Thursday, July 30, 2009

The morality of healthcare

Ben Stein wrote a great article on yahoo finance about this topic.

http://finance.yahoo.com/expert/article/yourlife/178987;_ylt=AojOTBf8MTYC2QDenJZuT.e7YWsA

In the article he writes:

"A short while ago, I said in a public forum that while I did not doubt that in a society as rich as ours, no one should be denied health care, and that health care was a right, I still had some questions about the administration's plan. This had been my feeling for all of my life, i.e., that health care was a right, and that if necessary, it must be paid for by the taxpayers if some people could not afford it."

Put simply I don't think that simply because the united states is rich compared to other countries that the defenition or right changes.

A right in my opinion is life (this does not imply anything about quality of life), liberty and the persuit of happiness. I also believe strongly in the right to own property and no one elses moral obligation to provide healthcare to everyone should get in the way of that.

I do think that there needs to be some work done to make it more affordable but that doesn't mean giving it to everyone for free. If the government can decide what is a moral obligation and that you can be taxed extra to pay for these services that you don't use, there is no incentive to manage your wealth correctly!

Tuesday, July 28, 2009

iPhone as a productivity tool


Finding the right tool to be productive can mean the difference between being average and being a superstar. Although it still feels early, I think that the iPhone is that tool for me. I tried palm pilots and I've played with blackberries. The cost is significant but worth it.

It can be very easy to get caught up in the aspects of the phone that make it entertaining. Bringing games and other aspects of computers together really makes it a productivity tool. So I don't know what else to praise it for. But those are not the real reasons I like it. The very text that I'm typing right now is the reason.

Becoming adept at the keyboard is a bit of a learning curve. Butit is no different than the palm or the blackberry. And the quick composition of text makes the iPhone an all-star.

Now that I have this tool I can always work on something that interests me or even chill out with a game. But more than that, it is all in one. For me that I don't have to carry a separate item like a heavy laptop or notepad is a big deal. It let's me capture data how and when I want to.

My feeling is that this will make your time committing better. Even if you are in the car you can use the voice feature. I've experimented with some of the other features that there are in some of the iPhone applications. And the reality is that the people don't have much good technology to utilize the features. One example is a voice transcription software that I recently bought. The transcription was not stellar and furthermore the transcription took too long to process on the phone.

So, much like he Internet, the apple store is filled with stuff. Much of it is mediocre and the real gems are a rarity. But none of this detracts from the device. In short, if you are a desk worker and most of yorur productivity is done in front of a computer, then I would highly recommend this device to you. I've found that I use it as muh more than just a phone and that there is an incredible amount of time that can be put to good use with this device.

Friday, July 24, 2009

What's next

Ok so great. We finally are over nine thousand on the Dow and everyone is wondering if this is the right time to get back in. People find themselves rejoicing because those 401ks are starting to look better.

They are not alone. I am right there with everyone on this. The main difference is that I am not going to change my strategy in the wake if a good few weeks on wall street.

The new rules still apply for me. Cash beats credit. And there's no security like money in the bank. And getting in position to have many choices in case things go south is the best balm to soothe the wounds of any disappointment in any part of life.

So all of the above having been said, I am finding myself more interested in my retirement contributions. You see, I am not getting any younger and I think that it is worthwhile to get as much saved as early as possible.

Many people cite compound returns as a motivating factor and it is true that it matters. Over the past few months though, it has become increasingly clear that stocks may not be a sure thing even over the long term. But that's the best way I can come up with to invest long term right now with my own money. Unfortunately I am not a high roller so there is not much that I can do.

So, it may not be a sure thing but it is what I am doing in my 401k and Roth accounts using mutual funds. The exciting part of this for me is that my company just started offering very low expense ratio mutual funds. Now my urge to transfer to vanguard is somewhat diminished.

Sunday, July 19, 2009

Financial Primer

Financial Primer

When I think back on my financial situation growing up, I never really understood how many issues that there are when it comes to money. Understanding the major financial concepts early on in life and having some tangible, concrete understanding would have been much better than some random experiences and emotions. Just understanding these important aspects as a young person and how to handle them correctly can contribute to financial well being.

Income

Income is the way money enters your life. Usually, this is in the form of a job, but there are also other sources of income like gifts, bonuses, interest income, and investment income.

My concept of income was rather skewed as a kid. I didn't usually need much money. I like to think that I wasn't that greedy. I generally was happy if I had a bike to ride and some sticks and balls to play with outside and some video games to play with inside. I never got a steady allowance per se, so by the time I started learning about income, I was 14 years old. I think this is far too long to go before you learn about how important it is to manage the amount of money you have coming in.

Expenses

Expenses were not anything crazy. A trip once in a while to the store to get candy with money my mom or grandmother gave me. Or perhaps money that I had saved from a special occasion. I never really had enough money to save until I started working when I was fourteen. Again, that was when I first started learning about expenses.

Interest and Saving

Once I started working at 14, I had to open up a bank account to keep my money safe. I started with a savings account at the local baybank which has been bought and sold several times since then. But the idea of earning interest on my money was something that seemed rather abstract. When you are making 4.25/hr, 1 or 2 percent interest doesn't really matter all that much. I remember thinking, oh, cool, 20 cents interest, now I can get half a candy bar. Even at that age I was disappointed about low returns on my money. But I didn't know about other options.

Somehow I saved my money from working until I had about 400 dollars saved and I used that in conjunction with money and gifts for christmas to buy my first computer. That computer was a great gift because having AOL made me really love having a computer, forced me to become a fast typer, a really important skill for people working with computers all day, and also made me interested enough to really continue working in computer-related fields through college.

Inflation

The concept of inflation didn't really hit me until I got out of college. Of course, for the first time, I was really making money and having to pay for everything. This was great, but I realized as well that I needed to make sure that I had enough money to pay for food and gas. And oh, geez, this seems to cost a lot more to fill up my gas tank now than when I was 17 in high school!!! These thoughts start to really come into play when you see gas prices spiking.

Credit Scores

In college, in my sophomore year I decided to get my first credit card. It was for a small purchases mostly. I knew that I needed to build up credit but I also knew that on my low-paying work-study job, I couldn't afford to pay a huge bill. So I kept the charges under 20 bucks. But then, the second semester of my senior year, my laptop that I used for college died. And I needed a computer to do my work and my programming. So I bought one. It was a refurbished pc that I bought for about 300 bucks. But it let me work into the wee-hours without having to worry about the computer lab being closed. This was my first real experience with credit. Even now I wish that I had started a little earlier. It would have been good to start building a good credit history earlier.

Blogging My Net Worth

I've been using a tool to track my household net worth for years and I think that it has been an enormously helpful tool as a motivating factor for helping me to make the correct decisions.

The tool I have been using is NetWorthIQ. You can view a small sample chart that they produce. But I think that more than the chart, it is about the motivation that the chart provides. Besides providing a simple line of how your net worth has grown or shrunk, it shows how your net worth can be impacted by the events of the day and how well you've navigated those storms.

Personally, the great opression of 2008/2009 has been awful. It has left me feeling somewhat void. My feelings are not that unique, and my approach is not that unique. From the perspective of making money, it is difficult because the people that tend to do well are people who are far out on the risk curve, people who are doing something different.

So, with the net worth tracking tool, I am able to determine that my approach, while bad, may not be so awful. My net worth is essentially flat since this crisis began. And the vast amount of the destruction of worth is a result of the crash of the stock market. The value of my cash accounts (my fdic certificates of deposit and savings accounts) is stable. Furthermore, my home, while now worth less, is really only a loss on paper.

Paper losses, which is what many people feel is the case with stocks, are losses you can tolerate. Tolerating these losses only happens if you are in a position where you don't need to sell the assets. The key to avoiding selling such assets is to avoid leverage. As such, I've avoided debt like the plague other than a mortgage and I've been paying off student loans and auto loans and other debt with wreckless abandon. All of this is motivated at consistently and carefully growing my networth.

The importance of this strategy comes back to one point that most professional investors agree with when it comes to money: Don't Lose Any! So, this is my feeling also. I look at the net worth chart as a scoreboard. If I lose in one category, I want to have gains in another that offset the change. In the end, only time will tell if this crisis will end quickly. Many people feel like the changes in March 2009 are indicative of a good possibility that is has now ended, but only time will tell.

Wednesday, July 15, 2009

Healthcare on Life Support

One of the possibly most historic bills in the history of the united states. It could be compared with the new deal and other initiatives like that.

Interestingly, many people who were once big supporters of Obama seem to have now withdrawn support. Popular opinion among political pundits is that he was elected as a left center president but has now begun pushing a radical agenda.

In some versions of the legislation, people making over one million dollars will be taxed an additional five plus percent. In reality, the problem is the additional burden will impact the average American.

In short order this legislation will transform not just healthcare but the entire economy. Personally, this feels like the biggest economic issue since the stimulus.

By standing by and doing nothing, we are giving our legislators a blank check. I think that is a mistake. I've written to my reps and I urge you to do the same. Right now the decisions to spend money will impact us and our future generations more than most decisions in the past decade. Please contact them and weigh in. It will help your money more than most other things you can do.

Sunday, July 05, 2009

Wealthtrack for July 5th 2009

This week Wealthtrack's Consuelo Mack had a sit-down with PIMCO's co-CIO Bill Gross. This was part of a new series of interviews with great investors. It was an interesting episode where Consuelo Mack pointed out some of the clear and present dangers for the United States of America:

1. An increasing reluctance on the part of large foreign nations to take on more treasury debt due to the lack of good real returns and the lack of strong returns on the US investments.

2. Increasing debt levels of the United States being rather sticky since the only way to really combat them is to re-inflate the economy and then pay down the debts with cheaper dollars.

Interestingly, Bill was asked the question whether or not there were any investments that he was excited about long term and he answered with a resounding "No." When the conversation drifted into why that was the case, it seemed that the "mean" return for investments long term would be in the 6-8 percent/5-7 percent range.

But on the other hand, it seems that there are other options for investors who are still seeking double digit returns, according to Gross. He pointed out that with his own personal money (and for his "poor" relatives) he'd recommend bank preferred stocks and closed end funds (some of which are managed by PIMCO and invest in corporate debt). These would offer double digit returns.

As always, I found that this was particularly interesting because it points out something that I've personally wondered about for a long time: does it make sense to hold large amounts of government backed debt or even government backed savings? I have an interesting take on this, so consider whether or not you have the correct level of savings. I'll talk about this more in an upcoming post.

Thursday, July 02, 2009

Madoff Madness

One of the more interesting things that happened in the news recently is that Bernie Madoff was finally convicted in what was basically a shut case. Many people have decried the punishment he received though: a hundred and fifty years in prison. His representatives were taken aback by this judgement but it seems reasonable to me.

According to the article I read online, there was not even a single person who wrote to the judge prior to sentencing in support of Madoff. Not his family. Not his friends. In the end it seems that Madoff is utterly alone.

Unfortunately Madoff took a lot of people. And certainly some of these investors should have known better. But, if you even ignore that, aren't we forgetting the people who probably were otherwise involved? I will be much happier when I find out that the accomplices are brought to justice also. Read the news story here.


All that this story does is underscore the fact that people need to be responsible for their own actions. No one else will watch your money for you. And if you end up like madoff you will need to have at least some friends to write letters!