Yesterday, one of my friends asked me if I thought the US would face a depression. He was pretty certain that a depression would occur, and it would be just like the previous depression where there were no jobs, no money and thus no food.
Some of the commonly stated reasons for the Great Depression are unequal distribution of wealth, lack of savings, high tariffs and war debts, over production in industry and agriculture, and the stock market crash and ensuing panic.
Given these reasons and the fact that we’re currently experiencing all of them, I can understand why one would think that a depression is imminent.
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Posted in Investing, Real Estate on Apr 20th, 2007 1 Comment »
In a previous post I discussed the basics of investing in real estate. One of the key steps is having good property management. Property management can make or break your investment. A bad manager will make your investing experience miserable.
Ideally you’d want someone who’s competent, honest and easily reachable. If you can’t reach him or her, your tenants probably won’t be able to either.
Here are the questions you should ask when interviewing property managers or property management companies.
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In a previous post, I mentioned why real estate is such a good investment. However, some people commented that they had gotten burnt by real estate. As with all investments, if you don’t know what you’re doing, there’s a good chance you will lose money. Real estate is no different. So I’ll try to go over some of the basics of investing in real estate.
1. Stick to bread and butter homes
Bread and butter properties are just your basic, no-frills 3 bedroom, 2 bath, 2 car garage homes which are usually around 1250-1500 sq ft. These properties will give you the best rent-to-mortgage ratio.
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Posted in Investing, Oil & Gas on Apr 17th, 2007 4 Comments »
In our everyday lives we come across investment opportunities very often. Unfortunately most people are blind to them. In his book, One Up On Wall Street : How To Use What You Already Know To Make Money In The Market , Peter Lynch mentioned how easy it was to come across companies that were extremely popular and were doing well.
While I haven’t had any luck finding the next Gap or company that owns Pokemon, I have had decent luck identifying different investments.
Some of the best investment ideas are in your own newspaper!
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Posted in Taxes on Apr 15th, 2007 3 Comments »
It’s general belief that wealthy people don’t pay taxes. While this is not necessarily true, what is true is that they usually pay a lot less as a percentage of their income than a single guy making $85,000 a year.
A single guy making $85,000/year pays Federal Income Tax and Social Security Taxes. Assuming he has no deductions, his tax for 2006 comes out $15,766 or about 18.5% average tax rate (and a 28% marginal tax rate).
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Japan’s economy has been dormant for the most of the past two decades but is on the rebound in a big way. It’s the second largest economy in the world and has the third largest stock market after the London Stock Exchange.
Investors have been shying away from Japanese investments in favor of the stronger US economy. This of course is changing rapidly as the US moves closer to a recession and investors are looking to pocket their profits and invest elsewhere.
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Posted in Taxes on Apr 13th, 2007 5 Comments »
One of ways people save on their taxes is by splitting their income. You set up a separate legal entity for tax purposes and it pays its own taxes.
If you’re a regular w-2 wage earner (an employee working for someone else) you won’t have this option available to you.
But if you’re doing some consulting work on the side, if you’re self-employed or if you’re a small business owner, setting up a separate corporation can save you a lot of money.
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Posted in Investing on Apr 12th, 2007 No Comments »
We’ve been brain-washed into believing that mutual funds are the only low-risk investment alternatives to stocks and real-estate besides government bonds or direct checking/saving accounts with a financial institution. This is no longer true and Exchange-traded funds (ETFs) is one prime example.
ETFs can best be described as a blend between index mutual funds and market-based securities and are legally classified as open-end companies or Unit Investment Trusts (UITs). ETFs are similar to index funds in that they will primarily invest in the securities of companies that are included in a selected market index (either all securities ore representative sample). ETFs can also track the price of commodities like gold (GLD) and crude oil (USO). EFTs are bought and sold like stocks on major exchanges but differ from traditional open-end companies and UITs in a number of ways:
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Posted in Finance, Saving on Apr 11th, 2007 No Comments »
Many of us carry debt on our credit cards, car loans, student loans, mortgages, etc. But once you have your emergency funds saved up, the inevitable question arises. Do you invest your savings or pay off your debt?
You’d definitely want to invest for your future, but also don’t want all your hard earned money to go to lenders in the form of interest payments and finance charges. So you need to calculate whether you’re better off using your money to pay down your debt vs keeping the debt and using the money to invest instead.
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Posted in Credit, Finance on Apr 6th, 2007 6 Comments »
Your credit score is the single biggest factor in dictating the financial aspects of your life. Your credit score, or FICO score as mortgage lenders like to call it, can be the difference between getting a good home loan (or getting the loan in the first place) and having low payments or being stuck with high mortgage payments. A higher monthly payment means you qualify for a smaller loan and results in you buying a cheaper (and probably smaller) house. With the recent implosion of the sub-prime market, lenders are tightening their standards and its becoming more difficult for people with bad credit to get loans. This makes it even more critical to improve the magic number. From a wealth building perspective, its also important as it provides you with a wider range of options when making financial decisions.
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