Smart Saving and Investing

Check this excellent explanation of compounding. Something that is key to investing. Aside from the blurry exhibits that are shown during the video, you can check out this example of compounding here.

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written by Bill Stevens

Attributes to look for when selecting financial planners:

• Select one that is fee based and not on a commission basis. Pay for advice and not a product.
• He or she should be calling you at least once a year to see what has changed in your life that could affect your current financial plans. Outstanding financial planners should be calling you every six months.
• Is your financial planner making the best decisions for you or are they making the best decisions for themselves? In other words, are they only recommending certain products that will make them money on commissions, fees, trips, etc.
• Stay away from annuities. There are much better investments out there.

written by Bill Stevens

Excelsior Value and Restructuring Fund

Symbol: UMBIX
Manager: David Williams
Record: Returned 14% every year for the last 10 years
Reason: Creates a solid base; Tax effecient
Style: Large Company Value Fund
Minimum Investment: $500.00 ($250.00 in an IRA)
Website: http://www.excelsiorfunds.com
Application: http://www.excelsiorfunds.com/applications_pdf.asp
Notes: Manage online at website. No need to purchase via broker.

written by Bill Stevens

Here are some rules guidelines to follow when investing in mutual funds:

• Invest in no-load funds that will beat the index funds in good times and won’t lose as much in the bad times.
• Index funds are ok. Index funds will do what the market does. You will make what the market makes and you will also lose what the market loses. However, that is certainly ok in a conservative kind of way.
• No fund company has a lock on all the best funds. For example, Fidelity does not have all the best funds. So you’re probably not going to buy four mutual funds from Fidelity.
• Find the best managers of these funds by looking at their track record and not the name of the fund. Don’t follow the fund name, follow the fund manager.
• Look for funds where the manager is making the day to day decisions and not a team of people. Good and bad people come and go on teams and you might not know it when it happens or who is making the decisions.
• Whenever a fund under performs for 12 months but it has proven itself over the 3, 5 and 10 year time horizon, then it’s time to start watching that fund closely and making a decision within the following 12 months.
• Use the S&P 500 to compare your mutual fund performance to.
• Use the EIFA Index to compare international funds to.
• Review your mutual fund(s) every six months or quarterly.

written by Bill Stevens

NEW YORK (MarketWatch) — So you’re one of the lucky taxpayers receiving an income tax refund this year? The IRS estimates that the average refund will be $2,548. While it’s tempting to spend that chunk of change on a plasma-screen TV or a fabulous vacation, consider using it to firm up your financial future.

Bill Stroh, co-CEO of Bills.com, says that “many tax refund recipients dream of ways to spend that cash. But before getting carried away in a spending fantasy, think long term. A tax refund is not really a windfall, but a return of your own money to you. Tax refunds are a forced savings plan from the IRS … not a gift. That shift in your mind may make it less likely that you will squander the refund.”

Here’s how you can spend your refund wisely:

• Pay down debt. Use the refund to get rid of high-interest debt, such as credit-card balances. Stroh also suggests slashing your mortgage and car payments.
• Create an emergency fund. You should have six to nine months worth of living expenses in your fund. Your refund can provide a good foundation.
• Buy insurance. If you’re not covered adequately with the proper health, auto, home or renters insurance, now is the time to get it.
• Save for retirement. Stash some of your refund into your 401(k), Roth IRA or other retirement-savings plan.
• Put the money back into your home. Take care of minor and major home maintenance so that you don’t have to deal with bigger, more costly problems later.

Marshall Loeb, former editor of Fortune, Money, and the Columbia Journalism Review, writes for MarketWatch.

written by Bill Stevens