Archive for May, 2010

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Tools To Help Me Become Financial Independent

May 10th, 2010

In theory, I should be able to obtain at least 1 million dollars 10 years from now.  As long as I stay frugal, and invest using principal of dollar cost averaging, and occassionally rebalance my portfolio (this is currently my biggest weakness), then I should be able to conquer that million dollar milestone.

How did I start believing that I could achieve financial independence? 

I started by reading “The Millionaire Next Door” when I was young and just starting college.  The problem with the book (at least the edition that I read), was that the numbers were a little dated, but the principals still rang true!

What is helping me focus on my goal of becoming financial independent?

  • Automated investments.  Using this technique, I’m saving for my Retirement and my kid’s future college expenses.
  • Statistics on the rich and the bell curve distribution of wealth in American…  This feedback helps me gauge whether I’m behind or doing okay.
  • Spreadsheets to track my progress.  Today, there are online site that can accomplish this now, like www.mint.com and www.networthiq.com.  I also keep a milestone spreadsheet just for motivation.
  • Quality books like “The Millionaire Next Door”.  Examples of the wealthy in “The Millionaire Next Door” gave me hope.  After reading this book, I realized that one don’t have to be born into wealth to achieve it.  In the past, I read about the exceptions, but I always thought that I’d have about as much a chance of getting rich that way as I would getting rich via winning the lottery…, pretty slim.  “The Millionaire Next Door” gave me hope and enabled me to Believethat in it was possible after all!
  • Picking the perfect risk model for my core investments (especially those in my 401(k)).  Although, I still do play with a little bit of cash in speculative investments.
  • Saving more than 20% of my salary.  It takes a little bit of sacrifice now to payoff later.

What tools are you using to obtain the financially independent goal?

-MR

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Posted in Inspirational, Wealth

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MoneyReasons Weekly Cache 2010, May 9 – Mother's Day

May 9th, 2010

Weekly Cache – 2010, May 9 – Mothers Day

Random Thoughts:

Another Mother’s Day spent on the road visiting our parents.  We took my wife’s parent’s out to lunch, and we took my parents out to dinner.

My wife’s parents recently bought a new house with an above ground swimming pool, they are in the process of getting it ready!  We stopped over to check it out and the kids are very excited about it.

At my parent’s house, they got a new black german shephard.  It’s a beautiful dog.  The dog was timid at first, but it warmed up to the kids, especially my son.  My parents have a hot tub, so the kids got their swimming suits on and got it.  It was cool, because it was 9:30pm and the star were out (my parents live in the country).  No adults went in because the tempature outside was in the 50′s…   The kids had a blast. 

My Favorite Top 4 PF Blogger Posts For The Week:

Money Funk:  The Mother’s Day Edition - This was a great post by Christine about her financial influence (via her blog) on her mother!  What a great accomplishment!!!  Too often, we are experts in certain subject matters, but are incapable of teaching our family those areas of expertise.  I think it’s great Christine was able to cross that family chasm!!! 

Financial Samurai:  Where Did All The Time Go? - The message is solid, but this post is worth it just to hear Sam sing the once very popular Goo Goo Dolls song “Name”.  Sam did a great job with this version, but more importantly, he’s completing the list of goals that he had from the beginning of the year!  Great job Sam!!!

Little House In The Valley:  What Kids Know About Money - Awesome comments by her students about money, but I’m also impressed with Little House’s introduction of money to her students.  My son (9 years old), can already make change faster that I can (but he’s gifted with math), but most of the kids in his class can’t make change in their head.  Such an money introduction would be good for her class, kudos to you Little House!

Eventual Millionaire:  How to Raise Your Kids to Be Entrepreneurs - This is a great video that Jaime found!  I personally relate to this since there are many small business owners in my family.  While I’m not exactly pushing my kids to be Entrepreneurs, at one time in the past I’ve started an eBay business involving my son, and even tried to get him to start his own blog (with my help, of course).

My Favorite Post from Money Reasons This Week:

Can An Individual Make A Difference At Work, this is my favorite.  This one is different that my typical weekly favorite.  The comments by readers were so thoughtful and well written, that this post was elevated to my favorite for the week sole because of their great comments!  Thanks guys (Blair MacGregor, MoneyCone, Len Penzo, kt, Bret @ Hope to Prosper, Ryan @ Planting Dollars, Everyday Tips and Thoughts).  They provided an extra level of depth and direction!

Closing Thoughts:

Another busy but great weekend!  I continually learn great things from the blogging community!  This week, I submitted an article about overcomming your family history to succeed to tip’d, it was a great experience and I appreciate all those who tipped the article!!! :)

All those mom out there, have a nice relating Mother’s Day!

Respectfully,

-MR

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Posted in Weekly Review

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Can An Individual Make A Difference At Work

May 8th, 2010

I have a friend that’s a director that told me that we’re all replaceable.  Her claim is that everybody at where I work, can easily be replaced.

I’ve been thinking about this, and I agree, we can all be replaced… but does the company suffer when they replace the wrong person?

I’ve noticed that sometime a company doesn’t realize the value of their employees.  This is observable with layoffs, I’ve seen instances where employees get laid off, then rehired back and promoted shortly there after.  I’ve seen this happen through the various rounds of layoffs that my place of employment has performed.

A great example is the incredible successful company Apple.  Steve Jobs left Apple and the company just barely slipped by for years.   Then Steve Jobs can back and shook things up, and now they once again are the great company that the were.

Would Microsoft be Microsoft if it wasn’t co-started by Bill Gates?  I don’t think it would!  How about Warren Buffett and Berkshire Hathaway?

Do you think that it’s only the CEO that make a difference?  I know people at work that are rock stars and they don’t even know it.  They have incredible skills, but because they lack social skills, they stay hidden except to those that work directly with them.  Even after getting numerous awards…

Have you even seen hidden invaluable people at work, and it seems that only you realize their worth?  So yes, in the end a person can be replaced, but does the company suffer without anyone realizing it?

Regards,

MR

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Posted in Employment

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Stock Market Rebalance Opportunity Missed

May 7th, 2010

Yesterday, I missed another opportunity to rebalance my 401(k) account.  I had this magic number in my head, and once I hit that mark, I swore to myself that I was going to rebalance my portfolio so that it had less exposure to the equity markets.  I was less that $1,500 dollars away from hitting that mark.

So am I going to sell out tomorrow?  No, most likely the market will recover a bit so I’ll hold on.  I don’t know about next Monday though.

I actually like it when the market is a bit choppy for a while, that enables me to buy some more shares at a lower price (dollar cost averaging).  Of course, I still want the general direction of the market to climb upwards…

In my taxable brokerage account, I still have some money on the side, but I’m not in a hurry to jump in, especially so early in the game.

The amounts in my accounts are now much more important to me, I must shift my portfolio so that I am exposed to much less risk in the marketplace.

I will still keep my speculative amount for playing in the market though, but only 10% of my entire balance.

Readers, please consider creating a balanced portfolio (a mix of mutual funds, bonds, and cash like investments) at the beginning instead of just having and agressive equity only portfolio.

-MR

UPDATE: (5/7/2010): Sounds like the problems was worsened by market orders!  This should be a wakeup call to us all that we should always use limit orders when making trades!  The markets still doesn’t know what happened yesterday.  They do believe that with the complex electronic system being used, a cascading effect took place.  I have to wonder if the uptick rule mechanism would have prevented this from happening?  The flaw would still be there, but perhaps the uptick rule would have short circuited the damage.

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Posted in Investments

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Funneling The BP Oil, Buying The Stock Again

May 6th, 2010

Okay, I bought back into the BP stock again.

Why?

First, the stock went down 10% from where I cashed out.  While 10% isn’t quite the percentage that I was hoping to buy back in at, I tried to gauge how far the stocks would go down.  How did I do this, you might ask?  I found something as close as possible to this disaster, and that was the Exxon’s “Valdez oil spill“.  Exxon’s stock went down a little, but not much more than a few percentage point.  What about the Exxon dividend?  Was it affected…?  Nope, Exxon continued to pay it out.

Second, sometimes a company or a person gets lucky. So far, nature has worked in BP’s favor.  The winds are blowing in the right way, the waves have settled.  More than just BP is participating in the cleanup, many other companies and countries have offered to help.  While BP has had good luck to date, that doesn’t guarantee anything, but it’s still encouraging, hopefully BP and the US’s luck holds out.

Third, they are trying a funneling system that if BP can get it into place can stop or drastically reduce the continued outflow of oil into the ocean.  The funneling system has been done in shallower waters, so whether it will work or not a mile down in the ocean is still in question.

So my decision to buy back into the stock, like my decision to sell out of the stock is based on a gamble.  Is this good investing?  No, but I’m only playing with money that I can afford to lose (but, I really don’t think BP will go under…).

Anyway, I really hope that the funneling system works!  If not, it will be horrible for Louisiana, Florida and the entire Gulf of Mexico.

-MR

UPDATE: Wow, the DOW fell 1000 points in practically less than 1 hour!  It ended the day down 347.80, but wow.  Apparently, there was a glitch in the system.  One stock went from $40 all the way down to 1 cent, then back up to almost $40.

UPDATE:  (5/10/2010) Yes, the funnel failed, so I jumped back out of BP.  Enough oil has spilled out that I’ve decided to lick my wounds (sort of, after all I still ended with a gain because I’ve been in the stock for at least a year) and give up on BP.  I may sit in cash for a while until I find something else good to invest in!  The BP mess is so bad that I decided not to jump back into the stock.

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Posted in Investments

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