Marlo’s Money Advice

Investing your time to learn

We all spend time investing time into our relationships, our jobs, our hobbies – so why not spend time (and money) investing in our financial future. The ideas and tools I will be sharing with you will hopefully encourage you to make investing, or at the very least reading about investing, a hobby. Reading about money, finances, banking, and investing is one of my biggest passions and hobbies. If you start with the basics, then you might find this topic interesting as well.

It is not how much you save, but the disciplined approach you take. You can even start with $100. No amount is too small.

The Basics

Learning about investing seems so daunting to some. Since I have been around business-minded people my entire life, I find investing interesting and intriguing. However, some of my friends tell me it is daunting, and it is not interesting, and quite frankly, boring.

So I am going to focus on the basics to get you started, and hopefully you will be stimulated and excited to learn, and find this interesting too.

Recommended Website on Banking Rates

First of all, I recommend that you spend 10 minutes a day reading articles and websites on banking and investing. Here are my favorites:

Bankrate.com http://www.bankrate.com provides CD rates and mortgage loan rate quotes for home loans, mortgages, home equity loan, auto loans, and the best CD rates.

I check this site frequently for mortgage rates and CD rates, and then I know if my bank is offering me a good deal or not. I recommend this site for mortgage calculator, checking CD rates, and some of the articles are interesting to read. For better articles on banking and investing, I recommend Yahoo Finance.

Recommended Websites on Finance

Yahoo Finance http://finance.yahoo.com I have been using this site the longest, and like the clean, simple layout.

When you start to type in the company name to find the stock or mutual fund price, all companies will appear that are related to that phrase (ie, I typed in “Sun”, and 9 companies popped up, then you select your company - very simple).

You can track any stocks and mutual funds you want to follow. The articles are so helpful, and great to get you started, such as “Love Your Money and It Will Love You Back” and “Eight Sure-Fire Ways to Save Money” and “Fifteen Smart Money Moves for Tough Times”. Yahoo Finance truly speaks to the novice or average investor.

Google Finance http://finance.google.com/finance This site offers a broad range of information about stocks, mutual funds, public and private companies.

If you are strictly a Googler, then by all means, use this site. Google Finance focuses on stock and mutual funds prices, and related company articles.

Savings 101

Savings accounts are the best way to get started, and are liquid at any time. Even $20/week will equal $1040/year and if you do that consistently for 5 years, you will have $5,200, not too shabby.

With compounding interest at 3% (hopefully interest rates will go up again!):

1. Year 1 - $1,020 becomes $1050
2. Year 2 - $1,050 becomes $1,082
3. Year 3 - $1,082 becomes $1,114
4. Year 4 - $1,114 becomes $1,148
5. Year 5 - $1,148 becomes $1,182

Now that is $162 more than you started with!

I recommend looking for high interest savings account, or MMSA (Money Market Savings Accounts). This is a practical way to save, and is FDIC insured. Many banks offer high-interest on line savings account, such as HSBC, which is offering 3.55% - which is actually high right now.

Last year at this time, HSBC’s rate was 5.05%, but since the Fed lower the interest rate, all savings rates has decreased. Good for the borrowers, bad for the savers.

CDs - Certificates of deposits are excellent ways to lock your money up for a short or long period of time, and usually pays a higher interest rate than a savings account, but right now rates are lower too. However, if you can find a CD with a 3.5% rate (even for 6 months) versus the 1.5% you are earning in your savings account - go for it!

Mutual Funds

According to the U.S. Securities and Exchange Commission, a mutual fund is a professionally-managed firm of collective investments that pools money from many investors and invests it in bonds, short-term money market instruments, and/or other securities.

I highly recommend that you read the article http://www.sec.gov/answers/mutfund.htm, to get you started on overview and basics of mutual funds.

To start, go with a no-load (versus a fund with a sales charges or loads, like a Vanguard fund. You can call Vanguard at 877-662-7447 and only if you have a very little to invest, they will help get you started. Some funds need a $1,000 or $3,000 initial investment, but if you have less than that, you can start with $500, and add $100 a month until you reach the minimum.

Investing for Retirement

401K - If you have a company sponsored 401k, save as much as you can until you reach the company’s matching minimum. For example, if your company matches 2% of the first 10% you save, save 10% to get that FREE 2% (total savings: 12%).

401k Contribution Limit

• 2006: $15,000
• 2007: $15,500
• 2007: $15,500

No 401K - If you do not have a 401K (self employed, full-time mom, working part-time, company does not offer one), then I suggest you open a Roth IRA (Individual Retirement Account). You pay the taxes now (you buy the Roth IRA with after tax, take home money), and when you redeem the Roth IRA at the age 59-1/2, you pay no taxes on the earnings.

Vanguard can help get you started too!

Conclusion
I hope these basics helped you get excited about reading and researching savings methods and investments. If you have any questions or comments, please do not hesitate to post a comment.

Happy investing and saving!

I know, it is so overwhelming to pay bills. I have a simple solution for this – grab all of your bills for a month and write them down by date order.

Most of your bills are monthly and recurring. So grab a piece of paper (or use Microsoft Excel), and write down all of your bills.

Example: (Click on image to enlarge)

Steps:

1. Make a Full Year Of Expense Sheets – One for each month (one for January, one for February, up to December).
2. Write Down the Bill Immediately - When ever a bill comes in the mail, if is emailed to you, or you check a bill on line … WRITE IT ON YOUR SHEET.
3. Consistency - Be consistent, and do this whenever a bill comes in. If you do not, you may loose track.
4. Write the Due Dates of Each Bill in Your Planner or Calendar – You need to write each bill on your monthly planner or calendar. This sheet will not do you any good, if you do not remember what the due dates are. Also, if the due dates are not written down on your monthly planning tool, you may forget a date. If you do not have a planner or calendar, you need to refer to this sheet everyday. However, you may check you sheet one day and realize the bill is due! You will be paying it that day and probably be late.
5. Pay your bills on time – If you online pay your bills online, schedule it will enough time to pay. If you write a check, send it in plenty of time so you are not late.

• (Once you are disciplined and use this approach, you will be able to breath easier. You will not pay late fees, and make sure to pay the bills on time.)

In my opinion, I do not recommend having the money taken directly out of your checking account. I would rather use online bill pay, or sent a check, and have control over my money. However, if you have a car payment and like the money taken out of your account every month (and you are not over withdrawing), by all means, use this approach.

You CAN afford to spend 15 minutes a week in your finances, and avoid late fees.

If you are paying $6/month in late fees –that equals $72 dollars a year ($6 x 12 months). What about these hefty credit cards late fees – some are upwards of $39/month!

By using my systematic approach to paying your bills hassle free … save yourself the stress, and money!

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