful in whatever subject they are discussing (not just money). So, if the person dishing out the information retired from an investing career, it might be worth considering. Otherwise, be careful.

Be realistic. We have seen with the Maddoff scandal – and countless other examples – that if it seems too good to be true it probably is. Yes, we have heard this before, but the tough economic times are giving life to more scams and con artists than ever before.

Is the timing right for you? Given how hard the markets and our portfolios have been hit, is now the time to put your hard earned money into ’stock tips’?  We all are eager to make up for our losses, but there is (still) no quick fix. Building wealth is a lifetime endeavor. Don’t get yourself into deeper financial straits by trying to make up for the market meltdown. We all are hurting.

Final thought. Personally, I would rather see my financial or investment adviser tracking and researching the markets. I worry that someone who is texting stock tips or using social networking services may not be focused on the right activities. Markets move rapidly. Information changes even faster. I need and want an informed adviser – not a good sales person.

Copyright FELA, Inc. 2009
Ms. Career Girl, a Financial Education & Literacy Advisers company
www.themindsetforwealth.com

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Tales of “Woe” from Girls Who Date Bankers

My sister sent me a link to a New York Times article which I found as oddly addicting and bizarre as an issue of US Weekly. The article is called, “It’s The Economy, Girlfriend.”
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The article highlights a group of twentysomething aged women in New York City who started a support group called “Dating a Banker Anonymous” and a blog. The women who started DABA noticed their romantic relationships with investment bankers and traders tanked with the economy. The women said that as the economy went down, the stock market shed points, and jobs were being cut on Wall Street their sex lives, gifts and date nights were cut as well.

Their blog is totally funny and addicting. Women write in to tell their dating stories and misfortunes of having their trips to foreign countries cut, their bottle service being eliminated and how sad it is that someone would want to move to the Midwest for a more affordable lifestyle. There is even a story that mirrors a segment that aired on Good Morning America yesterday which tells the story of a 24 year old girl who is dating a married millionaire who enjoys trips and designer gifts from her “sugar daddy.” When he is faced with having to eliminate 20 people at work, all of which have children to support, she whines that he isn’t getting her enough stuff anymore.

Although the stories are fun to read, they definitely make me question what was significant enough about these stories of “misfortune” and high expectations to make the New York Times?  While most of America is losing their job, their home and their retirement accounts, the New York Times is highlighting a tiny group of twentysomething ladies who are no longer receiving Louis Vuitton bags, bottle service, Manolo Blahniks and trips to Italy from their boyfriends. Seems out of balance. Apparently the public is ready for an escape from reality though, which might explain why these girls already got a book deal.

The concept that the DABA girls created is absolutely entertaining. Unfortunately, I don’t think it promotes financially savvy and independent women. Then again, the girls’ experiences of dating rich men was enough to get them a book deal and perhaps they can start buying their own Louis Vuittons now!

Do You Understand The Time Value of Money?

The phrase “time is money” is not just used in terms of a powerful career person talking to his or her subordinates. “Time is Money” is actually a mathematically proven statement that explains the value of money now versus its value in the future. The reason is simple: A dollar that you receive today can be invested so that you can have more than a dollar at some point in the future. Therefore $1 today, is worth more than $1 received tomorrow.

Perhaps you’ve heard the famous lottery debate: would you take the $100,000 now or in 5 years? Let’s just keep it VERY simple for now and review the basics of this concept. Once you understand it, I hope you will see how valuable putting your extra cash in an interest bearing account or investment is. I also hope you can apply the principle of TMV in your daily life.

For some of you this is a review. If you weren’t a business major, this may seem a bit foreign. Either way, it is very important stuff to understand because everyone has and needs to learn to deal with money.

Example 1

You have an extra $1,000 sitting in your checking account that you never touch. If you moved that $1,000 into an account that earned 5% interest and didn’t touch it for 3 years, how much would you have after 3 years?

Present Value of your money is: $1,000

Value at the end of year 1: $1,000 * (1.05)= $1,050
Value at the end of year 2: $1,000 * (1.05)^2=$1,102.50
Value at the end of year 3: $1,000 * (1.05)^3= $1,157.63

Future Value of your money after 3 years: $1,157.62

Example 2

You want to pay off your $5,000 student loan in 3 years.  Assuming the loan accumulates no interest, how much would you need today in order to have $5,000 at the end of 3 years at 5%?

To answer this question, we need to flip the equation. Therefore, $5,000 is the Future Value of your money, we need to solve for the Present Value.

So if, FV= PV * (1 + i)^n

Then, PV= FV/ (1 + i)^n

(n=period, in this case years; i= interest rate)

PV= $5,000/ (1.05)^3
= $4,319.19

So you will need to start with $4,319.18 today to grow your account to $5,000 at 5% after 3 years.

Example 3

How does saving $150 per month at 6% look after 5, 10, 20 and 30 years?

5 years: $10,466
10 years: $24,582
20 years: $69,306
30 years: $150,677

Plug in your own example using this calculator.  Here’s how to fill in the calculator for this type of scenario:

PV= 0 (you start with nothing)
FV= leave blank (because this is what we are solving for)
Rate= interest rate
Periods= # of years you want to save*12 (i.e. period for 5 years is 60, or 5*12)
Drop Down Menu, select monthly (you will be contributing to this account each month).   Then click FV to solve for Future Value.

The Rule of 72

The Rule of 72 is a popular way to quickly calculate how long it will take to double your money. It’s quite simple. All you do is take 72 and divide the interest rate you are getting, to find out how many years it takes to double your money.

So if you are earning 9% on your investment, 72/9=8 years

If you are earning 8% on your investment, 72/8= 9 years

In today’s economy, if you are earning 3% on your investment, 72/3= 24 years

If you have other scenarios that you’d like me to teach you to solve, send ‘em over.  I’m happy to help!

A Tale of High Achieving Ladies

If any of you are like me, you worked your butt off in college to get decent grades and graduate with a major that seemed valuable in the real world. The cycle started at the ripe age of 18 when you started down the long road of your chosen career path. For some of us, we felt the need to prove our worth by choosing majors that seemed to be the most respected, male dominated, difficult or those that typically result in the highest paying jobs. Most often I’m talking about those in finance, accounting, pre-law, pre-med or engineering.

Some of these female “high achievers” may go to class and start joking with friends and family about being one of the few ladies in the classroom who is cute, well dressed and social. These comments come from the completely inaccurate stereotypes of what society has portrayed certain professions to act or dress like. When you are home for the holidays, you love bragging to your relatives or people you run into at the local mall about your internship offers and other career endeavors. The praise you feel from their reactions and those around you temporarily boosts your ego.

As you get over the odd pleasure of being “different” from others in your major or maybe even the feeling of being “superior” to those in less respected majors, you may start noticing a pattern of losing interest in the material you are forced to study. Or, maybe you frequently call your Mom from the lobby of the library in tears to: a) put off studying for another 15 minutes and/or b) “It’s just so hard Mom!” Then you get back to your cube at the library and start wishing you were watching Grey’s Anatomy with your roommates only to face that you are stuck at the library, again…

At that moment, the very tiny nagging feeling in your stomach starts. You wonder if you even like anything about your major… but before you can blink, you landed an internship with that big corporation which gives you another temporary ego boost, followed by a job offer at “Big Company USA” downtown Chicago. Before you know it you are stuck living the same day over and over in “cubicle land” wondering how in the hell you got there.

And that’s where this blog begins. If you’re feeling a bit lost, you’ve come to the right place. Career Girls is a forum where ambitious young women come together to face the ups and downs of life after college. Get ready to face the truth about your career, to find your passion, and learn how to deal with all of the awkward new situations that come along with being an “adult.”