Compound Interest

PDF Version

CompoundingInterest.doc
Excel Spreedsheet - Change Interest Rates and fees to see how it affects your outcome.

The sooner you start saving for retirement the more you will have.

Compounding Interest is a beautiful thing.

Bi-Weekly Mortgage Payments

No time to edit and make it look good so I will just post an email conversation I had with a friend.

---

I'm always going back and forth about whether to
pay the house off or keep the money in an account to pay the house
off. I definitely see both sides to Ramsey's vs Edelman's argument.

The bank has to be willing to receive payments for this and their is usually a fee to set it up.

This is not magic.
You are simply paying 1 extra payment a year.

If you are going to go this route you should try and put more down on your house at the beginning. As the bank makes most its money off of you in the first 5 years. And most people only hold their house for 7 years.

The negative side.
The faster you pay it off, the less you can deduct on taxes.

I'm not sure why I reply to your emails.
I already know you know this.

Craig.

-----

So one of the most amazing things I have
learned about investing is is Bi-Weekly mortgage payments.
This can easily take 7-10 years off your 30 year
payment plan.


Please take a look at my favorite website of financial
calculators:

http://www.dinkytown.net/java/ExistingBiweekly.html

Howto add Dave Ramsey Podcast to iPod using iTunes

After you have downloaded and installed iTunes from http://www.apple.com/itunes/download/
Click on "iTunes Store" then type "Dave Ramsey" into the Search box.




Now Click Subscribe.



Everyday you turn on your iTunes you should get a new 40 minute Dave Ramsey radio show episode. If it does not automatically download, right click and select "Update Podcast."







Now attached your iPod.
It will show up in the left.
Click on the podcast tab to make certain your iPod and computer Sync.






If you don't have an iPod you can listen to the podcasts from your computer by pressing play.
There are a lot more podcasts out there.
Ric Edelman
Real Estate
Investing

How to Purchase an Index fund with Scottrade

When you purchase an Index Fund it will be under the "Mutual Fund" section.
$3000 is the minimum initial investment.




Reinvesting the cash back into the fund will help it grow faster.




This page is to helping you to remember that this is a long-term investment.
The cost of $17 is higher than the usual $7 because it is an Index fund instead of individual Stock.
I believe if you have a Vanguard account, they don't charge you the $17 cost.

Index Funds

Index Funds

"Indeed, I have terrible news about brokers and money managers generally - news which I expect you've suspected, but couldn't quite believe, all along. There are no brokers who can beat the market consistently and by enough of a margin to more than make up for their brokerage fees. Or, if there are a few, they are not going to work for peanuts - and any account under $500,000 is peanuts. By and large you should manage your own money. No one is going to care about it as much as you."

"This is a very simple concept but profound: just by investing all the money you have earmarked for the stock market in the Vanguard Index Trust, you will generally do better than most bank trust departments, mutual fund managers, and private investors--with far less effort!"
Andrew Tobias "The Only Investment Guide You'll Ever Need."

Example Portfolios with multiple Index funds
http://www.thekirkreport.com/lazy_portfolios/index.html

VTSMX - (Vanguard Total Stock Market Index Fund)

http://www.fool.com/investing/mutual-funds/2007/04/26/the-4-best-words-of-investing-advice.aspx

First, hold a portfolio that's diversified across market caps and industries. One way to do this is to anchor your portfolio in a broad market index fund such as Vanguard Total Stock Market (VTSMX) -- a low-cost option that holds more than 3,700 names and includes heavy exposure to stalwarts such as Microsoft, Intel (Nasdaq: INTC), and Google (Nasdaq: GOOG). Thus, when your micro caps inevitably dip and dive, the effect on your portfolio will be muted by the relative stability of your index.

Buffett on Index vs ETF

http://www.marketwatch.com/news/story/story.aspx?guid=4A899C35-02F6-42CB-BB01-7B7E303003D4&siteid=yhoo&dist=yhoo


Other Vanguard Index funds

http://www.fool.com/investing/mutual-funds/2007/05/07/vanguards-best-index-funds.aspx?source=mppromo

Saving & Investing

Here are the notes of a class I taught today.
More detail is found within the blog.

Saving & Investing

1) Emergency Savings – 3 to 9 months of monthly costs.
• http://savingsaccounts.com/
• HSBCDirect
• EmigrantDirect
• INGDirect
Avoid credit card debt and using retirement account.
Reduce stress with job loss, car accident, and natural disaster.

2) Retirement Account - matching.
• 401k, TSP, 403b, Roth IRA
"By periodically investing in an index fund, the know-nothing investor can actually outperform most investment professionals." ~Warren Buffett

The miracle of Compounding Interest:
http://www.geocities.com/craigfield12/IRASheet.jpg

3) Education - the fun way!
iTunes - Podcasts
• Dave Ramsey - Basics
• Ric Edelman - Advanced
http://finance.yahoo.com/
Expert Opinion – Great Articles

4) Take Action!
If you know you are going to have 7 years of plenty what decisions will you make before the 7 years of famine?

My blog:
http://colonial-investment-club.blogspot.com/

Dave Ramsey classes taught to 60% of high school students in Utah, sponsored by Zions Bank.
http://www.daveramsey.com/etc/cms/index.cfm?intContentID=8922

Financial Experts

I find it very interesting to compare advise from financial advisers.

Dave Ramsey
If you have $300,000+ of debt listen to me to get motivated and make the required sacrifices to get out of debt by selling the second car and getting a second job. "Out of debt" includes your mortgage. Then buy a mutual fund but keep it simple or you won't do anything.

Ric Edelman
Once you are out of debt get diversified with all available asset classes, stocks, bonds, ETFs, Index Funds, International funds, real estate, natural resources and cash; but stay away from evil 3% annual fee Mutual Funds.

Suzy Orman
Get out of debt and diversify for women. And once you are as rich as me, buy Munibonds.

Robert Kiyosaki
Nothing works but real estate investing and silver. The US dollar will never be worth anything again because US is going broke due to Social Security and Medicare.

Jeremy Siegel
Macroeconomics tells us to keep investing for the long-haul and I've created my own ETFs called Wisdomtree to help you get there. (Economist for Wharton.) Economists always will give you a reason as to why their earlier predictions were so wrong.

Larry Kudlow
Always optimistic about America no matter what!

Cramerica
Buy! Sell! Buy! Sell!

At the end of all of this, I find I like listening to all of them because they do help somebody. When I try to help people most tend to be strapped with debt, then they slowly move to buying a house and getting a few mutual funds with their retirement account. Emotions and bad ideas from the media will drive them in and out of bad investments with even worst timing.

Most people will hopefully be realistic about their financial life, get out of debt, eventually pay off their house and stick with Warren Buffett's "Buy one or two low cost Index funds" idea and they will probably be fine. Unfortunately most won't make it this far.

Amazingly most of this list of financial experts admit to having made extremely large financial mistakes. Experience is what they have to share. Perhaps the best thing to happen to you will be an extremely bad choice early in life.

Craig.