About Time…

So I get back from my trip, and then I have an unexpected stay in my neighborhood hospital. That’s kind of a buzz-kill and it definitely keeps you tied up for a while…
Anyway, I’m back.

So I was in a taxi on my foreign trip (you know the kind of taxi ride I’m talking about – where the driver feels that signs, stoplights, and other cars are merely…”suggestions” of where he should or should not go) and in between points of near-death, my brother asks me what the conversion rate is for the dollar (you see, there was a moment for finance on my trip). I tell him what the rate is and then say that the dollar has been falling, so that it buys less where we were than it did even a few weeks ago. He then asks why, and for a moment I think: “What do I tell him? Comparative advantage, relative strength of the economies, interest rates, the trade and/or budget deficit, the over-supply of the dollar, China…?” Finally I just looked at him and said “It’s complicated.”

I’ve been doing a little research on the CPI and some of the arguments of why it is not necessarily the best indicator of inflation and some of the problems with the statistics, so for the next few days, I’ll have a little discussion…

International Moose

Sorry it’s been a little slow around here, but I’ve been out of the country on vacation.  Gimme a couple of days to get over the jet-lag catch up on everything…

10K!!!

I mentioned earlier that I didn’t know about the 401(k) where I work until a little less than two years ago. (Yes, I know…everyone should know about these kind of things…) When I found out, I immediately signed up, but only started by putting in 5% of my salary. After a few months, it didn’t look like enough, because let’s face it, 5% isn’t that much. So I upped the contribution to 7%. Still not working for me. 10%? Uh…no. Now I’m up to 12%. I’m comfortable where I am now, but will probably increase that in the future. My funds returned over 18% last year, and I am looking at 10% return year-to-date, so I’ve got that going for me.

Well, with the recent run-up in the markets, I finally broke $10,000 in my 401(k)!  About time!  When I started out, it seemed that my balance was increasing soooo slowly, but now I’m at five figures.  Sure, most of the increase is due to my contributions, but after a few years, the investment growth will really start to add up (I hope).  Anyway, it’s a milestone that I wasn’t even thinking about when I started because it seemed so far away, but now I’m there.  Let’s see how long it takes to get to 25k…

Where we are now, financially…

So I moved all may accounts over to Fidelity. What do I have? An IRA and Roth IRA for both my wife and I, which were the transferred accounts, plus my wife’s 401(k), are at Fidelity. I have my own 401(k) through my work at yet another company. I was initially interested in Vanguard, with its extensive line of index funds. However, I had less in the Roth IRA accounts than the account minimum, which is currently $3000. (Vanguard also charges a $10 fee on accounts of less than $5000, which also includes my IRA account, plus a $10 fee on each index fund in each account.) So, for the moment, Vanguard is out, although I might consider moving the accounts over once I have more than in each account. In any event, as my wife and I are contributing into our 401(k)s, I will roll over the IRAs into the Roth IRA accounts in 2010, when the income limits on this type of transaction go away.

A little more history

The last post got me thinking about my “financial advisor” and how his knowledge, and my lack of knowledge, got me in the position I was in. Looking back, here the problems that I had:

• Load, which I explained earlier, and have since learned that you should not pay it.
• Account fees, in addition to the load, I was charged an account maintenance fee or something like that. These were flat fees, and combined with the relatively low amounts in the accounts, came out to about 1% on each of the accounts.
• Fund fees, which were over 1% for each of the funds that my wife and I owned.
• Finally, poor performance. None of the funds performed well during the last few years. In fact, one fund I was in even lost value during 2006 (on top of all the fees). Did I mention that there’s been a bull market for the past few years?

My situation, of course, can be applied to many people that deal with the financial industry. At first, I felt uncomfortable “asking questions,” like I was disputing the advice I was given. But then that made me angry. First of all, I shouldn’t have to deal with the fees and the poor returns. The financial industry is a competitive market. If I didn’t like the service I was receiving, I could vote with my wallet, and take my business to another company that could provide me with better options for my money. Secondly, I worked hard for that money, and I shouldn’t have to feel uncomfortable worrying about hurting someone’s feelings if I am losing money.

This brings me to my third point (and the moral of this post): the more knowledge you have, the better off you will be. The reason I was in this position was because I didn’t know any better. After seeing that my investments were not performing that well, I realized that I needed to take charge. I looked at the company that was holding my money, looked at other companies, and found out I could do better, so I switched my money out. If you are not sure about where to invest, for mutual funds there is Fidelity, or Vanguard with its extensive index funds, or other companies where you could purchase stocks individually (with low trading fees), such as Scottrade or Share Builder. The point is that doing a little homework can make life much easier.

So, the “gem of wisdom” I can impart today is to learn from my mistake, and educate yourself, learn your options, and then make your decision. You may still make mistakes, but you can learn from them. And at least now I’ve realized now that there are things I must learn, and this entire process (of saving and investing) is one of constant education and continuous improvement. So, next up, where I am now, and what I am doing to improve…

A Little History

OK, a little backstory on where we’ve been…

It’s the late 90’s, my wife and I have a little bit in a couple of IRAs from old jobs, but they’re just sitting a money market, not doing anything. We met up with one of those salesperson/”financial advisor” types, you know the one, “get a free lunch if you listen to our pitch” thing. Mrs. Moose and I didn’t know anything about finances, so we fell for it.

And Another Thing…

I’ve thought of another reason why I’m doing this. I read this reason on other pages, none of which I can remember now, but I immediately agreed with them, and the reason is the publicity factor. My financial situation, while definitely not as bad as others, is not what I would like it to be. By raising this in a public forum, I am not only making myself address these issues, but I am making a public commitment to address them (even if no one reads this) which forces me to do something, rather than just half-way deal with it, like I’ve been doing. Also, I hope that people do read my blog, and I could give me some some good ideas.

Hello world!

So I thought that I’d get into this whole blogging thing…

Here’s the story: I check out the blogs of lots of other folks (soon to be listed once I get the hang of wordpress), and sometimes I leave comments, sometimes I don’t, but I usually always have an opinion about what was written. So, I’ll just put down all my thoughts here. Maybe some people will read this, maybe they won’t. If people do read this, I hope they get something out of it.

I’ll discuss life in Austin, personal finance issues (like trying to pay off my stupid !*&@?! credit cards), and other random ideas as they come to me. Hopefully I’ll keep this thing up…