Inve$tment Club - Final

1. Closing Costs

Here is an article that talks about all the closing costs.
http://www.fool.com/homecenter/deal/deal04.htm

As we learned first hand from one of our members it can cost as much as $12,000 of closing costs for a $280,000 home. Make sure to take the time to know the fees and know that everything can be negotiated.


2. FICO
FICO -Fair Isaac Corporation was developed in 1956 by two guys named Fair and Isaac. This is the mostly widely used credit scoring system but not the only one. Some creditors will use their own system.

Improving your FICO credit score will entitle you to a better interest rate on a home.
Just because you are entitled to the rate, doesn't mean they will give it to you, so show around when it comes to financing a home.
http://www.myfico.com/CreditEducation/ImproveYourScore.aspx

Congress passed a law to allow everyone to view their credit "report" for free once every year. If you want your FICO credit "score" at the same time it is usually around $10.

Here is the site for your FREE report.
https://www.annualcreditreport.com/cra/index.jsp

The Three credit reporting agencies are Experian, TransUnion and Equifax.


3. Warren Buffett

I finished reading a compilation of some of Warren Buffett's annual reports and here are some quotes I feel pertain to our investment strategies.

"Another situation requiring wide diversification occurs when an investor who does not understand the economics of specific businesses nevertheless believes it in his interest to be a long-term owner of American industry. That investor should both own a large number of equities and space out his purchases. By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals. Paradoxically, when "dumb" money acknowledges its limitations, it ceases to be dumb."

"If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."

"The most common cause of low prices is pessimism--sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer." (Translation: When everybody thinks stocks are a bad idea, is when you can buy them cheap. Buy low, sell high.)


4. Scams and Schemes

A wise man once told me that half of investing is knowing what NOT to invest in.

If somebody "guarantees" you 20% a month or a year.
It's not a good investment, it's a scam.

One of the most convincing, and still used, large scale schemes is called a Ponzi scheme which is also very similar to a Pyramid scheme.
http://en.wikipedia.org/wiki/Ponzi_scheme

State of Utah, top 10 investment scams for 2008.
http://www.securities.state.ut.us/press/topscams2008.pdf