Valentine’s Day Don’t Break the BANK

Valentine’s Day Don’t Break the BANK

Don’t Go Breaking the Bank for Valentine’s Day

Stay Focused for Valentine's Day
Stay Focused for Valentine’s Day

5 Ways to go Non-Traditional for Valentine’s Day and Show Your Love

Valentine’s day isn’t the go for it all break the bank to show your love day.  However, it is a good time to start making real moves to solidify your relationship goals by building the foundation of a relationship, finances.  No matter what you’re gonna have to make a showing of love with flowers, cards or candy. Just don’t get lost by becoming a retailer’s dream, instead, I have 5 things to focus on that are non traditional, yet great moves for solidifying a relationship that’s moving forward.

-Miles.

Holiday Spending: Stay Focused on Your Finances

Holiday Spending: Stay Focused on Your Finances

Holiday Spending: Now is the time to stay focused and watch your budget.

Keeping in mind that the end of the year is also a heads up of the new year to come.  Regardless of how you celebrate in the name of what you celebrate or where, being mindful of your finances should help make the holidays that much brighter for you.  Typically by this time of year I have some idea of what monies I have available to spend and to what degree the gift giving will go.

Holiday Saving Club Accounts let your save a little all year slowly and gain interest
Holiday Saving Club Accounts let you save a little all year slowly and gain interest

One trick I’ve played on myself is to let the FSA reimbursement checks accrue in an account, in a folder, on my desk or someplace and then use them to make the holiday budget.  This accrual method has worked for me for years, works just as good as any Christmas Club type plan.  Good thing about this accrual type approach is it lets you target and budget, even if you want to splurge a little bit and take a trip or buy something a little more expensive than usual all while staying in the same pattern of saving, bill paying and keep up with the household economics such as heat and new blankets for the winter.

 

Unless your the savviest shopper, this is a sucker's game
Unless your the savviest shopper, this is a sucker’s game

Consumer Traps Turned Up During Holiday Time

Be on the lookout for the 15% off game.  Stores off their own credit cards to shoppers and entie them by offering something like 15% of more off of the entire purchase today.  This is a Sucker’s game unless you are the best of the best when it comes to due diligence, what’s known as a sophisticated shopper.  Don’t let your ego take advantage of you, you may not be as sophisticated as you think.  These store charge anywhere from 20% to 30% or whatever the legal limit is and very few folks squeak by without getting caught up paying the heavy fees at least once, and once is all they need.  Just think of it this way, they offer you 10% off to have an opportunity to charge you 30% extra. Stay focused. Not to mention this makes you think you’ve extended your buying power, wrong again.  You’re only extending the opportunity to buy more stuff at a potential 30% hike.  Who wants to buy something that costs $100. for $130. instead???  Well, that’s what it becomes. Stay on budget and steer clear.  Let the less than savvy shoppers take this deal, it allows the retailer to make those deep discounts and Black Friday deals, that you pay cash or debit for.

 

Better Ways to Gift Money

Stock Certificates as GIFTS
Stock Certificates as GIFTS

The holidays also another opportunity to learn, teach or usher in new habits of personal finance management.  One of the not so advertised or marketed gifts is the gift of stock ownership, while it’s difficult to stack up against a new watch, trendy shoes or game console it may serve well a an add on or secondary gift that may outlast all of the foregoing.  Sort of the “teach a man to fish… ” idea, very inexpensive to buy one, two or even ten shares depending on your budget in the name of the person your buying it for and have the stock certificate sent to them. An actual stock certificate of ownership with the stated number of shares denoted on it.  You’d be surprised how such a gift may knock some one’s sock off, introduce them to the world of finance and investing and take things in another direction altogether for them.  Learning to become more than just a consumer and shifting toward an investor.

Like Netflix? How about the stock alongside the Smart TV pre-loaded with it.
Like Netflix? How about the stock alongside the Smart TV pre-loaded with it.

Great for kids as they will come to understand they can actually own a part of some of their favorite companies and brands such as Facebook, Netflix, Disney, Sony, Microsoft, Footlocker and many other well known companies.  You can Buy Stock Certificates as Gifts Here for more information on gifting stock certificates.

Happy Holidays 2015.

-Miles

Young Money Investing

Young Money Investing

Young Money. Raising Investors…

Little investors can make big decisions too.
Little investors can make big decisions too.

Getting started early is a key aspect to success in almost every endeavor, and there’s no difference when it comes to building a foundation for a good understanding of finances.  Much like cigarette manufacturers took notice to focus on teens and early age kids, banks have started to the same except with a more positive focus.  Get children involved early, make in popular and chic and you’ve built a foundation that may last the rest of the lives.

As parents and guardians we often recite the saying “We want to provide better for our children than what we had”, in the area of personal finance and economics the opportunity is there to do just that.  For me I hadn’t opened a bank account or had a credit card until I was an adult and by then the marketers of the retail world had shaped my conscious consumer mind.  It would take me a long, long time just to get eh basics of how to operate and manage a bank account, credit cards and other finance tools effectively.  Lots of lost money in fees, late fees, interest and the total misunderstanding of some basic rules for the money road ahead.  Not that it would be anyone’s fault but my own, but it just wasn’t typical culture in my household to handle and deal with financial tools. It was always a far off thing and I didn’t even notice banks until I was a young adult.

Today’s environment isn’t quite the same as when i came up, the world is quickly moving further and further into a cashless society where you login to pay bills and check balances regularly.  Payments are made electronically various bank accounts are linked together making easy to move and manage finances and phishing scam email steadily come in asking for access to accounts from far away heirs to estates and kingdoms.  In preparing your children to thrive in today’s environment, a solid foundation in finance has become far more important to their individual prosperity.  Everything from simply managing a bank account to understanding the reasoning why to not pay just the minimum balance, or default makes the difference between getting going right out of college or involuntarily living at home until they are 35.

A greater number of banks now offer juvenile and custodial accounts to help young adults and children get started than ever before with saving accounts, online access, checking accounts and even brokerage accounts for investing in their own future.  Oftentimes there are special programs and guides that focus on everything ranging from saving for college to buying a new car.  Depending on the bank you can link your child’s account for funding, have remote access to control spending and even set up automatic allowances.  Automatic allowances? Yes, basically direct deposit and you can do it every 2 weeks just like your paycheck.  Having these sort of accounts gets them started early with setting up accounts online to make payments for recurring bills such as cell phones (since children seem to have phones these days, not in my day!), even paying for school lunch, they can buy bus passes, travel and do whatever you may find yourself holding their hand doing.  Getting started early on with understanding their balance available to them, penalties for overextending themselves and how to avoid doing so, and just getting a good understanding of how these things work.

Kids understand gains and profits more than you probably think.
Kids understand gains and profits more than you probably think.

Recently, I contacted my investment broker to open a custodial account for my youngest son, although I had set up traditional bank accounts as a norm for all of my children while in their preteens I hadn’t given an investment account much thought.  As it turns out, this is a great idea.  There’s nothing like learning while actually doing and participating.  And, and enthusiastic student makes for easier teaching as well.  Once you get past explaining how companies sell shares to the public, how shares are valued, start using the terminology and put things into perspective that they can understand the light bulb comes on and super bright too.  The side benefit comes from whatever you aren’t too well versed on gets refreshed or you just end up learning some new things as well.  Opening a brokerage account, looking at stocks and getting an idea of how to buy them.  Even without buying stocks, just looking up companies that they know and understand will draw their interest as they compare which companies are larger or better for whatever reason.  Companies like Sony for the PlayStation, Microsoft for the Xbox, McDonald’s, Foot Locker for popular shoes, Gamestop for gaming, Kellogg and General Mills for the cereals (kids love to eat!!), EA Sports for the games and the list just goes on of what companies they know and can tell you about these companies.  A quick review of how becoming a shareholding investor makes them own a piece of the company and they should have a sense of pride in ownership of something they may hold so high and know so well.  This makes it easier to embrace the practice of evaluating the merits of the companies and reasons to keep stocks, understanding dividends and how investing can allow them to make money from good and well calculated decisions –all without doing chores!  I know my son cannot wait to see his first dividends, it could be ten cents, it won’t matter because in his mind he did nothing, (as far as physical work is concerned) and got paid.  This could change everything, starting at a young age.

Surely, getting them started young and deeply interested to what they understand has immeasurable benefit for them later on in life. Understanding credit, banking, interest rates, investing, returns, insurance, healthcare costs, small business and consumer economics will lay the foundation for their prosperity.  No matter which direction they take in life whether to become a veterinarian, a politician or a barber your children will definitely need to make financial decisions that their overall success will hinge upon.  So get on it now or you’ll never get to use their room as a walk in closet because they’ll be home even though they have a good paying job.

Adult Children at Home
Adult Children at Home

For some info and ideas on banks that offer youth checking and savings accounts check out:

Well Fargo Youth and Teen Accounts

USAA FSB Youth Accounts. 4.5 out of 5 stars

Fidelity Youth and Custodial Accounts

Scottrade Custodial Accounts

Just to name a few, however, if you already have a bank account try there first or go to a local credit union as they offer very terms for youth accounts.  For the brokerage accounts, again try yours if you have one or you can try one of the few above.  Most are pretty good in their own right, consider the details as of course there are some special rules and laws that apply to custodial accounts, none of which however that will preclude anyone from getting started.  Also consider, most of these custodial accounts are out of reach and are protected from certain entities should you find yourself in financial straits, and that is something that should always be considered in my opinion.

Banking and savings can start small, and adds up over time.
Banking and savings can start small, and adds up over time.

Another way to get the children involved to make them aware of any 529 plan accounts and let them actually see money being saved for college, they can also make contributions to 529 plans from allowances and any earning from their own work as well as gifts, (you know the birthday card with $50. in it) yeah, drop that in there too.  Although 529 plansare more or less mutual funds, it gets the conversation going there too.

Kids Can find investing exciting when it's relevant
Kids Can find investing exciting when it’s relevant

Lastly, try not to be intimidated by any lack of major funds on your part, not opening an account because you don’t have much would be a big mistake.  No matter how small, it’s important to get started understanding these things early and practicing them too.  Most 529 plans and Custodial IRA’s will let you open an account with $50. if you set up an auto draft deposit from you bank once a month, and in the worst case scenario you can suspend the deposits but he account remains.  You can fund a typical brokerage account with $25. if you need to and by whatever stock you can afford, and there are no ongoing fees to keep it open and hold the shares for you.

A world of opportunity just waiting.

 

-Miles.

Make Money Like Water. Really.

Make Money Like Water. Really.

Has Water Become The Most Profitable Commodity in History?  Guess what?? It always was!

Water is Now Available in Brands, Which Suggests Varying Levels of Quality
Water is Now Available in Brands, Which Suggests Varying Levels of Quality

If you are a retailer of any sort then you must have some idea of the average amount of profit you make on most items you stock. In some cases it’s anywhere from 25% markup to maybe 100% or even 200% if you’re lucky in some cases. Then there are the special situations, things like when you get a great one time wholesale deal, or you negotiate a great deal that includes a contract for futures purchases and you’ve locked in a great volume discount price, as if you could see the future before the prices actually went up. Then there’s that super category item, it has all of the things going for it such as low cost, availability, low add on costs or maintenance, and an established market along with price and high demand. There are many items that have the foregoing qualifiers, however, most don’t have the possibility of offering up to a 400% markup. Even with such high potential markup, it’s still hard to even keep on the shelves. That item is water, plain old simple water. While it is life sustaining and has always been in demand everywhere in the entire world, in the most recent decades, it has even taken on a popularity that even includes branding. I mean, how do you brand water??? A little less than rhetorical, this question has more answers than you may imagine. The brands range from Evian to Perrier to Deer Park and even “no frills” supermarket brands are available. The folks at Coke and Pepsi are offering branded water. Can you imagine what goes into the process to make soda? The amount of sugar and everything else to make cola including the filtered distilled water and after all of that, they can just sell the filtered water right alongside the soda at less than half of the cost, ok probably at 10% of the cost of making soda. Both Coke and Pepsi have been chasing this market for some time now, but it seems that Nestle has the death grip on it. Coke and Pepsi went the route of using their own existing distribution channels, brand development teams and marketing departments figuring they can just align it with the soda and juices. Leveraging existing distribution channels is a good idea, since they are locked into so many places ranging from ball parks to offices with soda machines around the country and the world it would seem to be a no brainer. Only thing… Nestle owns all of the brands that were already in place and anchored as the official water brands before the trend took place. Brands like Perrier, Poland Spring and Deer Park and Pellegrino are owned by Nestle. Although Nestle itself is a European brand, we can get in on it through buying its ADR, (American Depository Receipts) shares through your local broker, only not so great thing is they aren’t paying dividends at the moment and that’s a key element for me. However, the company is very healthy (financially speaking) and has great valuations with a P/E (Price to Earnings Ratio) of 15 or so.

Everybody is making money of water, from the guy at the stop light in every major city to Nestle’ and Coke to the corner store guy that’s selling water for more than the price of soda and juice. Go to an amusement park and they’ll charge you up to $5. For a bottle of water that costs thirty cents!!

Everyday Hustle
   Everyday Hustle
Making Money Selling Water
Making Money Selling Water

We often think of droughts and water being life sustaining for third world countries around the world, however, we have drought conditions we are dealing with right here in a first world economy. California has perennial issues with water to the extent that there is legislation surrounding the use of it. Current day, California is considering all sorts of alternative methods to meet the demands for water. Desalination plants and a push to develop better desalination methods have coastal states changing their infrastructure to include new plants as permanent part of the solution. Folks that like in super arid states such as Arizona, Nevada and Texas have substituted lawns with rock gardens, it’s just a pretty array of rocks, but hey, rocks don’t need to be watered.

Protests aren't ab out police brutality or CEO pay, Residents are demonstrating for access to water.
Protests aren’t ab out police brutality or CEO pay, Residents are demonstrating for access to water.

Detroit may be by far the worst, while there is no legislation preventing or directing the use of water, due the local economy the residents aren’t able to afford the water. The City of Detroit is in financial crisis and is targeting whatever residents are left to pick up the tab for all of the fateful decisions made by its city leaders. According to the Detroit Water Brigade, a non-profit community based advocacy group, 40% of the population of Detroit is having their water shut off. Detroit residents are unable to pay past bills or afford current rates. There are civic organizations, community groups and residential groups developing to help one another survive during the water shut offs. Water sharing plans, buying plans, bottling and saving plans to help sustain the residents while advocacy groups try to negotiate with the city to cap water costs for residents. This sounds crazy, but imagine this in your city. Imagine if ½ of your neighbors didn’t have water! None at all, because the city shut it off. Would you feel compelled to help? Would you report them for illegally turning the water back on at the main? It can get crazy, very quickly too!

Water Shut-offs are happening daily, completely cutting off access to entire households.
Water Shut-offs are happening daily, completely cutting off access to entire households.

So how much does water cost??? According to American Water, one of the largest water suppliers in the US, tap water costs about 1 cent per gallon and is estimated to be about 1% of the annual expenditures for the average US household.

Tap water = about .01 cent per gallon

Store bought generic gallon = about .99 cents per gallon

Store bought quart/ pint/ liter = about $5. per gallon

However, everyone needs it, everyone uses it and now it’s even trendy, which basically amounts to people paying more just to be seen with it. It’s to the point that people don’t even want the tap water for drinking, as if suddenly doesn’t meet some quality standard that doesn’t even exist. Certain restaurants will ask if you want tap or bottled water “flat” or “sparkling”. I love this question, just so I can answer “tap” and watch the face of surprise that I’m not subscribing to this pretentious standard. I grew up drinking tap water and the only bottled water was Perrier, and I’ll admit at the very least Perrier does taste like you’re drinking something special.

People used to laugh at the idea of buying water to drink, but  Perrier is the good stuff.
People used to laugh at the idea of buying water to drink, but Perrier is the good stuff.

Another interesting yet strange thing we see every year is many fire hydrants running free for hours during the summer days in cities throughout the country. When we look at such a thing it’s easy to see how many people think water is free and forever abundant, but trust and believe it is not, not at all. The costs aren’t so clear and standout for most city urban areas, apartment dwellers for example the cost of water is estimated and included in their rents. Many people that pay indirectly for it use it as if there is no cost, which at the end of the day may make a statement on how known costs affect consumer behavior. If renters knew how much water cost and that their consumption could impact the amount of rent they pay, I’m sure many would folks would be as mindful as homeowners who pay quarterly.

Low cost summer fun. Or is it?
Low cost summer fun. Or is it?

 

Point being that water supply companies, which at the end of the day are regulated utility companies, are making more profit than ever. Every part of the market, both primary and secondary is seeing an uptick as a result, everyone from the trucking companies that ship it to the companies that make and service filtering equipment.   And with the everyday person now buying it by the gallon for at least a 99 cents, well there’s plenty money to be made.

How does it all relate? Well, we can all get in on it too.

American Water, ticker symbol AWK sells for about $50 a share with decent financials, a P/E of 20 and an almighty dividend of $1.36. Not bad, considering that everybody loves water! And yes, they do offer a DRIP plan at American Water DRIPs so can invest a little monthly and reinvest or take dividend profits.

There’s also American States Water (AWR), and Aqua America (WTR) which both offer decent dividends and DRIP plans at American States DRIPs and Aqua America DRIPs respectively as well.

To get in on every day the retail action of Poland Spring and Deer Park without standing on the corner in rush hour traffic with a cooler of Ice cubes and bottled water, you can just buy some Nestle ADR shares (NSRGY). Nestle also has Dividend Reinvestment Share Plan administered through Citibank at Nestle DRIP shares

So the next time you see dude selling bottled water at the stop light or when you’re at the amusement park and they’re fleecing your pockets for a drip drop of that precious water, you can feel like you’re in on it too.

For more information on Detroit’s water issues and how to donate, contribute or volunteer for those in need contact the Detroit Water Brigade at Donate To Detroit Water Brigade or call (313) 279-0608 to get more info on how you can help or get involved.

The Detroit Water Brigade
The Detroit Water Brigade

-Miles.

No 401k Plan for Retirement, Now What?

No 401k Plan for Retirement, Now What?

Retirement Income Strategies for Those with Less Than a Hefty 401k, IRA, or Pension.

401k Savings are at an all time low, if any at all.
401k Savings are at an all time low, if any at all.

We hear or read about it all of the time, either the stats of how many Americans aren’t saving enough in their 401k’s for retirement or how important it is to build a retirement strategy that includes a 401k and a maybe a pension too. But really, are these people talking to or about everyone? Does everyone have all of their retirement plans in the bag but you? Conversely, we also hear about all of the hundreds of thousands that are unemployed or affected by the 7 year long recession, so it doesn’t all really make sense at times. Even a hefty emergency fund alongside extended unemployment isn’t built to last 5 years! Are these unemployed folks still funding some 401k or IRA somehow? Obviously not, so for the rest of us who aren’t in the “prime” zone financially, that aren’t set just yet and whose retirement plans will be a combination of jobs worked, savings and creative financial planning, there are some key things to focus on early.
What if you don’t have a healthy well vested 401k or other retirement plan, what will you do for retirement income? Do you have a pension from your current employer? How long can you do your current line of work, until you’re 60? 70? 75? Will you be physically able to work in your later years? Will your pension be enough if you have one? The ever daunting question that begins to come clearer and clearer as time goes on ad you do happen to survive all of those near misses in life leading into your thirties. Banks and brokers are offering cash incentives to do your rollover with their firm, so many of us don’t have a rollover. So many of us don’t have the $200,000.00 or more rollover to get the free $500.00
The conventional wisdom states to start saving in your 20’s and you can save up to one or two million dollars by the time you retire and do just fine meeting your living expenses from 4% – 10% of that savings a per year. That 4% – 10% is supposed to come from interest, etc. and it sounds like a great idea, if I had a brain in my 20’s… or um, my 30’s. So now what? There’s socking away as much as you can in the 401k now at the job you’ve working at for the past maybe 8, 10, 15 years… maybe. Speaking of maybes, there’s maybe a pension for some of us, if you’re lucky because that is disappearing with the clouds these days unless you work in the public sector -with no guarantees still. Well, if none of those fit you, again, then what?
There are Roth 401k and Roth IRA annual contribution limits of about $15,000 or $5,000 annually, give or take some details. About $10,000 limits or so in Education IRA’s if you plan to stash and dash there, but that’s not tax free contributions, only growth so it doesn’t matter anyway. And we can’t forget the high yield savings accounts that get a whopping 1%, so you’re only about 1% down every year behind inflation, At best it’s a money pit stop, but don’t get too comfy trying to reach “0%” interest by getting a high yield savings account in order to keep with inflation, easier said than done. Let’s not forget Social Security, if you’ve worked and paid into the system. The government sends letters every year with the estimates of how much you could expect if you were to retire today. Is it enough to cover your living expenses where you live and how you live today? Don’t fret, because there’s always something, some ways to make it happen for those who refuse to play dead. Ways to make to retirement moves that offer relative safety of principal invested and potential growth too. You just got get to doing it.

There are many strategies ranging from setting up annuities to inventing the iPhone and the all-time worst, the ”Lump Sum” plan. Here are three strategies that anyone can employ regardless of where they are on the retirement horizon as long as they willing to work at it.

  1. Leverage Peak “Earning Years”. The largest opportunity that exists is taking advantage of your “Earning Years” as they reach a plateau. These will be the years you can take risks, make very aggressive moves, change directions while you are at your highest level of marketability, skills are sharp and current, knowledge is current and relevant, you’ve earned your worth and know what it is. You’ve reached a point of having enough experience to command the high rate for what you offer to any employer. During these years you can lay real plans and execute them. If retirement savings isn’t caught up to where you are or want to be, then your peak “earnings years” give you one last great opportunity and they can easily last about 10 -25 years depending on your type of work.
  2. Create Small Business, the business of You. If you have skill, talent, knowledge set, or a specific ability that is marketable then cultivate it further. So start by becoming fully invested in you, become licensed, certified, more educated or get whatever credentials necessary to operate as a small business with the intent to hand over the “production” part of the business to someone else while you still own it. Consider that even doctors and dentists have private practices where other doctors and dentists are in their employ. This may or may not last into retirement depending on the line of work, however, it does offer the possibility of getting up some serious savings from income for investing or just keeping safe. For example if you are handy or a mechanic, becoming a contractor and then hiring capable employees to carry on doing the work while your run the business. Same goes for everything from hairdresser to real estate agent to painter or car mechanic. Yes there will be some upfront investment of both time and money, yes you will need to step up your business savvy, and yes there is some risk. Just keep in mind, you are also taking the bull by the horns, by providing these answers for yourself.
  3. Income Generating Real Estate. In any case Real Estate is an available avenue to consider, building an income property portfolio or adding it to your current retirement plan can give it a boost if done properly. Consider first building up the necessary monies and position to make quality real estate purchase in a moderately high demand market. Try to stay away from low rent and problem areas as much as possible, although they have profit too, they also require much more hands on management at times. Consider the ongoing costs of maintenance and management for everything from water leaks to tenant evictions. This isn’t something most people want to do in retirement, so be prepared to give up to 15% for this to get done, it’s deductible so keep it simple and let someone handle the potential headaches. Focus on a market close to your area of retirement. Most people have some time between now and retirement to get this done by building up savings, taking care of any credit issues, learning the ropes and locking in their income generating properties.
It'll come down to maintaining an income when you're retired.
It’ll come down to maintaining an income when you’re retired.

There are still the usual routes of saving and investing in everything from bonds, REITS, ETF’s and mutual funds and they are as good as the hundreds of other plans the finance gurus come up with. Still, for the rest of us, we may need to put together a plan that is workable to add on to the savings and investment plan that is something we can work on and cultivate. Unless you really have a ton of money invested in a mutual fund, ETF or somewhere else in the general market, then it’s just sitting… not doing much, just there, sometimes it’s up, sometimes it’s down. Some of us are hard line go getters in life and will need to take more of an active role, and feel encouraged as their plans come to fruition right in front of their eyes, that’s what this post is about. All the while, saving and investing the profits.

-Miles.