Moneyist

GetSmart Money Term of the Day: Undervalued

andreasmith — Fri, 11 Jul 2008 04:50:06 +0000

Undervalued - 1. A stock or other security that is trading below its true value. 2. Of, relating to, or being a security that trades at a price lower than it logically should trade. Determining whether a security is undervalued is a subjective judgment. 3. A stock price perceived to be too low or cheap, as indicated by a particular valuation model. For instance, some might consider a particular company’s stock price cheap if the company’s price-earnings ratio is much lower than the industry average. To refer to undervaluation or overvaluation implicitly assumes some model of valuation. It is always possible that the security is valued correctly and that model applied is wrong.

Source: www.financial-dictionary.thefreedictionary.com

In The News

andreasmith — Fri, 11 Jul 2008 04:29:12 +0000

Legendary Stock Picker/Fund Manager, John Templeton, Dies At 95

Early on Tuesday, July 9, John Templeton, the legendary international stock picker and founder of the Templeton Growth Fund died in a Nassau hospital. Templeton, who was born in Tennessee in 1912, began his investing career on Wall Street back in 1937. Templeton’s rise to worldwide notoriety as “arguably the greatest global stock picker of the century” is attributed in large measure to his uncanny ability to identify, acquire, and profit from undervalued stock. Reuters news service described the billionaire philanthropist this way:

“Templeton’s knack for investing was evident as early as 1939, when at the start of World War II he borrowed money to buy 100 shares each in 104 companies that sold for $1 per share or less, including 34 companies that were in bankruptcy.

According to the [Templeton] Foundation’s website, only four of those 100 turned out to be worthless, and Templeton made large profits on the others after holding each for an average of four years.”

In 1992, Templeton sold his mutual funds to Franklin Resources for $440 million.

ATM Security Varies By Location

Before you run into a convenience store to grab a quick $20 bill, you may want to consider taking a few extra minutes to travel to the nearest bank instead. That’s because research by security analysts indicates that ATMs located in public places like ballparks, train stations, and convenience stores are more susceptible to tampering than bank ATMs. This is due, at least in part, to the fact that bank ATMs are generally videotaped and maintained by the branches that host them while the ATMs located at or near public venues are generally maintained by a third party.

Proactive Money Management Helps Women Lead Healthier, Happier Lives

According to a recent study commissioned by Northwestern Mutual, a financial security company, and LLuminari, a national network of health experts, “Women who are proactive in managing their finances are significantly more likely to report that they are in excellent to very good health, happy, hopeful, optimistic, confident, cheerful and upbeat. They are also less likely to say they’re worried, regretful, conflicted, disappointed and depressed.”

The study went on to show that while nearly 75 percent of women “place a high importance on financial security,” only 14 percent reported feeling financially prepared. In an effort to aid those who desire to improve their financial lives—and their health—Northwestern Mutual and LLuminari have teamed up to launch a new website, www.sevenfinancialhabits.com. At the site, visitors (both men and women) can take a ”Healthy Habits Quiz” and tap into the Seven Financial Habits of the healthy.

Sources: www.reuters.com, www.biz.yahoo.com, www.northwesternmutual.mediaroom.com

GetSmart Money Term of the Day: Mutual Fund

andreasmith — Thu, 10 Jul 2008 05:33:15 +0000

Mutual Fund - “A mutual fund is a company that brings together money from many people and invests it in stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of these holdings.”

Source: www.sec.gov

In The News

andreasmith — Thu, 10 Jul 2008 05:30:19 +0000

Sales Tax Holiday Season Set To Begin

Each year, a number of states across the US temporarily suspend sales tax charges in an effort to boost their economies and lend a hand to the back-to-school shopping crowd. This year, a total of fifteen states will participate in the much-anticipated “sales tax holiday,” beginning with Vermont this Saturday, July 12. With gas prices through the roof and food prices not so far behind, this year’s holiday is sure to be a hit with many Americans—not just the parents. Besides Vermont, Alabama, Connecticut, Georgia, Iowa, Louisiana, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of Columbia will participate. For more information on the holiday including the items covered, dates, and tips on how to maximize the benefit, visit the personal finance section at www.smartmoney.com.

SPECIAL TIP: The sales tax exemptions will apply to web purchases as well as those made in-store, so if you want to save some on gas, dodge the crowds and shop online!

GetSmart Money Term of the Day: Traditional Individual Retirement Account (IRA)

andreasmith — Wed, 09 Jul 2008 03:20:11 +0000

“Traditional IRA. An IRA that is not a Roth IRA or a Simple IRA. Individual taxpayers are allowed to contribute 100% of compensation (Self-employment income for Sole proprietors and partners) up to a specified maximum dollar amount to their Traditional IRA. Contributions to the Traditional IRA may be tax-deductible depending on the taxpayer’s income, tax filing status, and coverage by an employer-sponsored retirement plan.”

Keep on learnin’. Keep on growin’.

—Andrea

Source: www.investopedia.com

Save Your Way To $1 Million: The 35-Year Plan

andreasmith — Wed, 09 Jul 2008 03:07:23 +0000

Although I earnestly intended to get away from the topic of saving for a while, it seems that just about everywhere I turn, I find some great new insight on how to conserve cash. And no wonder. Just about every major news outlet in the country seems to be talking about money these days—especially how to save it. So here we are again. Learning more and more about how to turn the money that you earn into the fortune of your dreams.

During May, Kiplinger.com ran a story entitled “Turn $451 a Month Into $1 Million Bucks.” In it, they outlined eight steps that could net readers $451 each month and pave the way to a much wealthier future. Here they are:

If you are in the 25% federal tax bracket and a new parent or homeowner, you may be eligible for three extra exemptions that would net you $219 monthly. If you are, massage your exemptions, and then take the money and run.
Dine in for lunch and snacks. Save $100 each month (and maybe a lot more).
Cut out one date-night (dinner and a movie) per month. Savings? $80.
Use pre-tax flexible spending account dollars to pay health care expenses and save $28 monthly.
“The average consumer pays $829 annually for car insurance, according to the National Association of Insurance Commissioners. Raising your deductible from $250 to $1,000 can save you 15% or more.”
Tune your car and inflate your tires. Save $8 on gas per month—$100 annually.
Buy generic prescription drugs instead of name brands to conserve $6 a month.
Make The Deposit. Dump that $451 into a retirement account averaging 8% a year over the next 35 and enjoy!

For guidance on how to find just such an account—or to view the slide-show for this story—visit www.kiplinger.com.

Happy Saving!

—Andrea

GetSmart Money Term of the Day: Save

andreasmith — Sun, 06 Jul 2008 02:24:11 +0000

save - v. 1. a. to rescue from harm, danger, or loss. b. to set free from the consequences of sin; redeem. 2. to keep in a safe condition; safeguard. 3. to prevent waste or loss of; conserve. 4. to set aside for future use; store. 5. to treat with care by avoiding fatigue, wear, or damage; spare.

Keep on learnin’. Keep on growin’.

—Andrea

Source: www.thefreedictionary.com

Creative Saving 101: Final Thoughts

andreasmith — Sun, 06 Jul 2008 02:13:42 +0000

Make The Deposit.

Spending this week serving up a full-menu of Creative Saving strategies has been a truly joyful experience for me. If it is not already obvious, I love to save money. Even so, it occurs to me that it wouldn’t be right to close out this week’s series without spending at least a few moments rounding out our discussion with a word of caution. And the word goes like this:

Make The Deposit.

So what do you mean by that Andrea? Well, just this. I have found over the last few years that as fun as it can be to “save” money by shopping for the best deals, auditing expenses, and clearly delineating the difference between wants and needs, all of the “saving activity” in the world will ultimately add up to zero dollars if the person holding the money bag fails to take the final and most important step in the overall saving process. Specifically, MAKING THE DEPOSIT.

I mean seriously, think of it. What good will it do you to unplug your appliances, cut your trips to the grocery store, and install a low-flow showerhead if you never actually add up the amount of money that your saving strategy has netted you, set-aside the physical dollars and cents saved, and deposit that money in an account somewhere?

Allow me to answer that for you. Very little. (Trust me, I know, because that’s the chief savings deception that I myself have fallen prey to…)

So if you will, please consider making a commitment along with me. And what’s the commitment? Just this.

“No longer will I allow myself to be busied or satisfied with a wide variety of ’savings activities’ that I fail to cash in on. Instead, when I save money—by catching a great deal on a needed item, or trimming the fat on my monthly budget, or maybe by simply passing on a purchase that I don’t really need—I will, instead, ’step up to the financial plate’ and actualize those savings by converting the theoretical dollars and cents into cold, hard cash and doing something responsible with it. ‘Something responsible’ could mean stashing the money in a tin can until I can make a physical deposit at the end of the week. ‘Something responsible’ could mean visiting a broker and adding that little fortune to the money that I’ve already put to work. Or ’something responsible’ could mean donating the money to a person or organization that I believe in. No matter what the case, the bottom line is this—I will no longer allow myself to be deceived by nebulous ’savings activities.’ From here on out, I will conduct all of my financial matters, including my savings, with my eyes wide open and a heart that’s fully conscious. From here on out, I will control my money. My money will not control me.”

Happy Saving!

—Andrea

GetSmart Money Term of the Day: Independence

andreasmith — Fri, 04 Jul 2008 04:36:47 +0000

independence - n. 1. The state or quality of being independent. 2. Archaic Sufficient income for comfortable self-support; a competence.

Happy Independence Day!

andreasmith — Fri, 04 Jul 2008 04:30:17 +0000

How Do You Define Financial Independence?

Now is as good a time as any to begin thinking the matter through. To help get your juices flowing, consider what a few others have to say.

“What is Financial Independence? Why is it a worthy goal?

To me, Financial Independence means ‘getting out of the rat-race.’

Your Money or Your Life — still my favorite book on frugality and personal finance — defines Financial Independence as “having an income sufficient for your basic needs and comforts from [sources] other than paid employment”. Passive Income is money that you earn without having to work for it. When you earn interest on a savings account, you are earning money passively; it accrues whether you’re working or not.”

—J.D., getrichslowly.org

“What is Financial Independence?
What is your definition of Financial Independence?

-Having tons of money and living off the ‘interest’?

-Never having to work again?

-Never having to look at price tags?

-Alternating between your Mediterranean yacht and your Aspen chalet?

Let me offer you a different definition. Financial Independence is the attainment of freedom, peace of mind, and flexibility, built on a sound financial foundation. It includes:

-Not being a slave to poverty, but also not being a slave to a high income

-A sense of resourcefulness, even in the face of circumstantial setbacks, a sense that you can survive the setback and get back to where you were -Independence from consumerism -Having a need that falls below what you bring in”

—Jane Herman, WITI.com

“Financial Independence. What exactly does it mean? Well, Webster’s Dictionary defines the terms this way:

Financial:

Pertaining to the science of managing money.

Independence:

Freedom from assistance by others.

So financial independence means the ability to manage your money in such a way that you have sufficient funds to live your chosen lifestyle without assistance from others. In other words, enough money to meet all your needs whether you work or not, because a job is really assistance from someone else — your employer.”

—John Cummuta, nightingale.com