Smart Saving and Investing

Ok gang, it’s the last week of June 2007, can you squeak out an extra $x to put into your online saving account as described in action one? If you get paid on the first of the month and the end of June is a weekend try to send an extra $x amount to your online savings account before you possibly blow it this coming weekend. Depending on your situation, $10.00, $20.00, $100.00, $200.00, etc.

If not and you’ve at least completed action one, then that’s great. If you still haven’t done action one, get going.

Have a great day!!
Bill

written by Bill Stevens

When you have a big fund it’s harder for the fund manager to maneuver. For example, a pretty darn good fund in the Fidelity family of funds is the Contrafund. However, it’s become rather large at greater than 70 billion dollars in assets.

So, the fund becomes representative of the market. If the market goes up, most likely the fund will go up and if the market goes down, most likely the fund will go down.  The fund’s manager has to get creative to move those type s of dollars around.

It’s like parking semi-trucks in a fast food restaurant. So what to do? Well, I still think if you don’t have other choices, the Fidelity Contrafund is still a great fund with a great fund manager. I would hold it in a company retirement plan like a 401k, 403b, 457 Plans.

But, there are smaller funds in this category of Large Company Growth funds that are more agile. It would be good to find a fund with a great fund manager that is managing say 1 or 2 billion dollars worth of assets.

So one example would be the Brandywine Blue (BLUEX) fund. It has more than 2 billion dollars in managed assets and the fund manager William F. D’Alonzo would have more strategies to implement with the investments in the fund.  However, the initial investment to get into this fund would be a whopping $10,000.00.

So for some folks this is just an example and not what you should do with your money.

written by Bill Stevens

Over at The Simple Dollar there’s a great discussion on Figuring Out A Debt Strategy After The Home Purchase and I wanted to weigh in on the comments but didn’t know if my comment was too long or what.  So here it is below.  Basically there’s discussion on what Trent wants to do now with his debt/money after he moves into their home.

My recommendations are listed here:

1. Pay down the education debt normally.  Feel ok with debt that’s allowing you a better life - education.
2. Pay your mortgage normally.  Did I read that right?  You want to pay off the mortgage?  That is a grand goal and can certainly be paid in 15 years.
3. Too much in HSBC - 3-6 months total for the both of you or set an amount that the return will make the account grow automagically to your satisfaction.
4. Lose the 529 plans for your kids.  It would be better to have an investment account at a brokerage with both your and your wife’s name on it called the education account.  If your kids need it then use it for their education.  If they don’t because of grants, scholarships, etc. then it’s your money or help them start a Roth IRA with it.  You owe your kids equality of opportunity and not money for all of them to go to college.  You never know what they’ll want to do when they get there.  Plus you really need to look at what the 529s do to your financial life when your kids reach that age.  There’s more than one way to pay for college, there’s only one way to pay for your retirement.

Of course, like Trent says, there’s more Personal than Finance in Personal Finance.    

written by Bill Stevens

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written by Bill Stevens

So there’s some folks in my life who always ask me, “What stocks are in that mutual fund you’re talking about?” I remember asking this question myself a long time ago when I didn’t know what the heck mutual funds were. When you first understand what mutual funds are sometimes there’s a feeling of “gee, I own a piece of this stock and a piece of that stock. ” Which is true but the mistake is when people choose mutual funds based on that reason.

That isn’t the best way to choose mutual funds. The moment you find out what’s inside a mutual fund or what stocks are held within the mutual fund, the fund manager could have already sold them.

An analogy would be if you were deciding to buy a baseball team and you asked, “What color are the uniforms?” Implying that if the color of the uniforms are pleasing to me, then I’ll buy the baseball team and everything will be good. Ok, kind of a goofy analogy.

The analogy you want to use is, what if you were buying a baseball team and you had a great batter like Sammy Sosa and great pitcher like Randy Johnson on the team. If these folks were on your team, then the odds of you having a pretty good season go way up.

Well, the same thing applies to mutual funds. The question is, “who is the manager of the fund and what’s his or her track record?” That’s how you should be thinking when reviewing mutual funds.

written by Bill Stevens