Money Reasons

Smart Reasons to Save, Use and Invest Money

Archive for January, 2011

Hidden Value In Owning Dividend Paying Stocks

January 31st, 2011

With non-dividend yielding stocks, you have to sole depend on capital appreciation of the stock price to get ahead. Admittedly, you could latch onto a great stock and ride it up to the moon, but more than likely, this will not be the case.

So today, I’m going to talk about the advantages of stocks that do yield a dividend. Perhaps a good example would be McDonalds (MCD), it has a decent yield (3.3%) and a chance for stock price appreciation to boot.

In Volatile Markets

When there is scandal or a major concern in the country (or world), stock prices get pummeled. This can create stress and even temporarily depress investors. Currently, there is instability in Egypt that has caused the stock market to decline by 166 points this past Friday. While I’m very concerned about this, having dividend yielding stock takes some of the edge off of the stress about the stock market.

Why, you might ask?

Because for the most part, dividends that stocks pay out aren’t determined by current events. Temporary drops in the stock market do not affect the dividend payout by the companies that elect to pay a dividend. Mainly profits and executive decisions are what determine what the company will pay out as a dividend (at least at the better companies). Some companies (like REITs) are required to pay out around 90% of their profits for the year to be classified as a REIT (Real Estate Investment Trusts).

Since most dividends are paid out quarterly, current news is immaterial and may have resolved by the time that the dividend payout amount is determined.

Another positive value is that fact that the dividend payouts reduce the downward action of the dividend yielding, stocks price. People are less apt to give up the juicy dividend, so the decline of the price of the stock moves slowly. The reason for the slow downward movement of the stock price is because if there is a drop in the stock price, the dividend yield become more appealing because the payout percentage will be higher. This naturally motivates people to jump in and grab hold of that great percentage yield before the stock price starts to go up again!

Caveat!

Just because a stock pays a dividend, doesn’t mean that they are still viable! Do the proper research to make sure that the dividend paying stock is a solid investment (don’t by any typewriter stocks!).

As an alternative to purchasing individual dividend paying stocks, Nicole at “Grumpy Rumblings of the Untenured” suggests and go out and buy a mutual fund that is oriented towards paying out a dividend or actually only purchases dividend paying stocks (watch out for high fees though). This way you reap the rewards while a professional manages your dividend portfolio.

-MR

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Disclosure, I do own a very small position in McDonalds stock.

18 comments »

Posted in Investments

Tags: dividend dividend benefits dividend stocks dividends hidden value in owning dividend stocks hidden value of dividends stock dividends

MR Review 2011, Jan 30 – Tips On Avoiding Malware

January 30th, 2011

This past week, two pop-ups happened while I was browsing on my laptop. Since last year I got some nasty malware, I decided to write about ways we can avoid getting malware in the first place!

Avoiding Malware Tip #1:

Don’t open up cute little attachments that people send you in email.

Many times these cute little applications work, but they are really trojan horses in that fact that they show and run something cute, but at the same time they install a real trojan virus (that’s why they call it a trojan or trojan horse) on your computer allowing hackers to access your system without you knowing it.

Avoiding Malware Tip #2:

Have you ever visited a web site, then go to leave and a pop up occurs stating that you have a virus and to click here to remedy the problem, or a pop up that says anything… For example, “Are you sure you want to navigate from this page” or any pop up really…?

The following is what I do when the above happens:

Press “Ctrl-Alt-Delete’, select the Application (Internet Explorer or Firefox in this case)
Click the “End Task” button at bottom of the pop-up window.
When you go back into your browser, select go to home page instead of restoring the last session.

My Top 7 Favorite Reads of the Week:

Watson Inc: Do Rich Parents Matter Round Up? – Shawn discover and post about an intriguing study about the mental abilities in young kids and different socioeconomic environments. I think poorer kids get less attention and therefore less exposure to mental developmental games and tools.

MoneySmartLife: Best Tax Breaks 2011 – This guest post by Miranda reminds us of the tax changes that go in effect this year (2011). I’m sad to see the child tax credit is being reduced to $500 this year, down from $1,000.

First Gen American: Bad Tenant Incidents and Lessons Learned – Horror stories about being a landlord! These stories are very entertaining and scary at the same time!

Financial Samurai: Most People Make A Lot More Money Than You Think – At one time, I wouldn’t entertain this article by Sam, but now I’m a convert. Check it out and see if he convinces you too!

Everyday Tips and Thoughts: More Great Financial Advice From the Media “Don’t Rush To Pay Off Your Mortgage” – This post all comes down to the old saying “Don’t believe everything that you read”. The article also reflects that just because an article gets published in a bigger, more well know website, doesn’t mean that quality.

Consumerism Commentary: Jeremy Siegel’s Economic Outlook for 2011 – Flexo pointed out this great article that has a video of Professor Siegel voicing why he thinks that 2011 will be a good year for the stock market. I admit, the video changed my views on the stock market and I bought some more dividend stocks.

Budgeting in the Fun Stuff: Our Stock Portfolio – Crystal has a great dividend portfolio, but I read between the lines and realize what a great spousal relationship Crystal has with her husband! It even inspired me to write an article that include her relationship in it.

My Favorite Post from Money Reasons:

My favorite post of the week was Sometimes Free Is Better. I especially like this one because often we overlook great opportunities and free stuff just because were are let to believe that there is no free lunch. But there is and it’s good!

-MR

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Posted in Weekly Review

Tags: avoiding malware Weekly Review

Childhood Thoughts About The Universe And Time

January 29th, 2011

When I was a pre-teenager (and then later as a teenager), I use to think about things like the universe and time. So now I’m going to write my rambling childhood thoughts about the universe and time below.

Time

With “Time” we usually associate a starting point, a duration, and an ending point. Time is always running and measurable, it’s quite an amazing concept really. But Time must not really exist, at least at some more permanent level. There can’t be a beginning and there must not be an ending.

There must be a form of pulsing (like the Big Bang Theory), where our Universe expands, then contracts in a continuous cycle.

To be honest, to think that there is no such thing as time kind of freaks me out. After all, it’s all that we known our entire life. What I mean by this is that at a higher level, there is no such thing as time in that there is no start or end times to the existence of matter. It’s always has been there, it must have been.

Okay, I’m not going to dwell on this because it really does freak me out, even today!

The Universe

As a child, first I thought that our solar system was like an atom in many respects. Then later, I thought that our Universe was like an atom too. Then much later, I wondered if all the universes that we know of is part of a larger atom and so forth, continuously becoming part of the atom cyclic pattern, and then somehow everything circles in on itself to become an atom on our planet, and all of the heavenly bodies. etc.

It’s still an odd concept for me that there is not boundary to matter, we don’t have an edge of existence… We can’t it’s not possible, this is also a weird concept for me. Not only does time not exist for matter, but neither does boundaries to matter.

Now as an adult, I just live in my little space on a little ball of a planet and just enjoy life the best that I can in the little time that I have on it that I do.

Conclusion

I had some weird thoughts as a kid, and to be honest, I still don’t know the answers. But I will say, as an adult, I no longer want to know, ignorance is bliss…

Below is a youtube video that is the classical piece by Samuel Barber called “Adagio for strings“. It has a video of space, but truthfully, I just like the music! If you listen to it, I’m sure you’ve heard it before in plenty of movies.

-MR

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Posted in Ideas

Tags: Adagio for Strings Big Band boundaries do not exist childhood Childhood thoughts time time does not exist Universe

Getting Paid To Lose Weight

January 28th, 2011

Working Out

Many companies are starting to encourage their employees to improve their health. First they restricted smoking in the office and now many are focusing on the overweight crowd. Where I work, I’m excited to say that I’m going to get paid to lose weight! Bonus!

While it’s only a few hundred dollars, it’s perfect for me because I wanted to lose weight anyway. The thought process by employers is that a healthy employee is a more productive employee! They are more productive because they are sick less and think better when they are in shape! I know that this is true in my particular case!

So since I’m now getting paid to lose weight, I decided to create a diet and exercise journal that I will post every Friday. After a shopping run for the needed foods for my diet and a quick design of the journal spreadsheet, next Friday, I’ll post my results.

Okay, One Problem!

When people go on a diet or start to workout, they usually spend more than if they weren’t on a diet. For example, both Weight Watchers and a gym memberships add to the cost of getting healthy. My goal during this process is not only to lose weight, but also to spend less money than I would if I weren’t trying to lose weight!

An alternative goal of mine is to make money off of this diet/exercise process by spending less on food. This is another way that I will indirectly get paid to lose weight. I expect that I’ll save more money by spending less on food than what my company will pay me if I meet my weight loss goal.

My Process

Basically it’s a simple routine! I’m going to eat food like eggs, brocolli, beans, oatmeal and other cheap but healthy foods. As for working out, I’m going to start out with just situps, pushups, and a leg exercise.

My Current Weight

As of today, I’m 5′ 10″ and I weight 247 lbs.

I think it should be pretty interesting seeing my progress on the amount I save in food expenses vs my regular spending.

-MR

31 comments »

Posted in Health

Tags: cheap diet diet lifting weights losing weight losing weight cheaply

Life After The Joneses Moved

January 27th, 2011

The neighbors directly across the street from us moved last year in June (2010) to a much larger house. At first, I thought it was a foolish move and that I was glad I was staying put since I had just paid off my house and I no longer have a house payment.

I wish I could telly you that I’m doing great now that they are gone. But quite the contrary is true. You see, now I’ve changed my mind, I miss our neighbors, they were friendly, good people. The couple that moved in are much younger than we are. The new neighbors are in their very early 20s, and they don’t have any kids yet. My son and daughter miss the old neighbor’s kids too, they all played so well together.

Since my neighborhood has changed, I’m feeling the urge to move to a location where there are larger houses and more land.

So what does my urge to move have to do with the Joneses?

Well, I honestly don’t think I would be wanting to move as badly if they were still across the street from us. Oh sure, I’d still complain about the small yard and the smaller rooms, but as long as I knew my almost similar neighbors were in the same boat, I don’t think I would mind. In fact, I’m sure I would be pretty content knowing that I no longer any debt.

So now I understand why the average person want to keep up with the Joneses, after all nobody likes being left behind.

So what am I going to do about it?

Nothing for now. I like not having a mortgage payment to pay each month! Besides, my kids are still happy with the neighborhood, even without the Joneses kids to play with. But they are missed!

-MR

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