There’s a good article called Becoming a Security Analyst by William A. Hayes. This is one of my main career goals right now.
This is what I got from the article:
Get an MBA, CFA or both.
Network.
Write your own research report.
Get lucky.
There’s no right way to get a security analyst job. It’s a tough world out there.
There’s a good article by Liz Pulliam Weston on MSN. It talks about why a lot of Americans are broke because of the car purchase. They buy more car than they can afford and do not realized that they’re spending an average of 8,000 a year on vehicle expenses. This can put a big dent into a persons savings and can be a big reason why a lot of people live pay check to paycheck and why some will never afford a down payment on a house.
| Income range | 2005 spending |
|---|---|
| Less than $19,179 | $2,742 |
| $19,179 to $35,999 | $5,330 |
| $36,000 to $57,659 | $7,437 |
| $57,660 to $91,704 | $10,504 |
| More than $91,704 | $15,691 |
| All households | $8,344 |
(Sources: Bureau of Labor Statistics, Census Bureau. Average transportation expenses include vehicle purchases, finance charges, insurance, fuel, maintenance and repairs, public transportation and other out-of-pocket expenses but not vehicle depreciation.)
Most young people get brainwashed by the media. Advertising affects our lives everyday. The average person may see 5,000 advertisements a day compared to 500 a day in the 70s. No wonder people can’t think for themselves.
The general rule of thumb for people is to spend no more than 20% of their gross income on vehicle expenses. It’s more preferable to buy a car with cash unless they can get a low APR on their loan and they are able to pay their monthly payments.
Most people trade their cars in every few years even though their car is perfectly fine. It’s not a very financially savvy move though. I plan on driving my car until it dies. There’s no need to impress anyone, especially when they can’t afford it. Most rich people don’t drive nice fancy cars anyways. They drive the same old vehicle for 5+ years. Think hard before buying a new car. Buying a 2 to 3 year old car is even better because the previous owner has already a good chunk of the depreciation already.
I need a better system to keep track of all my financial activity. I find myself wasting some time trying to keep track of all my transactions as well as my overall asset allocation. I have too many brokerages and mutual funds spread out across different accounts. I have Scottrade, Tradeking, Zecco, Sharebuilder, American Funds, and more than half a dozen savings accounts which include HSBC, ING Direct, HTH Worldwide Bank, Virtual Bank, ELoan, Emigrant Direct, and Washington Mutual. Keeping
I also have about 15 credit cards. I just paid off about 12,000 in 0% balance transfer money that I borrowed a year ago. I still owe 30,000+ and will plan on opening more cards once my credit score goes up from the lower utilization that will reflect the credit bureaus in a few months. My goal is to borrow at least 100,000 by the end of the year.
I keep track of all my accounts with Yodlee. Yodlee is an account aggregator that shows the value of all your accounts in an easy to read page. It does a good job and lets users know if there are any activities in any of their accounts. I can tell if there is any unusual activity going on any of my credit cards by logging onto Yodlee instead of logging into all my separate accounts. The only problem with Yodlee is if someone got a hold of my Yodlee password. That would give them access to the user name and password for all my accounts. All of those accounts are not difficult to keep track of, but it does get a bit messy. I may plan on consolidating all my money from my brokerage accounts into 1 brokerage account. I might get Quicken or MS Money to keep track of all the accounts. Something that keeps track of the performance of my portfolio would be nice too.
Some people think that real estate is a great investment. Over the past decade, real estate has been a very hot performer. But, over the past 40 years, real estate has underperformed stocks by a large margin. Real Estate’s real rate of return since 1963 is a 1.35% compared to the 5.95% that stocks returned. Real estate returns are slightly higher than treasury bonds.
The returns on real estate, especially residential properties that people buy seem a lot higher than it actually is because of the use of leverage in a hot market when some local property prices were going up 20% a year. With a 20% return per year over the span of a few years using 80% leverage, some people made up to 7 times their invest money in a few years. A lot of people sat on hundreds of thousands of dollars in equity in their home.
It is hard to beat the returns of real estate in the hot market, but unrealistic returns do not last forever and what gets overpriced will correct. Leverage works both ways and it can kill you in a bad market. Many people now are suffering because they got greedy and bought homes they cannot afford at the peak thinking that buying real estate is easy money. They got what they deserve. Homes are foreclosing left and right and now “experts” are calling it a “buyer’s market”. I still think real estate prices still have a long correction ahead and buyers should be patient. Buying overpriced assets will only lower your future expected rate of return.
As an investment, I believe real estate deserves a small portion in a portfolio, somewhere along the lines of 5-20% depending on an individual’s financial situation. Buying a home you can afford to live in is fine because it serves the purpose of shelter. Don’t buy real estate to flip it using an interest only loan. There are better investments out there. Use real estate as only a small portion of your portfolio for diversification.
Parents should use a 529 plan for their children’s college education if they are saving for their children’s education. They should only contribute to their child’s education fund only after maxing out their own retirement accounts. This is because if a child has no money for college, they can always take a loan. Parents on the other hand need take care of their retirement first because they cannot borrow for retirement. Instead, they may become a burden to their children in old age if they did not fund their retirement.
Saving money in a bank account is not a good idea because the average college tuition increases by 8% a year. That is a lot higher than our general inflation rate of 3%. It only takes 9 years for college costs to double. The money earned in a savings account would not be able to keep up with tuition costs, so in the end, parents will have to contribute a lot more to fund the college education or they may not have enough to cover tuition costs.
Some advantages of 529 plan include:
Federal tax free withdrawal on higher education expenses. Parents may be able to deduct contributions from their state tax depending on the state that they live in.
Parents own the account and not the child. So if the child does not go to college, the parent can rollover the fund to another person.
If the child gets a scholarship, the parent can withdraw the amount up to the scholarship without incurring any penalty.
Cons include the amount in the 529 plan affects financial aid eligibility.
Withdrawing funds for noneducation expense will be taxed at the parents income tax bracket along with a 10% penalty.
Each beneficiary must have their own account. There is no sharing allowed.
The tax law is set to sunset on 2011. Law makers need to make the the tax free withdrawal permanent or withdrawals will be taxed at the childs income tax rate. (I am sure that they will make the tax free withdrawal permanent in 2011.)
Where is a good place to open up a 529 plan? I recommend a plan sponsored by your state, so that withdrawals will be exempt from both state and federal income taxes. If you use a plan in another state, you may have to pay state taxes on withdrawals, even if they are for higher education purposes. Vanguard and Fidelity are two good choices.
