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25 Random Things About Money

25 Random Things About Money

In the barely-a-month-old tradition of the “25 Random Things About Me” phenomenon currently taking over Facebook’s servers, here is a random list of oft-overlooked, occasionally quirky tidbits and observations compiled from my personal finance archives. They include the up-to-the-minute and the tried-and-true, personal experience and general knowledge, local as well as national. Hope you find some gems you can use!

The tax credit to aid first-time homebuyers enacted as part of the Housing and Economic Recovery Act of 2008 is actually a loan, not a credit. And you don’t actually have to be a first-time homebuyer, only someone who hasn’t owned a home in 3 years.
That is in contrast to the NEW tax credit for first-time homebuyers, part of the brand new stimulus plan of 2009, which actually IS a credit.
Attention, prospective Cabinet appointees: If you pay someone ,700 or more in a calendar year, or ,000 or more in a calendar quarter, for domestic service in your home, you need to pay the so-called “nanny tax”.
Those who buy a qualifying hybrid vehicle can receive a tax credit of between 0 and ,000. (NOTE: The key word is “qualifying.” Believe it or not, vehicles cease to qualify after a certain number are sold, so visit the IRS Web site for a current list.)
The laundry list of tax breaks for college includes 529s, CESAs, Hope and Lifetime Learning Credits, tax-free employer reimbursements, tuition deduction, student loan interest deduction, US Savings bond interest exclusion… Warning: No double dipping!
Having trouble tracking medical expenses that qualify for reimbursement by your Cafeteria Plan? Check your store receipts! These days, some drugstores indicate right on the receipt whether or not a particular purchase qualifies.
From the Dave Barry “I swear I am not making this up” files… being a member of AAA got me a big discount at Walgreens on medicine for my cat, Morsel.
Enrolling him in the Walgreens Prescription Savings Club saved still more on his next refill, even taking into account the Club’s annual fee. (In case you’re wondering… yes, he does have his own login on Walgreens.com, so he can mail order as well.)
By the third visit, they’d lost track of the fact that he was a member of the Club, and would have charged the higher AAA rate, were it not for a gentle reminder. Lesson: Paying attention to detail pays.
MA buyers of auto insurance – If you haven’t researched your options since the state passed a law allowing for competition between insurers, the recent Boston Globe article “Shopping auto insurers can really pay off” suggests you may be missing out on big savings.
Want to know what it will take to pay off a debt? Use “What will it take to pay off my balance?” calculator on Kiplingers.com.
Did you ever notice (with apologies to Andy Rooney)… although most people will go to great lengths to minimize their income tax bill, many are not just willing, but insistent, on giving Uncle Sam an interest-free loan every year? If you’re one of those still getting a giant income tax refund check every April, consider spending some quality time with the IRS Withholding Calculator to determine how to set your income tax withholding so you keep more of this cash working on your behalf throughout the year.
I usually get a chuckle out of people whose name matches their vocation, e.g. Ed McMahon’s spokesman Howard Bragman, 2008 Olympians Deedee Trotter (track), Peter Waterfield (diving), Trey Hardee (decathlon.) But a money manager named Madoff who “made off” with clients’ money – well, that’s not so funny. Besides the obvious (choosing me as your financial planner), check out the article “Consumers Can Protect Themselves” for tips on how to to avoid this fate.
Speaking of getting burned… Did you prepay for heating oil this year, only to see the price plummet immediately after the check cleared? Being a member of Our Town Consumers Choice, the largest Fuel group in NH, ME or MA, saved us from that fate this year, and has provided excellent guidance – as well as other benefits – in years past.
After quite a few years of marching in lockstep with savings/money market accounts, you can now find CDs that reward you with a higher interest rate for the privilege of hanging onto your money for a pre-defined period. Rates, terms, and FDIC coverage vary, but I’ve seen attractive offers everywhere from big banks to local credit unions to online-only institutions, so shop around.
Not all lifecycle funds are created equal. Before choosing a fund because its name matches your retirement or college time horizon (e.g. “BrokerX Target 2025 Fund”), make sure the manager for that fund has chosen an asset allocation model that’s right for you, neither too aggressive nor too conservative.
Investors are now allowed to make up to two changes in investment strategy per year in their 529 Plan, instead of one as previously.
One of the few “silver linings” in the cloud that was last year’s financial crisis: Some excellent mutual funds long closed to new investors, including some from Dodge & Cox, Oakmark, and Third Avenue, are open again.
OK, one more: Losses incurred on the sale of securities in currently taxable accounts can be used to offset income, and reduce tax liability, probably for many years into the future for some folks.
If you don’t begin taking Required Minimum Distributions (RMDs) from tax-deferred accounts such as 401k’s and Traditional IRAs every year starting at age 70½, you will owe a tax of 50% (!) of the required amount.
Except if you’re working, except in certain circumstances.
And it’s not really exactly 70½, since you have until April 1 of the following year to actually take the RMD.
And you can skip 2009, for which an RMD “holiday” has been enacted. (Gee, an RMD holiday sure is nice, but how about a simpler tax code? Now that would be a reason to celebrate.)
The 0,000 income limit, which kept some folks from doing a Roth conversion, goes away in 2010
Finally… there’s good news if you are one of the few whose biggest financial challenge this year will be what to do with surplus cash. In 2009, the maximum contribution to a 401k, 403b, etc., plans has jumped to ,500 (+ ,500 catch-up for age 50+).

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Phew! When I started this list, 25 sure seemed like a lot of “Random Things” but, as it turns out, there are plenty more where these came from. So I will be posting new ones as I think of them – randomly, of course – on the new New Means Financial Planning Facebook page. If you have learned some Random Things you think others might benefit from, please drop by and share them. And while you’re there, become a “fan”

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Learn About Money Market – Shop Mortgage Rates for the Best Place to Invest Your Money

Learn About Money Market – Shop Mortgage Rates for the Best Place to Invest Your Money

Making money with a Money Market Fund can be fun and easy to do but you need to know some facts so you do not have pitfalls along the way. A Money Market Fund is a great tool that you can utilize to make your money grow year after year but know what your risk is before you jump in.

More Information on getting : More for Your Money

Basically a Money Market Fund is money that is invested in to a mutual fund associated with the money markets. It is similar to the bank account that you have in that it gains interest while your money is invested there. The great benefit to this is that you see monthly interest payments because it is short term usually 13 months. The advantage you have with investing in a Money Market Fund is you will see real money with little risk involved.

Learn How to Get a : Make Money Now

The rates are variable and this means that the amount you will make each month also varies. So as it goes up you earn more money in your account but be careful because if it dips below a certain amount it can take from your principle. You want to keep it a short term investment because over a period of time of you keep with the same investment inflation may dip into your money as well.

There are many places to search for a Money Market Fund on the Internet and you may want to check with your bank or financial institution because they usually have lots of information on getting into a fund.

Remember that a Money Market Fund can be a great short term investment but make sure you fully understand the ins and outs and you will watch your money grow and be prosperous.

It?s All About Money

It?s All About Money

The India money market has come a long way since the last two decades. In short, money market means exchange of short term funds (that included, lending and borrowing). Thus the money market funds come into play. If we want to revise the history of the growth, the rise in the money market news is a clear indicator of that.

Before we discuss the India money market scenario, we first have to know what exactly are the money market funds. As we get to know from the investment dictionary, A money market fund’s purpose is to provide investors with a safe place to invest easily accessible cash-equivalent assets characterized as a low-risk, low-return investment.  The money market news tries to get the people updated with the latest money market scenario so that they can make uptheir minds regarding the kind of money markets funds they want to invest into.

The money market is a mechanism that deals with the lending and borrowing of short term funds. The India Money Market has come of age in the past two decades. In order to study the money market of India in detail, we at first need to understand the parameters around which the money market in India revolves.

The Indian Money Market is heavily dependent on the interest rate that is inflation adjusted (real interest). As is the case with the money market funds, structural barriers and other institutional factors creates distortion in the India Money Market (as it gets reflected in the money market news) though the money market is free from interest rate ceilings. Apart from the call market rates, the other interest rates in the Indian Money Market usually do not change in the short run. Like the money market funds, there are the money market deposit accounts, which play a similar role. There are others like the ultra short cash bonds, enhanced cash bonds etc. the money market news are filled with the contents and information about more such many making/increasing devices.

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Q&A About Money Market Rates

Q&A About Money Market Rates

A money market account is a type of investment strategy where your money is given to a bank for a predetermined length of time. You are, in turn, offered an interest rate that is your reward for turning over your money to them for that time. These money market rates are based on the principal that you contribute and they’re typically compounded by year; therefore, it’s higher the more you put in and the longer you put it in. Learn more below.

What Types of Money Market Accounts Are There?

You can start a money market account through either a bank or a credit union. The former investment is protected by the Federal Deposit Insurance Corporation (FDIC) while the latter is protected by the National Credit Union Association (NCUA). Although “money market account” may refer to its own singular type of high-yield savings account agreement, depending on the organization with which you work, the phrase can also refer to any number of account types, ranging from bonds to certificates of deposit. This mostly has to do with how the financial institution plans to invest your money and the parameters for how often you can access it. Another thing that differentiates the terminology is whether contributions are tax exempt. Ask your financial advisor for the specifications and definitions on any money market account consideration.

How Can I Get the Best Money Market Rates?

To ensure that you’re getting the best money market rates, you have to shop around. You should not only rely on the advice of your financial advisor or broker, but also do some research on your own. This involves calculating the annual percentage yield (APY) on your investments for the length of time you’re willing to commit your money. This number is the compounded interest each year, rather than the annual percentage rate (APR), which is just the interest percentage without accounting for time. This number should provide a fairly accurate picture of what you stand to gain – but be sure to also consider the fine print. How much money you pay to get started (in many cases, you shouldn’t have to pay anything at all outside of, potentially, a broker’s fee) and how much money you could possibly lose in penalty fees (such as in agreements where you have less flexibility to withdraw your money for free) can factor into the total deal.

Why Are Money Market Rates Higher?

Money market rates are higher than regular savings account rates because the bank is able to apply your funds to the moving financial market. This is a risk that falls squarely on the bank, since they owe you the sum you invested, minus any deductions, plus your interest rate per statement term. Their ability to capitalize on your money is what they are essentially paying you for, in direct contradiction to the way a savings account works.

6 Common Misconceptions about Dividends

6 Common Misconceptions about Dividends

by Jason Whitby,CFP, CFA, MBA, AIF

 During periods of low yields and market volatity, more than a few experts recommend dividend stocks and funds. This may sound like good advice, but unfortunately, it is often based on misconceptions and anecdotal evidence.

It is time to take a closer look at the six most common reasons why advisors and other experts recommend dividends and why, based on these reasons, such recommendations are often unsound advice.

Misconception No. 1: Dividends are a good income-producing alternative when money market yields are low.
Taking cash and buying dividend stocks isn’t consistent with being a conservative investor, regardless of what money markets are yielding. Additionally, there is no evidence that money market yields signal the right time to invest in dividend-focused mutual funds. In fact, money market yields were anemic throughout 2009, a year that is also one of the worst periods for dividend-focused funds in history. 

Many advisors also call dividends a good complement to other investments during times of high volatility and low bank yields. In an October 22, 2009 article, financial  guru Suze Orman recommended the following dividend funds: iShares Dow Jones Select Dividend Index (NYSE: DVY), WisdomTree Total Dividend (NYSE:DTD) & Vanguard High Dividend Yield Index (NYSE:VYM).

Reality Check: The 12-month performance after Orman’s recommendation was DVY (+7.86%), DTD (+21.91%), VYM (+17.72%). These returns seem pretty good – until you realize you could have just held on to the S&P 500, which was up +26.36% over the same period.

Misconception No.2: Dividend companies are more stable and better managed.
It is generally believed that companies that raise their dividends over a long period have solid market positions and strong cash flow. As a result, the stocks’ total return is likely to outpace other stocks.

It’s also common to hear the argument that dividends tend to hold companies to a certain standard of financial discipline and that, as a result, these companies budget more carefully and avoid wasteful projects out of fear that shareholders will punish the stock if it fails to return profits to its investors.

Reality Check: It’s easy to pick a “solid” stock in retrospect but it is impossible to pick a company today that will meet this statement moving forward. Sure, if you had purchased Coke in 1962…but what about today? In 2007 we would have said that General Electric (NYSE:GE) and AIG (NYSE:AIG) were stable and well-managed dividend companies. Would we say the same in 2009? What about in the future?

The notion that dividend-paying companies are held to higher standards does not bear out. Look no further than the financial industry. In September 2008, AIG had a .40 dividend – almost a 4% dividend yield. By 2009, it was clear that AIG and others such as Freddie Mac, Fannie Mae, Bank of America, Bear Stearns and Citigroup were far from being financially disciplined companies, despite that fact that they were all long-time dividend-paying companies. As it turns out, dividends aren’t much of an indicator of the financial discipline or the quality of a company’s management.

Misconception No.3: You can count on dividends from solid companies.
Many people believe that it’s rare for a solid company to suddenly reduce or rescind its dividend payment.

Reality Check: “Solid” companies like Bank of America (NYSE: BAC), General Motors, Pfizer (NYSE:PFE) and GE, have either suspended or cut their dividends. Unfortunately, it is a lot easier to identify companies that had a solid record than to identify companies that will have a solid record going forward. It is impossible to predict which “solid” companies today are going to be on shaky ground tomorrow. There is no certainty or stability in future dividends.

The idea that dividends allow you to get paid to wait doesn’t make sense. It is the total return of your portfolio that matters, not the current yield. Throughout 2008 and 2009, companies were cutting or suspending their dividend payments at record levels, proving that there is no guarantee for those who buy in to these companies. Just ask anyone holding Freddie Mac since June 12, 2008, which was when Freddie Mac last distributed a dividend and traded at .01 a share. At that time, Freddie Mac had a dividend yield of 4.34%. By October of 2009, the stock was down over 90% and hope for future dividends had all but evaporated.

Misconception No.4: Dividend stocks provide upside potential and downside protection.
A 2009 SPDR University brochure states that “Dividends provide a stable source of income that can help partially offset market price depreciation that occurs in turbulent markets.”

Reality Check: Dividends provide very little – if any – downside protection during market corrections. The S&P 500 was down -41.82% during the September 2008 to March 2009 crash. During the same time, the SPDR S&P 500 Dividend ETF was down -35.87%, which doesn’t seem like much downside protection. Additionally, some well-known, dividend-focused funds provided no downside protection and performed worse than the S&P 500 over this period. For example, the Fidelity Dividend Growth Fund was down -46.94% and the iShares Dow Jones Select Dividend Index was down -43.07%. 

Since 1926, dividends have provided about one-third of the total return for the S&P 500, while capital appreciation has provided the other two-thirds. Focusing on dividends, which provided less returns than capital appreciation, makes little sense, especially since the dividend focus is just as risky.

Misconception No.5: Preferential tax treatment makes dividend stocks more attractive.
This misconception seems to imply that dividend stocks are more attractive investments since they are taxed at a preferential rate. Obviously, the lower rate is better than the normal income rates but what does it really mean? Does it mean you should avoid dividends in tax-deferred accounts since they are less attractive?

Reality Check: Of course it doesn’t. Then why should the tax treatment warrant dividend investments more attractive than capital gains? It doesn’t, which is shown by the lack of any noticeable bounce in 2003 when the preferential tax law was implemented. We need to remember that the tail should not be wagging the dog. After-tax returns are important, but taxes should not drive your investment decisions.  

Misconception No.6: Dividend-focused investing is ideal for retirees and conservative investors.
An October 5, 2009, article in the Wall Street Journal stated that “Most types of fixed-rate bonds don’t provide any protection against inflation and can lose value when investors are worried inflation will flare. Rising dividends, along with any appreciation in the share price of the company paying them, offer a measure of insurance against inflation.”

Reality Check: This statement is incredibly misleading. First, if you want a bond that protects against inflation, you can buy an I-Bond instead of taking equity risk. Secondly, all equity investments provide a measure of protection against inflation, not just dividend stocks. 

No one ever said you could only have one investment.  If you are a conservative investor, you can simply create a portfolio of bond funds and a little bit in a stock fund. The idea is to create an investment portfolio, not an investment collection. Each investment in the portfolio should work with the others to achieve a goal. This works much like the ingredients in a recipe, which come together to create a great dish.

Why are dividends a better way to generate income than capital gains? Capital gains are not a sure thing, but neither are dividends. And there is simply no way to know which stocks will continue to be “solid” in the future.

Conclusion
Dividends are absolutely an important part of the investment equation. Yet there is no empirical evidence that focusing on dividends is a wise decision. Actually, Miller and Modigliani received the Nobel Memorial Prize in large part for their paper, “Dividend Policy, Growth, and Valuation of Shares,” in which they found that dividends are irrelevant to a company’s value (“irrelevant” is their word, not mine).

On one side the media is dishing out long-lived misconceptions about dividends. On the other side, the Nobel winners are saying dividends are “irrelevant” to stock values. I’m not sure about you, but I know which one of these two groups I’m going with.

by Jason Whitby,CFP, CFA, MBA, AIF

www.investorsolutions.com

www.StockMarketFunding.com The gold price traded up to a new all-time high of 65.70. Intraday Reversal Gold Gold Prices Surge to All Time High into MAJOR SELLING on HEAVY VOLUME! Yesterday we highlighted the Big Money on Wall Street Betting on Gold GLD Massive Call Options Trading on the GLD ETF. Massive Call Options Bought on the Gold Index Indicating a Flee to Safety? We’ve seen major names like “Alex Jones”, “Ron Paul”, “Gerald Celente”, “Robert Prechter”, “Doug Casey”, Max Kieser” and other notable names have been coming out and telling people to “buy gold” as well as the highlights with “gold manipulation” brought about by Gold Anti-Trust Action Committee (GATA). The SPDR Gold Trust (NYSEArca GLD) had some massive amounts of call buying today as we see big players on “Wall Street” move in to make “big bets on gold” “massive call options” purchased today represent huge amount of amounts to be purchasing on an intraday level. The technical analysis of options trading goes like this. The buyer of the call options is obviously “bullish on gold” and wanted to give him or herself time for the gold trade to work in there favor and that is why you’re seeing the majority of the gold options traded today in “LEAP”s going out till year 2012. We saw 97687 “GLD” January 2012 145 Calls traded and 70500 “GLD” January 2012 140 Calls traded. It’s obvious to anyone paying attention the “federal reserve” is printing a mass amount of “US dollars” and we’ll eventually feel the impact …
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What Every Consumer Should Know About Checking Account Rates

What Every Consumer Should Know About Checking Account Rates

What if, instead of just a regular checking account, you had an account which paid you back?  It’s possible when you open an account with interest, allowing you to take advantage of competitive checking account rates.  But how can you be sure you’re getting a good deal?  Here’s what to look for if you are considering opening an interest bearing checking account.

How to Get the Highest Rates

The highest checking account rates aren’t hard to find.  There are plenty of Web sites which make it easy to compare the interest amounts on these types of accounts.  Be sure to also check the particular terms, as there may be a minimum balance involved to maintain the competitive interest rate or a monthly fee if you fall below a certain amount in your account.  Ideally, you should keep a minimum balance of ,000 in your account to avoid monthly charges and maintenance fees.  Having this minimum balance will also help you take advantage of better checking account rates.

Look Beyond the Numbers

A checking account with interest is about more than just the numbers.  You’ll also want to look for other convenient features such as a free check card (debit card) that you can use anywhere credit cards are accepted. Also, be sure to ask your bank if the checking account rates are compounded daily and posted to your account monthly.  This lets you benefit from compound interest where, the more you save, the more you can earn.  Be sure that you have the ability to access your account online, 24 hours a day, 7 days a week.  This free online access will let you manage your account from anywhere – making it easy to see how much you’re earning with competitive checking account rates.

Greater Convenience

Your bank also shouldn’t restrict how many checks you can write.  Look for unlimited withdrawals and written checks along with the ability to link your checking account to other accounts for overdraft protection if desired.  One choice of bank that will let you take advantage of competitive market rates while giving you all of these flexible features is the interest checking account at Aurora Bank (Equal Housing Lender, Member FDIC).   But no matter which account you choose, getting the best checking account rates is only the start. 

Be sure to look into savings accounts, CDs and money market accounts if you’re looking to save for short term or long term purchases.  Having an account that pays high interest rates is just one way to make your money work harder while giving you easy, streamlined access to your cash when you need it, along with all of the features you’d expect from the best checking accounts.

All about Exchange Rate Calculators

All about Exchange Rate Calculators

Exchange market is a phenomenon that is responsible for the regular change in the valuation of currency. Exchange rate market depends on the economy of the country or shows its valuation in international market.  Everyone knows that nation has it own distinct currency and its value changes from time to time. The exchange of currency amid people belonging to different nation is known as foreign exchange. The exchange rate is described as a rate at which a currency can be purchased using some foreign currency. A person requires this currency converter when he or she is traveling to a foreign country or when a person looks to earn some profit with the fluctuating Money market.

Now, what is an exchange rate calculator and why do we need a calculator in exchange market? The answer is quite simple. This is a tool which gives the latest trend in the exchange market and we need an This tool because the calculator keeps us updated with the latest variations of the market. The market has trends and variations and we have to along with it. The valuation depends on the economy of a country. The Tool is a simple tool which keeps you updated with the current trend of the market. So, before cracking a deal you can use this calculator to earn profit. This tool also provides statistics such as profit ration, gain and loss on the deal at a particular time. As the exchange rate fluctuates and there are always variations, so, the necessity of exchange rate calculator is a first priority for a trader. We all are aware with the fact that every country has its unique currency and the exchange of currency among people belonging to different countries is known as foreign exchange.  So, every social and political happening in the country influences the economy of the country.

The calculator is available on the web, you just have Google it. There are many websites that are offering different types of software which works as an exchange rate calculator. You don’t have to do anything just get yourself a calculator which you think is worth using.

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