Saturday, March 25, 2006

Investing with Dividend Reinvestment Plans

Investing with Dividend Reinvestment Plans

Did you know that you can buy stock without a broker? Would you like to purchase shares of Starbucks or Disney for your kids or grandchildren but you don't know how? Are you interested in buying shares in a particular company over time but don't have a lot of money to do so. Participating in a Dividend Reinvestment plan might be just the solution that you are looking for. The DripAdvisor has a great list of companies which participate in dividend reinvestment programs. It even has a search function that allows you to search by ticker symbol or company name to determine if they have a dividend reinvestment plan.

What is a dividend reinvestment program: Dividend reinvestment plans also known as DRPs or DRIPs is a way for individuals to buy stock directly from the offering company in small amounts. If you have a lot of cash you can buy a large amount but then you would probably already have a brokerage account.

How to participate in a dividend reinvestment plan: The are several ways to buy stocks through a dividend reinvestment plan. First of all you can go to ShareBuilder 401(k) and sign up for their plan. Sharebuilder allows you to invest any dollar amount on Tuesdays exclusively online. You can also schedule investments on a weekly or monthly basis. They have a broad selection to choose from including over 5,000 stocks and Exchange traded funds or (ETFs). Of course there is a fee but it is minimal, there advertised rates start a $4.


Advantages of dividend reinvestment plans: First of all the biggest advantage is that you do not need a large amount of money to start. Another benefit of participating in dividend reinvestment plan is literally the dividend reinvestment. If the stock that you purchased pays a dividend then the dividends are automatically reinvested to buy more of the stock usually at no fee. Additionally some companies allow you to invest additional funds in amounts as small as $10 to $50. There are nearly 200 companies that offer the option to have your investments made monthly by automatic withdrawl from your checking account. Some companies even allow the DRIP investor to purchase stock at a discount to the market rate.


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Monday, March 20, 2006

Health Insurance for those who are unisured

Finding Health Care coverage and other tips on Health Insurance


Health insurance or health care coverage is probably one of the most concerning things on American's minds these days. It ranks right up there with the ecomony, jobs, education, and terrorism. Businessweek had an interesting article about finding the health care coverage that you need.

Not insured by your current employer? Find the health care coverage that you need! According to the Census Bureau, in 2004 45.8 million Americans (15.7% of the population) lacked health insurance. Here are some of the tips on fine the health insurance coverage that you need.

  1. First of all stay insured. Maintain your health insurance coverage even if you loose your job by participating in the COBRA payments. This rule passed by congress allows you to maintain your health for up to 18 months. While the premiums can be expensive it is important for you to determine if you want to run bare without health insurance or if you want to bite the bullet and pay for the coverage. The good part is I think you have roughly 45 days to determine if you want the coverage before your first premiums are do. Your previous employers HR department should be able to provide you with a copy of rules.
  2. Buy your own health insurance: Let's say you are on your own for an extended period of time without health insurance. Did you know that you can purchase your own health insurance from Wal-Mart? I know a lot of people have a real sore spot about Wal-Mart however, a family of 4 can purchase health insurance from Wal-Mart for $138 per month. That is pretty cheap! Granted the deductible is $10,000 however, you are also buying coverage that has a $3 million maximum benefit. So basically, you are self insured for the first $10,000 however, beyond that you start to get some benefits. If you want a lower deductable you just need to select a plan with a higher premium.
  3. Health Savings Account: A health savings account allows people to set aside fund tax free to be used for health care expenses. This doesn't do you much good unless you have been contributing to it for a long time and have enough money saved up to pay for health care expenses.
  4. Keep working: Another option while you are waiting for your real job to come along is to keep working. If you work at Starbucks for at least 20 hours you are eligible for health insurance. Additionally, you can also participate in the 401K and stock options.
  5. Contact an insurance broker: If all else fails contact your local insurance broker to review the insurance plans offered. It pays to shop around and talk with more than one source.

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Sunday, March 19, 2006

Stock tips and investing tools

Stock tips and investing tools

Are you looking for stock tips? Are you trying to find some good sound investment ideas. The internet makes it easy with a wide variety of investing tools. Below I have listed some of my favorite sites for investing tools and stock screening. If you have some favorites sites that you would like me to add please leave me a comment and I will add them to this post.

MSN Power Searches: This is a really nice stock screener that has some built in searches for you to quickly slice and dice the stock market in different ways. It has everything from highest yielding stocks to stocks that have reached new 52 week highs. Before you get started investing in stocks I recomment one of my favorite books on investing which is by the creator of Investor's Business Daily (IBD) called How to make money in stocks. Also by the way if you really want some great investement ideas all week long and want to read a paper that is designed for the investor you can do no better that IBD.

Quantum Online Preferred Stocks: If you are looking for the ulitimate screening source for prefered stocks look no further than Quantum Online. They request that you actually register and become a member which so far has not been a problem for me. It doesn't appear the they have sold my email address.

Mad Money Stock Sreener: Do you like Jim Cramer's Mad Money? I am a big fan, I really enjoy catching his show on XM Radio on the way home in the evenings. Most of the time he goes so fast it is impossible to remember his picks and call on all the stocks. Have no fear, just go to the Mad Money Addict Page for a data base of all his picks and calls. Cramer also has some excellent books out that assist you in understand the market and his method of stock picking and evalution checkout Books by Cramer.

Keeping Track of Your Stock Performance: If you are an active trader you already know how challenging it is to keep track of your cost basis and won loss record for the stocks that you have been trading. Even though you might be able to do this through your online broker it is still a challenge to keep track of the capital gains when it comes tax time. Microsoft has a simple
Excel sheet
that helps you keep track of this. By far the easiest way to keep track of this is by using the software Quicken.

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Saturday, March 18, 2006

ETFs or Exchange Traded Funds

ETFs or Exchange Traded Funds

Are you thinking about investing in Exchange Traded Funds currently the darling of the investment world. So exactly what are Exchage Traded Funds or ETFs? ETFs are more like a similar to an index mutual fund however when you buy and sell them they are more like a stock. Each ETF represents a particular group of stocks such as the SPDR or QQQQ.

SPRD example: The investment SPRD seeks to correspond generally to the performance, before fees and expenses, of the S&P 500 Index. SPDR Trust is an exchange-traded fund ETF that holds all of the S&P 500 Index stocks. It is comprised of undivided ownership interests called SPDRs.

QQQQ example: The investment QQQQ ETF is a unit investment trust designed to correspond generally to the performance, before fees and expenses, of the Nasdaq-100 Index. The fund holds all the stocks in the Nasdaq-100 Index, which consists of the largest nonfinancial securities listed on the Nasdaq Stock Market.

What are the advantages to ETFs:
First of all unlike a mutual fund ETFs can be bought and sold any time during the day. Mutual funds only trade at the end of the day closing price. ETFs generally have much lost expense ratios. For example the SPY that we talked about above has an expense ratio of only .1% which is significantly lower than a mutual fund. ETFs are also more tax efficient that mutual funds because there are less capital gains. Mutual funds pass on the capital gains at the end of each year to the investor. With an ETF a significant portion of the capital gain can delayed until the investment is actually sold.

Disadvantages of Exchange Traded Funds: Probably the biggest disadvantage of ETFs are the commissions. Since they are traded like a stock you need to have a brokerage account to buy them and therefore you will pay a commission. ETFs also don't have to trade at a net asset value and potentially could be trade at a higher or lower level than the actual value of the portfolio.

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Friday, March 17, 2006

Investing in Gold Top ways to Invest in Gold

Investing in Gold - Top ways to Invest in Gold

Rising interest rates, high oil prices, inflation fears all of these items have rekindle a big demand for gold. Gold prices have risen to new highs over the last several months. Investing in gold can be confusing, however, there are a variety of ways to invest in gold and not all of them require you to actually buy gold coins.

Top ways to invest in gold:
  1. Gold coins: First of all you can buy gold coins directly from a coin dealer or you can buy them online from Blanchard. Investing in gold coins you can benefit from two areas, one is the rise in the price of golds and/or the rise in the numismatic value of the coins. The challenges of actually holding the gold coins include shipping cost, storage cost and selling your coins when you want to cash them in. Blanchard agrees to buy your coins back from you however, you will need to pay some level of fee or commision on the gold that they will buy from you.
  2. Bullion: Instead of buying gold coins you can also purchase gold bullion. Gold bullion investing is only for the potential rise in the value of the gold. There is not really any potential numismatic value in the bullion.
  3. Gold Mutual Funds: You could also buy a mutual fund the invests in companies that mine gold or have other gold related businesses that should benefit from a rising gold price. For example you could purchase the mutual fund GOLDX which has had a 34% annual rate of return over the last 5 years.
  4. ETFs: Another option for investing in gold is an ETF or exchange traded fund for example you could invest in COMEX Gold Trust (IAU) from iShares. An exchange traded fund is similar to a mutual fund and also similar to a stock. Most likely you will need a borkerage account or a financial adviser to buy a Gold ETF.
  5. Buy gold online: You could also buy gold online and not actually take possesion of the gold. For example you could buy gold from Goldmoney online and they will buy the gold for you and store the gold for you for a minimal charge.

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Thursday, March 16, 2006

Saving for retirement with a Roth IRA

Confused about your retirement options? Are you trying to determine if you should invest in a 401K, traditional IRA, Roth IRA, or brokerage account? My first rule of thumb is invest in the 401K it generally has the most benefits like matching employer funds, see my related article.

What's your best retirement option: For most people the Roth IRA is the next best retirement option. In 2005 the max contribution was $4000, if you are over 50 the limit was $4500. Another advantage of the 401K is the you can usually contribute more than the $4000 to the Roth IRA. For example my employer allows us to contribute up to $14,000 per year.

Roth IRA Income Limits: Unforturnately, the Roth IRA is not for everyone, it does have limits on who can contribute based on income. If your adjusted gross income is $95,000 if you're single or $150,000 if you're married, the amount you can contribute to a Roth begins to decrease, reaching zero for those with an AGI of $110,000 (singles) or $160,000 (married). So if you cannot contribute to a Roth IRA make sure you are contributing to the 401(k) and/or traditional IRAs.

Tax advantages of a Roth IRA: Roth contributions do not reduce taxable income in the year of the contribution in other work there's no deduction. However, the Roth is a tax-free account; no taxes are paid on the interest, dividends, or gains ever. So in other words if you contribute every year to a Roth IRA and you do a wonderful job of investing all of your withdraws from the account are tax free. Pretty cool in my book.

Another advantage of the Roth IRA is that there are no mandatory withdraws. For example lets say you retire and you don't need to dip into the Roth IRA. The government doesn't care they aren't getting any tax benefit so you can let the account grow for 10 or 20 years what ever you want. This benefit also applies to your heirs as well, however, the heirs will be required to pay taxes on the inheritance.

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Wednesday, March 15, 2006

Top 10 ways to become the Millionaire Next Door

Top 10 ways to become the Millionaire Next Door

Everyone wants to get rich and become the Millionaire Next Door. Unfortunately most of us will not be on the Forbes list of Billionaires under 40. However, we would all like to have the Millionaire Mind or be the Millionaire Next Door. Some keys tips to becoming the Millionaire Next Door are:

  1. Live well below your means, try paying cash for purchases versus running up debt
  2. Own your own home
  3. Most millionaires are married
  4. Unfortunately, working for 30 to 40 years is key.
  5. Own your own business or be self employed.
  6. Be conservative with money have a family budget, save and invest your money
  7. Get a college education, advance degrees are better, Eighteen percent have master's degrees, 8 percent law degrees, 6 percent medical degrees, and 6 percent Ph.D.s.
  8. Put in your time most millionaires work 45 to 50 hours per week.
  9. Invest wisely and divesify your portfolio
  10. Non-formal eduction is also important, read a lot, self help, investment magazines, Wall Street Journal

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Monday, March 13, 2006

Reverse Mortgages Pros and Cons

Reverse Mortgages Pros and Cons

What is a Reverse Mortgage: Reverse Mortgages are generally only used by retired folks. The funds from a reverse mortgage can be used for retirement income or paying for healthcare expenses. A reverse mortgage allows the homeowner to extract some of the equity out of their home without having to sell the home or take out a home equity loan. In a reverse mortgage you receive cash from the bank and don't have to pay it back for as long as you live in the house. Just a general note, I don't think most banks will give anyone a reverse mortgage on a house that they are still making payments on. Again this type of mortgage is generally for someone who is retired and has their house paid off.

Whats the conclusion of a reverse mortgage: The conclusion is at the end of a reverse mortgage the bank get your house because you either died, sold your home or the home is no longer your principle residense. In other words if your retired parents did a reverse mortgage and they passed away and you thought you might get a windfall when you sell the house you might be sadly surprised.

Who can apply for a reverse mortgage: First of all you must be at least 62 and you have to live in the house that you are doing a reverse mortgage on. The proceeds from the mortgage are generally tax-free and most do not have any income restrictions.

In conclusion a reverse mortgage is a tool that can be used at retirement. It is not for everyone, make sure you shop around and get several opinions. I would also consult a financial advisor or CPA to confirm if it is right for you. You may qualify for other assistance and may not need to do a reverse mortgage.

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Sunday, March 12, 2006

Buying US Government Bonds

Buy US Government Bonds

Buying US government bonds is faily easy thanks to Treasury Direct. At Treasury Direct you can buy Treasury bills, notes, and bonds directly from the government. You don't even have to have broker, there are no hassles, and very limited amount of paperwork. Your options to buying US government bonds are via the phone or Internet, or, if you prefer, by traditional paper methods.

Types of US government bonds: You have serveral choices when you are considering buying US government bonds, including treasury bills, treasury notes, TIPS, and Treasury bonds.

Treasury bills, or T-bills, are sold in terms ranging from a few days to 26 weeks. Bills are sold at a discount from their face value. For instance, you might pay $970 for a $1,000 bill. When the bill matures, you would be paid $1,000. The difference between the purchase price and face value is interest. For the latest auction results on T-bills click here.

Treasury notes, sometimes called T-Notes, earn a fixed rate of interest every six months until maturity. Notes are issued in terms of 2, 3, 5, and 10 years. For the latest auction results on T-Notes click here.

OTP 1

Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater. TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation For the latest results on TIPS click here.

The U.S. Treasury resumed issuance of Treasury bonds with a 30-year bond auctioned in February 2006. The next auction is scheduled for August 2006. Treasury bonds pay interest every six months until they mature. For the latest auction results on Treasury bonds click here.
You can buy bills from us in TreasuryDirect and Legacy Treasury Direct through non-competitive bidding. To purchase US Government Bonds click here to go to Treasury Direct.

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Home Based Business Ideas - Work at Home

There are hundreds of home based business ideas that allow you to work at home. Below you will find a list of home based business ideas that you can start for very little cost.

Home based business ideas: Make sure when you are considering a home based business that you work from your strengths. Are you good with computers, people, your hands, or childeren? Make sure you target something you enjoy because you will be better at it.

  1. Selling on ebay, selling your own stuff or someone elses
  2. Photography or video, have a great camcorder, you could record weddings and parties for people.
  3. Baby sitting service, daycare servce
  4. Wedding planner or party planner
  5. Website development
  6. Book keeping business
  7. Sewing
  8. Selling for Mary Kay, Pampered Chef, Avon, Cookie Lee etc.

Marketing your home based business: They key to success of any business is the ability to operate at a profit, manage cash flow, and attract new customers. Advertisting and marketing your home based business can be done several ways.

  • Word of mouth, do a good job at your business and you will get referrals
  • Networking: Make sure you tell everyone you meet about your new business. Be careful not to brow beat them about it but a 1 minute conversation on the topic is fine. I always tend to inform them about my business and I ask them to let me know if someone they know might need my services.
  • Business cards, make sure you have a nice business card, I ordered mine on line and they are really nice and were only $.18 a piece. If you give your business card to someone they may never use your services but they may in turn give that card to someone else.
  • Traditional advertising can be expensive for a new business and may not make sense

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Saturday, March 11, 2006

Selling Covered Calls

Do you have a stock that has been standing still for years. Do you want to earn a return on a stock that is far greater than any potential return your could get from the dividend? Selling Covered calls on the stocks that you own may be the right thing for you.

What is a covered call? A covered call is a stock option that you actually create the option by writing or selling a call option against a stock that you already own. First of all you have to have a brokerage account, you have to own the stock, at least 100 shares. Calls are sold in increments of 100 share. The start of the process is called sell call to open, SCO.

Covered call example: Let's say that you own 300 shares of Ford Motor Company, as the owner of the stock you could sell the March covered calls today for $.50 per share. Your profit is 300 x .50 or $150 minus commission on the trade.

Considering that the current annual dividend payment of Ford is only $.40 cents or 2.7% by selling the call option every quarter you could potentially generate another $2.00 per share of income from the Ford stock which would increase the yield from your Ford stock to almost 16%.

Cisco Systems covered call example: Let's say that you own 300 shares of Cisco, as the owner of the stock you could sell the April covered calls today for $.95 per share. Your profit is 300 x .95 or $285 minus commission on the trade.

Considering that the Cisco does not pay any annual dividend by selling the call option 3 times in 2005 you could potentially generate $2.85 per share of income from the Cisco stock which would produce a yield of almost 15%. Based on the fact that Cisco has not done much in the way of appreciation in price over the last several years this may have not been a bad strategy.

Profit potential of covered calls. The profit potential for a covered call can be as high as 3 to 10% in a one or two months. For the latest on covered call premiums goto coveredcalls.com.

What is the risk in a covered call? A covered call has one risk, if you sell a covered called you have the risk that the stock could go up beyond the strike price and you stock will be assigned to someone else.

For example: If you sold the Ford March 15 calls and the stock went to $20 you keep the $.50 per share from the covered call, however your stock is assigned to someone else for $15 and you do not receive the benefit of the appreciation of the stock price.

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Thursday, March 09, 2006

US Government I Bond Earning Rate 6.73%

US Government I Bond Earning Rate 6.73%

Did you know that you can earn 6.73% on US Government I Bonds. The rates is over 2.5% higher than most bank CD and almost 2% higher than the Treasury Bonds. The earnings rate for Series I Savings Bonds is a combination of a fixed rate, which will apply for the life of the bond, and the inflation rate. The 6.73 percent earnings rate for I bonds bought from November 2005 through April 2006 will apply for the first six months after their issue. The earnings rate combines the 1.00 percent fixed rate of return with the 5.70 percent annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U increased from 193.3 to 198.8 from March to September 2005, a six-month increase of 2.85 percent.

Treasury’s inflation-indexed I bonds are designed to offer all Americans a way to save that protects the purchasing power of their investment by assuring them a real rate of return above inflation. I bonds have features that make them attractive to many investors. They are sold in electronic form in amounts of $25 and above, or in paper form at face value in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000, and earn interest for as long as 30 years. I bond earnings are added every month and interest is compounded semiannually. They are state and local income tax exempt, and Federal income tax on I bond earnings can be deferred until the bonds are cashed or they stop earning interest after 30 years.

What if I want to cash the bonds in early: Investors cashing I bonds before five years are subject to a 3-month earnings penalty. This is the same penalty that you have with a CD. I don't look at this as a negative because the rate of return is so much higher than you typical money market account or CD.

How to buy I bonds: Savers and investors can now open an on-line account to purchase I bonds in electronic form, as well as EE savings bonds and Treasury marketable securities, through the website http://www.treasurydirect.gov/. Account holders can purchase, manage, and redeem such I bonds over the Internet 24 hours a day, seven days a week. You can also purchase them at most banks. You just need to fill out a form and write them a check.


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How to become an overnight millionare

How to become an overnight millionare

So what is the fastest surest ways to becoming a millionare? Most people are looking for short cuts to the good life and joining the ranks of the millionares? The real question however should be what is the fastest way to become wealthy? To be rich and not have to work any more if you don't want to.

The first question might be what does rich mean? If you have $1 million dollars in the bank does that mean that you are rich? How about $10 million would that be enough? In most cases it really depends on your current spending, debt and life style to determine exactly what rich means to each person. I once read a definition that said rich means the length of time that you can last without working until your investments run out. For some people who live a modest life style they may have a few rental properties or a nice business that provides them with an excellent income. If they don't have to contribute a significant amount of time to this business on a day to day bases in order for it to keep running in my book I would consider them rich or wealthy.

Things to remember: There are several things to consider when trying to become a millionare fast. Without careful consideration you may head down the wrong path and become frustrated or broke while trying to become the next millionare.

  1. Remember their is only one of you so working harder, faster, and more is not the fastest way to get there. What ever you think of Bill Gates he did not get to be the richest man in the world by doing all the work himself. You are going to have to leverage something or someone else.
  2. Other peoples money (OPM) or leverage: Most of the time when you start a business and try to get it off the ground you will require some debt. This is what we call OPM or other people money. The bank may not seem like it is there to help you but it really is. Take advantage of debt to help you along but remember there are a lot of companies that have taken on too much debt and failed and a lot less companies who had low or no debt and thrived.
  3. Other peoples time (OPT): Again refer to item one, there is only one of you. If you figured out a way to make money doing something can you take advantage of the OPT or other poeples time and leverage the fact that you know how to do something, now you can get other people to work for you doing what you know how to do. In this way you can pay the person a wage and your company charges a price higher than the wage and therefore allowing you to get cut of the profits. For example, when I was in junior high and high school I use to cut lawns for people. I cut about 6 different lawns. I was getting sick of cutting lawns so I hired a few people to help me with the lawns and I paid them a wage but charged the customer a hire wage. I had started a business by having employees. What I should have done was continued hiring more people and cutting less lawns myself and eventually cutting no lawns and just running the lawn crews.
  4. Establish a repeatable source of income: I cannot prove this statement but I am pretty sure it is true, most millionares have some form of repeatable source of income. That do I mean by repeatable? Well for example, do you live in an apartment complex or know someone that does? The person that owns that apartment complex probably makes money off of it every month, it is repeatable. In fact depending how long they have owned the apartments they may have very low debt on them and may be making a bunch of profit from them each month. Chances are they might have an apartment manager that gets free rent to sign people up for leases and so on and the also might have a maintenance person that takes care of the broken toilets and so on. If they are doing it right they have a repeatable source of income that they may not have to really do much each month to maintain. Sounds pretty nice doesn't it? The great thing about this is once you have established this source of income one time you can do it again.

The fastest ways to become rich: Below you will find a list of the fastest ways to become a millionare. None of them are easy and some of them require significant risk and you could and people do loose their money and hard earned savings.

  1. Establish multiple streams of income: Most millionares have more then one income source. They might be a doctor, lawyer, or business man, or even Mr. White Collar worker, however, they have established other streams of income.
  2. Invent something: Do you ever think of an invention only to see it in the store one year later and everyone seems to be buying it? Doesn't that just grind you the wrong way. Inventing something is a fantastic way to get rich. A lot of times you think of an idea and you don't really pursue it or don't know how and that is how your invention idea fizzles and stays nothing more than an idea. If you are going to try to invent something go for it and don't do all the work alone. Don't worry too much about trying to patent it, file a statement of invention for $80 with the patent office to protect it for one year and then spend the next year trying to manufacture the product or sell the product.
  3. Start a business: There are a million different ways to ways to make a million and there are a million different business to start. I would recommend picking something that you are passionate about. Again the goal is to make money, if you can make your first $50 then you are on your way, you need to replicate the first $50 again and again and when you get too many orders or requests for service you need to hire a person and then the next person and so on. Make sure you take advantage of the Small Business Association in your area to learn from the resources that they have to help you start a business.
  4. Smart stock investing: Warren Buffet is probably the most recognized stock investor. He not only buys stocks but he buys entire businesses as well. Getting rich with stock investing is not easy, you have to do a lot of homework and research and the tough thing for me is to know when to sell my dogs and not take huge losses.
  5. Investing in real estate: Investing in real estate is a popular way to become a millionare. Unless you have great foresight and were able to invest in places like Florida or Vegas before they started to boom you will probably not get rich overnight with real estate but it is a great way to develop a passive income. You can buy and hold and rent property, buy and flip fixer uppers, or many other methods.
  6. Produce something: What do I mean by produce something. Most people know what movie or TV show producers do, they underwrite a show and hope to make a profit off the show. There are many different things to produce that are much smaller than producing a movie or a TV show. For example one person that I knew organize and produced a bike tour in Michigan. They had over 10,000 people a season going on their bike ride and they made money by booking the hotel rooms and accomodations for the bike tour.
  7. Sell something: Ebay has make this very easy for most people to sell something. The great part about selling is that is repeatable. If you find something to sell and can sell 10,000 of them you can potentially make a lot of money. For example I see people on eBay selling ink cartridges and cell phone batteries and they specialize only in these items and they have sold tens of thousands of them. Not a bad side business in my book.
  8. Solve a big problem or fill a big need: Do you have trouble find a lead for your Tupperware? I do. So someone who had the same problem invent that silly little Tupperware hold with all the same type lids and now and sold thousands of them one TV and in stores everywhere and the get $20 bucks for it. This person solved a problem and not is making big money off of the idea.
  9. Write a book: Did you know that J.K. Rowling is a billionaire. The Harry Potter books and movies have been incredibly popular over the years. I am not saying you need to be the next J.K. Rowling but selling 100,000 books on some topics might be a nice side income for you.

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Wednesday, March 08, 2006

Saving for retirement with a 401K

Saving for retirement is an important thing to get started on early in life. Most companies do not offer a pension any more so you are usually on your own when saving for retirement. Don't hold your breath waiting for social security either it probably won't do most of any good 20 years from now. Below you will find tips on saving for retirement and the advantages of saving for retirement by using your companies 401K plan.

History of the 401K plan: In 1978, Congress amended the Internal Revenue Code to add section 401(k). Originally the 401k plan was intended for executives, however it proved popular with workers at all levels because it had higher yearly contribution limits than the Individual Retirement Account (IRA); it usually came with a company match, and provided greater flexibility in some ways than the (IRA), often providing loans and an employer stock option.

Why should you save in a 401K plan: There are several advantages to saving in a 401K plan. The top three reasons are


  1. Matching funds: Most employers will provide a certain level of matching funds based on your level of investment into your 401K plan. For example if you contribute 6% of your income to the plan your company may match your contribution by 50%. Therefore if you make $50,000 per year and you contribute 6% or $3000 your company would contribute $1500 dollars. This is an immediate return of 50% on your investment, thats truely amazing. Just wait though it gets even better when you consider the tax benefits of contributing. Note: I recommend that even if your employer only matches a certain percent of your contribution if you can I would try to max out your contributions, the current limit for most people is a max of $14,000 per year so remember don't just contribute the 6% if that is all your employer will match.
  2. Reducing your taxable income: The contributions that you make to the 401K plan are tax efficient and provide most people with there best deduction to lower there federal and state takes. Lets take the same example that we did above, suppose you contributed $3000 and your tax rate is 28% on federal tax. By contributing this amount you will effectively lower your taxable income from $50,000 to $47,000 which lowers the amount of federal taxes that you need to pay during the year. So 28% times $3000 is $840 dollars in tax savings. Therefore when you add in the employer match of $1500 to the take savings of $840 the total return in the first year on your $3000 contribution is 78%. This return is a 1 time event for this year. However, 78% is pretty amazing.
  3. Tax efficient savings: The investment returns on your 401k plan will grow tax free until they with drawn during retirement. This means that is your investments in the plan are successful they will grown and compound for years without being tax. So for example if we add the numbers above the $3000 you contribute and the $1500 match from your employer you have $4500. Lets say you pick some good mutual funds in the 401K plan and you have a first year return of 10%. Which is $450 dollars, if you earned this amount in a bank account you would be tax on the $450, however in the 401K plan it grows tax free. Pretty cool.


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Tuesday, March 07, 2006

US Government I Bonds

Are you tired of low interest rates at the bank? Are you looking to make more than .6% on your money market account. How about earning 10 times that amount with virtually no risk? Sound too good to be true? Well look no further than the US government I bonds.

I bonds are sold at face value unlike Series EE bonds that are sold at 50% face value. I bonds can be purchased at your local bank and are sold in the following increments $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000, and earn interest for as long as 30 years.

I bond earnings are added every month and interest is compounded semiannually. They are state and local income tax exempt, and Federal income tax on I bond earnings can be deferred until the bonds are cashed or they stop earning interest after 30 years. Investors cashing I bonds before five years are subject to a 3-month earnings penalty.

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Did you know that you can even setup an account with the U.S. Treasury to purchase Series I U.S. savings bonds, just goto Treasury Direct. Through this process you can have the Treasury hold the bonds in electronic form in your Treasury Direct account. If you want to hold the bonds in physical form and can't find a bank in your area that sells them, I suggest that you contact the Federal Reserve bank that services savings bonds for your area of the country and ask about buying the bonds. This Bureau of the Public Debt's Web page will provide you with that contact information.

What if you lose your bonds, oh my! Bonds that are lost, stolen, mutilated or destroyed can be replaced free of charge as long as we (the Bureau of the Public Debt) can establish that the bonds haven't been cashed. To assure that the bonds can be traced, owners should keep records of bond serial numbers, issue dates, registration and Social Security or taxpayer identification numbers in a safe place separate from the bonds. (The Savings Bond Wizard is a great way to do this!) Just complete the Form PDF 1048 to get your bonds replaced. On this form, provide the approximate issue date along with the complete names, addresses, Social Security number that appeared on the bond and the bond serial number. If you don't know the serial number or denomination, just write "unknown" in the space provided.

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Friday, March 03, 2006

Reverse Morgages

What is a Reverse Mogage? A a reverse mortgage is also known as a conversion morgage. The home owner uses his or her home as collateral to get cash. They are similar to a regular morgage, however a big differnece is the homeowner doesn't need an income to qualify and there are no monthly loan payments. With a reverse morgage, the loan and the interest on the loan are paid off when the property is sold.

So how exactly does a Reverse Morgage work? A reverse morgage is a was for a home owner to get equity out of there house without the requirment of taking on debt. Basically the reverse morgage turns over ownship of your house to the bank that is providing you with the reverse morgage.

Hows does the bank get the money back? When the property is sold—and this can be during the homeowner’s lifetime or after his or her death—the sale price of the property pays back the loan. The lender must accept only the sale price and cannot—by law—go after the homeowner’s other assets.

When should you consider a Reverse Morgage? If the homeowners needs cash they can pull equity from their home, without incurring monthly expenses. The advantages of the reverse morgage is the lenders cannot force homeowners to sell the property to pay back the loan. The Reverse mortgages ensure that the own can live in the property for as long as he or she lives. This rule applies even if the loan and interest grow to exceed the value property’s value.

When you should stay away from a Reverse Morgage? Of course the fees for a Reverse morgage are high. Lenders aren't stupid they want to make a profit off your reverse morgage. But the home owner does not have to pay for the fees until the house is sold. The fees incorporated into the loan and not paid upfront. The key point is a reverse mortgage can significantly more in fees than a conventional morgage. A lot of times the Reverse morgage is a last resort if the homeowner really needs cash.

Rules and regulations of Reverse Morgages? Again to reduce their risk and hopefully ensure themselves of profit, lenders will limit reverse mortgage loan amount to something less than the property’s full value. The older you get the more you could borrow. You must be at lease 62 years old.

Whats the max you can borrow with a reverse morgage? The most popular option, the Home Equity Conversion Morgage, which is limited to $312,896. Another options is the Fannie Mae Home Keeper loan which limits the loan aount $359,650.

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Making money with Google Adsense, Linkshare, and Commission Junction

Are you interested in making money at home with Google Adsense and other affiliate programs? Did you know that you can have a home based business that sells real products from Walmart, Target, and other retailers without ever having to ship anything. The best part about these programs are they are real home based businesses that do not require any investment on your part. I currently participate in the following programs to earn money on line.

  • Google Adsense: Making money with Google Adsense is very simple. You simply place contextual ads on your websites using the code that your cut and paste from Google Adsense. The cool part about contextual ads is that you do not have to sell anything to get paid you get paid when vistors click on your ads. For example I started a web site on school uniforms which allows users to search for the best deals on school uniforms. Click here to buy books on Google Adsense
  • Linkshare: Linkshare is an affiliate program, which means the customer has to buy something in order for the affiliate to earn a commission. Linkshare has a variety of different companies that you can establish an affiliate relationship with. You can keep track of the click through rate, the number of items that you have sold, and the amount of commission that you have earned. Click here to become a LinkShare Affiliate!
  • Commission Junction: Commission Junction is a competitor to Linkshare. Basically is it the same concept. You form relationships with you online stores, place adds on your websites and then you earn commissions when visitors click on your adds and actually buy at the sites.
  • Amazon Associates: If you are familiar with Amazon.com you know that you can buy almost anything from Amazon. They sell more than just books. So if you are looking for products to sell on your website becoming an Amazon Associate is a great idea. I started a website on digital cameras and I have several products on the site that users can buy directly from Amazon.

Start your own home based business: So how do you get started earning money on your websites with contextual ads and affiliate programs. Here is the step by step list of how I got started.

  1. Start a website or blog on a specific topic. If you have little experience on developing websites I would suggest you start a blog. If you can type you can make a blog, they are very easy to develop and are the same as website but they don't require you to have a lot of programming knowledge.
  2. Register with the affiliate programs that you would like to place ads on your site.
  3. Place your ads on your website. The Linkshare and Amazon ads are easy to put on a blog because they do not have any Javascript in them, however, the Google Ads are a little trickier.
  4. The next step is to drive traffic to you website. The higher the traffic the more potential you may have to obtain click throughs on you pay per click ads or affliate ads.

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Here is the orginal article from Business 2.0 magazine that motivate me to start trying to make money on line. I have found a more interesting magazine which combines business new with high tech. I recommend this magazine.

THE BLOGGER WHO MAKES $55K WORKING 3 HOURS A DAY

If a 19-year-old kid can make a respectable living by working the Web a few hours a day, why can't you? Jon Gales still lives with his parents in Tampa, Fla., has no college degree, tends to his site occasionally—and could pull down $55,000 in a year for a job he'd gladly do for nothing.
He's one of a rare but growing breed: the independent blogger who, through smarts, dedication, and a bit of luck, turns a profit. In August alone, his all-cell-phones, all-the-time website, Mobiletracker.net, earned him $4,600. Given the time he put in, that works out to about $70 an hour. He has done a great job his site has a 7 out of 10 page ranking. It is a pretty cool site check it out.

Not a bad haul for a born geek. Gales started writing HTML code at the age of 13. After finishing high school in 2002, he got a Sony Ericsson mobile phone and posted a review on a Macintosh enthusiast's site that linked to Amazon Associates, an online affiliate program that pays for referrals. After getting back $150, he realized that "there was some money to be made here," he says. So Gales launched Mobiletracker in early 2003 to cover the cell-phone world. Logging on in the middle of the night to search for late-breaking tidbits—like when Siemens would bring out a fancier camera phone—he posted news, which attracts viewers. "Over and over again, traffic goes to the sites where people write regularly, honestly, and authoritatively," says David L. Sifry, founder of Technorati, a site that monitors blogging trends. Mobiletracker serves more than 300,000 pageviews a month to 140,000 unique visitors, according to Web-tracking sites. And every time a viewer clicks on one of Mobiletracker.net's Google-provided ad links, the search engine giant kicks back some money to Gales, depending on what an advertiser is willing to pay. Generally, the more expensive the products or services advertised on a site, the bigger the payout. Fortunately, Gales covers relatively high-priced goods; life would be different if his passion were toothbrushes. "Write about something low-cost and you'll get nothing out of it," he says.

This is a business that's just starting to grow. Gales is looking to extend his publishing empire into other moneymakers. "Quality content will be rewarded," he says. "People will come to me." — A.T.