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The Last Days of Stock Investing Risk

The following is a guest post from Rob Bennett, who writes for A Rich Life.  He aims to put the “personal” back into “personal finance” by focusing on the role played by emotion in saving and investing decisions. Everybody loves the high returns obtained by investing in stocks.  Nobody likes taking on the risk that comes with doing so. The happy reality that few know about is that risk is today almost entirely an optional element of the stock investing story. Current General Belief Our belief that stocks are a risky investing choice goes back to the days when investing in stocks meant picking individual companies that would perform well in days to come. That is a difficult business. To pick individual stocks successfully you need to do enough research to figure out which companies have good managers and which companies have a strong product pipeline and which companies produce products and services coming into fashion and on and on. Few of us possess either the ability or time to pull it off. Index Funds Everything changed when John Bogle founded the Vanguard Group of funds in the mid-1970s and made index funds available to the average investor. Index funds do … Read more…

And the Winner Is…Patience

Last Friday, I posted about choosing between our want list and buying a new rental property.  Well, we’ve decided to postpone everything for at least a few months.  🙂 Patience for the Win I usually love making money decisions, but this time around felt different.  I felt awkward.  Then I realized that every time we squirrel away a large nut, we spend it or invest it nearly immediately.  We always keep a solid emergency fund, but the rest seems to flow in and out like water. For example, when we had saved up $50,000 at age 23 in 2007, we invested $15,000 in a friend’s business (that failed miserably) and $25,000 into our first home.  It took us about 2 years to save it and was gone within 4 months.  When my online work started taking off unexpectedly in 2011, the money I brought in started adding up quickly.  Within 9 months, we had paid off the remaining $23,000 left on our first house and started building our new one which used up about $50,000 for the 20% down plus the closing costs by October 2012.  When we got a large tax refund this past April 2014, we threw the majority of it to our Roth … Read more…

Postpone Our Want List Again to Buy Another House?

Everybody wants something.  I get that.  Mr. BFS and I are no different.  We’ve had an ongoing want list that we add to and subtract from for years.  The problem is that we keep prioritizing other stuff, investments, and trips before some of the things that have been on the want list for as many years as we’ve had it. Our Want List Here are the things that we were specifically, consciously spending on this year…or so we planned: Lasik – Mr. BFS has had glasses since elementary school and would like to move along now.  He’s been putting it off for years only because of the small risk to his eyes, but he wants to pull it off this time. Media room furniture – We have a specific plan for 6-7 media room seats/recliners.  But we keep putting off this purchase in favor of everything else. College Referee Training Camp – It’s about $2000 for a one week camp, but if they like you, you get hired to be a college sports official for football.  Mr. BFS would love to move up to college level reffing (which pays more too), but paying for the $2000 camp doesn’t guarantee anything at … Read more…

Our Stock Portfolio and Retirement Investments – 2013 Update

I just realized that I hadn’t posted an update of our stock portfolio holdings for about a year and a half!   Stocks and market stats still seem foreign to me, so Mr. BFS does most of our direct investing.  We sold about half of our holdings late last year when we bought our new home.  So here are the current stocks we are investing in via Scottrade, their current dividend yield, and what Mr. BFS said about them: Scottrade Holdings Conoco Phillips (COP) – 3.93% Yield – “They still have a good dividend based on what rate we bought at.  And they haven’t had to spend the money on exploration that other companies have, so they put that money back into share repurchases and dividend growth.” Intel Corp (INTC) – 3.92% Yield – “Good yield and a solid company.  They’ve gotten a lot better in the last year or two with competing with their major competition, AMD, with their processors.  They are still the #1 installed chip in pre-built computers.  As long as they have that market share, we’re in.” Johnson & Johnson (JNJ) – 3.04% Yield – “Bought it at a steal and has great payouts.  We managed to buy when they were … Read more…

The Mortgage Meltdown Didn’t Destroy My Portfolio

You can also check out the going rates like below by clicking here! Amex with a great interest rate: Rate (0.85%) – Apply Now Today I’m writing about “My Scariest Money Mistake and What I Learned From it” for the Yakezie Blog Swap. A group of Yakezie Finance and Lifestyle Network members all write about the same topic on another website. Check out all of the contributors (at the end). And be sure to visit Barbara Friedberg Personal Finance for Crystal’s post! The mid 2000’s were a golden era in the U.S.A. Interest rates were low, there were enough jobs to go around, and investment values were trending upward. Finally, there was hope that all American’s could finally own their own homes. The American Dream Turned into a Nightmare Mortgage companies were thrilled with the abundance of capital and low rates and began giving out mortgages like candy. If a buyer didn’t have enough income to qualify for the loan, no problem, the mortgage company tweaked the numbers a bit! Their consciences were clear as they believed that home appreciation would up the principal value of the borrowers home. And, the mortgage companies sold the loans they made so if … Read more…

Are You Ready For The REALLY Fun Stuff?

The following is a guest post from William Cowie, a previous contributor to BFS.  He blogs about successful investing at Bite the Bullet Investing and you can get his free Investing Basics series here. Who doesn’t like to have fun? The only problem, though, is finding both the time and money. Remember the old Willy Nelson tune: If you’ve got the money, honey, I’ve got the time? I remember thinking in graduate school how cruel life is that we either have time, or money, but rarely both simultaneously. As a student I had lots of time for fun things, but no money. Then, when I got a nice job, we had the money, but no time. So… is it possible to have both the money and the time to have fun? Yes. How? 1. Understand Your Income Possibilities You have only two possible types of income to live from: Income from a job or business Income from your investments Some people get upset when they hear this. Take Betty for example (not her real name). “Surely there are other ways of getting money!” When I asked her to name one, though, all I got was one of those looks: a scowl on the face … Read more…

The Adrenaline Junkie In Me…

The following is a guest post is from my younger sister, Ambi (short for ambitious).  She’s a recent college graduate, started her first post-college career here in Houston, and has been living with us since January.  Please give her a warm welcome!  Investment Opportunity Maybe I am an adrenaline junkie, but here’s my latest radical decision. Currently, I am very actively looking to invest in Groupon stock.  After hearing its disappointing last quarter’s numbers and reading former CEO Andrew Mason’s blunt exit email, I want in. No, I don’t have an emergency fund that is 6 months worth of my earnings.   No, I have no experience with stocks.  No, I have not even held my job for 3 months. I understand how choosing to invest in a tanking company that just fired its CEO, based on an unproven coupon business model, may seem unwise.  Here are my three justifications: 1)  I see a great opportunity. Groupon stock held a high of almost $20.00 a share at one point in time, and while I do not even pretend that Groupon stock will ever be worth that much again, I do see it rising above its $5.30 a stock current price. 2)  I feel secure … Read more…