Archive for the 'Money/Investing' Category

3 Steps Toward Saving For College

Saving for college has become a large factor in budgeting for retirement. It certainly has for mine. Here are 3 simple things to consider when planning for your child’s education while keeping your own finances in order.

1. Determine An Amount
According to FinAid.org, college costs increase at about twice the inflation rate. Current increases have averaged 5% to 8%. Go ahead…use their College Cost Projector and see for yourself.

Based on trends in college pricing by The College Board (the 2006-2007 average total costs including tuition and fees, room and board, books and supplies, transportation and other expenses were $16,357 for students attending four-year public colleges and universities), here is what the estimated cost of sending my 4-year-old son to school will be according to the College Cost Projector:

Public Institution

	First Year Projected Costs:	$42,177.08
	Second Year Projected Costs:	$45,129.48
	Third Year Projected Costs:	$48,288.54
	Fourth Year Projected Costs:	$51,668.74
	Total Projected Costs:	$187,263.84

Tuition inflation rate of 7.00% with each year adjusted after matriculation

Using the same metrics for a four-year private college or university at the current average per year of $33,301, the total projected cost is $381,247.99.

2. Set Up A 529 Account
There are many advantages to using a 529 college savings plan versus a traditional savings account or other savings vehicles.

• Earnings on a 529 account are not taxed.
• If your kiddo gets a scholarship, any unused funds can be withdrawn without penalty. However, you must still pay tax on the amount.
• Your child does not have control of or access to the account. Only the account owner (usually the parent or guardian) has access.
• Most 529 plans do not have an age limit for the end user. If you decide you want to head back to grad school someday, you can use the 529 to do that.
• In the event your kiddo wants to “skip a semester”, you have the option of transfering the account to another family member.

Be sure to check out Upromise to see how you can save money with everyday purchases. Our family currently uses it, and we’ve saved a bunch. The trick is to get as many people involved.

To learn more about 529 Plans in greater detail, the SEC (sec.gov) has a great Introduction to 529 Plans.

3. Don’t Ignore Your Own Financial Situation
It is easy to overlook your own finances, specifically with regard to retirement planning. Revise your budget often. Stash some away for your own retirement, especially if you can take advantage of a company-matching 401(k). Pay down debts. This is the method I use personally when determining the amount I save in Lil D’s 529. Why? Keep in mind that student loans have been and (probably) always will be among the least expensive borrowing tools. Worst case scenario — let them pay for it with student loans. They’re cheaper than your 11.9% interest rate credit card and your 6.2% mortgage.

Popularity: 4% [?]

Yahoo! CEO Terry Semel Steps Down, Jerry Yang! Steps Up

After months of criticism regarding the ongoing battle with Google for online ad supremacy, Yahoo! Inc. CEO Terry Semel steps down taking a back seat to Yahoo! (Yet Another Hierarchical Officious Oracle) co-founder Jerry Yang. As John Shinal of MarketWatch explains in the following video, technology will be the focus with Jerry Yang at the helm. Well…it might be.

Read the rest of this entry »

Popularity: 5% [?]

Consolidate Your Student Loan Debt

The costs of college are increasing at a rate almost double that of the general inflation rate….on average about 8% per year. That means the cost of college doubles every nine years. If it’s too late for saving money with Upromise, you may want to be better prepared when it comes to managing your student loan debt. Luckily, I incurred very little student loan debt over my college tenure so I didn’t qualify for consolidation. And it only took me 3 years to pay off my student loans.

According to the 2003-2004 National Postsecondary Student Aid Study (NPSAS), the average student loan debt among graduating seniors is $19,237 (excluding PLUS Loans but including Stafford and Perkins). So, to make things easy for the sake of calculation, let’s assume that you graduate with $19,000 in student loans at 6.8%, the current rate on Stafford loans, and you want to repay the loans in ten years. That would require a monthly payment of about $220. With FinancialAid.com, an interest rate as low as 5.375% is possible (calculated as the weighted average of the interest rates on the loans being consolidated rounded up to the nearest one-eighth of a percent).

Student loan debt consolidation with FinancialAid.com.

There are consequences to student loan consolidation. Well, sort of. As with any loan, if you stretch the amount of time it takes to repay your debt, you will pay more interest over the duration of loan. However, because there are no prepayment penalties and it is a simple interest loan, and by maintaining the same payments you were making prior to loan consolidation, you will not pay more in interest. And you will pay off the loan more quickly than before.

Do you qualify? Find out securely.

Keep in mind that there is a slim possibility that you will not always get a lower rate when consolidating. One thing is certain with FinancialAid.com — you will turn multiple payments into one single payment not to mention enjoy other benefits (such as a 1% rate reduction after 48 consecutive on time payments and a 0.25% interest rate reduction for using auto debit to repay your loan). A student loan consolidation program such as FinancialAid.com can help significantly.

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Cut Your Stock Losses With Stop-Loss Orders

One of your priorities when trading in the stock market should be to avoid being greedy. It’s tough, and takes alot of discipline. I practice this particularly when a stock is speculative. Rather than sit and constantly watch the market every hour on the hour, I use stop-loss orders.

According to Investopedia.com, a Stop-Loss Order is an order placed with a broker to sell a security when it reaches a certain price…designed to limit an investor’s loss on a security position. A stop-loss order is also referred to as a “stop-market order”. This is because when the stock hits the price you’ve previously set, your stop-loss actually becomes a market order. The stock is sold at the best market price available.

I don’t like to lose more than 10% on any stock purchase I make. To use an example, the Derrich.com welcomed Coach (NYSE: COH) at $51.40/share. As of yesterday’s close (05/15), the stock fell 2.66% to $46.10/share. That’s a loss of 10.31% since we added it to the portfolio. A stop-loss order would have sold COH at or around $46.26/share ($51.40 - $5.14 = $46.26).

Put Me In, Coach!
Despite being down yesterday, Coach is back up about 1.5% today. In my non-financial advisor, stock market aficionado opinion, now is the time to get into the stock if you haven’t already. In a real-life situation, I would not have placed a stop-loss on Coach simply because I like the long-term outlook for the stock. I certainly have my limits, but I’m pretty confident that women all over the country are still eyeing that new Coach bag in the latest catalog.

UPDATE: Coach closed the day (05/16) up $1.36, or 2.95% recovering its previous day’s loss.

Learn and understand more about the stock market at Stock Trading 101.

Popularity: 5% [?]

Stock Picking Contest @ Stock Trading 101

I’ve been picking stocks all year. Blain Reinkensmeyer at Stock Trading 101 is running a short term stock trading contest in which I have agreed to participate. The idea is to get some participation in the contest from a variety of reader groups and have some fun. Maybe you guys can give me some short-term ideas for my CNBC contest.

Play By The Rules

1. Entries will be accepted until Sunday, April 8, 2007, 9:00 PM EST.
2. Readers are invited to provide two estimates:
   • One stock (represented by a ticker symbol) that you think will provide a high return for the week (stock picks must be over $1 per share).
   • Predict the value at which you think the Nasdaq will close at on Friday the 13th.
3. To participate, just add a comment to this post (Blain will track your picks from here) mentioning the two items listed above.
4. The contest runs (your predictions and stocks will be tracked) officially from Monday April 9 until Friday April 13, 2007.

There are three ways to win: having the top stock pick, closest Nasdaq close, or best overall community pick average.

The Other Blogs

• Stock Trading 101
• Wall Street Fighter
• Frugal Trader
• Clever Dude
• Investoid
• GolbGuru

So, let’s see what ind of skillz the Derrich.com readers have (yes, that’s a “z”). And for those non-stock savy folks…don’t be afraid to pick a ticker symbol out of thin air just because you like the way it sounds or because it happens to match your initials. In case you need to do a little research, my two favorite sites are MarketWatch.com and Yahoo! Finance. Now, get to commenting!

Popularity: 2% [?]

Buying and Selling Domains

One of my first posts on Derrich.com was about how I’ve invested in domain names. I own about 50 domains not including every derrich.xxx I could scoop up (yes, I own them all…muahahahaha!!!). Not alot in the whole scheme of things, but definitely a start. I park about 40 of those for free at Sedo.com. Well on Monday, I received an email from Sedo notifying me that an offer had been made on one of my domains, vinoaficionado.com, for $60. Needless to say I was pretty excited about the offer, just not about the amount. I should have taken a page out of my stock market rule book: Don’t be greedy. I counteroffered for $500, which was declined.

Sedo will sell your domain on a commission-based schedule…not much different from other domain brokers. So, on the $60 offer, I would have actually made $54 considering that by simply parking my domains, I’ve already recouped all of the expenses associated with buying the domains by parking them for free with Sedo. Anyway, for most non-foreign domains the commission is 10% when you park your domain with Sedo. Gregg Hawkins wrote an excellent article about how to park your domains with Sedo. Check it out.

Buying domains can be highly-speculative, but if you stay on top of those domains changing hands, or of new trends and new sites, you can really benefit from investing in online real estate. About half of my domains are typos, and those are also my most profitable with regard to domain parking. Sadly enough, my menshealth[dot]com typos were getting more pageviews than Derrich.com in its first two months of existence. But after a few push-ups and crunches, Derrich.com prevailed.

Get In On This Trend
The growth in domain values for CO.UK domains has surpassed that of .COM domains for the first time. According to an article written in DomainNews.com,

Annual statistics for 2006 compiled by domain marketplace Sedo and DNJournal, the domain industry trade magazine, reveal a surge of 153% in the value of all published .CO.UK domain sales worldwide, in comparison to a growth of 79% in 2005.

Well, that got me started looking. And I recently bought 7 new CO.UK domains, one of which was trialbyjury.co.uk. In 3 days, it had already received over 30 hits. The average is just under 9 hits a day right now. I also tried buying yourhealth.co.uk, but due to an error, the order was not processed. Anyway if you’re interested, catch the rest of the article at DomainNews.com about the growth in .CO.UK domains.

How To Catch The Next Trend
Recently, I’ve subscribed to the DomainNews.com and to the DNJournal.com newsletter. I also subscribe to the Sedo newsletter to stay on top of aftermarket domain sales. Sedo realized the greatest amount of market share for aftermarket domain sales for 2006.

Feel free to add your suggestions to get the latest domain news.

Popularity: 4% [?]

Get Your Stocks! Stocks For Sale!

Yesterday, the market was the most green I’ve seen it in awhile. Celebrating St. Patty’s Day a little late there, aren’t we? Well either way, the current condition of the market should be seen as a buying opportunity. It’s not too late. You might call me bullish, but I’m just as cautious with my money as the next investor.

Keep Your Eye On The Ball
The “ball” being fundamentals. Making this suggestion to investors is usually pretty ineffectual. Reading the headlines may translate into…how do you say…thinking too much. Yeah. That. Don’t do that. When I say fundamantals, I mean know the company’s financial condition, be aware of the industry they are in (competition is a stock killer), and determine the company’s value without being concerned about its price. Bottom line: due diligence.

Don’t Panic
Someone like Jim Cramer might say “don’t hesitate”. He’s definitely a “pull the trigger” type of guy (but he has rules…read one of his books), and I like that. Back to the suggestion at hand…don’t panic. Don’t fall into the fast-paced whirlwind that is the stock market. Stay calm, do your due diligence, and pull the trigger. Ok. There I said. All this subprime news caused a huge sell off. To everyone that sold: thanks. Think of this as a stock sale. Many stocks are more valueable than their prices indicate…for now. Many investors are able to buy stocks at the bid right now primarily because they believe the bid is below the market value of that stock. No need to be greedy. Just pay the price it deserves…in today’s market. I’ve heard Warren Buffet analogize buying stocks to paying $20 for a steak one night, and then returning to the restaurant to find out the steak is $15 now. Who complains about that?

Fed Agrees with Derrich.com
Well, not officially, but Fed Chariman, Ben Bernanke, has downplayed the subprime issue from the get go. And rightly so. Look, investors shouldn’t be frightened away from the market. Just guesstimating, there’s no way more than 5% of all mortgages made were subprime loans. I’d bet more than 95% of the mortgages made still boast positive equity. The crappy part is that there is likely to be an increase in lending standards hurting future borrowers to which banks will lend money. (There you go, bears. Are you happy?)

So, get out there and buy some stocks. I suggested a few stocks under $10 last week. I’m just plating seeds here. I’m no licensed investment advisor, but I’ve got some experience and wish to share it. Do with it as you wish…and good luck.

Popularity: 4% [?]

BlogRoll

• Milk Was A Bad Choice
• CrackBerry.com
• Stock Trading 101
• For The Love Of Sports
• Project Spurs
• Busted Coverage
• WallStreetFighter

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