« May 2006 |
Main
|
July 2006 »
June 2006 Archives
Jun
28
Rich Dad, poor dad
I have never read this book and I don't ever intend too. But I have read several of this guys articles on Yahoo Finance and I can't believe that there is much worth while to learn from this book, From the reviews on Amazon that I saw and if reading his articles are any indicator of his advice, it's pretty bad.
In the first article that I read he argues that no one should invest in mutual funds because they are too expensive for investors and do not earn good returns. In his example e argues that your average mutual fund will ding you 2.5% of your invesment on an annual basis. This is flat out untrue. According to morningstar a review of all the US mutual funds the average expense ratio of a mutual fund is 1.5% of total assets invested. Now I agree that there are lots of mutual funds out there that aren't worth the money to invest in but when we are trying to decide if mutual funds belong in our portfolio we should at least take a fair few of how much they are going to cost us. As with everything a fair asseswsment of the situation requires us to look closer. There are mutual funds which will charge obscene amounts of money for mediocre returns. But there are also funds that are run by talented managers and have much lower costs. For example, take a look at John Montgomery funds at Bridgeway. He offers a wide range of funds and has shown himself to be an ethical and talented manager and they come with a reasonable price tag. Some mutual funds aren't worth there exorbitant fees, but some are priced more fairly and deserve a look at.
The second point in this article by Richard Kiyosaki is that mutual funds don't offer the performance that a good active investor should expect from the market. He says you can expect about 10 to 25 percent annual return. That's crazy! Show me the fund that offers 25% annual return and I'll sign up. This is when you know this guy really is a nutter. The S&P 500 is generally used as the benchmark for average US stock return and that benchmark has acheived 10.25% annually or the last 75 five years on average. Small caps have done a percentage point or two better but no where near the 25% return that Kiyosaki says you can expect. The greatest part is that he scoffs at that though!
In another article I read by Kiyosaki he argues that only stupid investors diversify to cover their financial planners butts. He says you should be a focused investor because that's what the worlds greatest investors are. Guess he's never heard of Ben Graham, the father of modern investing. According to Graham and many other studies by intelligent people asset allocation which means diversification is a good thing. I feel bad for the focused investor who took Kiyosaki's advice, done his due diligince but invested in the next Enron ... bye, bye nest egg and riches. I guess for Kiyosaki your not an investor unless you are perfect. I for one am not and don't know anyone who is so I think I'll stick with the rational people and stick to an intelligent asset allocation.
From his two articles I'm pretty convinced this guy knows next to nothing about good financial practices. There will always be the cult followers who say this guy has made a bundle and is trying to enlighten us. But, as for me I think I'll stear clear, and my pocket book will probably thank me for it.
So long story short: don't waste your money on this guy.
Jun
23
hmm, a wife sounds nice
I'm not married nor am I dating someone; but boy, having a wife sure sounds great. As I get older it's scaring me more and more and that I might end up alone and when I look around there doesn't seem to be anyone that really catches my attention in that department. My faith is so little, so often. I wish I could just trust that I will be happy with whatever God has in store for me. I always have been in the past but yet my self exulting nature seems to think it knows best. If only I could cast it out for good instead taking on a spirit of complete trust in the Lord, that would be nice.
As I think about the reasons I'd like a wife most of it seems pretty selfish. I want a wife so I'm not alone and lonely, so that I can have a family, so that I have a companion, and the list goes on and on. I wish that my heart was better and that my desire was for a wife so WE could bless one another. I believe I really want that but sadly the I dominates the WE in my mind. If I am to be married I wonder what my wife to be is thinking and feeling right now. If I think about her in those terms it is much easier for me to not be so selfish.
Jun
16
0% APR For life
Recently I feceived an offer in the mail from Discover Card for a 0% APR on balance transfers for the life of the loan. Now it's not unusual that a I get one or two offers in the mail for some new credit card or what not. Usually those offers go straight into the trash but hey, 0% for the life of the transfer sounds pretty darn good. At this point I'm thinking to myself, "WOW! That sounds pretty good, I wonder what the catch is?" It turns out the catch is you have to make 2 purchases a month after March 2007 to keep the 0% rate. That doesn't seem so bad until you relize that their payment allocation policy applies payments to the special rates first then normal charges. That means you will have a growing balance at the 10.99% APR while you pay down the balance transfer, in short this could be a very expensive offer. But it's only bad if the balance accruing interest is high so I got to thinking what if I transfered $25,000.00 of my mortgage to this offer? That would take 10 years off of my mortgage and save me about $60,000.00 in interest payments over the term of the mortgage. If I were to invest the extra dollars that will have to go toward the monthly payments I would end up with $40,000.00 assuming an average annual return of 10.1% where as my total savings with this method would be somewhere around $80,000.00. That's a lot of money, but there's still that pesky problem of how do I keep the balance on the card that accrues interest low enough to make it worth while. So I went to the grocery store and trolled for items that were less than $1.00. I found lots of things, but the most compelling item was definately carrots. I can get a carrot for about $0.17 which would satisfy the monthly transaction limits and keep the balance low enough that the offer would still be worthwhile. Now I just need to apply for the card and get approved for the largest credit line possible.
Thanks for the free money Discover Card!
Jun
09
Motorola PEBL Take 2
So I have had my PEBL for a couple of days now and I'm pretty happy with it thus far. The battery life seems pretty good (at least so far it beats my old phone which I pretty much had to charge everyday). Right now I'm going on day 3 without charging it and moderate talk time.
The speaker is still a bit soft for me but it gets much better if you just know how to position it over your ear correctly, if you get it just right it's plenty loud but if you get it off just the slightest bit the volume dramatically drops. It's kind of interesting actually, they must be doing some sophisticated directional sound to save power or something, or maybe I'm just losing it ;)
Reception and voice quality seem pretty good and there's some neat software you can buy from motorola to sync it with your computer and load on custom ringtones (you just plug in a USB cable to where you charge the camera) which is a really neat extra feature. It sucks that motorola just doesn't provide this software for free but oh well. The user interface on the phone could use some work, you can customize it but there really is no excuse for a sloppy user interface; especially in a phone where they seem to have paid a lot of attention to detail.
So all in all I am pretty happy with my new phone. Hopefully it will last me 4 or 5 years like my other one :)
Jun
06
Eulogizing a faithful servant
Yes, yesterday was a very sad day for me. My Samsung S105 cell phones attenna broke off. For some of you this may not be a very surprising event, as most cell phones break so quickly these days. But for my phone this was a sad day because it has faithfully served me for the past 4 years. It's sad that a cell phone lasting 4 years is a long time in my eyes but sadly it seems that most cell phones don't live nearly that long. So last night I began my quest to replace my trusty old companion and what I found was mostly dissappointing. Of all the phones I looked at only 2 appealed to me: the Samsung a900 and the motorola pebl. It seems that manufactures have got it all wrong in my opinion. I don't care about watching T'V on my phone or paying for their overpriced music, I don't even really care if it has a camera or not, in fact I would preferr it didn't! I just want a small phone with good voice quality and good battery life. Is that too much to ask for? Unfortunately that's a tough bill to fill these days. It's almost impossible to find a phone without a camera (the sales folks argue that they sell more phones with cameras than with out but if you look at their choices without cameras the options are pretty meager.)
Of all the phones I looked at I wasn't ecstatic about any of them. The one I eventually ended up with was the Motorola PEBL. I liked it because it was small, had a nice look to it, and wasn't so wizbang as some of the other phones. I haven't gotten much of an opportunity to play with it yet but so far things seem OK. I like the way it looks and feels in my hand a lot. The keyboard is a little funky but nothing that bothers me too much, I'm sure I'll get used to it anyway. Thus far my biggest complaint is probably the volume. What they call maximum volume is pitiful. At best what they are calling max should be on the lower end of medium. Anything less than max is just about impossible for me to hear, that's quite annoying. The speaker phone volume isn't great but it's not terrible, in a quiet room it should be ok but a in a noisy environment I doubt I'd be able to hear anything.
After I've used the phone a bit more I will probably post a few more detailed comments.
Jun
06
Planning for Emergencies
It has been a while since my last financial advice post, so I thought now would be a good time for the second installment of how to plan for financial security. In the first article we talked about simple budgetting and knowing where your money is going. That is always a good thing, after we have that down it's time to start planning for the inopportune events in life which are bound to affect us all at one time or another. When the unthinkable happens it's good to have some cashed stashed away to pay for it. Generally this types of funds are called emergency savings. Just like budgeting this is a fairly wide spread concept so most personal finance books will cover the idea in great detail if you are interested. In general the idea is to have enough money accessible to pay for disasters should they arise. Depending on who you talk to they will tell you different stories when it comes to how much you should actually stash away. In the end a lot of it comes down to personal decision of how much you need to feel comfortable. A good rule of thumb is anywhere from 3 to 12 months of after tax income should suffice as your emergency savings. I maintain about 6 months of after income in a tiered savings structure. Three months of that income is in a high-yield internet money market account which currently yields about 4.6% APR. These funds are accessible whenever I want them and earn a relatively high interest rate for such liquidity. The remaining 3 months of savings I keep in a laddered 12-month CD porfolio. What that means is that I have 12 CD's that are staggered such that one matures for each month of the year. This allows me to maintain a higher interest rate while still keeping the money partially liquid. No matter how you do it emergency funds are a good thing to have and since most people don't have 30 or 40K laying around for emergency funds now is a good time to start budgetting a monthly amount to put into savings to try to reach your savings goal.
Jun
02
Critics, blehg
It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things. - Theodore Roosevelt
We as a country would do well to remember this. It's easy to play the role of the critic and place ourselves in a place of superiority to those who are actually doing something. I am not saying that we should completely abandon the review of our work but we should be careful that we do not become professional critics. A man who's primary role in life is to review another man's deeds does not accomplish much and the world he leaves is little worse for his departure. But when a man who attempts great things departs this world, society has lost much. He is the one we should admire and strive to be like.
On the surface I am sure everyone would agree with this but it's easy to not know what category we truly belong too. Step back and ask yourself how much time do I spend complaining/reviewing things and how much time do I spend actually acomplishing something that is worth while? I think many of us will find that we are all to often complainers and not nearly the doers we would like to be. We are a society constantly in search of the "best" and when we cannot obtain it we settle for finding the flaws in others efforts. Many times the best does not truly exist; and it is often the case that simply making a decision will go a long way. The quest for perfection is a lesson in insanity, the only place we will find it is in God. In our day to day endevours it is certain that imperfection will surround us. Therefore we should determine ourselves to be doers and not the idle complainers of which we have far too many already.
Jun
02
Site down ...
In case you were wondering the site has been down for the last couple of days because the DNS entries for digitalredemption.net got deleted :(
Oh well, it's up for now.
