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Thursday, January 11, 2007

Growing Money Blog Has Moved to New Domain

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Tuesday, January 09, 2007

2005 Investment Goal Results

Back in June 2005, I made a daring investment goal of making $20,000 profit in stocks over a year period. I went back to my records today and saw that on June 1, 2006, I have made a gain of $11,000. I've only accomplished 55% of my goal. Note, I've added a total of $50 in my investment account during that one year period. But nevertheless, it was a good attempt.

Monday, January 08, 2007

Dow Dogs May Be Barking Up The Right Tree

An investment strategy that has been derided by some money managers and academics as overly simplistic, once again, proved to be best in show last year. The Dogs of the Dow strategy produced a capital gain of 26.59% in 2006 plus a dividend kick of 4.77%, handsomely beating the Dow Jones Industrials gain of 16.3% and yield of around 2.2%. The strategy, popularized by Michael O’Higgins in his 1991 book “Beating the Dow,” consists of simply buying the 10 highest-yielding dividend payers in the Dow Jones Industrials, holding them for a year, and then buying the new crop of dogs. Proponents call it an easy way to handsomely outperform the average fund manager most years with an easy, do-it-yourself strategy. Critics call it an overly simplistic approach with hidden costs and risks that has outperformed only because of “data mining” - searching for statistical anomalies and then assuming they will work in the future. “The starched shirt and suspender crowd in New York are pretty savvy, and it’ll take a bit more to beat them than this,” said finance Professor Grant McQueen of Brigham Young University’s Marriott School of Management. “It’s a competitive world, and to think you’ll get rewards without doing homework is naive.” Source: Scottrade News, Jan 3, 2007

Saturday, January 06, 2007

Quote of the Day

Being rich is having money; being wealthy is having time. - Stephen Swid

Friday, January 05, 2007

EverBank Icelandic krona 13.10% APY 3-Month CD

Empty Spaces Inc. said...

have you looked into everbank.com's icelandic CD? it pay ~10%

EverBank offers a 13.10% APY 3-Month Icelandic krona CD. The yield looks very attractive so I did some research on this CD. The CD is FDIC-insured. And the reason why the yield is so high is because Iceland is combating inflation and the banks are offering high-yield CDs to combat inflation. So what's the big catch on this CD? I found out that you can lose on principal in the CD, because the krona currency fluctuates. Also, there's a exchange rate fee. The conversion fee is three quarters of a percent (0.0075%) for CDs less than $100,000. The way it works is that your US Dollars get converted to Icelandic kronas and then at maturity if you decide to withdraw, the kronas will be converted back to US Dollars. The exchange rate then could be different from the start of the CD. Does any one has experience with Icelandic CDs? Do you think it is low risk? Are they are other catches I am missing?

Stocks Trading vs Real Estate Investment

Empty Spaces Inc. said...

just curious, if you're good at making money in the stock market why not stick to it?& why would you try RE investing after its already been appreciating for several years and may be peaking in most areas?
The stock market is unpredictable. No matter how good you are or how well you have done, there's no guaranteed of future results. Granted, I have done well in the stock market since I have officially started investing and I'm confident I'll continue to do well, I cannot depend on that to make me rich. Also, my earnings in the stock market is not steady. There are some months I go into the negative zone, and those months are hard to bare even though I have very high tolerance. It's not good to be constantly picking stocks in the long term. It's very time-consuming; I've spent a lot of time reading up on companies and financial news. Also, studies show that you'll likely be beaten by the index in the long run. Even if I can match or slightly beat the index in ten years, I would lose in time and opportunity because I'd have spent thousands of hours. An investor in the index would have done nothing but did not sacrifice as much time as I did. Unless I can beat the index by a huge margin year over year for many years, it's not worth spending hundreds of hours a year. I admit my view has changed slightly. I'm not against investing in individual stocks, but I advise caution, because many people go in without really understanding the risk. Play with money you can afford to lose. Real Estate investing is an alternative to stocks trading and in many people's eyes, it's less risky. I agree, because real estate property is tangible and with the increasing population, real estate demand is bound to go up. My rental property is in Philly, which is not a hot area like NYC or San Diego. Even though the property value is not skyrocketing, I still have rental income to fall back on. The rental income covers my mortgage and property expenses. Basically, the tenant is paying for my house. Eventually, the mortgage will be paid off and I will own the property. It is a long term investment and property value will go up. So far, my real estate investment has been less stressful than my stocks investment. I get a check every month and my tenants never bothered me. Hopefully, I can be this lucky for every investment property.

Wednesday, January 03, 2007

VLO and Oil

VLO and oil in general are taking a hit right now because of the warm winter (see article below), but I think VLO and oil will do well in the long term. There are many variables in the price of oil, and warm weather is only one of them. The winter is not over yet, there's still a chance colder weather will appear. The middle east conflicts also affects oil prices. If there is a shortage in supply, oil prices will go up. Odds are, the the prices of oil will go up in the long term. I'll hold on my shares of VLO. Verdict: HOLD on VLO ----------------------------------------- Source: Scottrade News 1/2/2007 Oil Prices Face Warm Weather, High Stocks The new year began with a whimper, weatherwise, in the world’s biggest heating oil market. In New York City, temperatures on the first day of 2007 hit a peak of 54 degrees - 45% above normal and 10 degrees warmer than the first day of spring 2006. The current spring-like weather - in line with forecasts - looks likely to put strong pressure on heating oil and crude oil futures prices when trading resumes on the New York Mercantile Exchange on Wednesday. But there’s more afoot that can rile the market than just the warmest December on record in Boston, in the heart of New England, where heating oil inventories stand at their highest level since 1998. Latest revised data from the U.S. Energy Information Administration show oil demand in October in the U.S. - the world’s largest oil consumer - was 2.7% lower than expected, though still 2.5% above a year ago. The new figures put demand at 20.757 million barrels a day in October - some 567,000 barrels a day below earlier indications - as demand figures for heating oil, gasoline and jet fuel were reduced. EIA’s preliminary data would have put October demand at 21.324 million barrels a day, the highest level since December 2005. The weakness at the start of the fourth quarter calls into question whether U.S. demand will manage to post even the modest year-to-year gain of 1.25% to 21.05 million barrels a day, which EIA forecasts would make it the strongest quarter of 2006.

Closed HSBC Business Checking Account

I went to my HSBC branch and closed my Business Checking Account on December 30, right before the start of the new year. I've moved my Business money over to Fidelity Investment since I was not earning any interest in my HSBC account. Fidelity Investment was offering interest and check writing on my business account. While I was closing my account, my HSBC account manager told me the things that were going on in her department. She said HSBC will be implementing a Point System for staff members. Supposedly, the staff will receive points for opening new customer accounts, CDs, etc.
She told me there's no points for closing accounts, and that's why no other staff members were willing to handle the close of my account. She was a little disgruntle and frustrated at how picky (lazy) the staff members were. She also hinted how the Point System is going to cause more tension among the staff.
HSBC has excellent customer service. I hope they can maintain that.

Tuesday, January 02, 2007

Penfed 6.25% CD Strategy

Penfed is currently offering 6.25% APY CDs for their 3 to 7 year terms. The rate is very attractive for an investment with virtually no risk. This rate is among the highest, if not the highest insured-rate in the nation. With interest rates expected to decrease in the future, it would be a good idea to lock in these rates. I want to maximize the benefits of these CDs. I have 100K to invest and I've come up with a few scenarios.
Scenario #1: Lock 100K in a 7-year 6.25% APY CD and have the interest paid out by check monthly. The idea is to have a recurring income.
Pros: Lock in high interest rate for the maximum CD term. Protected from future interest rate decreases. Income delivered my savings account every month. Principal is protected.
Cons: Sacrifice of compounded interest. Principal amount will be lock in for a long period, money is not accessible immediately and may result in loss of future investment opportunities if they arise.
Scenario #2: Lock 100K in a 3-year 6.25% APY CD and have the interest reinvested. Cash out CD at maturity.
Pros: Short term
Cons: If interest rates decrease a lot, I would lose the opportunity for high insured-interest-rates.
Scenario #3: Lock 25K each in a 3-year CD, 4-year CD, 5-year CD, and a 7-year CD, and compound interest.
Pros: Duration of CDs are spread out.
Cons: May not maximize interest earnings.
My idea in Scenario #1 is to create a streaming income investment vehicle by putting 100K in a CD and collecting interest each month. The downside is locking up 100K of cash. Early withdrawal is a steep 365 days of interest for the 7-year CD. I can put the whole 100K in a 3-year CD (Scenario #2), which would give me more liquidity but if interest rates come down in the future, I would lose the high inerest rate opportunity. The third option (Scenario #3) is a CD ladder and would give me better liquidity. Still, locking up 100K for at least 3 years without seeing any income from that investment is a tough decision. That brings me back to the idea of receiving a monthly check for interest and locking in the CD for the longest term, the 7-year CD.
Locking in 100K in a 7-year 6.25% APY CD and compounding interest would yield the highest interest, but that would made the 100K inaccessible for a long period of time and I can't afford that. There's always good investment opportunities out there and I don't want to be caught with money tied up. Also, I'm looking forward to buying an investment property in the near future, so I may need to tap into the money. What do you think is the best option for me?

Monday, January 01, 2007

Happy New Year

Happy New Year to all!

Friday, December 29, 2006

Interview with Kas

I was talking to my coworker, Kas a few days ago and she told me she made $18,000 in the past two months. I asked her what she was doing. She said that she had this side business in addition to her day job. I learned that she was selling Christmas ornaments in the mall. It was her friend's business, but because she had been working with her friend for a while, her friend trusted her with the merchandise and gave her 20% profit-sharing. If her share was $18K net, imagine what her friend's was. According to my calculations, her friend made $72,000 in two months.

The business was selling Christmas ornaments at a small area in a mall. They rented one of those cart spaces. The rent was $25,000 a month, it was a special deal because Kas' friend knows the owner. They hire a few helpers on an hourly base. They sold Christmas ornaments with personalized name labels on them. It was a perfect time because everyone was shopping for Christmas ornaments, and the lines were very long.
I believe they made a gross profit of 100K+ in two months. The ornaments are from a distribution in Hawaii. I was told that you would need connections to get to the supplier. Kas' friend has connections to the supplier and the mall. She rents the mall spot for only two months and has the spot reserved for her every year. Kas' friend has been doing it for years, and she will continue to do it indefinitely. It's a no-brainer. Kas' friend owns many business, including gas stations.
I was really impressed that Kas made $18,000 in two months. She did say it was hard work, it was very busy during the holiday season. But I think it paid off well. She seems to be very good at making money. She told me it's easy for her to make money. If you're willing to do some work, you can make money easily. I'm going to talk to her again and see what ideas she has in mind.

Thursday, December 28, 2006

Be Careful on Giving Unsolicited Advice

I love reading up on financial news and learning more about personal finance. And I like helping people as well. Sometimes, I give advice to my family and friends. Although they would listen for the most part, they almost never act on what I tell them to do. It's interesting that despite my honest advice to help them, they would push away everything I say. They would always have some kind of doubt or excuse. Recently my friend is running low on money. He's a real estate agent and he hasn't closed any deals lately. Since I know a few extra bucks would help him, I told him about signing up for credit cards or bank accounts with cash bonus. Or he can play the 0% balance transfer. He thinks it's too much hassle.
I have spoken to several friends in the past two years about contributing to retirement accounts, such as 401k and IRA accounts. They give me the usual answer, "I have no money." I tell them the importance of saving up for retirement. Moreover, I provide them with important financial messages - pay off debt, have emergency money, save up for retirement, invest, etc. They don't seem interested and don't listen. Yet they like to complain about not having money.
Sometimes I feel that they don't want financial advice -- they want MONEY. What they want me to do is not to teach them how to make money, but to hand them cash. Everybody wants to be a millionaire but nobody wants to work for it anymore. It's all about get rich quick.
They tell me they don't have time, and it's not worth making a few extra hundred bucks. If you have a lot of money, I would understand, but if you need money and have the opportunity to do it, why not?
It's hard to teach family as well. They don't seem interested in learning. I tell them to start ROTH IRAs because it really helps if you have low income, the government even give you tax benefits if you qualify. But they say they rather have the money now.
While I'm no certified professional, I know my advice can help my friends and family. They just don't see it. Perhaps they need to learn their own way. I just thought maybe I can give them a shortcut, but sometimes people need to learn the hard way.
I figure I'll save my energy on going out of my way to help people. People just don't appreciate. Instead, I'll focus on those who wants my help. It's a lose-lose situation if they don't appreciate your advice. Because if they miss the opportunity, they would blame you. If they execute your advice improperly and the results come out bad, they would blame you. The moral of the story is never give unsolicited advice.

Wednesday, December 27, 2006

New Year's Resolution

My Plans for 2007: Move GrowingMoney blog to my own domain. This will give me more flexibility in the web design and I will also have my own web space to host files (photos, PDFs, etc.). Feel free to provide help for those with your own domain. Contribute to my SEP-IRA. I have open a SEP-IRA with Fidelity and I will make a contribute in the beginning of the year after my accoutant decides what the amount should be. Reallocate 401k Funds. I plan to shift more towards large-cap growth funds. Qualify for IPO trading.

Tuesday, December 26, 2006

Year-end Coming

As the end of this year is approaching, what are your new plans for the new year?

Monday, December 25, 2006

Merry Christmas

Merry Christmas to all.

Tuesday, December 19, 2006

Word of the Day: Options

Options A contract giving an investor a right to buy (call) or sell (put) a fixed amount of shares (usually 100 shares) of a given stock (or indexes and commodities) at a specified price within a limited time period (usually three, six, or nine months). The purchaser hopes that the stock's price will go up (if he bought a call) or down (if he bought a put) by an amount sufficient to provide a profit when he sells the option. Source: www.environmentalinvestors.com

Thursday, December 14, 2006


SAI has been dropping for a few days and closed at 17.96 today. At under $18, it's a screaming buy, and at under $19, it's a good buy. Upside SAIC Report 8% Increase in Profits SAIC Stock buyback up to 40 million shares Still new to the market, large potential increase in institutional holdings. Low P/E. A good defense/homeland security play. Winning lots of new contracts from government. Downside Options expiring soon (shares selling off). $1.6 billion dividend to insiders. Low guidance. SAI looks like it's going to hit rough waves in the near future, but after smoothing all those problems, it should sail smoothly higher in the long term. Its price is currently at a two-month low and seems to have support at high 17's. At under $18, it would make a very good long term position.

Thursday, December 07, 2006

Heelys IPO

I spent 30 minutes watching the roadmap of Heelys and did some research on the company. My summary: Good short term play because of the hype, but its long term prospect is questionable because the wheel-in-a-shoe may become a fad. Heelys IPO gets rolling Heelys looks to stay on a roll with IPO Cramer's 'Mad Money' Recap: Heelys Worth a Roll "Looking at the comps, Cramer said Heelys should be worth $26 a share eventually and it could even go to the mid-$30s. The bottom line: buy Heelys in the low $20s and sell it as soon as it crosses the $30 line."

Status Update

I have been very busy lately with work and personal stuff but I am still very active in the stock market. I have made many short term trades but just haven't had the time to post. I hope to do a post about my stock performance later on this month. I'm considering a tablet laptop where I can do some scrap work to depict my investment plans and strategies. I would like some feedbacks on tablet PCs. I know Neville uses a tablet PC, and it looks useful. Another thing I had been wanting to do is move my blog to my own domain, because I want to be able to configure everything and host files, but I thought the move and maintanence would be time-consuming so I didn't do it. Future Posts Philly House Lease Renewal and Rent Increase Annual Stock Performance Review Student Loan Wipeout 2007 Financial Plans My "Safe" Short Trading Strategy

Wednesday, November 22, 2006

Bye-bye Student Loans

I have about $3,200 in my student loan balance and about $112,000 in my mortgage loan balance. My student loan interest rate is at 3.875% and my mortgage loan rate is at 5.75%. I have $5K cash that I can use to repay my loans. It seems to make more sense to use the extra money to pay off my mortgage loan first. But I've decided with the help of my accountant to just pay off my student loans totally. That way, at least I clear out one debt account. According to my accountant, it would not be much of a tax savings for me even if I put the money in the mortgage loan.

I went online and sent a payment online to my student loan provider for the payoff amount (which is different from the balance). Now I am finally freed of my student loans.