Posted in Investing on Mar 13th, 2007 2 Comments »
Professional investors have the opportunity to borrow money in japanese yen at interest rates of less than 1% per year. So they borrow hundreds of billions of dollars worth of yen and invest any stock, bond, commodity or derivative that looks like it can produce a higher than 1% yield. (When US treasuries are returning over 4%, that doesn’t seem too difficult). This is whats called the carry trade.
Posted in Investing, Real Estate, Taxes, Oil & Gas on Mar 12th, 2007 2 Comments »
One of the basic criteria for the perfect investment is the ability to shelter your profits from taxes. If you can compound your money without having to pay taxes on it every year, you’ll become wealthier much quicker.
Normally investments like stocks, mutual funds and CDs are subject to taxes. But stocks and mutual funds can be sheltered from taxes by investing in retirement plans. Plans like a 401(k) or an Individual Retirement Account (IRA) avoid the tax hit when you put money into the account where it can grow tax-free until retirement. At that point, you must pay taxes on the withdrawals. However an account like a Roth IRA is the opposite. You pay taxes on the deposits, but the withdrawals are tax-free. Not only that, you need not wait until retirement either. After 5 years you can withdraw your deposits (but not the gains accrued) without penalty or taxes.
Posted in Investing on Mar 11th, 2007 2 Comments »
There really isn’t any perfect investment, but you still need to know the characteristics of an ideal investment. Here’s the 5 basic criteria to look for.
Posted in Retirement on Mar 10th, 2007 No Comments »
You have a few different choices when it comes to naming your IRA’s beneficiary. The worst thing is not to name anyone. In that case, the IRA is divided according your your will. If you don’t have one, then each state has its own rules for distributing your assets and I’m pretty sure you won’t like any of them. Least of all, paying the high probate attorney fees and court costs!
If you don’t name a beneficiary, the proceeds of your IRA must be distributed within 5 years. However, by naming a beneficiary you can extend that over the life span of the beneficiary.
Posted in Retirement on Mar 6th, 2007 3 Comments »
There are many companies in the US that offer a matching contribution to employee 401(k) plans. Usually its a 50% match up to about 3% of the employees salary. Sometimes its a lot more generous. Some educational institutions offer a 200% match with no limits! Some companies offer a more complex graduated matching plan.
Lets look at an example. If you earn $50,000/year and your company offers a 50% match upto 6% of your salary, then for the first $3,000 you contribute, your company will put in $1,500. Thats a 50% return in your first year! Considering that the company also has to pay just over 15% payroll tax on all contributions, its pretty generous.
Posted in Retirement on Mar 6th, 2007 1 Comment »
One of the most common methods that people use to save for retirement is their company 401(k) plan. A certain amount is automatically deducted from your paycheck every pay period and deposited in this special account called a 401(k) account. You can invest in a set number of specific mutual funds and sometimes in your company stock too.
The government offers an incentive to people to encourage them to save by making contributions to a 401(k) plan tax deductible. Not only do you not pay income tax on the contributions, but you don’t have to pay payroll tax either (currently at ~15.5%). Of course your employer pays the payroll tax, but it saves you the 7.75% that you normally pay.
Posted in Finance on Mar 6th, 2007 5 Comments »
There are no secret sauces to becoming wealthy. It takes dedication, sacrifice and effort to pull yourself out of debt and towards riches. The sooner you start, the quicker you’ll be on your way to creating wealth!
Posted in Insurance on Mar 1st, 2007 1 Comment »
It always pays off to shop around for a car insurance policy. Insurance companies sell their policies through three different channels: their own insurance agents, independent agents and directly via the web or phone. Make sure you get quotes from each type of company.
Apart from the above there are several things you can do to keep your car insurance rates low:
Posted in Finance, Investing on Mar 1st, 2007 5 Comments »
Most of us have received checks in the mail from our credit card companies. Often these carry very low fees and 0% interest rates, sometime for as long as a year.
Some people have figured out a way to use this to their advantage. They borrow the money at a low rate and invest it at a higher rate, thus engaging in ‘arbitrage’.
Posted in Credit, Finance on Mar 1st, 2007 2 Comments »
A lot of people get checks in the mail from their credit card companies. They often advertise 0% APR or some low teaser rate. What many people don’t realize is that the fine print is where the credit card companies get you.
