The Round Table – December 14, 2014

wood round table

wood round tableI hope everyone had a great Thanksgiving and is getting ready for the holidays! We had an awesome Thanksgiving and just decorated our house for Christmas this weekend. My shopping is just about done too. I took a few hours on Cyber Monday to buy all of my gifts. Was it me or were this year’s Black Friday and cyber Monday deals crap?

I am not one to go out shopping for gifts on Black Friday, I instead look for deals that I can resell for a higher price. It felt like all of the “good deals” were on products made by companies I’ve never heard of before. And for Cyber Monday, the “deals” I found were free shipping on orders of $100 or more. Wow, what a deal (end sarcasm).

Ir seems as though the deals rotate from year to year. Last year was a great year for finding deals. Two years ago, not so much. Hopefully next year is better.

Anyways, the year end is upon and that means 1,000’s of articles about goal setting and New Year’s resolutions. I am putting my foot down and telling you now I will not be writing about goals come January. At this point, it just feels like every article is the same thing just in a different voice.

Enough about all that. You came here to find some awesome posts from other personal finance bloggers. Here are the posts I’ve found to be the best while surfing the web recently.

Great Blog Posts from Other Bloggers

The Power of Asking at Bare Budget Guy
802 Reasons Why cash Is More Thoughtful Than Gift Cards at Len Penzo
Are The Experts Killing Our Savings Potential at Blonde on a Budget

Posts Money Smart Guides Wrote for Other Blogs

How To Make Money With Photography at Penny Thots
How The Long Road To Building Self-Confidence Got Me Out of Debt at Ready For Zero

[Photo Credit: Wicker Paradise]

Book Review: Live It Up Without Outliving Your Money

book review

book reviewIt has been some time since I’ve done a book review here. With that said, today I am reviewing Live It Up Without Outliving Your Money by Paul Merriman. I’ll just tell you from the start that this is a definite must read.

Live It Up Without Outliving Your Money Summary

The book itself teaches its readers how to build a perfect portfolio for their situation. Mr. Merriman has even built recommended portfolios for you to use as well. These portfolios are built off of funds from Vanguard, T. Rowe Price, Fidelity, and Schwab. You can view his website to find all of his sample portfolio’s, or save yourself the time and check out my model portfolios which has many of the elements that Merriman talks about.

Getting more detailed, the book starts off with the first few chapters talking about investment philosophy and what makes some investors successful and others unsuccessful, mainly the two biggest enemies that most overlook: fund expenses and taxes. He breaks both down showing readers why you need to take these into account when building a portfolio and why you are crazy if you ignore them. (I also talk more about fees in this post.)

From there the book builds a portfolio over the next few chapters. Each chapter looks at a specific part of the portfolio and shows you why you need to invest in certain asset classes.

The book concludes with how to live on the money in your investment portfolio.

My Take On Live It Up Without Outliving Your Money

Aside from the overall content, the one thing I really enjoyed about the book is that it is outlined in a very useful fashion: Each chapter has what I call “a short summary”. This short summary provides you with a good brief overview of the chapter topic. In essence, you could just read these short summaries and be done with the book. But the chapters themselves go into excellent detail.

Another thing I enjoyed was how all of the chapters were smartly laid out, with each one building perfectly from the last. While you can jump around, it is best to read from beginning to end.

Other things I enjoyed about this book:

  • Mr. Merriman’s writing style is great – not too complex for the non-investor but enough meat for the person that has been investing for some time.
  • The chapters are short, which shows he does not use a lot of filler. In fact, most chapters are just 10 pages long. This makes it a great book to read just before bed.
  • There are text boxes scattered throughout the book that go into greater detail for those looking for more. I like how it is up to the reader to dive into this information as opposed to the books where the author simply assumes everyone wants the added information.

Final Thoughts

While he provides sound advice, what I enjoyed most out of Live It Up Without Outliving Your Money was the fact that anyone can pick it up, read it over a weekend, and set up his or her ideal portfolio. The book doesn’t weigh you down with overly complex financial terms or statistics. It is presented in a straight forward manner that is easy to understand. I highly recommend this book to both the beginning and seasoned investor and have added it to my bookstore. There you can find other books I reviewed and a link to Amazon to buy the books.

[Photo Credit: Enokson]

Why Life Insurance Is Not A Good Savings Plan

life insurance poor savings

life insurance poor savingsIt’s been a pretty popular idea to use a life insurance policy as a savings plan. The money is always there to withdraw, right? However, the following five reasons are all why life insurance is not a good savings plan. In many cases life insurance is important to have and with today’s quote websites there is no reason not to look into it, but you need to consider these five important points.

The Investment May Not Produce Great Results

Many life insurance policies are promoting their savings potential and talk about the remarkable investment turnarounds. However, these are more optimistic than anything. The investment may not produce the great results you need for this to work as a good savings plan.

In order to get the savings amount you’ll need for college or retirement planning, you may need to make a larger premium payment than originally advertised.

High Management Fees

While some savings plans may have a small monthly fee, most do not have a management fee. However, with a life insurance policy that makes investments for savings, the management fees could outweigh your returns. [Read more…]

The Only Tip You Need For Retirement Saving Success

retirement success

retirement successWe suck at saving for retirement. The average 50 year old has $43,797 saved for retirement. I hate to break it, but that is just not going to cut it. With the fact that most of us have such a hard time saving for retirement, we need to come up with a way to make it more fun or enjoyable so that people start actually saving.

Let’s look into the mind of a typical person. They say to themselves, “I should probably start saving for retirement.” The a commercial comes on TV for the new iPhone and drooling ensues. By the time the commercial is over, they say to themselves, “what was I going to do again? Oh well, that new iPhone looks sweet!”

I’m not trying to pick on people, but we have a short attention span. That and companies spend millions every year to better understand how we think and react. They then use this against us so we fulfill a short-term need instead of a long-term need.

If the above example doesn’t describe you, then maybe this one does:

When you think of saving for retirement, you say, why should I save a bunch of money when I might not even be around to enjoy. YOLO people. YOLO.

In either of the examples I presented there is one thing true about both of them: we are not good at conceptualizing the long-term. So, in order to save for retirement, we need to re-wire our brains. Don’t worry, it won’t hurt.
[Read more…]

What Outrageous Fees Are You Paying?

Value of Investments

outrageous feesIn today’s business world, profit is more important than ever. Whereas in the past most businesses would do the right thing just to keep a customer, today many companies are more concerned with milking every penny out of the customer. How do I know this? Just look at the fees various companies are charging you.

Outrageous Fees You’re Being Charged

Here are a handful of various fees I’ve encountered recently. Sadly, they are all too common:

Airline Change Fee: Did you know it costs you around $150 to change your plane ticket? How crazy is that? I have plans to fly down to Florida to see my niece and sister next month. We just found out my sister’s husband might be getting a new job and they may need to relocate, which puts my trip down there in question.

I called the airline I am booked to fly on to see if I could go down earlier. The woman was super nice and told me “of course you can”. They she quickly added “it’ll cost you $150”. I nearly fainted!

Using A Bank Teller: How crazy is this fee? If you go to the bank and want a human being to handle your deposit or withdrawal, it is going to cost you. Granted not all banks are using this fee, but why do I have to pay to see a teller? Isn’t it their job to wait on customers? (As a quick aside, if any bank tellers are reading this, I would be concerned for job safety. This sounds like a way to boost profit, err, cut costs by letting you go.)

Airline Baggage Fee: I hate to pick on the airlines, but it is too easy. At first, this fee was charged to us because of the high gas prices, or so the airlines told us. Here we are, almost 10 years after gas prices first skyrocketed up and we are still being charged this fee. Interestingly, gas prices have come down while this fee is still here.
[Read more…]

How To Save On Taxes The Way The Wealthy Do

how to save on taxes

how to save on taxesThe following contribution is from The Money Template, a personal finance blog exploring all things related to wealth and well-being.

Taxes are simply one of those things where no matter how much you fight them they never seem to go away. That is … unless you know a few tricks on how to get around having to pay more than your fair share.

Believe it or not, this is actually one of the contributing reasons why wealthy people stay wealthy. Even though the tax code appears to be written in such a way that you should owe more money the more you make, this is generally not the case. In fact it was famously revealed in the 2012 presidential election that millionaire republican candidate Mitt Romney was paying an effective 14% tax rate. Are YOU enjoying a nice 14% tax rate?

Similar to Romney’s case, the trick in knowing how to save on taxes is learning how to use legal tax incentives to your advantage. Though you may think this is something that is only reserved for the ultra-rich, the reality is that a lot of these same techniques can be applied to your own situation with the aid of financial planners and accountants who are familiar with the tax laws.

Here are a few you can start using now:

7 Strategies for How to Save on Taxes:

1)  Retirement Accounts:

Contributing to your employer-sponsored retirement funds is one of the simplest ways to take advantage of tax-sheltering. With these types of programs the contribution is taken out of your gross pay, meaning that it is no longer considered to be taxable income. Your regular income taxes are calculated on the total amount that is left over. The more money you defer to your retirement plan, the less money there is to be taxed! The IRS will allow you to defer up to $18,000 per year to your 401k plan starting in 2015. [Read more…]

Investing Giveaway: Do You Want $2,500 In APPL Shares?

apple stock giveaway

apple stock giveawayI am a big fan of raffles and giveaways. I’ve really only one one in my life that I can remember. As a kid, I was big into collecting baseball cards. My Mom would take me to local malls that had baseball card shows all of the time. One such time, there was a raffle for a signed Art Mahaffey baseball. (He was a pitcher in the ’60s.) We go there just before they pulled the winner out, so I filled out my entry and placed it on top of the pile. My guess is they never really shuffled the entries and picked out the one on top because a few minutes later my name was announced over the loud speaker as the winner. It was a great feeling, even if at the time I had no idea who this guy was.

In any case, today I am here to share with you a giveaway for you to enter. Do you know the company Apple? Unless you live under a rock the answer should be yes. Well, I am taking part in a giveaway that will have the winner receive 15 shares of Apple stock, the runner up will win 7 shares of stock and the third place winner will receive 3 shares of stock. How cool is that? Even better is that your prize can increase in value over time through appreciation.
[Read more…]

Carnival of Financial Planning – The Getting Sick Sucks Edition

getting sick

getting sickWelcome to this week’s edition of the Carnival of Financial Planning. This weeks edition is the “Getting Sick Sucks” edition, because, I got sick. I’m one of those people that get touches of a sore throat or a stuffy nose, but rarely does a cold knock me out. For a few days this week, this cold did just that – knock my out! I’m happy to say that I am on the fast track now to getting better. In fact, I slept for over 9 hours last night!

If you are in the unfortunate situation of getting sick, I found that doing stuff actually made me feel better than just laying around all day. Of course, you can’t be moving all of the time. To that, take some time to better your finances. Lucky for you, here are a handful of great posts to read to get started!!

BUDGETING AND ECONOMICS

Gretchen @ Retired by 40 writes Throw a Frugal Birthday Party – Throw a Frugal Birthday Party

Maria @ The Money Principle writes Don’t Make Debt a Worry: Try These Business Tips – Don’t look at your bank statements, you think to yourself. If I don’t see my debt then it isn’t there.

Alexa @ Single Moms Income writes Another Great Way to Give: Operation Christmas Child – I’m completely convinced that giving back to people whether that be with a thoughtful note, big batch of cookies, or small gift is one of the best ways you can make a difference in not only the world, but also in yourself. [Read more…]

Sharebuilder Review

sharebuilder review

sharebuilder reviewIs Sharebuilder an online broker you should look into? What, you’ve never heard of Sharebuilder? I’ve been investing with them for the better part of 2 years now and based on what I see, Sharebuilder is positioning itself to be a big player in the online discount broker world. Below is my review of Sharebuilder and why it should be on your short list when looking for a place to invest. Be sure to check out my online broker comparison chart are well as these other reviews too:

When it comes to investing, it’s important you choose the broker that meets your needs best.

My Sharebuilder Review

Sharebuilder History and Background

Sharebuilder began back in 1996 through NetStock Direct. It was created with the philosophy that to be successful, one should look at dollar cost averaging as opposed to day trading.

In 2005, Sharebuilder began to offer 401k plans to small businesses and in 2007 was purchased by ING Direct. After the housing bubble meltdown, ING sold off its US based banking business to Capital One and Sharebuilder was part of this deal. The deal was completed in 2012.

Today, Sharebuilder is still around and is better than ever. Capital One has certainly made some smart moves in making Sharebuilder more competitive and I hope that the trend continues.

Sharebuilder Features

Now on to the features that makes Sharebuilder so great for investors. I’ll highlight these in bullet points and then go into more detail:

  • $6.95 online trades. This used to be higher, but Capital One knocked the price down to be more competitive.
  • Tons of investment options for investors. Choose from stocks, bonds, exchange traded funds, mutual funds, and options. You can invest in non-retirement, retirement and educational accounts as well.
  • Automatic Investing Service. For $3.95 (per security) you can set up an automatic investing plan with any combination of stocks, mutual funds and ETFs.
  • Easy to use website. There is a lot to be said when you find a website that is easy to navigate and find what you are looking for. I found this to be the case with Sharebuilder. I had no issues finding what I was looking for.

Sharebuilder Benefits

There are many benefits to using a firm like Sharebuilder. Very few other brokers allow for automatic investing plans to be used by an investor. With over 1,000 no load mutual funds, and 70 no fee mutual funds, you have a good mix to choose from.

Other benefits include:

No Account Opening Fee. You can start investing with as little as you like. The only exception to this is with mutual funds. Many mutual funds have initial minimums that need to be met. The good news is that the minimums are much less than if you invested with a fund family directly. For example, if you invest in American Century directly, the fund minimums are $2,500. But, if you invest through Sharebuilder, the minimum is $250.

Low Fees. There is no inactivity fee with Sharebuilder. The only fees you will encounter are the typical fees that most places charge – wires, returned checks, etc. There are fees though to transfer your account, either in full or partially to another broker.

Portfolio Builder Service. This service allows you to pick between 6-8 ETFs and build a portfolio. You can then invest a minimum of $200 to buy the entire portfolio on an ongoing basis for $18.95. More info on this service can be found here.

Easy Navigation. The website is easy to navigate and is very user friendly.

Good Research Tools. Another benefit to Capital One buying Sharebuilder was the introduction of more research and investment tools.

Downsides to Sharebuilder

Unfortunately there are downsides to Sharebuilder that you need to consider. Some are bigger than others, so you will have to decide which ones matter most to you.

  • Automatic Investing on Tuesday. If you enroll in the auto investing feature, the trades are made on Tuesdays only. In the grand scheme of things, this shouldn’t matter to a long-term investor. But for those that are looking at a shorter time horizon, not getting to buy on any day of the week can be an issue. Also, the $3.95 fee is on each security you buy, not on the automatic investment as a whole. So if you set up an automatic investment for 4 securities, you are looking at close to $16 in commissions. Of course, this is still much less than if you buy them separately with Sharebuilder or any other online broker. But in the past, it used to be a fee on the total automatic investment.
  • Basic Options. If you are looking to get involved with options, Sharebuilder doesn’t allow for the advanced trading strategies that E*Trade or TradeKing offer.
  • High Portfolio Builder Cost. At $18.95 per portfolio, the fee is a little steep when you could buy a handful of ETFs through Schwab or Betterment for no fee at all.

Who Is Sharebuilder For?

The ideal clients for Sharebuilder are investors without a lot of money. If you are just getting started with investing and only have $100 or so to invest each month, Sharebuilder is a consideration for you. You can create an automatic investing plan or use the ETF Portfolio Builder and call it a day.

Of course, you should first check out the other online brokers first. I say this because you might find comparable ETFs with Schwab for no fee at all, or even at Betterment. While Schwab does not offer an automatic ETF investing service yet, word is they will be soon.

Overall, Sharebuilder is a work in progress at this point. It has good and bad features. For me, I would look to the other online brokers I reviewed first and if they don’t meet your needs, then consider Sharebuilder. Here is a link to their site to do more research or to sign up.

[Editors Note: This post was updated to reflect new offerings and pricing from Sharebuilder.]