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Monthly Archives: April 2017

About Savings Accounts between Investing Accounts

Savings accounts do have great benefits. Savings should be allocations of cash put aside for short term goals. Savings should also be used for personal expenses like loan payments, utility bills, and insurance. Savings accounts should also be used for anything in life that will require a large amount of cash in five years or less. The stock market can fluctuate and losing value of money while trying to achieve a short term goal is counter productive.

There are numerous types of investment accounts. There are a plethora of services offered with both discount brokers and full service brokers. Most people go to full service brokers because they like face to face transactions and customer service while others prefer internet based discount brokers because they don’t value face to face interactions. Since Millennials are tech savvy and don’t have money to be throwing away for steep fees, most young investors go the discount route.

I own an account with a discount broker because I like to micro manage my investments and I firmly believe Millennials should go in this direction as well. Most accounts are free to open, and I highly recommend using TD Ameritrade because of their vast array of pointers and customer service that goes above and beyond most other companies.

Once you’ve found yourself a brokerage firm that you find fit for your needs, its time to determine which account type fits your needs. Account types include a Roth IRA, Traditional IRA, Cash, and Trust. Brokers will offer more sophisticated accounts as well but most new, young investors won’t need to dabble in those right off the bat. Each account has its perks but to start out, a cash account is the most efficient. It’s essentially a bare bones trading account that allows for deposits and withdrawals along with trading abilities.


Most brokerage firms charge commission fees. There’s no getting around these pests unless your account is through Robin Hood but there is a learning curve and TD’s customer service is worth the $9 per trade commission; at least in the beginning. These commission fees are, essentially, the cost of transferring your cash into a stock purchase which is then put in your account for you to monitor as it grows (or declines). Although some brokers may offer lower trade fees than others, they are often indicative of other aspects like customer service, technology, and trade speeds so it’s not always best to be cheap. On the flip side, full service brokers can charge up to $200 per trade which is far too steep for most Millennials just looking to put a couple hundred dollars away at a time.

Other Fees

The finance and banking industry is really good at hiding fees for unknowing victims. Brokerage firms can charge for inactivity, margin, mutual fund trading fees, and much more. This obviously is a deterrent however, once again, I’ve found TD Ameritrade is the most upfront about their fee structure and it usually doesn’t have any impact on novice traders. Another angle of attack is account minimums which is an obvious roadblock for most Millennials. That being said, TradeKing, USAA, and TD Ameritrade have no minimum.

Protect Retirement Accounts

Investors should always keep a close eye on how much they’re paying, since a fee of 1 or 2 percent can have a surprisingly large cumulative impact on their financial future if it’s charged yearly.

For example, did you know that mutual fund returns in 401(k) plans are normally reported as net returns, meaning that fees for managing your investments are subtracted from your gains or added to your losses before calculating the annual return. Other costs, such as administrative and record-keeping fees, are often divided among plan participants but are not explicitly listed on individual investment statements. This lack of transparency is frustrating for investors.

Investors should also ask detailed questions about how their advisers are being paid. What incentives do they have to steer you into products they recommend? An adviser may operate differently if they’re paid by the hour or by a percentage of the assets they manage, versus if they’re paid extra commissions for certain in-house products. Even if the rule passes, I just can’t believe that institutions are going to stop pushing products down your throat.

People who don’t know the first thing about annuity expenses, load fees, or the importance of a mutual fund’s expense ratio have been held hostage by unscrupulous salesmen.

The truth is that the financial services industry has many caring people of the highest integrity who truly want to do what’s in the best interest of their clients. Unfortunately, many are operating in a “closed circuit” environment in which the tools at their disposal are “pre-engineered” to be in the best interests of the “house.” The system is design to reward them for selling, not providing “conflict-free” advice. And the product or fund they sell you doesn’t necessarily have to be the best available, or even in your best interest.

Start Retirement Financial Planning Now

Retirement Is More Expensive Than You Think

If asked, most people could not tell you how much money they need to have saved so that they could leave the workforce for good. Retirement financial planning suggests the average household will spend just over $40,000 per year when all of its members are no longer working. This amount is for a very conservative lifestyle, with little in the way of travel or other luxuries. Social Security benefits usually only amount to roughly $15,000 per year.

This leaves a significant gap that needs to be made up through savings and investments. With the average American living longer, savings must be increased to ensure that accounts do not run out prematurely. A second aspect that makes leaving the workforce so expensive is the unforeseen costs that people encounter. With an abundance of free time there is an equivalent increase in entertainment costs per year. Medical expenses also increase substantially, to more than $5,000 per year on average. All of these extra expenses are on top of the cost of utilities, groceries, insurance, rent or mortgage, and travel.

In conclusion, retirement financial planning can be tough to prioritize. Most people have many other expenses, and retirement can seem very far away. However, it is not particularly hard to save for your later years. Putting away a small amount now can mean a comfortable life when you finish your career. Furthermore, life after work can be very expensive, with increased expenditures for entertainment and medical issues. Start planning now.

Info of Personal Financial Management

1) Mutual Funds:

Investing in mutual funds can be much more profitable if one is a little more active than most in one’s choices of fund selections.

For example, most people allow their employer-designated financial advisor to choose funds for them.

Unfortunately, many financial advisors are really not that in-depth in their knowledge of mutual fund investing, and often simply choose funds based on the limited selection of funds they have knowledge of, or access to.

Choosing funds should take into account:

1) finding funds with relatively low expense ratios.

2) finding funds that combine:

– stable tenure of management


– above average rates of return (for funds in that risk category)

After conferring with colleagues of mine in the past, I learned that, when one does not have adequate financial advice, it is almost always best to invest in an American Stock Exchange index fund, that is called the “Standard & Poor’s (S&P) 500”.

That fund is a passively-managed fund that owns stock in the 500 largest corporations in the United States.

A portfolio that diversified, composed of stock in that many huge, United States based industrial or informational corporations, is usually a very safe investment.

Additionally, even though I do not believe that many of their labor and environmental practices overseas are acceptable, U.S. based corporations that invest in Chinese (and other East-Asian manufacturing nations) are often highly profitable, so if one has to temporarily sacrifice social ideals in order to earn some money, then those U.S. based corporations are often a good investment.

In the long term, multinational corporations are almost always going to give you the highest rates of return, as they are able to capitalize on ever-shifting politically-created labor-market gaps.

And as long as no workers (particularly children) get hurt, and their workforce is energetically optimistic about leaving the farms and entering the manufacturing sector of their nation’s economy, then investing in multinational corporations can be acceptable.

2) Stocks:

There are a few methods through which one can choose corporate stocks to invest in:

1) Finding stocks in companies that have a high degree of likelihood of increasing their sales (and thus, hopefully, their profitability).

2) Finding stocks that have the lowest Price to Earnings (P/E) ratios.


3) Finding stocks that exhibit buyers heavy interest, and are also included in one (or preferably both), of the previous 2 categories.

That being said, on a superficial basis (as of June 5, 2015), I would tentatively assume that:

Apple computer stock is probably overpriced (due to the hyped, and irrational, swarming demand for it’s stock).

And that companies like Samsung (which manufacture products similar to the iPhone and iPad) are probably more fairly priced.

With regard to real estate:

I think, as time goes on, that California real estate is going to represent a great investment, due to a few factors:

1) the climate here is great.

2) huge U.S. based multinational corporations are based here.