Beware Stock funds that aren’t.
Posted on | July 3, 2009 | No Comments
When times turn tough in the stock market and we’ve seen the kinds of portfolio pummeling losses common at the end of 2008 and beginning of 2009, it’s normal to want to see how your funds held up against their peers and perhaps make adjustments.
The danger this time around is that you may not be comparing the same kind of funds.
Take for example the Reynolds Blue Chip Growth fund (RBCGX). In 2008, it only fell 5%, while the S&P 500 lost 32%. Seems like a slam dunk for being a better choice than an S&P index fund, right? Not so fast.
The reason the Reynolds Blue Chip Growth fund only lost 5% that year is because it had 89% of it’s assets in cash!
Some of you may be wondering, “So what?” since it performed better. But if performance is all that matters, you may as well start chasing individual stocks. What good is a blue chip growth fund if it invests the bulk of its holdings in cash?
Most investors pick and choose stock funds based on the type and style of that fund. From there, they chose where it fits into their overall stock portfolio. What if you thought you had a nice mix of 70% stocks and 30% bonds with retirement 30 years away. Only while the rest of the stock market is booming, you’re lagging behind getting little more than a fixed income return because the fund’s manager decided he knew better and was going to abandon the intent of the fund?
These guys ought to ousted at the next shareholder meeting!
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How Not to List Your House.
Posted on | July 1, 2009 | No Comments
If you’re bored, or just want a quick giggle at some of the most bizarre and ridiculous real estate listings world wide, check out It’s Lovely! I’ll Take It!
Each listing comes complete with a photo and a link to the original listing (see need to be seen to be believed!).
If you’re thinking of listing your house, this site can serve as a cautionary tale of what not to do. For instance, you’ll learn:
When a letting in a little too much light might be a bad thing.
When you need a professional stager.
And you must see this bizarre fireplace - I’m pretty sure it doesn’t meet the fire code!
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Why are YOU in debt?
Posted on | June 29, 2009 | 2 Comments
We’ve been hearing a great deal in the news lately about debt. I know a lot of people are in various kinds of debt. Common causes highlighted by the media are the death of a family provider, job loss and medical emergency. I suspect this is because those causes are very dramatic. But what about more mundane and widespread causes?
What about lifestyle creep?
That’s how my wife and I found ourselves in over $12,000 of credit card debt. It happened before we knew it, and once we had a minor medical emergency (sick pet) we realized how bad things were.
Eventually we resolved to take care of our lifestyle issue and dig ourselves out of the debt hole we dug.
So, there you have our problem: Lifestyle creep. What’s yours?
Also, that was mostly credit card debt. We also had car loans, a mortgage and student loans. So, what kind of debt do you have? Is it student loan debt, tax debt, credit card debt?
I’m interested in a general idea of the kind and cause of debt of my readers - even if you’re out of debt now. It’s ok, you can use a fake name and we won’t know. 
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BankRate’s Top 10 causes of debt.
Posted on | June 25, 2009 | 1 Comment
The folks at BankRate.com have come up with their list of the top 10 causes of debt, based on reader emails.
- Reduced income/same expenses.
- Divorce.
- Poor money management.
- Underemployment.
- Gambling.
- Medical expenses.
- Saving too little or not at all.
- No money communication skills.
- Banking on a windfall.
- Financial illiteracy
I don’t know about you, but I think this list could be trimmed down to 7 because Financial illiteracy encompasses #’s 3,7 and 8 in my mind.
Control what you can and accept what you can’t
One of the most powerful realizations that can come from a list like this is seeing what you can control, and accepting the things that you cannot control.
You alone have the power over your life to control 3, 7, 8, 9 and 10! Begin with becoming financially literate, and the rest will fall into place.
While you cannot always control your state of employment or whether a spouse is going to seek a divorce, you can plan for such event, and mitigate their effects. For example, maintaining an emergency fund in a high yield savings account will provide you a cushion between your lifestyle and sinking into debt should your income vanish. Likewise, you could work to get extra sources of income on the side, so you will still have some money coming in if your primary source of income is lost.
Medical expenses and Gambling are the sort that you mostly have to accept, at least in the sense that you cannot entirely prevent such things from plunging you into debt. Still, there are coping techniques and other actions that can mitigate their effect.
In the end, I think most people end up in debt because of a lack of planning and generally not paying attention to their finances. It’s a shame, but it’s also preventable.
This is what happened to me. And I eventually woke up, took control of my financial life and got out of debt - and you can too!
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