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Monday, October 31, 2005

Dollar Cost Averaging

I was reading Poe's post about Dollar Cost Averaging and was playing around with the numbers. I realized that the shorter the time frame for your automatic investments (assuming same total monthly contributions) the better your dollar-cost-averaging affects are. Here's my example. SEMI-MONTHLY PLAN Month Price Amount Shares Jan $10 $20.00 2.000 Jan $8 $20.00 2.500 Feb $9 $20.00 2.222 Feb $7 $20.00 2.857 Mar $9 $20.00 2.222 Mar $10 $20.00 2.000 Apr $11 $20.00 1.818 Apr $10 $20.00 2.000 Total Amount: $160.00 Total Shares: 17.620 Average Price/Share: $9.08 SEMI-MONTHLY PLAN Month Price Amount Shares Jan $10 $40.00 4.000 Jan Feb $9 $40.00 4.444 Feb Mar $9 $40.00 4.444 Mar Apr $11 $40.00 3.636 Apr Total Amount: $160.00 Total Shares: 16.525 Average Price/Share: $9.68 One interesting factor I noticed is that the average price/share remains the same regardless of the amount you contribute regularly in both of the plans. That makes sense, because if you increase the regular contributions the number of shares you buy increases proportionally for the same price.

Sunday, October 30, 2005

Philadelphia Investment Update #7 - New Tenants

My agent called today and told me some really good news. He has found new tenants for me. The new tenants have very good credit, some of the best my agent has seen. They also have stable jobs, two kids, and a dog. Because they have a pet, my agent took down $300 for pet deposit. I knew nothing about taking a pet deposit, but that's the good thing about hiring a competent and knowledge agent. The new tenants are going to move in around mid-November, the rent will be pro-rated for that month. The rent is $925, which is on the lower end of what I aimed for, but the amount is still considered very good. Many of the houses in Philly rent in the 800s. My agent is going to have them sign the lease next week and pay one month security deposit. Also, my previous tenants have moved out and my agent said "they left the place spotless!" I'm lucky compared with some of the horror stories I heard from my friends' ex-tenants. It looks like the new tenants are going stay permanently. The adults are young couples and have gotten new jobs in the area. My agent also said that they should be good tenants and not give me any trouble. As long as they don't give me trouble, I would be so happy. I just want to sit back and collect money now. Let the money flow in!

Thursday, October 27, 2005

Trading Stocks

I've been recently closely watching the stock market and monitoring my list of stocks. My current favorite pick is Click Commerce Inc. (CKCM). I've played the swings and made some decent money. I just added more shares yesterday. The stock price has been pushed down with no reason. The company is doing well and has a lot of potential. It has just been chosen by the U.S. Air Force for a huge contract. The valuations are incrediblely attractive. Priced at 16.19, the trailing P/E is 19 but the forward P/E is 13 times next year's earnings, and it's a major player in RFID technology. Next week will be interesting for this stock.

Tuesday, October 11, 2005

Short-Term Goal Meter

I've added a new short-term goal meter on the right side of the template. The goal is to raise $10,000 in my savings account by 6/1/2006. Thanks to Clutter2Cash for helping me set this meter up.

Monday, October 10, 2005

Business Idea #1 - SEND-A-TUNE

I've posted this idea on MMI #8 - Send A Tune. I really like the idea and I'd like to know how I can suggest this to a music/phone company.

SEND-A-TUNE is a service that lets you send a song to someone's voicemail. What is it? It's basically a service that incorporates music into phone messages. The service is targeted towards people who like to pick songs to express an emotion or to say a congratulation. For example, I want to wish my friend a happy birthday and play her the song. It would be nice if I can record my message and play a happy birthday song over her voicemail. When she checks her voicemail, she would hear something like this.
" Hey, it's me. I want to wish you a happy birthday. [Music beings and the song plays] Happy birthday to you Happy birthday to you Happy birthday to YOU Happy birthday to you. I hope you're having a great time at the party. "
The service allows a great selection of songs. You can pick a song for your girlfriend, wife, friend, or family member. How does it work? You call a company that hosts the service, SEND-A-TUNE (for example). You pick a song from the selection. The selection should include a wide range of music, genre, and artists. You enter the destination voicemail number. You are allowed to record a personal message before and after the song. The song and message will be delivered to the targeted destination number. Why send a song? Sometimes a song can express your feelings and thoughts. Send a song to confess your love. Send an apology. Send a congratulation message. There are many reasons.
  • Example #1: John has feelings for Rebecca for a long time but never had the courage to tell her. He sends the song, "Right Here Waiting."
  • Example #2: Maggie appreciates the five years she's been with her boyfriend. On her anniversary, she picks "Thank God I Found You" and sends that to him.
  • Example #3: Joe wants to apologize to his girlfriend for the mistakes he has made but it's hard to explain his situation, so he sends, Az Yet's "Hard To Say I'm Sorry."
  • Example #4: Jimmy just graduated high school. He picks "That's What Friends Are For" and sends them to two of his best friends.
Who would pay for this service? Mostly teens and young adults, but people of any age can use the service. I imagine mostly lovebirds and people who like music. But parents can send songs to kids to express their love and care. That gives parents another way to tighten the gap with their kids. How much would it cost for users? The service has to be inexpensive for people to use it. One-time payment and memberships are available as well. Methods of Payment
  • A charge directly to the phone account
  • Credit Card/Debit Card
  • Membership Account
    • One-time charge, deducted for each use (like a phone card).
    • Unlimited monthly usage (for high volume users)
One easy way for customers to pay is to have it charged to their phone bill. The music company can talk to the phone company about this. If the customer doesn't like adding to their phone bill, they can sign up for a membership account where they enter a short account # and a pin#. Great expansion idea for existing music stations. I think this would be a great opportunity for existing music stations like Yahoo! Music to incorporate in their expansion plans. They already have all the licensing and it would be a great thing to add to their agenda. This service should help them boost revenue.

Sunday, October 09, 2005

Business Idea Section

Lately, I've been coming up with a lot of new ideas. I'm going to create a new section for this and I'll post some of them up when I have time. Note: The Business Ideas are original thoughts of the author and shall not be copied without permission.

Saturday, October 08, 2005

Backup Plan

Currently, most of my money is invested in the house and I have little savings left, so the question is, how do I prepare for the worst case scenario? Although I'm confident I can have the house rented out by November, I should still have a plan B. My house is already rented out for the month of October, so let's assume it takes me two months before I find another tenant. My total monthly expense for the house is about $810; two months would set me back $1620. Assuming I will need to shell out another $3000 for unexpected repairs. This scenario would cost me $4620. If necessary, I will dig in my paychecks to cover the extra costs of the house. I'm currently working two jobs, so my income has increased slightly. I'm also selling some of my assets at home to increase my cash line. However, those are not enough cover for the worst case scenario. So, I had borrowed $10,000 from a 0% APR credit card ahead of time and the money will be in my account by this week. I have been positive about this investment all along, so I believe things should work out well for me. But since I'm a very defensive player, I always have a backup financial plan.

Thursday, October 06, 2005

Investment Goal Update

Earlier, I made a post about an investment goal with stocks. Since I have been pouring money on real estate in Philadelphia, I have withdrawn most of the money out of the stock account. I will now focus more on the real estate investment since that is a majority of my assets.

Short of Cash

My cash supply is dried up from buying a house. I have spent every penny and now I have to build up my savings again. So what do I do? Think of ways to make money of course. Growing Money is about making money! I referred to my Money-Making Idea #5 and posted unnecessary items on ebay and online forums. Below is my status after two weeks. Sales report so far:

  • Binoculars: $20
  • (3x) Sharper Image Air Purifer Units: $120
  • PCMIA Wireless Card: $20

Total: $160

Monday, October 03, 2005

Philadelphia Investment Update #6 - Closing Day

My schedule was really crazy today. I woke up before sunset this morning and traveled more than two hours to Philadelphia. I got to Philly around 10am but my house closing appointment is at 11am. My agent picked me up from Philly and drove me to the house for a pre-purchase inspection. We were running short of time so we took a quick look at the house and recorded the water/gas meter readings, and then we rushed to the title company. In the office we all sat down around a huge table. The sellers and several other people were there as well. There were stacks of paperwork on the desk for me to sign. A few hundred signatures later, I was finally done. I have officially become the owner of the house -- my first house.

  • House Value: 142,000
  • Down Payment: 28,400
  • Mortgage: 113,600
  • Closing Fees: 8,100
  • Total Cost of House: $150,100
  • Mortgage: 113,600
  • Interest Rate: 5.75%
  • Monthly Payment: 662.94
  • RE Tax: 105.83
  • Home Insurance: 41.08
  • Total Monthly Payment: $809.85
I also got $810 of rent for the rest of the month from the seller. I paid my current agent a fee of $600 to find a future tenant. Hopefully, I can get at least $900 of rent and there will be no problems with the house. I've now joined rank with the real estate owners. Kudos to my first investment home!