Archive for August, 2011

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Why I Enjoy Investing In A Roth IRA

August 31st, 2011

First let me start out by saying that I’ve been neglecting my Roth IRA.  I’ve been neglecting it by not contributing to it in the past two years.

I’ve been neglecting it, and instead building my regular brokerage account balance.  One reason that I haven’t contributed to it is because I’m trying to build up an dividend portfolio in my regular brokerage account, and in the process I decided not to put the money in a Roth IRA.

But secretly, the real reason that I haven’t been contributing is because I’m trying to increase my account balance via investing means, actually more like active trading.  Oh sure, I have most of my money in my Roth IRA invested in a solid dividend stock because Roth IRAs are the perfect dividend shield   But I also have about 10% to 25% invested in stocks that I trade weekly or during big dips in the market.  I also have a cash position to take advantage of big dips during down stock market days too.  It’s a fun activity and lately, I’ve become more refined at it.  I’ve found that the less desperate that I am since I have some money saved up already, the more cool I am when I make my purchases.

 

Buy Low Sell High

Yep, since I’m pretty cool headed with the small percent of the Roth IRA that I actively trade, I’m able to buy low and sell high.  I never hit the absolute high or the absolute bottom, but I still make my margins which makes it fun.

The advantages of playing in my Roth IRA are as follows:

  • Any capital gain that I incur isn’t taxed!
  • Any dividend that is distributed isn’t taxed either.
  • The amounts are small amounts and if I lose money it won’t bother me much
  • I use the money to buy during dips in the market, this has work out great!
  • I don’t have to worry about keeping track of all my stock transaction (although I still do keep all of the trading slips that are mailed to me).
  • Since I keep a part of my Roth IRA money in cash, that cash serves as a stealth emergency fund

In chess, a Roth IRA is like the queen piece.  It’s very powerful and far reaching!

 

The disadvantages of playing in my Roth IRA are as follows:

  • I can’t take any capital gain losses if they were occurred.
  • Once I pull the money out for an emergency, I only have so long to put the money back in else wise I can’t put it back in.  While this isn’t a true negative, I miss out on future tax free growth that the money could provide… and this would be a tragedy!
  • My Roth IRA can make me rich some day, oh wait… that’s not a disadvantage!!!

 

As you can see, just from a fun perspective, the Roth IRA is the best thing since sliced bread!

MR

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Posted in Roth IRA

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Saving Money On Lattes

August 30th, 2011

I really enjoy lattes, whether they are from Starbucks, Arabica or McDonalds.

Yes McDonalds!  While the lattes from McDonalds aren’t as good as Starbucks, they are still very good, but are they worth it?  I drive past McDonalds on the way to work, so naturally, I’ll go thru the drive-thru for a quick liquid treat in the morning occasionally.

Lately, I’ve been getting a small coffee with two creams, and ironically, this combo isn’t that far off from a regular latte (at least from McDonalds).  The different is the price, the small coffee with two creams is half the price of a latte.  So I have taken it upon myself to switch to the small coffee with two creams for my occasional treat instead of the slightly better, more expensive latte.

After thinking about it, a latte is just coffee with steammed milk.  But just because it’s steamed doesn’t make it that far off from a coffee with a decent amount of cream in it.  Oh sure, I’m missing out on the foam, but does that really make the coffee worth twice as much?  I’ve decided not!

While I have the craving for McDonald’s latte under control, I still find myself getting a latte at Starbuck whenever I’m near one.  Luckily, to get to Starbucks, I have to drive out of my way to get there, so it’s not as tempting as McDonalds.

After thinking about it, do you think lattes are worth the extra money versus a coffee with two or three creams?

MR

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Posted in Frugality

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Technology Benefits For The Elderly

August 29th, 2011

Growing up, I lived close to a nursing home.  My family use to go to this nursing home because it had a church in it too.  During that time in my childhood, I use to see the elderly often.  Honestly, it usually made me sad, especially those that were not as coherent.

While sometimes I question if technology is good for employment in the short term, for the elderly, technology can be an incredible benefit!

While we’re all aware of the hearing aids and other medical devices such as a pace maker, I believe that technology for the elderly is just starting to be realized.  Much like the old TV series, “The 6 million dollar man”, bionics should be doable by now, or perhaps an exoskeleton of some sort.  I think the Segway could just be the start.  Perhaps in the future, the elderly could use more accommodating but similar devices in concept to replace wheelchairs and the like.  Perhaps vehicles could be automated so that the user could just tell the machine a location and the machine would take the person there without any manual intervention.

What I think would be really exciting and an area to be explored is virtual reality for the elderly.  Wouldn’t it be great to get plugged into a machine and have full body motion, like the movie “the Matrix”.  The elderly could visit Paris, or go water skiing, or anything think that they desired instead of being confined to a wheelchair in a nursing home.  Of course they would know that it’s just virtual reality, but it could be a great experience.

Now some of you may think virtual reality would be a trick and a waste of life for the elderly, but I disagree.  After all, look at many of the non-elderly generation, many of them watch reality shows, which in my opinion is just a waste of life too.

Hopefully, in the future, technology can benefit the elderly in other ways too, especially with robotics and virtual software.

Just thinking out loud,

MR

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Posted in Ideas

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Giving My Son A Financial Checkup On Getting Rich

August 27th, 2011

I’m very focused on teaching my kids as much about finances and making money, and have been teaching them the financial knowledge that I know over they years.

On a whim of the moment, I decided to get my son a financial checkup to see how he has progressed.  The following are the questions and results that he answered (his answers are in blue).

 

Getting Rich Questions:

1.) How did the rich get all of their money?

By having businesses and investments.

2.) Do you think you’ll be rich some day?

No, not really, just regular.

3.) Do you want to be rich?

Kind of.

4.) Do you think that rich people are rich because their family have been rich by making investments and owning businesses way back when?

No, some but not most

5.) What would it take from someone exactly like you to get rich someday?

Hard work, lots of hard work

6.) Do you think that everybody that is rich has a college degree?

Most, but not all.

7.) Do all rich people have fancy cars and houses?

No, not all of them.

Conclusion:

First, let me say that my son’s responses impressed me.  I know that I’ve worked with him, but still some of his answers surprised me.

I’m a little concerned about his answer on question #2 “Do you think you’ll be rich some day?“.  When he said that he doesn’t expect to be rich some day.  From a probability perspective, he’s right, only a few actually ever become rich.  But if you don’t try, your chances of becoming rich or well off decrease dramatically.  By having knowledge on finances, you increase your odds of being rich just be being in the known.  I know plenty of people who have made more money that I have but don’t have anywhere near the net worth that I have.  So, question #2 is a takeaway action for me to work on.

Second, I’ll have to boost his confidence that he can be rich based on his answer to question number 3 “Do you want to be rich?“, I didn’t think it was possible either until I started reading financial books.  Perhaps I can give him a leg up on this.  That way he can start earlier.

Overall, I think I’m doing a good job with his financial education, I’m very please with the results of this little checkup!  I’ll be doing future checkup and quizzes in the future just to get a reading on how I’m doing with my the financial teaching efforts.

MR

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Posted in Wealth

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Taking Advantage Of Large Corporation Retailers

August 26th, 2011

The following is a story of  someone I knew briefly in college.  I’m telling this story because it’s an interesting story, but it’s for entertainment value only, please don’t think about mimicking his technique!

Today, with all of the camera and security mechanism attached to merchandise, I’m willing to bet that theft from stores is at an all time low.  I’m sure it’s lower than it was in the past before such theft deterrents devices and cameras existed.  But if you are a clever person with little scruples you can still get away with theft, even with big-ticket items.

A while ago, I had a friend that unfortunately had a problem with his shower, in particular with a certain part.  Unfortunately, when he went to order the part, it wasn’t possible to get the piece individually.  Angry and smart, he came up with a way around having to purchase a $400 dollar replacement system.  Not to mention the additional cost of installation of an entire new shower door.

To get around the exorbitant expense, here is what he did:

  • He went into a local hardware store and bought the entire kit.
  • He then called the support line and complained that the kit was missing certain parts.
  • He then identified the part that he needed, and a few extra parts too.
  • The company then shipped him the supposedly missing pieces.
  • Once he receive the additional pieces, he then proceeded to return the original kit to the store saying something along the lines that it was the incorrect model.
  • Next he used the piece that the company shipped him, effectively getting a free shower part for free (obviously).
  • He then sold he other pieces to a friend that he knew needed such pieces for his shower (at a greatly reduced price of course).
  • He joked that he could have sold the pieces via other means for more money, but I won’t go there…

He justified his actions by saying that they should have provided the piece individually for sale.  Had they done that, he said he wouldn’t have done what he did, etc.  He seemed to feel pretty guilty about it, and I don’t think he will do that again, but who knows.

I’m guessing that less than 1% of the population uses techniques like my friend and that’s why he was able to trick them, saving himself a bundle.  That said, I’m sure if this become a regular occurrence, large corporation would have to come up with a deterrent to counter this sneaky method of theft.

What do you think, and what should be done? 

Pretty clever, but wrong of my old college acquaintance, huh.  I think this is a riskier move these days, especially with the advanced computer system applications and databases.  I don’t think I would want to try such a bold move…

I hope he doesn’t still do this!

MR

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Posted in RipOff

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