Tag Archives: money

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

Advertisements

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.”
2854119183_d1d1a69cb6_m
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!

Nicole’s Review of Suze Orman’s “Women and Money”

2418695_3600b4cab5_m

As featured on justthrive.com!

Only Suze Orman could talk about two topics as sensitive as Women and Money so honestly and accurately. In her eighth book, Women and Money, Suze uncovers the mysterious stumbling blocks that so many women face when it comes to their finances, “It doesn’t matter if I am in a room full of business executives or stay-at-home moms, I find the core problem to be universal: When it comes to making decisions with money, you refuse to own your power, to act in your best interest.”

Women are typically the givers of the world: they are always putting others before themselves, nurturing their families, and sacrificing for others. Suze is NOT suggesting women replace “nurturer with narcissist.” She says, “I simply want you to give TO yourself as much as you give OF yourself. By taking care of yourself financially, you will truly be able to take care of those you love.” She asks why women don’t show their money the same attention they show every other relationship in their lives and claims it is because women have a dysfunctional relationship with money.

It is this dysfunctional relationship that has intrigued me personally to start a business to help educate women about their finances. My belief is that it is not intelligence or information that women lack, it is a mental “block” that is holding women back. Suze points out that so many women feel they must be all things to all people, “mother, wife, dutiful daughter, supportive friend, school volunteer, cheerleader at home and at work.” With the demands of life, it’s easy to keep denying the importance of learning new things that may be uncomfortable or hard to face. It is much easier to deny that money exists, say you are just “too busy” or blame others for your financial shortcomings.

My favorite chapter of Women and Money is called “The 8 Qualities of a Wealthy Woman.” I like it because it sheds light on what many women are not doing and clarifies how changing our thoughts and behaviors will improve our relationship with money.

For example, numbers 1 and 2 are harmony and balance. When you are in harmony, what you think, say and do are aligned. How many women do you know who say, “Oh I’m fine!” or “Ok daughter, you can have that new ___” even when they don’t feel that way or can’t afford it. That leads us to quality 3: courage. Courage gives you the ability to make sure your thoughts, feelings, and actions are aligned. So many women fear that if they say no, they may hurt someone else or not be loved as much. Suze points out, “It’s so much easier to hurt yourself than to hurt someone else, isn’t it?” When you think logically about that statement it is so true, yet women do it several times a day.

I believe that courage is important because it allows women to set boundaries with quality number 4: generosity. Women are known for being too generous with their time, support, love and money. Suze points out that the act of generosity must benefit the giver as much as the receiver, or it is not true generosity.

Quality 5 and 6 are happiness and wisdom. Quality 7 is cleanliness, which is really just another word for organization. And lastly, number 8 is beauty, which is a combination of the other 7 qualities.

Notice I haven’t gone into any detail about the technical side of money in my review. Suze Orman and I could sit here all day and tell you about the importance of saving, investing, and organizing your finances but if you don’t have a relationship with money first, you will never stick to making good decisions with your money. Just like losing weight, we have to get to the bottom of what is really causing that “stumbling block” in order to conquer it.

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!

Dave Ramsey Books For $10!

If you’re looking to get a head start on achieving your financial goals in 2009 or still have some holiday shopping to do, consider buying financial expert Dave Ramsey’s books for only $10-wow!

Dave Ramsey is a fabulous personal finance expert who has been through his own share of debt and now helps others take baby steps to get out of debt, start saving and achieve their financial goals. As a disclaimer, I will say that Dave is a straight up guy who will tell you like it is, even if you don’t want to hear it. He is also very conservative and his teachings are Christian based.

I’m hoping you have started writing down your financial goals for 2009. Writing down your goals and re-visiting them regularly is the first step to achieving them. From there, you will need information and support so why not start with a $10 book.

I was listening to Dave’s talk show today on XM radio and it sounds like a great place to start is with his book called “The Total Money Makeover.” I’m sure we could all benefit from a Money Makeover in 2009!