Friday, October 18, 2013

Save $3,000 a year

Save $3,000 a year on your 401k or IRA
There are over 14,000 mutual funds, 1,000 ETFs and thousands of other places to put your money because managing money is very profitable. It costs managers very little to invest your money so your fees of 1-3% are almost all profit. Paying your fees, which increase every year, can take 40% of your nest egg’s potential total because of compounding. Paying fees every year can take $400,000 during your lifetime. Ask your HR or IRA person for the lowest cost stock or balanced mutual fund and save. Use our Guide to help you get what you pay for: 

Are hedge funds right for you?
Many hedge funds don’t report returns publicly so it is hard for investors to judge. The bulk of hedge funds are positively correlated with stocks making them a poor choice for an alternative to stock funds. However, they underperform equities in up markets and outperform equities in down markets, according to the work of Fung and Hsieh. In fact Warren Buffett made a bet with one hedger in 2008 that the S&P500 would outperform his 5 hedge funds in 10 years. So far, the Vanguard 500 is ahead, 8.69% to 0.13%.  
Patience NOT leveraged trading wins long term:

Even wealthy investors don’t know how much they are paying
Instead of making it clearer, regulators are allowing advisors, brokers and agents make the actual costs even harder to find. The industry is migrating to complex “hybrid” schedules of fees and commissions that blur the 1% clients think they pay into 2-3% they actually pay. “It's all disclosed, but it's hard to make the fine print any smaller.” And the wealthier a client is, the greater the opportunity for a financial institution to pile on fees by investing his or her money in private placements and partnerships that transact business with affiliates, industry observers noted. Investment bank clients with $10 million and up think they're paying 50 to 75 basis points for advice, he said. In truth, they are paying 300 to 400 basis points. Typically, this a partnership or hedge fund with a truck-load of documents that only lawyers read.
Switch and keep more by using mutual funds operated at cost:

ObamaCare program glitches like Apple’s and Mercedes’ glitches--NEW
A number of iPhone 5s owners are reporting that their new smartphones are displaying the feared "blue screen of death" (BSOD) after using certain apps, and then launching into a reboot. The contractors responsible for the exchange—CGI Federal for the website itself, Quality Software Systems Inc. (QSSI) for the information "hub" that determines eligibility for programs and provides the data on qualified insurance plans, and Booz Allen for enrollment and eligibility technical support—are scrambling to deploy more fixes. 
So sign up next month.
We never buy the new car model for the same reason. Mercedes-Benz recalls 11 different models due to software glitch ..
Health care costs rise at slower pace
In 2013, U.S. companies and their employees saw the lowest health care premium rate increases in more than a decade, according to an analysis by Aon Hewitt. After plan design changes and vendor negotiations, the average health care premium rate increase for large employers in 2013 was 3.3 percent, down from 4.9 percent in 2012 and 8.5 percent in 2011. Buy only what you need with discounts:

Getting over the learning curve
Young people are showing interest in buying insurance through Maryland Health Connection, the state marketplace created as part of federal health care reform, with those under 35 making up a third of those exploring the organization's website. Women tend to be better planners.

Teens need to use Buffett’s advice
Nearly half of teens (49 percent) report feeling pretty clueless about money management, according to a new poll conducted by Opinion Research Corporation. The survey also identified one of the reasons behind this lack of financial knowledge: 90 percent of teen respondents said they're not learning everything they need to know about money management. There are plenty of online resources:

Sandy storm victims still waiting
Joanne Gwin's home in the Silverton section of Toms River NJ was wrecked by the storm. Her insurance company paid $101,100 on a $250,000 policy, and she is appealing that decision, still living in a rental a year later. Many homeowners have had to use their own money because FEMA and insurers use time as leverage. This is another reason to have an emergency fund:

Could this government crisis happen again?
Yes. Your SS benefit may be delayed—there is no SS trust fund! One analyst says, assuming the borrowing authority runs out and lawmakers stay in their stalemate, a batch of Social Security benefits scheduled to go on Feb. 7 would likely be delayed by two days. A larger batch, scheduled for Mar. 1, would be delayed by 12 days. The longer the debt-limit impasse, the longer the delays.
Wait, Social Security brings in more money — in taxes and interest — than the benefits cost. How could it not have money to pay benefits?
Because lawmakers don’t treat Social Security, to borrow an old phrase, like it’s in a lockbox. They mix its tax receipts with income taxes, capital gains taxes and every other revenue source the government has. Benefits get paid out of that big mixed revenue stream.
You can bet Congress, President and Supremes will all get paid before we do. Big government contractors aren't likely to get hurt substantially in any event, as they have the reserves to make it through any payment delays unscathed. United Technologies had $4.9 billion in cash on its balance sheet, while Boeing had more than $14 billion in cash and short-term investments.
Emergency fund of 1 month’s expenses is necessary so you are ready Jan 15 for another shutdown.

SCAMS           “Deficits don’t matter” Republican Godfather, Dick Cheney, 2002
Bush wars increased the debt by $4-6 trillion to $16 trillion. 1985 debt $3 T, same as 1945. Only years of surplus—1998-2001.

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