All I Need is 3 Million Dollars

Prosper.com is Back

2009-04-28T07:25:00.000-07:00

I got an email today from Propser.com and they have finally started offering promissary notes again. They also report that they have new features, like the ability to purchase parts of loans from other lenders like car loans, etc. They have also improved their ratings system. I'm definitely going to do some more investing with them, as the first $50 I invested to a person expanding his patisserie (shortly before Prosper paused offering their services to investors) has been consistently earning me just over a 20% return.

This Little Piggy Got Flu and Scared the Market

2009-04-27T16:22:00.000-07:00

I read today in the news that the market dropped today because of fears of Swine Flu entering the US and causing Armageddon. I have two thoughts on this. First off, the DOW dropped a whopping 0.64%, which is hardly newsworthy, but I guess it sounds cool so it will create a catchy headline in the Financials pages. Second, are times when everybody panics because of a disease scare a good time to buy stocks? They are obviously deflated because people are just freaking out.

In my mind one of two things would happen in a situation such as this. The first scenario would be that this, like other disease scares in the past, will pass and the market will go back up to where it would have been without the scare in the first place. In this case it would be a good time to get stocks. The second scenario would be that there really is an epidemic, and everybody dies. In this case you'd be dead, so if you had bought stocks you won't mind that they are worthless, or if you're one of the few survivors you'll be just happy to be alive.

Some nice macabre thoughts for a Monday :)

Tax Season Brings Another Lesson Learned

2009-04-26T19:00:00.000-07:00

Tax season is over for most of us, and I have learned a big lesson for the newbie investor like myself: don't trade more stocks than you need to.

My wife and I went to a tax professional at Jackson Hewitt this year since she started a business, and we found that our tax preparation was way more expensive than it needed to be because I had traded so many different stocks and each one required a separate fee from the preparer. I had thought that they were all traded in one broker that it would be simple, but apparently each asset is treated as a separate form to fill out. During Zecco's month of unlimited free trades, I did all sorts of micro-transactions, buying a bunch of different penny stocks in amounts under one dollar. These types of transactions were worth less than what they cost to be looked at by the tax preparer. Another reason not to invest in small amounts, even if there is no broker commission!

With that lesson learned, my next return should be simpler, as my new investing strategy for now only includes VT and PZD (more on my refined strategy later).

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Thanks to mdid on Flikr's Creative Commons for the IRS stencil pic

The Great ReBalancing Expieriment 3: May

2009-04-05T14:36:00.000-07:00

My experiment is finally beginning to show some results after three months! The portfolio rebalanced every month is actually in the positive (wow) about 59 cents, while my annual and semi-annual ones are down by about 4 dollars. That's significant, after only 3 months. Let's see if we can keep the momentum going.

The sheet below contains all three portfolios. Use the tabs on the bottom to switch between them. Alternately, the spreadsheet can be accessed here.

ShareBuilder Kaput = Beginning of the Upturn?

2009-03-23T09:19:00.001-07:00

I'm ready to put in another installment into my ING Sharebuilder portfolio, but I haven't been able to access the site all morning. It doesn't really matter to me that much since I do automatic investments and all I have to do is get the money transferred from my ING savings account at some point today to get the transaction to happen tomorrow, but I feel pretty bad for all those who think that the stock market is recovering and want to purchase their stocks at the beginning before prices go up.

--From the Sharebuilder error page:

We are experiencing unprecedented traffic to our website and we sincerely apologize for the inconvenience. We recognize your time is extremely valuable and we are working to resolve the technical issues as soon as possible.

This jogs a distant memory in a time long ago. Ah yes, it was September 2008, when I'd just started investing with Zecco, and Zecco's site went down the day everyone started panicking, marking to many the beginning of the stock market collapse. Could this buying frenzy, enough to shut down Sharebuilder, be the mark of the beginning of the upturn?

Predicting the market on the reliability of stock brokers' websites is probably not the best way to time one's investments. It does, however pose another question: is there a broker out there who'se online access can be depended on not to blow up when there are large events in the market?

Financial Chart Music!

2009-03-21T09:09:00.000-07:00

Yes, times are down, but that doesn't mean we can make light of our situation. Johannes Kriedler demonstrates this by feeding a bunch of financial and other charts into Microsoft's SongSmith, a song composition tool. The results are both depressing and hilarious.

The Great Rebalancing Experiment 2: April

2009-03-07T19:31:00.000-08:00

Last month I started an experiment involving rebalancing a simple portfolio of 10% bonds and 90% stocks. The goal is to find if it makes a significant difference to rebalance the portfolio every year vs. every 6 months vs. every month (assuming no trading commissions). Below are this month's results. You'll notice there is no difference in the totals of this months, but that is because we'll need to wait until next month for the market to fluctuate now that i have different totals for each stock. It should be a fair amount, since I arbitrated $18.30 by selling BND and buying VTI.

The sheet below contains all three portfolios. Use the tabs on the bottom to switch between them. Alternately, the spreadsheet can be accessed here.

Been There, Done That? Make the T-Shirt

2009-03-01T11:57:00.000-08:00

Taking a diversion on my efforts trying to make residual income from investing, here is a quick tutorial on making some extra residual income on CafePress. CafePress is a site where users can upload their own artwork, photos, etc and convert them into merchandise which is sold in a free shop, and printed on demand. The products are generally high-quality (many of the shirts are American Apparrel and Hanes), and the system is used by even big-name organizations to sell their merchandise (Discovery Channel is one good example)

I've been playing with CafePress for over a year now, but haven't really stepped it up until recently. As of now I have 11 stores, and I'm getting about one order per month, gaining me income ranging from $.50 to $4.00. Sure, that might not sound much, but the work was minimal, fun, and in my free time, and this is equivalent to having a lot of cash invested in a dividend-paying fund. I figure if I keep making more and more stores, this income can grow to a larger amount. So here's the basics.

Open a cafepress account (use this link if you find value in this tutorial)
Read up on how to do designs, market them, etc in My Account>Resources
Go to My Account>Resources>Product Templates and download the templates of the items you want to design for in a safe folder. The most commonly used template is probably 10x10_Apparel, as that is the one used for TShirts and sweaters, and can fit on almost any product
Obtain a graphical editing program, such as Photoshop. If you do not want to pay for one, I use an excellent open-source editor called The GIMP, which is totally free. It's almost as powerful as Photoshop, and if you have basic knowledge of PS, the GIMP isn't hard to adjust to. If you are new to image creating and editing, I recommend to take a couple of online tutorials first. You can find some pretty neat free ones involving PS/GIMP here.
Think of something to design. This could be a current event or holiday (my examples below were made while I was doing my St. Patrick's Day design), a hobby or interest (I've made stores on biodiesel, smart cars, and electronic body music), or some creative artwork, jokes, or sayings. Can't think of anything? Try a random quote generator. The sky is the limit!
Open your template in your editor and immediately save it as the editor's native file format (.xcf for the GIMP) in a folder for this design
Put on some creativity-inspiring music, get a creativity-inspiring beverage or snack, and get to work
Add elements by adding layers, making the first layer (the template) invisible. Be sure to have transparency as your first layer
TIP: it's a good idea to make two initial layers, one in white, and one in black, that you keep invisible. These are useful for testing to see what your design looks like on a white and a dark surface. Don't forget to make these invisible before saving your final images!
Keep in mind that for light surfaces, white (and colors very close to it) will be transparent. On dark surfaces, however, white ink will be printed, so be sure to set white areas and transparent areas appropriately. Cafepress has a tutorial on designing for dark
For a dark surface, a lot of transparency will be used. I recommend that if you are using any type of selection to make a transparent area, to "grow" the selection by two px. This will make the edges a little less messy. In GIMP, you can do this by clickingselection>grow
Save your image in an appropriate format to upload. My favorite is .png, as it is a high-quality format that supports transparency. You probably want to save two slightly different copies for light and dark designs
In Cafepress, go to My Account>My Shops>Create a Shop. You have the choice of a premium or basic shop. Basic shops are free, and I'd recommend using those to start with. If you get an awesoe design that starts selling, or a great concept that you think will, open a premium shop to get the advantages of your own URL and much more advanced features
Once you've chosen your name and URL, you can set the store settings. Set up a description and other settings.
Markup is an important setting, as it's a balancing act between setting the price so low that you don't make anything and so high that no one buys your product. I usually just use medium, though you have the choice to also set a percentage or an exact markup for each product
Upload a default image into your media basket. I recommend creating a folder for each store to avoid clutter
After uploading, choose 20 appropriate keywords to be associated with this image. A handy tool below will show how many times your keywords were searched today and yesterday
For an image with transparency, you can use the three buttons underneath it to choose the default display of the image for people searching for it; black backround, white background, or transparency grid--don't forget to specify this, or your search results could be pretty ugly
After choosing this image, choose the products you wish to sell. Your default image will automatically be added to them. You'll have to do this two times if you have a light and a dark image.
Edit the properties of your images (image size, etc)
For some items, multiple colors will be available select/deselect the ones where any colors blend into the background, and select the default color to show in your storefront
Click DONE and bask in the glory of your new, profit-generating storefront!
Promote your store where you feel appropriate. Be sure that it gets listed on search engines. There are many tips on promoting your shops in the Resources area, and in the CafePress Forums
A side-note: don't fall into the trap of buying something with every design you put on it. You'll be sure not to make any money unless your product is a huge success. You may want to buy a couple items at first to get an idea of what works and how its printed, but don't get carried away :)

While this probably won't make you rich alone, it's a fun way to practice your creativity and maybe make a few dollars while doing it. The most rewarding thing for me is that I know there are random around the world wearing my t-shirts or driving around with my license plate holders on their cars. Cool.

If you find this article helpful, and are inspired to try this out, join cafepress while supporting this blog by clicking here.

The Credit Crisis Animated

2009-02-28T23:24:00.000-08:00

Found a nice animated piece that describes the credit crisis and how it came to be in an extremely clear and easy-to-understand fashion on vimeo, a video-sharing site a-la-flickr. Check it out below:

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

1 4m 4 1337 1n\/3570R

2009-02-19T18:24:00.000-08:00

Yep, I bit the bullet and got some PWND today. I figure that with Obama's investments in clean energy, and the fact that I believe that wind is one of the most viable forms of clean energy, I decided I'd do well to have some stock in an ETF that covers the global wind energy industry.

Let's just hope it is I who PWN$ the market and not the stock that makes me PWND. At any rate, wind energy R0XX!

Investing In One's Cause

2009-02-14T17:49:00.000-08:00

Until recently, I've been donating $15 per month to an environmental group that's primary purpose is to go and lobby the government for environmental causes. It recently struck me, however, that instead of paying people to try to convince the government to instill green policy, that my money might be better spent investing businesses who are making innovations in providing clean solutions to our needs. I find several advantages to this approach:

If a business can make it profitable to be environmentally friendly, it is much more likely to be a true success than people being forced to do it
If being environmentally friendly (ie using renewable energy) becomes more profitable than doing the major un-environmentally friendly things (such as drilling for oil, using fossil fuels, etc), then theoretically the un-environmentally friendly things will stop happening by default
I get a good feeling supporting people to move forward instead of supporting people to hold things back
I get to keep my investment and even make some returns (hopefully)
Investing in it is a great way to tell the world that you have faith in a cause because you are taking owenership in it.

So, the other day I cancelled my monthy contribution to the group, and instead I'm putting a bit more than the amount I used to donate every month into a separate savings account. Every time this account reaches $400, I will use it to buy shares of PZD (PowerShares CleanTech Portfolio ETF). Depending on the market, I might use the funds to venture into other environmentally sound ETF's, like the hilariously-named PWND (PowerShares Global Wind Energy Portfolio). In doing this, I feel like I'm promoting progress by investing in companies that are moving forward in technologies that don't leave as much of a footprint on the earth.

Green isn't your faviourite colour? Here are some other ideas to invest in your cause:

Animal Rights

-Invest in a company that is innovating in faux fur

-Invest in companies that produce free range produce

-Buy shares in a corporation that is making the next innovative meat substitute

Poverty

-Lend money through a microcredit organization like Kiva or Grameen Bank (sure, you might not get interest, but you get paid back and you're making a difference at the same time

-Invest in a bank that helps communities and low-income people, like Shore Bank (Sorry, they don't have stock for sale, but its the only example I could find)

Finding a Cure for a Disease

-Figure out which pharma is working hard on a cure and invest in them

Civil Rights

-Invest in businesses who are known for supporting civil rights and/or hiring people from all walks of life

Pro-Life

-Invest in CHD

Pro-Choice

-Invest in CHD

Anti-War

-Invest in Electronic Arts (ERTS) --if everyone gets hooked on games, there is no need for war!

-Invest in companies that are making innovations in making water and energy less scarce, thus diminishing the need for war

There are many organizations out there doing great things because of donations, but I think that investing in one's cause is also an effective way to bring along change. Got an idea on how to invest in one of the causes above or in your own cause? Share it by leaving a comment.

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Disclaimer - Out of all stocks listed in this article, I own PZD

StockWire Gives Us Some Visuall Stimulus

2009-02-11T23:38:00.000-08:00

No, its not a picture of Jennifer Connoley. It's a graphical representation of the Government Stimulus package. It's not as pretty but I'll be studying it for the next few days. Pic links to the original.

AP Article on Following Insider Trading

2009-02-11T21:44:00.001-08:00

Came across an interesting article today by the AP on following insider trading for ideas on when to buy and sell a stock.

The basics are that while they can be a great sign of confidence of those "in the know", look out for factors such as whether or not the person needs cash for personal reasons or exercising options (if they are selling), if they are buying because of a commitment to the company or on a company-based loan (info available on the SEC website), or if a purchase is chump change compared to their salary (which could mean they are just trying to give the illusion of confidence to inflate the stock price).

Thanks to A of Doom on the Flickr Creative Commons for the nosey pic

ShareBuilder: "No ADX For You!"

2009-02-10T23:23:00.001-08:00

Looks like Zecco might still get (some) business from me after all. I got a reply to my customer service enquiry to ShareBuilder today, and it turns out that they do not trade ADX (Adams Express Company, my favorite Closed End Fund for now). They added that they have about 7000 securities that you can trade, which are contained on a list here. All of these securities are traded only on major US marketplace systems, like the NYSE (which ADX belongs to), NASDAQ, etc. One advantage Zecco has is that it trades just about anything, including OTC (stocks that are not listed on a securities exchange.

As the old saying goes, don't put all your eggs in one basket. Though that usually means "diversify your assets", I guess that will also mean "keep stocks with different brokers" for me, as I'll have to use Zecco if I want to buy a stock that is not on ShareBuilder's list. I guess it's not bad to have both.

Disclaimer: I own some ADX already (it's in my Zecco Account)

ShareBuilder and VT - A New Beginning

2009-02-09T18:11:00.001-08:00

Now that I have switched to ShareBuilder, I have scheduled my first automatic investment--in a stock that I think reflects what I've learned in my first seven months of investing. Though I plan to write a full review of ShareBuilder, I thought I'd jot down some of my first impressions.

So far my experience with ShareBuilder has been a positive one, though I have only tried the automatic investment feature (honestly for a buy-and-hold strategy I think it is all I need). $10 for an instant trade is a bit steep for me, but if someone wants to donate $1000 so I can keep my costs under 1%, then use the email me link on the right of the page :) Overall, the site has been easy to use, and the Portfolio Builder was an interesting exercise. I liked the fact that one can set the automatic investments to "invest when funds are available" mode. That way I can keep putting money into my "ShareBuilder Drop Zone" savings account until I have $400, then when I do, I transfer that money to ShareBuilder and an automatic investment will be made the next Tuesday. I was expecting to either have to put in less each month, thereby increasing my commissions costs, or keep turning off the plan until I had $400, so this was a nice suprise (sorry for ruining it).

My only issue so far is that I tried to put Adams Express Company (ADX) in my plan, and though the Ticker Search feature found it, I got a message saying that this stock was not traded on ShareBuilder. This was a suprise to me, since ADX is traded on the NYSE, and is probably one of the oldest Closed-End Funds. I guess if I want to buy any more of that (its trading at 15% below NAV at the moment), I might have to do it with Zecco. I put in a ticket with their customer service, so we'll see what they have to say.

To set up an auto-investment plan, I had to go through ING's PortfolioBuilder in order to set up my automatic investment, which was an interesting exercies. It basically asked me a few questions which were clearly designed to find out where on the scale to moderate to agressive I am with my investment style. I tried two times, and scored "moderately agressive" and "agressive". For each, it came up with a recommended balance of funds; 10% bonds and 90% stocks for the first, and 100% stocks in the second. I think the stock was an S&P SPDR but I don't remember for sure. Instead, I chose 100% in VT to start with.

I like VT (Vanguard Total World Stock Index Fund) because it is an ETF that captures the stock market of most of the world, including the US. With Vanguard's usual low costs, this stock makes it easy and cheaper (less trade commissions) to diversify in US and World stocks. This will be a good stock to load up on for a while, until I start to diversify into possibly some more Closed-end funds or some commodity-based ETF's (depending on how the market is doing when I do that). I still have yet to see what the dividend yield is like on VT, but I think overall it's a good stock to own.

One interesting thing I noticed about VT is that it has historically veered quite far from it's NAV for an ETF. Usually ETF's hover around 0% above or below. Looking at the history on ETFConnect, the fund seems to have gotten almost +4%, which looks more like a closed-end fund. I wonder if it is because the fund is relatively new and hasn't gotten a lot of volume yet. At the time I put in my order, it is just .71% over NAV.

Disclaimer: At the time of posting, I have an auto-investment order on VT. I also own ADX. I do not own any S&P SPDR's.

The Great ReBalancing Experiment: How Often?

2009-02-07T14:08:00.000-08:00

Many financial experts recommend rebalancing their portfolio among other smart strategies such as dollar-cost averaging and diversification. Rebalancing is simply resetting one's portfolio to one's planned ratio of assets. For instance, if you are a young man like myself, and have a 401k, you might be investing in it with a balance of 90% stocks and 10% bonds (to make it simple). Let's say a year later, the stock market didn't do so great, and the bond market fared well, and your portfolio is now 80% stocks, 20% bonds. At this point, bonds are inflated and stocks are deflated, so it would be wise to take the new 10% in bonds and convert them into stocks. It's an easy way to practice arbitration on your portfolio.

I've heard most people say to rebalance every year. Malkiel is very adament about this in his book. This naturally causes me to ask "why?". Hence the experiment. Starting today, I've started three theoretical portfolio's, which are identical in all aspects except for the frequency of being rebalanced. One will be anually, one semi-anually, and one monthly.

The sheet below contains all three portfolios. Use the tabs on the bottom to switch between them. Alternately, the spreadsheet can be accessed here.

About the portfolios: To keep things simple, I'm assuming it is a 401k account or something in which there are no commissions paid for trades. If there were commissions paid, the answer would be hands-down one year, because even at $4/trade, one rebalancing would cost $8, which could mean more than the amount being transferred in many cases). I'm starting with a $1,000 balance; 90% of it in VTI and 10% in BND. Each month I will add another $100, which I will use to buy the same ratio of these two stocks. For simplicity's sake, I'm using fractional shares, but only to the nearest .001, so there may be a few cents left over in my portfolio (I have $.01 left on my first day).

Updates: I'll be updating this every month when I put in my monthy theoretical investment and rebalance my "monthly" one. I hope to keep doing this for at least a year so we can see the difference. Maybe I'll keep doing it after that.

Disclaimer: As of the time of this posting, I own VTI. I do not condone doing such experiements with real money.

Does ING not want me to open a CD?

2009-02-02T15:25:00.001-08:00

I noticed today that all of ING's interest rates for CD's ranging from terms of 6 months (1.5%) to 60 months (2.25%) are all substantially lower than the rate for their standard checking account (2.4%). This seems counter-intuitive. Does this mean that ING wants to discourage one from opening a CD at the moment (why not just discontinue offering CD's), or is this the forshadowing of another drop in the interest rate in their checking account?

3millionbucks gets a new look!

2009-02-02T14:40:00.000-08:00

Changed the template today for a cleaner look that also displays the date each blog post is created. The faded green image in the top left now looks like its combined of a part of a London Underground map, the number 17, and a battery indicator at 30% left, so I'll have to find or create a more appropriate faded green image, but for now . . . honk if you like new look.

How Zecco Could Have Retained My Business

2009-02-01T09:27:00.000-08:00

The other day I wrote that I was discontinuing putting more investments into Zecco since they changed their minimum account value to attain 10 free trades per month from $2,500 to $25,000. The reason as stated in the letter they sent to their account holders states that the reason they are doing this is that because of the economic crisis, they can no longer afford to give away so many free trades. This got me thinking of ways that they could reduce the cost of so many free trades but still not lose a bunch of clients and potential clients who have less than $25,000 to invest.

I am the type of trader who is happy building my portfolio with one trade per month into a security, as I will be doing with Sharebuilder, as they chanrge $4 for an automatic investment, and that in itsself requires a $400 investment to keep the broker fee's down to 1%. The reason Zecco was so appealing to me was that I could do this while keeping my fee's at 0% once I reached my goal. I don't know if there are many other customers like me for Zecco, but here are three ideas that would have kept at least me.

Idea #1) Instead of multiplying the minimum by 10, thereby excluding a huge base of clients, just reduce the number of free trades per month. At a minimum, I would have even stuck with them with 1 free trade per month, as that is all I need, though I'm sure many other customers would have preferred 2 or 3.

Idea #2) A sliding scale could also have worked, starting with 1 free trade per month at a balance of $1,000, and ending with 10 free trades per month with $25,000.

Idea #3) Another idea: Offer two free trades per month, and a "free trade bank". If a customer, say uses one free trade in a month, the second rolls over to the next month, similar to AT&T's "free rollerver minutes" plan.

Still giving most customers at least one free trade per month might retain more customers and might even make more money, as those customers may go over one or two trades per month and start paying commissions. It seems a much more surefire way of retaining and increasing revenues than excluding most of your customers (and fans) from the most compelling reasons they have to sign up for an account.

A Sad "ByeBye" to Zecco

2009-01-30T19:37:00.000-08:00

Since I started this blog, I've been saving money to get to Zecco's $2,500 limit in order to get their 10 free trades per month. Today, I got an email update from them telling me that they are upping their minimum. Is it $2,500 to $3,000? No. $5,000? No; it is to $25,000. Because of this, I will be leaving my current investments in Zecco and trying out new investments will be done in Sharebuilder, as their (automatic) trades are cheaper than Zecco's. Any time my dividends in Zecco get over $10 worth of cash, I will be removing this from the account (yes, Zecco has implemented a $10 withdrawal minimum, so they get to keep my cash for now).

I can't help but feel a bit like this was a trick. In October, I'm sure they got a lot of new signups with their unlimited free trades program, promising 10 free trades per month after that. I'm sure that most of these people have less than $25,000 in their accounts today. Even though there was no special promotion when I signed up, I did so over the other providers because of the promise of an attainable free-trades program. Sorry Zecco, but I can't help feel a bit stung.

Orange is a cooler colour than pink anyways.

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[shameless self-promotion] I will be keeping my link to referrals open if you still want to use Zecco or have $25,000 to start investing with, but beware of them changing this to $250,000. If you wish to get a sharebuilder account and wish to support this blog, click here.

Book Review: Fooled by Randomness

2009-01-08T20:13:00.000-08:00

Shortly after reading (and really enjoying)A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition, by Burton G. Malkiel (reviewed here), I picked up Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb. It turned out not only to be a great read, but backed up Malkiel's words very well. The two make a great pair.

Taleb, a mathematical statetician and investor, tells us about the role of chance and luck in the stock market through some engaging narrative about the history of chance in investing and amusing stories about characters that embody different investing styles.

One of the ideas that he brings across that struck me is the concept of statistical wealth. We often hear about people who are very rich from some high-risk form of investing. In our minds, we might start to associcate that type of investor with becoming exceedingly wealthy. What we don't take into account, however, is how statistically wealthy they are, or in other words, how many of the same type of investor have "blown up", as he puts it, and are no longer in the game. One can make an analogy with an famous actor. Take Hayden Christiansen, the guy who played an adult Anakin Skywalker in Star Wars Episode II and III, for example. He is probably very wealthy at this point in a conventional sense, but in a statistical sense, he is maybe upgraded from a bussboy to a full-blown server, as thats where the many thousands of people who likely tried out for his part are.

I highly recommend this book for anyone interested in investing. It serves as an entertaining but effective caution on the role of luck in the markets and in life in general.

Lessons Learned in Click-Through Ads

2008-12-27T10:36:00.000-08:00

My wife is starting a Portuguese language teaching practice, and I'm helping her out with the website and marketing, being somewhat versed in such things. The other day we put up ads on Google AdWords and Facebook, and it was an interesting experience, which included an expensive lesson. Both services let you choose a budget for how much you can spend total; Google's is per month, and Facebook's per day. We chose the recommended minumums of $50/month with Google and $25/day with Facebook. Google's ads puttered along, and after day 3, we had about 4 hits, costing us around $2.00. Facebook, however, had maxed out the hits to $25 each day, costing us over $60 for halfway through the 3rd day! Wow! I guess the lesson is that with Facebook, people really are going to click on your ads! Lesson #2 would be that if you are using online pay-per-click ads, watch them like a hawk. It looks like after the 3rd day, Lu gained a new client as a result, so hopefully that will pay for the $60. However, $750/month to get a limited amount of clients who pay $30/hour is a bit steep, so we've paused the ad for now.

As expensive a lesson as that is, I'm really impressed with Facebook's ad program--especially if you are selling something that does not have a limit (ie Portuguese students are limited by the number of hours in the day). If I start a business selling some sort of good or information, I'm definitely going to utilize this service. When on Facebook myself, I've been compelled to click on the extremely well-targeted ads more than anywhere else, which speaks a lot for their effectiveness. That we had 100's of clickthroughs in 3 days for my wife's Portuguese classes speaks a lot to this effectiveness. Or it could just be my dashingly good looks . . .

Speak Like a Brazilian

If you're interested in learning Portuguese, or about Brazilian Culture, go ahead and visit my wife's site at http://www.streetsmartbrazil.com, or visit her blog on the language and culture of Brazil at streetsmartbrazil.blogspot.com.

Merryl Lynch Provides Bleak SlideShow on the Economy

2008-12-24T13:20:00.001-08:00

A friend forwarded me this slideshow by David Rosenberg, a US economist at Merryl Lynch, and I found it interesting enough to put up here. The slideshow, "The Frugal Future" shows the US in a time of peril, and is loaded with charts that drop sharply to the right-side of the pages. Take a look and get a pretty wide view of what is going on. I took some comfort in the end, where he outlines what can get us out of this, and makes clear the point that markets generally return to the mean if they go drastically up or down.

Enjoy

ING Lowers the Voltage of their Electric Orange

2008-12-23T12:13:00.001-08:00

Today I went into my ING Direct account to pay my rent (the check-sending feature is pretty nifty), and I was shocked to see that the high interest rate was slashed to just 0.5% on 12/17/08. I guess it's expected with the Fed lowering their rates, but it's a bit of a bummer. That's a huge drop, as I was earning over 1% before (not sure how much--its hard to find the history of rates for Electric Orange).

Even with the low rate, I'm still sticking with ING because of their simplicity, stability, and the speed with which I can transfer money between Electric Orange and my savings account.

Their new scale is as follows, which in my opinion highly favours those with high balances:

Balance Rate

$0-49,999 .5%

$50,00-99,999 2.85%

$100,000+ 3.05%

The 2.75% rate still remains for the savings account, and I hope it holds out.

I'd very much like to get to the $50,000 rate, so if anyone wishes to make a donation, please email me ;)

Still alive! An update from the rest of America

2008-12-09T20:48:00.000-08:00

Just writing a quick note to say I'm still alive and well--I'm just on a really long, unexpected business trip in Birmingham, AL. Been working very hard and long hours with my company's project here, so I haven't had much time to write about the subjects that have been piling up.

It's interesting to be in this part of the world. While San Francisco has its own eye-opening aspects, such as the homeless sleeping in the streets and the heroin addicts, and the immigrants living 8 families in a studio apartment; I feel that in some ways it is a bit isolated from the rest of the US. A lot of people in the place I'm working at here in Alabama are talking about home forclosures next door to their houses with people they knew. These are not heroin addicts, transients, or immigrants struggling to send some money home--they are working professionals like myself. In other words, I'm seeing my peers lose all they have. I haven't seen much of that in SF, so it's really hitting the whole economic-downturn-thing home to me.

Now is the time for people to start saving and investing, but who can do it if their mortgage has shot up and/or they are finding themselves unemployed? These are tough times, and if you have a job, live meagerly and save what you can, because either you'll need it soon, or it will become a fortune when the pendulum turns.

Manager of Index Clears Up Difference between Green and Clean

2008-11-23T09:02:00.000-08:00

I love Google Finance--its has many great tools, which I'll no doubt write about at some point. I came across an interesting tidbit a few weeks ago when I was looking for a clean tech ETF, in the unlikliest of places--the discussion boards. These can be pretty fun to read, especially when the stock in question is volatile. On rare occasions, however, the info can be more than just entertaining (let me emphasize the word "rare").

I found the PowerShares CleanTech Portfolio (PZD), I came across some info that was actually useful. Someone had asked the question "what is the difference between clean tech and green tech", and the person who answered was actually the manager of the index himself. He gave a good description of the differences and how his index tracked "clean" businesses that focus on technology to solve problems and reduce environmental impact like solar, wind, higher efficiency factories, etc, versus "green" industries such as waste cleanup, pollution control, etc.

To see the full discussion, click here.

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Disclaimer -- I own the stock mentioned above.

Awesome photo by rpeschetz on the Creative Commons area of Flickr

Bargain Hunters, Bovine Insticts, or Hasty Journalism?

2008-11-13T15:37:00.001-08:00

I had fun watching the stock market today--it was like a really good sports game where the team you are rooting for is losing and then they make an amazing comeback and slam the other team. I saw all 3 indexes fall to about -4% percent at 1pm Eastern, then shoot up to finish at over +6%. What a day!

I was suprised, however, when I saw this article at Reuters.com. The journalist states that the various indexes plunged today, and then rebounded to over 6% because of a surge of bargain hunters. I'm baffled by this. I can understand why bargain hunters would get into the stock market if the indexes are at new lows (I certainly was wishing I had some maintained excess in my brokerage account at the time). But surely once it's back up to, say, +1 or +2%, one can see it is no longer the bargain it was when it was -4%. While I would have bought stocks at around 1 or 2pm EST today, I was no longer interested when it started shooting up again (I was just happy my portfolio wasn't down as much anymore). I find it more likely that when the market hit a certain threshold, volume went up because of the bargain investors. At that point a massive amount of people said to themselves "OMG-everybody's buying and the stock prices are going up--I'd better get in on the action, as everyone else is doing it". Perhaps the global group of individual investors contain some sort of bovine hearding instinct?

Furthermore, how does the journalist know this rebound was due to an influx of bargain hunters? Did he interview a cross-section of the people buying shares at +5%? While I certainly can't say that I'm an expert at investments, or investor behaviour (i've been investing for just a few months now), I find it hard to believe that the surge was due to massive amounts of bargain hunters trying to get a good deal, when the market was clearly not as good a deal as it was, say, the day before. I think this is an example of a journalist having to make some hasty analysis for the reasons for market fluctuations so that they can fill their pages, which could be exactly what I'm doing now ;)

Image taken from Google Finance

Ing Direct Encourages Saving with Sweepstakes

2008-11-07T09:26:00.000-08:00

Doing some maintenance on my savings account today, I found out that IngDirect is running a sweepstakes to encourage their customers to save. I think that's a pretty cool idea--the customer wins because they either win a bunch of cash or at least up their automatic savings, and Ing wins because they have more capital.

The details:

If you have an Ing savings account and/or Electric Orange checking, you are automatically entered if you have either a recurring automatic transfer from another bank account or you have direct deposit, both of which are at least $100 per month. The winner will get a sum of 10X the amount in the recurring deposit, up to $50,000. Good deal.

Here's the link:

http://home.ingdirect.com/products/products.asp?s=ASPcontest

PS--if you want to open an account and support your local blogger, click the email link to the right in "referral central" :)

October--a month of many things

2008-10-31T18:55:00.000-07:00

Well, its the last day of October, and wow what a month it was for me in my journey to attaining 3 million dollars. Throughout, I rode the massive waves of this month's stormy investment season, watching banks collapse, stocks shoot up and down, and presidential candidates duke it out. Today marks the end of Zecco's unlimited free trade promotion, which I used to the max--doing some things you should never do if you're paying commissions. In review:

-I rebalanced my prortfolio in line with Burton Malkiel's advice in his book, A Random Walk Down Wall Street, to contain a core of market indexes with a few other stock picks to add some spice into life (and keep this blog a bit more interesting).

-I pumped as many small amounts of money as I could (between $50 and $100 increments) and bought small amounts of shares while the market is low

-I purchased shares in a Closed End Fund and an REIT.

-I used tiny amounts I had left on occasions to purchase very cheap penny stocks. The day before yesterday I bought 267 shares of Bionic Products (BNPD) for a whopping $0.39 total (note--this would be an extremely bad idea if I were to pay $4.50 for a trade). I plan to hold it until whenever, for the heck of it. Maybe they'll become the next Red Bull, or maybe I'll lose my $0.39 :)

-In total, I made 32 trades for free, saving approximately $144 in commissions.

I would have liked to try my hand at some options trading, but I ran out of time, and I still feel I need to read more about this. As I've said before, I've switched gears now to put a higher percentage of my savings into my Roth 401k, and will be putting small amounts into my savings account until I have enough to increase my Zecco account to $2500 so I can make free trades, as well as keep a buffer in cash. Learning that I would have paid $144 in commissions for a month's worth of heavy trading makes me really appreciate the rule of avoiding loss due to commissions. I had a lot of fun this month in the market, and I really hope Zecco does this again next year!

Who will you pay less taxes under?

2008-10-29T11:46:00.001-07:00

Taxes are a huge part of this year's presidential campaign. Many Americans are wondering how much they will actually save under Barack Obama's tax policy vs. John McCain's policy. To help, the Barack Obama website came up with a handy tax calculator widget, which you can use here.

Of course, since it's made by the Obama campaign, I can't claim that it's completely non-biased, but it seems to be in line with what each candidate has told us. To read more about the comparison from the Obama side, this link will take you a pdf report.

To see it from McCain's side, here is a link to his official comparison. IMHO it lacks some of the specifics that Obama's site has, but then again I'm clearly a bit biased. It would be really interesting if McCain's team made a tax cut calculator and we could see better from his side what he thinks America will save.

Finally, all biases aside, here is a tax calculator made by Alcehmy Today, based on the statements of each candidate. Also, you can check the updated analysis provided by the Tax Policy Center, a non-partisan group.

Of course, aside from taxes alone, there are a lot of other issues affecting our accumulation of wealth over the next 8 years, like: how will taxing corporations affect jobs and inflation? how will providing a tax cut for creating jobs in America vs overseas affect the job market? Who has the best plan to stimulate the economy? I encourage you to research both candidates' websites and commentary (preferrably non-biased if you can find it), and make up your mind.

Most of all, I encourage you to vote this year. I come from a family in a country where "free and fair" elections mean you can be stoned to death or shot on the way to or from the poles depending on how people think you are voting. It really is a privilage to take part in your country's future. As an American, I'm going to take full advantage of that privilage, and I hope you do too.

Happy voting!

Want to get the yields of $100 for $85?

2008-10-27T16:20:00.000-07:00

As many wise investors say; this is a good time to buy great stocks at a discount. How much of a discount is, say, buying Bank of America (BAC) $21/share? That's a hard question, mainly one you have to rely on analysts for an answer, which will invariably differ depending on who you talk to.

Closed-end funds (CEF's), however, are very easy to tell how much of a discount or premium they are selling at . . . and in a bear market like this, one can find them at bargain-basement prices.

A closed-end fund is a bit like a mutual fund, in that it is an actively managed fund that represents the value of all of the fund's holdings; usually a mixture of domestic stocks, international stocks, and bonds. While a mutual fund is usually purchased from the fund directly as brand new shares, the closed-end fund is made up of a set number of shares that are traded on the stock markets. Because of this, the fund can fall in and out of favor (usually depending on the market), and can sell at a discount or premium to its NAV, or net asset value.

For instance, a share of the fund may have a net asset value of $100, meaning the entire value of all assets divided by the number of shares equals 100. The share, however, costs $85 since the market is tanking and investors are panicking. This stock is said to have a discount of 15% over NAV.

Advantages

Since most CEF's are selling at a huge discount due to the panicky times, there are several great advantages to getting into closed-end funds at the moment:

-Happier times can have the inverse effect. This means that as the market improves, the fund's price will get closer to, or perhaps even exceed, its NAV. If that happens, you've moved up faster than the stocks contained in the fund, collectively.

-Dividend yields reflect the dividends of the assets, available at a discount. Since the dividends paid are the full dividends paid by the assets the fund owns (minus a small percentage for expenses), its like getting the dividends of a $100 stock investment while only having to invest $85. This is a very promising aspect for those buy-and-hold investors who want to earn returns (even reinvest them) over long periods of time.

-CEF's are managed by professionals. On top of that, since there is already a set amount of stock, if people make a run on the fund the professional does not have to sell stock that they would rather not in order to pay people back for their shares like they would in a mutual fund.

-Possibility of a conversion. If a fund gets discounted too far, investors might get pissed enough to rally the management to convert into an open-ended fund. If that happens, the share price snaps back to its NAV.

-Funds behave the same as stocks. One can buy and sell the fund on its exchange through their broker at any time in the business day. The fund may also sometimes do buybacks of shares.

-Greater diversity can be had. Since the funds own certain shares, they can own assets that are not easily attained by individuals, such as stocks from emerging markets that are not sold on major exchanges.

Disadvantages

-The converse can be true. If you had bought the theoretical share a few months ago, thinking it was a good deal at perhaps 5% discount over NAV, you wouldn't be happy about it today, since its tanked faster than the stocks held therein.

-CEF's are often leveraged. This could add risk in times like these, so be careful.

-CEF's are managed by professionals. That means that the human or humans managing the fund can screw up and buy and sell at the wrong time.

-Its not always the best time to buy a CEF. For instance, I would rather just buy an ETF of the stocks inside or the stocks themselves if a CEF is selling for a premium, which they sometimes do.

Conclusion

-While not always the best option, I think that right now is a good time to add some CEF's into your portfolio to diversity. In A Random Walk Down Wall Street (which I reviewed in the last post), Burton Malkiel said at the time of writing that CEF's weren't as great an investment at that moment (the market was doing really well at that time), but when the market was in dire straits it would be recommended to get some at a discount over 10%. With discounts going as deep as 25%, this is an awesome opportunity for the long term investor to earn some returns for a discount.

I just bought some Adams Express Company (ADX) at a 16% discount from NAV. I chose the fund for their discount, low turnover, low costs, and the reliability in dividends (they report that they have paid a dividend every year since 1936). There are a wealth of different funds out there, some of which I'll probably be investing in as I get the funds. Some that I've heard of are: Alpine Total Dynamic Dividend Fund (AOD), BlackRock Dividend Achievers Trust (BDV), Foreign & Colonial Investment Trust plc (FRCL), and Morgan-Stanley China A-Share Fund (CAF). I recommend to go and look for the best fund(s) to meet your goals, and use them to add some diversity.

If anyone knows of a good list of CEF's, please do post i the comments! :)

Sources:

Wikipedia - Closed End Funds

Adams Express Company

SFGate - Why Closed End Funds Often Have Discounts

Seeking Alpha - Closed End Fund Sale

Burton G. Malkiel - A Random Walk Down Wall Street

Flickr - atlantaB (thanks for the pic under Creative Commons)

Disclaimer: With the exception of BAC and ADX, I do not own any of the stocks mentioned above. I am, however, eying AOD and may buy that in the near future. Invest at your own risk.

Gearing Up for a Random Walk

2008-10-26T20:53:00.001-07:00

I just finished an excellent book on investing for the long-term. 3 months ago, I would not have guessed I would pick up a book on investing and finance and not be able to put it down. A Random Walk Down Wall Street, by Burton G. Malkiel, after reading it, has become a book I would recommend anyone interested in investing to read before you start. I certainly wish I had, and now I'm gearing up to re-position myself according to the author's advice.

Malkiel, who is both an academic and an investor, looks at his theory that the market is "efficient" and "random", and over the long term, reflects the proper market-price of the securities therein. He poses, therefore, that for the long-term investor, the best approach is to invest in the market itsself, as it is pretty much impossible to beat, except by pure chance. He then goes to point out some fascinating (if not hilarious and/or scary) examples throughout history of people's blunders trying to beat the market.

His book, in fact, is a historical testament to his theory. First published in 1973, before the advent of such things as ETF's, the work contains examples since that date that back up what he's saying--such as the average performance of professionally managed funds vs the market, several stock bubbles and crashes since the 70's, etc.

It's amusing how interesting I found a book that basically says to gain the best reward/risk ratio in investing is to simply keep investing in the broad market. What's the fun in that? Malkiel does acknowledge that investing is fun, and for many (myself included), part of the appeal is trying one's luck and attempting to "outwit" the market. However, it's good to make the core based on the broad market. He also points out the advantages of investing as much as you can in tax-advantaged accounts, such as one's 401k.

Based on this wealth of information, I've decided that I'm going to shuffle my portfolio tomorrow. Yes, many of my stocks (actually all of them) are at a loss at the moment, so doing so will confirm a loss. However, I'm not pulling out of the market--just redistributing the wealth into a broader market. I figure that since Zecco's offering unlimited free trades in October, I'd better make the most of it in the last week of the month. I'll also get a bit of a tax advantage, as there will be a loss reported on my tax return. I'm going to sell my positions in certain stocks that in retrospect I bought out of inexperience. Then, I will distribute most of those funds into more shares of the Vanguard Total Stock Market ETF (VTI) to track the market as a whole, which at some point should hopefully go up.

To keep some spice in my investment life, I'm also going to hold on to a couple of assets I believe have a good chance of going up. My two financials, for instance (BAC and ING), I will hold onto, as I believe that this happens to be a time of market irrationality (a panic), and that these two financials will at the very least recover in the long term. I also plan to purchase an ETF in Clean Tech, which I'll write about later, as I'm into the environment, and that will be my small part in sponsoring the movement to clean up industry. Finally, I'll be investing in a concept I just learned about (again, more on this later-stay tuned), which is a closed-end fund.

After this, since I'll still be under $2,500 in my portfolio, I'm going to stick to saving, and invest every $450 accrued, as that will limit my transaction fee's to 1%. I'll also up the investment in my 401k/Roth IRA, which will increase my benefits in taxes and my employer's match.

Disclaimer - Though it should be self-evident, I own all of the stocks mentioned in this post at the time of writing.

I Fired Comcast Today

2008-10-23T15:51:00.001-07:00

In the lines of thinking frugal, I decided to fire Comcast today . . . partially. I cancelled my cable service but kept the internet.

This may seem a bit extreme, and I wouldn't recommend it for everyone. I, however, don't watch a lot of sports, and I use the internet a lot more than I watch TV. If neither of the above were true, I wouldn't have done it. Aside from sounding crazy, here is my reasoning:

-Substantial savings: I just cut my monthly bill from $180 to $60. That's $120 saved per month, which can be invested or put into savings. In other words, if someone asked me "Would you give up watching cable for a year for $1440?" I would have to say "SHOW ME THE MONEY!".

-Still have access to my favourite shows: I live in direct line of site to San Francisco's Sutro Tower, so I'm going to get an HD antenna. Though its not as easy as flipping through my DVR recordings, here is a rundown of the few shows I actually watch and how I can still watch them:

Lost - Network TV, and available online

Fringe - Network TV

Monk - Available at monk.usanetwork.com

BBC World News - Avalable at bbc.com

Documentaries - Available on various websites, including Joost

Movies - Netflix, at a whopping $5.50/month, supplies all the movies I need.

To watch online content on my TV, I'm probably going to get a wii, with integrated Opera browser. Expensive? I'll have saved enough to get one with just 3 months of not paying for cable! Hmm, three months. Perhaps I should put myself on the waiting list now :)

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Thanks to rickremington for licensing his photo on Flickr Creative Commons

On My Way to Prosperity through Frugality

2008-10-20T22:03:00.001-07:00

Until I got into this wealth thing (around the time I started posting to this blog), I began to realise that unless you're very lucky, frugality is one of the key parts of building wealth. One cannot save capital to invest if they are spending it on lots of material things and nights out (unless, of course, the material things appreciate in value faster than the rate of inflation). During the Great Crunch of the 00's as it might be called, we're seeing the US culture become slightly more geared towards frugality.

So I intend to write about interesting ways to be frugal but still enjoy it as I find them. That may range from an interesting deal out there, or a cost-benefit analsys of cutting or replacing part of one's lifestyle with something else. Keep your eye out.

As the old cliche saying goes: Money Saved is Money Earned

Prosper.com Applies to Offer Promissary Notes

2008-10-15T09:44:00.000-07:00

I recently mentioned I had become a lender at Prosper.com. Prosper is an online community of "lenders" and borrowers, where borrowers apply for loans for personal or business use, and "lenders" purchase small (as low as $50) parts of their loans through bidding. It's a bit risky, but with the right amount of diversification in loans, and some common sense while choosing who'se loan to bid on (I'm not going to fund someone's vacation, for instance), you can get a much higher return than a CD. Right now, I've got one loan of $50, and I'm getting about 23% interest on it (assuming the borrower doesn't default).

I got an email this morning that Prosper has entered a quiet period because they are applying to offer promissary notes to their members. The full text can be found here.

Not sure if that means their current loan system, which I really like, will go away. Maybe Prosper's new idea will become a new currency? Um, probably not. At any rate, I can't make anymore loans there until their quiet period ends. You also can't apply until then. So, my $50 will sit there, earning some interest, and maybe my other $50 that I've bid on will get bid on. Until then, not much more Prosper action for now.

What are your thoughts about the impacts of Prosper's move to offer promissary notes?

ESPP + Financial MeltDown = Argh

2008-10-10T09:08:00.001-07:00

Today I got my trade confirmation for my quarterly ESPP purchase. I get my employer's stock automatically purchased at a 15% discount every quarter. I was pretty excited because our stock took a bit of a hit, but is still strong, so that should have equated for even more of a discount. The stock used to be hovering around $50 a couple of weeks ago, and now is down at $35 today. I happily clicked over to my trade confirmation details, and . . . .

4.15 shares bought at $40.222. Huh? That's a $20 instant loss. Wha?

It turns out that the stock is purchased at a 15% discount of the price it was at the last day of the quarter. Though technically it makes no difference if the stock was bought today at this price or if it was bought at this (then discounted) price on the last day of the quarter, it is still not the best way to start one's day :/

Can Hard Times become Good Times in Disguise?

2008-10-09T19:12:00.000-07:00

You may have noticed that I've been pretty quiet over the last few days. As the stock market plunged, and so did my entire portfolio, I've felt pretty humbled and daunted as a brand new investor trying to write a blog about investing and wealth generation. Upon seeing this...

...i've definitely seen the risks that investing can entail. In fact, probably look like this :( However, I'm remaining hopeful that this is, in fact, a chance to get a head-start on my wealth.

I've just started investing, and am doing so for the long run. So I believe that as far as my total in vestment goes, $2k is not that much. Though I'm down over one quarter of my investment so far, it's not the end of the world for me. However, I am now able to purcahse a lot of stock at bargain prices. Assuming the market recovers, if it does in fact do so, the stock I buy now should generally grow nicely. In this line of thinking, the longer the market stays down the longer I have to slowly accrue good stocks at bargain prices before they shoot back up again.

I definitely think the worst thing someone could do right now for themselves is to pull their assets. All that does is guarentee that the money they lost on their stocks is in fact lost, and that they will never recover that money again when it rebounds. That is, of course, for companies that do not get delisted and disappear. Looking at my portfolio it's hard to see any of the companies or funds disappearing, but it is still a risk I have to be willing to take (especially with all 43 cents worth of wamu stock). So, here's my plan:

Keep investing $100/2-week pay period into my Zecco account. With this, I will continue to purchase shares of companies that I think have a good probability of surviving and recovering. I wish I could invest more, but at my current salary, that's still pretty aggressive considering I also invest each pay period into a 401k and a HDHP. I think my next purchases are going to be more Dow Jones ETF shares (what could be more diverse within the stock market?) and some Kinder Morgan Energy (KMP) for their news about focus on natural gas and their attractive dividend. With what's left over, I will be ivesting in Prosper, an online community where ordinary people like myself can bid on loans for other ordinary people. Though this entails some educated risk-taking, it should offer me a bit of a higher return than a savings account and/or a CD overall (probably around 10%). I will write more on my experience with Prosper once I have built a decent porfolio of loans, but for now, this will take you to a nice article about it by the one-and-only Slacker.

As optimistic as I am about this "economic collapse" as actually being an opportunity to get a head-start building wealth, I can't help but feel for those who are in the middle of it. I spoke today to a work acqaintance who told me that he was thinking of delaying his imminent retirement indefinitely because his 401k had lost so much value. He had also panicked and traded in most of the stock and mutual funds in it for growth mutual funds. It was at that point that it really set in for me just how many people are totally screwed over by this mess. I don't know what I would do if I was about to retire at this point, and had just lost a sizeable portion of my life savings that I would be needing soon. However, I believe at my early stage in life, I can still take advantage of the situation since I have time to ride it out. If I can keep a good head on my shoulders, keep learning, and keep investing in some solid companies and funds.
So can hard times become good times in disguise? Definitely in this case a lot of people are on the low end of the stick. However, I believe that people in my position (ie young, employed, able to put aside some money over a period of time), assuming I keep being diligent about investing and saving, am in a good place to turn this situation around.

Picked up a Bond ETF

2008-10-02T09:51:00.000-07:00

In these uncertain times diversity can be a great thing, especially if you're getting stocks hoping they are undervalued at the moment and will rise. There is always the risk that some will disappear instead of rebounding. So I bought a share in the iShares Lehman 20+ Year Treasury Bond ETF (TLT). I figure that since its based on the value of bonds, which are a fixed income vehicle, the stock should not evaporate. I've never heard of bonds evaporating. On the converse, I don't expect it to be a stock that will take off either; just one that will give me a constant form of returns, whether it be in dividends or increase in value of the stock. Why the 20+ year one? I figure that the longer the note, the higher the return, so this is a great way to get the rate of return of a 20 year bond, without having to hold onto it for 20 years.

As I put more income into my trading account, I plan to purchase a couple of other ETFs based on commodities and/or bonds, maybe even real estate; as well as buy some great companies at cheap prices while continuing hedge my investment with gold.

Bye WaMu

2008-09-25T19:58:00.000-07:00

Wow, I'm now glad I only bought 5 shares of WaMu. I wonder what happens to my $.45 shares now. I'm going to hold onto them out of morbid curiosity :/

An Unexpected Treat from Zecco

2008-09-24T19:05:00.001-07:00

Just logged on to my trading account and learned that October is "100% free trading month". That means that the user can make as many free trades as they like in equity and options trades without paying commission. Best of all for me personally, you don't have to meet the $2,500 minimum to get free trades.

My speculation is that this is to keep customers who might have been inconvenienced in the recent storm of volume of the past couple of weeks. Apparently Zecco's servers couldn't quite keep up, and some customers were unable to log into the trading center during the craziest hours. Zecco announced in this promotion that they are massively increasing their capacity so that shouldn't happen again. Let's hope so!

At any rate this is a great time to start trading and get a brokerage account--not only because you can get osme good companies at a great price, but you don't have to start out with much to buy some stocks in October without blowing your returns on $4.50 commissions. If you'd like to use this opportunity to your advantage, click here or use the link in "referral central" on the right of the page.

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Image licensed under Creative Commons by Robyn Gallagher

Picked Up Some Sore Giants

2008-09-18T10:29:00.000-07:00

I'm one of the people who believes that this is the time to make some educated decisions and buy some hurting stocks from companies that will probably pull through, instead of liquidating all my stock while it's low. So I took the opportunity to purchase some giants that I believe will pull through this mess and get me some good returns as they recover (except one).

Got some Apple (AAPL), Bank of America (BAC), and some GE (GE). These are three companies that I think will not collapse. Consider these facts: Even though we're in the middle of an economic crisis, people are still lining up to get their iphones, and the iphone app store is growing faster than Itunes did. Bank of America is seeming to be the one bank that will end up huuge after this boils over, and they have a nice dividend to boot. GE is committed to keeping their AAA rating, so I think even if they lose that, they are being careful enough that they wont get hit as hard as eveyrone else. We'll see. These companies may fall a bit more, but I'm pretty sure that they have the potential to recover.

Since I had $15 left in Zeccocash, I went and bought 5 shares of Washington Mutual (WM). If they go away, I'm not going to cry about my $15, but if they get bought with a good deal for shareholders or recover, I might shed tears of joy. At any rate, $15 is worth a bit of adrenaline to spice up the day.

UPDATE: I wish I'd put more than that into my WaMu stock--it just shot up 31% since i got it!!

What would you do to make an easy million?

2008-09-15T19:42:00.000-07:00

Randomly came across this bloke's page, where he's offering to do "anything" for one million dollars. Well, almost anything. The task has to be legal, not cause any physical or emotional pain to any other, and not involve any disfigurement to himself or anyone else. This is an interesting concept that I think is possible only in this day and age, where the Internet gives anyone an instant and unlimited audience. Another recent notible case is the girl who is selling her virginity for the highest bidder. I'd be interested if the dude is able to get his $1 million, and what his task will be. I'd also be interested to see if he were to succeed, would it be possible for someone else to do it, now that the novelty has worn off. Maybe after that I'll offer my services for $10,000,000. No one has thought of that before!

There are, however, some things he should make a bit more clear before he sign a contract:

-What currency does he want the $1 mil? I could cough up 1 million Zimbabwean dollars right now if he goes and fetches me something from the curry joint down the road. I'll take a lamb tikka marsala with naan.

-Is this $1m before or after taxes? $650,000 is not that much in terms of setting oneself up for life. It's still my opinion that you need at least $3,000,000 to live comfortably without another source of income.

-How long is the maximum time your task can take before you get paid? Can it be to work like a slave for 10 years for $1,000,000 at the end? I was told at the large electronics retailing firm where I worked as a teenager that if you put in 10 years, and the company grows by a constant percent per year, you get a $1,000,000 vestment in the company at the end. I also heard a lot of people would get fired at 9 and a half years for random reasons.

-Are expenses included in the price?

Seriously though--what would you do for a cool $1,000,000 in US currency after tax, all expenses paid? Eat cockroaches? Swim with sharks? Not shave for a year?

A better question would be what would you not do for $1,000,000? Go ahead, leave a comment on what your limit would be, while still abiding the rules set out the one-million-dollar-hopeful's site.

Mine? Get stung by a bunch of bees. I haven't been stung before and I'm pretty bee-sting-phobic :/ Maybe i could deal with getting stung by just one bee?

Steer Your Finances in the Right Direction with Rudder

2008-09-13T21:37:00.001-07:00

On Friday I signed up at Rudder, a new web app that helps give you a wide-angle view of your finances (and even emails a report to you every morning if you wish). It basically calculates your bills and expenses, runs the numbers against what you have to pay, and then gives you a big-picture number of "what's left" before your paycheck two periods from now. Its brand new so it has a few kinks, but I'm really impressed at how eye-opening this tool can be and how helpful it can be in keeping a positive cash flow. It goes right in line with what I learned in my the meeting I wrote about earlier at The World's Greatest Team.

The process was easy. Upon signing up, you enter the usernames and passwords of your credit card sites and your bank account websites. It then pulls your balances from those sites. Next, you manually enter all of your other monthly bills (ie rent, emusic, netflix, your monthly donation of appreciation of my blog, etc). Thirdly, you put in your estimated paycheck and frequency (ie $1234.56, bi-weekly, next check on the 21st). Finally, you set your preferences on how often you want an email report sent to you.

I haven't gotten an email report yet, but the overview page shows what you get. It helped me determine how much of my credit card balance I should pay to be agressive about it but still be in the green (i recently splurged on a couple things).

The Good Stuff

-The site is easy to use

-It makes it incredibly easy to ensure you have a positive cash flow by giving you a global view of your finances

-It gives a cheeky description of your financial profile. Currently it says "You are a picture of financial responsibility"

-The site is customizeable and is widget-based. Not that many widgets to be added, but I'm sure there will be more

-They are based in downtown Houston and the site was up thorugout huricane Ike. Impressive!

The Bad Stuff

-There were a few hiccups one could expect on a new site. For instance I had a bit of trouble getting the overview to show up in Google Chrome a few times (seems to work fine now). I also had a bit of trouble clicking "add another account", but again that was in Google Chrome, a brand new browser.

-They have the username and passwords of all of my financial institutions. As secure as they say they are, that's a bit scary. I hope they are better at safeguarding info than most governments.

-They don't link to all financial institutions. Namely IngDirect. So I dont get to see my savings, but I'm sure as time goes on they will expand as will my wealth ;)

-They don't link to stock brokerage accounts. Oh well. Maybe they'll get a widget someday that does. In a way this and the previous point are advantageous because I can then determine my automatic savings as an expense and take it out of the equation.

All in all, I find this new tool to be very helpful and will definitely be making good use of it to keep me in the green. As its a startup though, I'm keeping my eye out to quickly change all of my online banking passwords if i need to. Happy saving!

Panic? A great time to buy

2008-09-13T21:17:00.000-07:00

Just read an interesting article that I really liked from The Motley Fool about panic. I share the sentiment and I hope it is right. It says that 2008, like many times in history, people are seeing the current economy as a disaster and pulling out (thus the term 'panic'). Each time, a few individuals were made extremely rich because they were able to buy stock of good companies at great prices which would recover and then some. It also goes to point out that a lot of the media that reports on the economy makes its money by making events more interesting to read by sensationalizing things, so our situation might not be as bad as it is being made out to be.

My strategy: find some good companies and/or ETF's and buy them while everyone else panics and brings the prices down. Hopefully I'm wise enough to know what ones will not disappear and will grow after the recovery. I'm hoping ICLN contains enough of those companies. I'll be researching what other trends we can expect in the future so I can stock up.

Zecco gets its Trading Center back

2008-09-11T08:27:00.000-07:00

Went online today and saw the trading center was back! Yay! I will now cease to leave a running commentary on the existance of the Zecco trading center feature. Let's get back to wealth, shall we?

Wizing up and some ETF's

2008-09-09T08:34:00.000-07:00

So I learned another lesson the other day; pay attention to stock symbols! When I bought PZE i thought I was purchasing stock in the Brazilian petrol firm Petrobras Brasileiro. It turns out that PZE is Petrobras Energias Participationes, an Argentinian firm owned by Petrobras Brasileiro. A bunch of other investors made the same mistake and the stock didn't do so well. I was thinking of switching to PBR (the actual firm) since the news is now out that they are going to merge in Jan, and I would expect this to go in favour of the parent company. Instead, I wised up and bought two IShares funds: the Ishares S&P Global Clean Energy Index Fund (ICLN) and the Ishares MSCI Brazil Index fund (EWZ).

Though it cost a bit more because I'm still paying $4.50/share, I think it's wiser to have more diversification. Having now a wide variety of ownership in clean energy (ICLN) as part and a wide variety of stocks in a great emerging market (EWZ) is a sounder policy than having 50% of my stocks in one company that's a small Argentinian division of a petrol company. I have good hopes for both funds to grow over time, as I believe Brazil still has a lot of growth potential (especially with the activity I saw in the Northeast of the country earlier this year) and there is more and more demand for clean energy as time goes on.

Here's an interesting article on the dangers of not double-checking your stock ticker symbols. Apparently a common mistakes is to mistake Appell Petroleum (APPL) for Apple Computer (AAPL). I gotta start a coproration called Golgotha Gothic Apparel (GOGL). Hehe.

Riding My Gold Round Disc

2008-09-08T19:15:00.000-07:00

I finally got hold of my KrugerRand this week, and have it back in my personal posession. I recieved this in 1998 when my grandmother was visiting on the way from living in the UK to go back to live in her home country of Zimbabwe. In that time it has grown from $300 in value to $900. That's 30%/year! Looking at my stock portfolio at the moment, it may be that this (almost half my non-tax deferred investment worth at this early stage) is the soundest investment I have.

Here's a pretty picture of it.

Even at an early stage in my journey of wealth creation, I can tell you with confidence that if you want to invest, you should own some gold. The KrugerRand is in my opinion one of the best ways to do so, and that's not just my Southern African bias talking. Let's take a look at some of the pro's and con's of owning KrugerRand as a part of one's investments.

Pro's of owning gold

-Rarely loses value: Thoughout most of human history, Gold has been valuable. It's value generally does not get affected by the actions of governments or people

-Physical commodity: Gold generally does not have the tendancy to vaporize like certain stocks and currencies, since it is based on a physical substance.

-Internationally traded

-Safety Net: Because of the above aspects, many believe gold to be the perfect hedge against the dangers of currency (inflation), stocks (market volatility), and even realestate (look at our current situation). No matter what happens, if you have gold it will still be valuable.

-It's scarce: According to the Rand Refinary, in the history of mankind only 150,000 tons have ever been mined. That's not a whole lot. In fact, the global supply grows only 2% per year. That's still more than the current global population growth rate of 1.3%, but that low figure still guarentee's a good supply/demand ration will be ongoing (until we find a planet with lots of gold and figure out how to mine it and bring it back here)

-It's nice to look at: It's more rewarding to look at your gold than your bank account balance.

Con's of owning gold

-It's massive: Gold has a lot of mass. It also takes up space. Therefore you need some place to put it and its hard to carry around with you and/or transfer. This may be offset by "location swaps".

-It can be removed. If you're not careful, someone can take the gold off your hands, and it's not FDIC insured.

-Gold does not provide income. While gold is good at increasing and holding value, scientists have not yet been able to find a way to get dividends to come out of pieces of gold. You just have to hold on to it until you are ready to part with it.

KrugerRand Pro's

-Lightweight and portable: They come in 1oz, 1/2oz, 1/4oz, and 1/10oz coins. The largest is a bit bigger than a Susan B. Compared to a nugget of gold, this makes it easy to manage.

-Quality: Each coin is a solid hunk of 22 carat gold.

-Durable: KR's are infused with a tiny bit of copper. This keeps the metal hard, so as to avoid scrapes and dings like most gold objects can get because of its inherant softness. Mine's a '75 and looks in better shape than me (i'm an '81).

-Trades on the value of the gold: Many collectors coins trade on the condition or the rarity of the coin. The KrugerRand, by contrast, is valued primarily on the value of the high gold content, and trades very close to the London Bullion Market Association's price for 1oz of gold.

-It is the most commonly traded bullion coin in the world

-It's legal tender: while there is no set value, the fact that it is legal tender means that the coin does not need to adhere to the same rules as trading just gold. For instance, it does not need to be melted down upon resale.

-You can make jewlrey with it. Ok, so I think its a bit rediculous, but apparently you can clean a coin up, attach a chain to it, and mark it up almost 400%.

KrugerRand Con's

-Lightweight and portable: This means that its easier for someone to sneak it away than a gold bar

-Not as shiny as most collector's coins: but that's the point--these are valued on their gold content, not how shiny and rare they are

-You can get duped: it's possible to make a fake one and plate it with gold. There are also some legitimate items out there that are "krugerrand memorabilia" that can be mistaken for the real thing if you don't do your research.

In conclusion: I think the Krugerrand is a must for any investor to hedge their bets against their other types of investments. Its easy to get hold of (still minted today) but holds its value very well. I will definitely be acquiring more KR's as my journey continues to even out my investment portfolio.

Zecco does away with Trading Center

2008-09-03T10:37:00.000-07:00

The other day I wrote that Zecco had a shiny new trading center. It appears it was short-lived, as its now back to the old trading center when I sign in. Maybe they're making it bigger and better.

Growing Wealth Through Osmosis from the Crowd

2008-08-31T11:55:00.000-07:00

A couple of weeks ago, I wrote that I had realized that in order to help become more knowledgeable and to start acting towards becoming an entrepreneur, one should hang out with people who are already effective or are getting there themselves. Since that post I've found it to be true. I've been attending the "World's Greatest Team" a series of coaching sessions for entrepreneurs. While I'm not yet one, I'm hoping that hanging out with entrepreneurs will help me gain insight, learn, and get ideas on how to become an effective one. Through the sessions, I've already gotten some great advice . . . not just from Sunil Bhaskaran the coach, but from the other attendees themselves.

For instance, in one session about milestones, I revealed that one of my milestones is to own real-estate as an investment (its a great way to diversify as opposed to stocks, etc). Later that evening I got a call from a fellow participant, called me up and gave me a ton of invaluable advice on getting started in real-estate investment, according to his experiences. After 30 minutes on the phone, I came out more knowledgeable about the subject, and with a starting point--realestate investor clubs (something I did not know about before). In line with my belief that if you want to start out in something, hang out with those who do, you can go to their meetings and network/gain/share insight with people who are already doing what you want to do.

All the more to show that if you want to start doing something, start hanging out with those who do. If someone does something that they love, then they will generally be glad to share their insight with those who want to learn. It's human nature. On top of that, you will feel more incented to move because the crowd around you is--again, human nature.

Many thanks Daniel of Daniel Cook Design for the wealth of advice.

New Snazzy Trading Center for Zecco

2008-08-29T15:24:00.000-07:00

I just noticed today that Zecco's improved their trading center, the first page you get when you log into the trading. Previously it just took you to the positions page. Now, it has a summary of your positions, recent and open orders, and summaries of how many trades you have made and the likes. Very snazzy.

I also found that you can type your password in while the logon page is grayed out/loading. That's a plus too.

Below's a screen shot that shows up in a popup message I got upon signing on as a "preview". I was a bit disappointed that they did not change my portfolio to look like the one in the screenshot :)

Entrepreneur.com a great place to brainstorm for business ideas

2008-08-26T23:14:00.000-07:00

I'm still trying to figure out a business idea, as I know saving 3 million dollars is not mathematically possible using my current income alone. In scouring the net for answers, I came across a site choc-full of information and insight--Entrepreneur.com. There, one can find discussion forums and great articles, like this one by Jennifer Alsever, that can get one started on practices to put ones self in a situation prone to find ideas. Once the idea has been found, there are plenty of resources on the site one might need in starting and running their own business. I'll definitely be reading more through this site in the days to come.

Vision Statements a great way to visualize in the connected age

2008-08-24T19:11:00.000-07:00

If you've been reading my blog you have probably guessed by now that I'm quite into the Law of Attraction. If you haven't read or watched The Secret yet, I highly suggest you do it. It's a great intro to the Law of Attraction, and if it gets you jazzed you'll want to delve into it more. Some say that the Law of Attraction is too optimistic. I'm just beginning to explore the possibilities of this Law, but if you study more you'll find that there are some very interesting facts behind the idea. You'll also find that in order to set it in motion you have to set yourself in motion and do actions that prove your intention, rather than just sit and imagine, as some people think.

This blog, in fact, is me setting the Law of Attraction in motion; I have an intention (3 million dollars), I'm stating my intention (the first post, title, etc), and I'm doing actions in line with my intentions (learning about investments and entrepreneurship and recording). What's more, its a great accountability tool.

Recently I attended a free seminar by Rocketship. This is an organization that helps people to visualize their dreams by making vision statements. They are basically short videos that are comprised of a string of statements and supporting (preferably vivid) images. The statements are affirmations, and said in the present tense, as if they are describing things that have already happened. Its like making a vision board or a list of things you really want, but cooler. You can upload it to Youtube, and they look very catchy.

I really recommend to anyone to attend one of these groups on Meetup or to visit their website, http://therocketship.org/.

And now, for your viewing enjoyment, here is my first vision statement. Unlike a lot of others, I chose to mainly use pictures of me, as I figured putting myself in these statements to be visualized would be more effective (easier to train my neurons if they see myself in the situations I want). I even photoshopped a screenshot of my bank account to have 3 million dollars in a CD. Enjoy!

PS. if you enjoyed the music, it's Conjure One, on their self-titled album. The track is entitled Pandora.

Word's Greatest Team Session in Mountain View

2008-08-20T22:48:00.000-07:00

The other day I noted I was going to go to a weekly seminar by a business coach in Mountain View. It turned out to be Sunil Bhaskaran and Jeff Slayter of The World's Greatest Team Coaching. They do a weekly group session, for which there is no obligation to pay. Instead, they encourage participants to pay what they feel the value of the coaching has been (or what their budget allows).

I found Sunil and Jeff's coaching session to be vibrant and enlightening. In this session, they made a number of points that reached to my core in my current situation/aspirations:

Be accountible - If you have a goal, find someone to be accountable to. That way you'll feel more incentive to actually work towards reaching the goal. I guess I did the right thing by creating a blog around my goal, so in effect I'm accountable to the entire world.
Know where you are financially. Since this coaching is centred around entrepreneurs, the pair encouraged participants to figure out where they were financially. Jeff made an excellent analogy; if you are a pilot, and find yourself in plane not knowing where you were, but are told you need to get to New York in 12 hours, the best idea would be to figure out where you are, no matter how scary the answer may be. Sure it may be terrifying to find out you are in the middle of the Pacific heading towareds Japan, but knowing to turn around and refuel is better than crashing into the Pacific. This also makes me glad that I'm doing this blog and therefore am starting to get the best view possible on my current financial situation.
Tools - A free spreadsheet for figuring out one's financial goal is offered. I've already started using it and it's given me a great 360 degree view on my finances. I'm planning on attending one of Sunil's coaching sessions on how to effectively use it soon.
NLP, or Neuro-Linguistic-Programming. I've really liked the concept of NLP for a while now--that you can program your brain to be perceptive to growth or whatever you want it to be. Jeff gave an almost-tear-jerking example by performing some analysis on one of the participants. It went to her core--how her family had brought her up and how that had formed her ideas of wealth. I actually signed up for some NLP sessions that they offered a $30 one month trial for at the end of the session. I really do believe that one can program or re-program their mind to be perceptive to opportunities that otherwise they would not be. It's my goal to use the help with NLP to program my mind to be perceptive to a creative and rewarding entrepreneurial path that will make me my $3 million.

Many other great points were given, and I really do recommend that if you're in the Bay Area that you attend one of these sessions. They do them in Mtn. View on Wednesdays and Cupertino on Thursdays. If you want to meet the 3-Million Dollar Hopeful in person, he will be there next Wednesday in Mountain View for more excellent insight and inspiration.

See you there :)

Monthly Report - 20080815

2008-08-16T09:41:00.001-07:00

Time for my first montly report. How am I stacking up in my first month being a millionaire in the making?

Online Revenue -
Adsense - $2.22. That's more than I expected after just one month in a new blog.
Cafepress - $17.70 (I'll write more on this later)

Cash/Savings
Checking - $1640.65
Zecco Cash - $25.71
Ing Savings - $222.59
Ing 6Mo CD - $300
TOTAL - 2188.95

Retirement, etc
401k - $4,457
HSA - $40 (after paying the last of my "dengue fever" bill)

Investments
American Express (AXP) - $117.21 ($6.36/5.74% gain)
Daimler AG (DAI) - #121.82 ($7.42/5.74% loss)
Pfizer (PFE) - $220.88 ($20.79/10.39% gain)
Petrobras Energia - $501.50 ($26/4.93% loss)
My Company - $333.85 ($77.90/30.44% gain)
TOTAL - 1537.98 (71.72 overall gain - that's 4% growth)

Currently my company, AXP and PFE are in the positive, PFE doing very well. DAI has lost value (but seems to be on its way back up), and PZE has lost value.

Debt
Car - $17,618.13
Cards - $1173.59 (it was an out of the ordinary month with guests over from Brazil, meaning lots of dining out, combined with a dire need to replace some old clothes and shoes. Excuses aside, I probably won't pay the entire balance this month--maybe just half)

Total Investments + Cash
$3150.36.

Overall, it's hard to figure out how much growth since my starting point since I didn't really know what I was doing and didn't put very precise measurements there. I'd say I've made about $500, primarily from work. This month will serve as a starting point for accurate measurements, and growth will be calculated solely on investments + cash. Though I'll include it in here for a big picture, debt will not be factored into this number. For simplicity's sake I'm also not including retirement/tax free accounts into this number.

Want to be Someone? Join the Herd of Someones!

2008-08-12T22:34:00.000-07:00

I'm reading this really good book that my wife had just finished, Harmonic Wealth: The Secret of Attracting the Life You Want, and as my wife was going to one, I attended a Meetup group on the subject. While I'll definitely review the book once I'm done, I had an epiphany of sorts at this group. I was speaking with another member of the group who was starting her own business in San Francisco. I got to thinking that in order to make my goal of 3 million dollars, I'm going to most likely need to come up with a creative business idea that leverages my skills and passions. However, I've known that for a while now, but I can't think of an idea or even an area to go into. I've had this dilemma for a while now. I'm sure I'm not the only one with this issue.

Then I realised a very simple answer to help find the path; meet people who have their own businesses! If I talk with enough of these people and ask them questions, then I'll start to get some perspective and possibly ideas of my own. Also, I believe that people generally start to naturally emulate those around them (at least I do). If I hang around with a bunch of people who are successfully starting their own businesses then eventually I'll start subconsciously acting like an entrepreneur, which includes coming up with great ideas and putting them into action.

Game plan: go to events with entrepreneurs and talk to people. There is a free weekly seminar in Mountain View tomorrow, given by a well known career coach, so I'll start with that. Other avenues could be Meetup, and seeking small businesses that I find intriguing and chatting with the owners. Learn from these people, emulate them. Rinse, lather, repeat as necessary.

Want to be somoene? Join a herd of someones. Take advantage of our bovine instincts.

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Any successful entrepreneurs out there? Feel free to comment on the following question: did you have the idea for your business first, or did you search for an idea? If the latter, how did you find it?

Zecco.com Review

2008-08-10T13:20:00.000-07:00

While we're on the subject of companies that I've used I'll go ahead and review Zecco, as I've been meaning to for a while. Zecco is the company I use to do stock trading, which if you've been reading I'm pretty new at.

I was initially introduced to Zecco when one of the top developers at my company left to go and work for them. Later, when I decided to make 3 million dollars, I found them as the best choice in my research.

While I don't have experience with other stock trading platforms (except Fidelty, where my employer's stock is automatically dumped), I've had an overall positive experience with Zecco and will probably stay with them.

The Good

Free Stock Trades - Zecco offers 10 free stock trades per month if you have a balance over $2500
Cheap Trades - If you don't yet have equities worth $2500 in your account (which is currently my situation), trades are only $4.50. In contrast, if I want to buy or sell any stock in my Fidelity account, its about $20 a pop. This means at Zecco, if you haven't got much to trade, its easer to keep your commissions at a low percentage.
Free Dividend Reinvestment - Should a stock you own pay out a dividend, and you have written Zecco a letter authorising them to do so, they will reinvest your dividend into that stock. Best of all, I asked their customer service and was informed that it does not count as a trade! That means you aren't using up one of your 10 monthly trades or pay $4.50.
Interface - In the trading centre, all assets owned by you are listed with the percentage and $ gained or lost per share and total, as well as a total for all assets. This is great because you don't have to go back and do the math to see how much profit or loss you will make if you sell that asset. In my Fidelity account I've had to go back to look at my history to see what the original purchase price per share was.
Forums - The site has a community with forums and profiles so investors can share their opinions. They also list their top earners (% of growth) so you can follow them. I would find this useful although it seems that the top ones always just end up being people who've gotten really lucky that week on a penny stock.
Great for noobs - Their site has an easiliy accessible glossary and learning center, with plenty of advice for noobs like me.
CAPS ratings - This is a 5-star system that they list on each stock's quote. It is made up of collecting stats of many investors betting on whether the stock is expected to appreciate in value. According to Zecco's site, assets with a rating of 5 have proven to be more likely to grow than ones with a rating of 4.
Additional Types of Trading - Mutual Funds, Options, Puts, Calls, trading on margin, etc. Though I won't go into detail on those because I don't have experience with them yet.

The Lame

2 Quote Systems - When in the Trading Centre, there is a less user-friendly quote system being used than the awesome one they have in the Quotes and Resarch section of the site. Why they don't just use the same system across the site I do not know but I wish I did. Instead these days I usually look up the stock in Google Finance as I really like the way they list news events on their incredibly flexible time chart.
Bare Bones - I've heard the term used around the net for Zecco as a "Bare Bones Investment Platform". I'm not sure what that means but I'm sure that is one of the reasons its so cheap! What more would you need anyways?
No Partial Shares - Some sites (like Scottrade I've heard) offer partial trades. Some people might think this is really important so I'm listing this as a "lame" aspect. For me, however, I don't really care. I've learned my lesson on buying small amounts of stock, so that doesn't matter much to me. I suppose it would be neat to buy a partial share in a stock that is $1000/share but come on-I think if a stock has reached that high that there would be smaller stocks with better growth potential. As for index funds, go for an ETF.
Ad Supported - Thats right, Zecco is plastered with ads for Forex platforms and stuff. An interesting thing is that I can't even click on them in Firefox which can't be good for Zecco's revenues. However, the ad-supported-ness is probably a large factor for Zecco's great value.
Waiting Time - At any chance it can get, Zecco will time you out of the Trading Center. Then, you have to wait for the entire login page to load, including all ads, articles, and other content. While this happens the entire page is grayed out and a "loading" animation plays. This happens for about5-7 seconds, and only for the logon page. It gets sort of annoying.
Money Transfer Time - It takes a few business days to get funds from your bank account into Zecco. I have lack of experience, so I'm not sure if its like that for all stock platforms.
Pink - Not a big fan of that colour

What I'd Like to See

It would be really cool on any platform if they would offer configurable notifications to both email and text message when stocks you choose or own hit certain prices or if your p&l on a certain asset reaches a certain percent or dollar value.
A simplified logon page for the Trading Center that loads instantly
Zecco widgets for Google Desktop or Yahoo Widgets based on your own inventory.

In conclusion, Zecco's a basic trading platform that is uber cheap. It has been helpful both with their learning centre and their forums. I plan to fund it past $2500 when I have the funds to get free trades and continue using it long after that.

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(Blatant Self-Promotion) Should you want to try Zecco, click here to be referred. I'll get $65 as a referrer, and as a referee(?) you get a free book. The book selection changes from time to time but its usually a nice book on investments that you could otherwise get at a bookstore, not a cheesy promotional vehicle for Zecco. As I write this post, they are offering China Shakes the World: A Titan's Rise and Troubled Future -- and the Challenge for America.

New Referrals Section Online

2008-08-10T13:07:00.000-07:00

Just about any company these days offers enticing referrals for both existing customers who refer people and their referred buddies. I've decided to make a table of offered referrals in the new "Referral Central" section on the right-hand section of this blog. I only plan to list companies that I either use or review for purposes of making or growing wealth. That way it doesn't fill with unrelated junk like "Sign up a friend to hear about our food and earn a bag of chips."

If you'd like to try out anything I review, feel free to use the referral method listed to get yourself and me the bonus. If you have friends or family that use the product, however, ask them to refer you first :)

Gambling on Oil in Brazil

2008-08-05T16:23:00.000-07:00

Used the money I was going to pump into Pfizer (PFE) (see earlier posts) and bought 50 shares of Petrobras (PZE), one of Brazil's main oil companies. They look like a good buy--their profit is up this quarter from last year (yes, they profited this quarter, were slightly negative last year), they seem undervalued according to analysts, and their CAPS rating on Zecco is 5 star (meaning they are expected to grow).

It is a bit of a gamble, however. Tomorrow is the quarterly earnings report at 8:30am. I guess that means the stock has more potential to move drastically in either direction than a regular day. Looking back in history, it seems that generally around the time for quarterly reports the stock is low and then goes higher. Let's hope history repeats itsself. I'll get up early (in California) to see if I sell it because of either of those two. I've been thinking more and more about ETF's anyways.

Another Lesson Learned - Why not to buy stocks right before ex div

2008-08-01T09:03:00.001-07:00

On my previous post about blunders, I mentioned I was going to order $500 woth of PFE (Pfizer) so I could get the dividend and maximise my investment. D from SlackerWealth.com left a very interesting comment questioning my logic. His helpful comments, along with this article on Ivestopedia, helped me change my mind through the following points:

The value of the stock will go down the amount of the dividend. This is because that $.32 is no longer part of the value that the stock represents (as its in my pocket). So, end result--i'm not really making quick money to gain back my commission fees. It is just being redistributed.
I will be taxed on it. So in fact I'm losing money.
I will be taxed more heavily on it. If you have the stock for less than 60 days, you are taxed at the rate of your tax bracket. After 60 days, I believe its only at 15%. So I'd rather just hold on to the PFE I already have for 60 more days.

So, on learning these facts, I cancelled my GTF order for PFE. I will spend some time researching into value/growth stocks instead, as the money is already in my account ready to be put into good use (and the interest rate in Zecco's cash is miniscule). I might consider purchasing more PFE after the div ex after some more research on their earnings potential.

IMCL, Madness, and One Lucky Guy

2008-07-31T15:26:00.000-07:00

Today I was trying out some of MSN's automatic stock pickers. I came across today's highest "Gapper-Upper" for lack of a better term, which was IMCL (ImClone Systems). Their shares rose from $46 to $64 overnight because they got an offer for a $60/share buyout by Bristol-Myers. Why are people paying $64 to have their shares bought out at $60? Because some think that ICahn may offer more. To me, that's too risky of a move. So either ICahn will offer more and you'll make a few bucks per share, or BM will buy it at $60 (a loss), or no one will buy it and it it might fall back to $46 (a huge loss). So either a small gain, a small loss, or a big loss. No thanks.

However, I did come across this discussion in Google Groups, which shows that someone sold 100 shares for $1999,99 each. WTF??? That person just made $200k on an investment of around maybe $5k or less. Someone please send me a private message telling me how to do that.

My First Blunder: Knocking off Profits with Fees

2008-07-28T19:02:00.000-07:00

Yes, I'm a noob :)

I'm still catching up on Slacker's blog posts and came across his second one, here. Its about his first newbie investor mistakes. I realized right away that I had committed one of them, which is to wipe out possible returns with commissions.

My first transfer into Zecco (more on Zecco later) was $500. In that, I invested
110.85 in American Express [AXP] (some might think that's a blunder in itsself)
129.20 in Daimler AG [DAI]
199.98 in Pfizer [PFE]

In doing so, I realize that I've now just paid $13.50 in commission, and should I make a profit and sell, I would have to pay another $13.50, totaling $27. That means I would have to make more than a 6% gain just to break even. Ooops.

Lessons learned?
a) Invest the minimum for free trades. For Zecco, its $2500 for 10 free trades/month. Better to keep putting your money in an interest-earning savings account until you have the full amount.
b) Don't buy or sell small amounts of stock if there is a commission fee.

I've started another ACH of $500 to put into my Zecco account. With that, I'm going to purchase more Pfizer for the dividend payout that is due in September and then to hold on for a long time. Other than that I'm going to hold off until I have another $1500 to put in there so I can have the free trades (unless AXP or DAI suddenly shoot up 20%). With the free trades, should I choose to sell what I have, it will be only 3% spent on commissions.

There are like minds out there!

2008-07-23T17:20:00.001-07:00

In searching for some info on some stocks today, I came across this guy's blog; A Slacker's Quest For His First Million. There are like minds out there blogging too! I read a few of his posts, and its really good stuff. He has some excellent sounding insights on stocks he purchases and avoids, as well as other things. I can't help but wonder which one of us, or both will make our goals.

Here are some thoughts of our respective journeys:
-Goal. Mine's 3 million and his is 1. However, his is by the time he's 40, and mine's by the time he's 51. That gives him a few less years.
-Wealth. He's already got a bit more wealth than me invested--thats a plus on his side
-Smarts. He's in graduate school. That means he's probably a bit smarter than me in a collegiate sense (I don't yet even have a bachelors degree--more thoughts on that another time). That also means he has to pay his tuition and any interest on loans though.
-Experience- the way he talks about stocks, his insight, and the simplicity with which he writes his monthly updates show that he's probably pretty experienced with finance. I'm not. The monthy updates are a good idea. I'll probably do something similar.

I hope we both make it! Mr. Slacker, if you are out there, we'll have to enjoy a glass of bubbly together to celebrate our achieved millions :)

The Little Stuff - Scour.com Pays You to Search

2008-07-23T16:34:00.001-07:00

It won't make you ritch, but all the little stuff adds up, right? Scour.com is a search engine that combines the results from Google, MSN, and Yahoo. As well as arange of searching one can do from the simple to the advanced, its results can be rated in relevancy and commented on by users. Pretty nifty!

On top of it all, they "pay" you for searching, voting, and commenting. They have a point system that you can save up towards Visa gift cards. In addition to your points, you also get a quarter of the points that your referrals get.

They estimate (and so did I, through their calculator) that the average user will make about $100 per year in Visa gift cards.

Sure, it's not cash, but you could put the amount you get into your investments. I mean that's like 5 dividend-paying shares of Pfizer per year!

Will this be the next big thing, or will it go the way of that company that put the toolbar on your screen and paid you to watch the banner ads go by?

Click the link to check it out (if you sign up I'll get rewarded-woot!). http://scour.com/invite/cspanoghe

How to Choose Stocks with Dividends

2008-07-22T15:49:00.001-07:00

My Zecco initial deposit finally went through! So today I spent some time researching about stocks and I found something that really makes sense: dividend stocks can be a great buy--especially when the economy is not doing so well.

Since dividends are paid based on the value of the stock, its a great way to get more shares for less, and if they grow, get a bigger dividend payout. That way even if your stock does not have fantastic growth, its always giving you some sort of income, that you can even reinvest in the same stock.

This article, by Harry Domash's WinningInvesting.com, shows how to use a stock screener app to find strong dividend-paying stocks with good potential for stability and a big payout. He says that MSN Money has one of the last free stock screeners out there. However, I found it a bit difficult to use, so I used Zecco's, which was really easy. The article has some great recommendations for putting criteria in that will generate great results, as well as a good explanation of what the terms mean.

Now I'm on my way to earn me some dividends :)

Some Nifty Finance Calculators

2008-07-21T15:25:00.000-07:00

Poking around today, found that American Chartered has a page choc full of nifty calculators. They don't work very well in Firefox, but in IE you can have tons of fun. I found out, for instance, that with an average annual return rate of 6%, I would need to put away only $ 3,707.08 per month to raise three million in 27 years! I'd better find an investment vehicle with a higher return or a job with a higher salary!

First Steps--Slight Tweaks in my Financial Planning

2008-07-17T19:02:00.000-07:00

Had some spare time today, so I did some research and made a few tweaks to my current financial infrastructure.

-Increased ESPP from 1 - 2%. This won't occur until the next quarter, which is too bad because our stock is a bit low--who knows what it will be in 3 months.
-Made the decision to keep stock for 2+ years. Under Section 423 of the IRS code, there is a big tax advantage to hanging onto company-provided stock.
-Added a Roth 401k, set contribution to 1% (totalling 2%). Keeping the contributions low until my wife gets her job so we can have more fluid savings if needs be.
-Opened a trading account with Zecco. Still wating to be able to fund it. I didn't know someone could make it that hard to put money in their hands.

Still looking into the best savings account.

Starting Point - An Initial Inventory

2008-07-15T17:26:00.000-07:00

Some readers, at this point, might be thinking "OK, this guy is either crazy, or he made it big in the .com boom and has a load of investments to work with". For the second part; maybe. For the second; I wish. To show how much of a challenge I have set for myself and to serve as a reference for later on, this posting is an initial inventory of what I have going for me at this point.

Income
-Fairly average income in the 60's for a technical customer support guy in the Bay Area.
-My wife is between jobs, so that is a bit of a strain at the moment, albeit a temporary one.

Investments
-401k - $4500. Nicely diversified into different types of funds my employer offers, but still depleting in value faster than I can fund it during the current recession. Currently only contributing 1% with 1% employer match the household needs extra cashflow until the wife's career picks up.
-HSA - Recently wiped out after a trip to meet my inlaws in Brazil brought what Palo Alto Medical Foundation believed was a case of dengue fever. That was the most expensive flu I've ever had. Currently contributing $40/month. Earms a whopping 1% interest, which is better than my 401k at the moment.
-Savings Account - currently researching one to put the extra money I'm not putting into my 401K, etc during my wife's career search. Estimated about $2500 ready to be invested.
-Stock - $300 - Employee stock plan. I get it at a 15% discount. That recently means that I get it at the price it gets to be once the transaction clears.
-Gold - I have a single Kruger Rand lying around somewhere from when I was a kid. I'm not sure which of my parents is in possession of it :*(

Debts
- Credit Cards - $1000 total. I was very irresponsible with credit when I was younger, which made me unable to get credit cards until recently. I've managed to rebuild my credit while sucessfully keeping credit card balances down. The current debt is at 0%. Apart from that card, I'm paying off my balances as I accrue them (cash back baby).
- Car Loan - $17,000. Recently I went against Suze Orman's advice of not getting a new car, but at least I got a cheap one that at the moment I can sell for much more than I paid for if needs be, as well as save me at the gas pump. Unfortunately the above previous irresponsibility has left me with a whopping 18% interest rate. I plan to refi after 6 months, as I expect my credit score to be brought up with the high payments.

Cost of Living
- I'll just say that San Francisco has one of the highest costs of living in the world. I wouldn't, however, give it up for the world. To me living in such a vibrant place is much more important than living in a 4 bedroom house with two-car garage and a lawn.

So that sums it up. If you include my Kruger Rand and the inflated price of my car, an un-educated guess of what I'm currently worth would be . . .
4500 (401k)
+2500 (cash)
+300 (stock)
+950 (est value of kruger rand)
+22000 (estimated value of my car on craigslist equipped as it is)
-17000 (est. left on the loan)
-1000 (est. left on the credit card)
=12250. Wow, thats somewhat suprising. Now I just have to turn that into 3000000 in the next 23 years. :)

The Idea

2008-07-14T14:40:00.000-07:00

I intend to open a savings account to start saving money outside of the usual methods (401k, HSA, etc) so that I'll have a little extra later on, or at least an emergency reserve. Upon looking up various online savings account companies, I found that a realistic APY I could get is 3%. I decided to play with my calculator and use some very simple math see what sort of different amounts would earn different amounts of money in a year. At first I was a bit disappointed at how little the interest actually would amount to, and how long it would take to compound to something significant. Here is what I came up with:

$ Invested Interest/Year1($) Total Amount after 10 years ($)
250 57 335
5,000 150 6,719
10,000 300 13,439
50,000 1,500 67,195
200,000 6,000 268,783

. . . OK, so no duh. 3% is not going to get you very far unless you put in a lot of money. As they say, you have to have money to make money. This is a disappointing thought, as this means should I save 200,000 in my 401K, by the time I retire, I'd probably be getting 6,000/year. Obviously one cannot live on that, so I know nothing about retirement, but I would guess that means you have to live on your interest AND cutting into your savings until they are gone (I guess you'd better have a good idea of when you'll snuff it so you don't run out before your time is up).

Then, I decided to pose a question to my trusty calculator. How much would you need in the bank to live comfortably . . . off interest alone? Modestly assuming the savings is still at 3% with that type of investment, I came up with this:

$ Invested Interest/Year1($) Total Amount after 10 years ($)
3,000,000 90,000 4,031,749

That got me thinking . . . I could live somewhat comfortably on 90k/year. If I didn't have to work, I'd have time to play more and probably would earn even more doing things I really enjoyed but either weren't as lucrative as being a technical customer support representative or entailed more risk. If I got really bored, I'd have the time and resources to search and prepare for the ultimate job. At any rate, not being entrenched in the daily life routines would probably enable me to live a lot better but more cheaply.

So here it is. I've decided that I'm going to make THREE MILLION DOLLARS by the time I'm 50. At 27, that gives me 23 years to do so. The challenge is to have this in my account before my 51st birthday in a combination of interest-earning investments, including my 401k, savings accounts, funds, etc. On top of that, I will do so honestly, fairly, and ethically.

Since I'm starting out as a middle-class 27-year-old IT guy, who knows nothing about banking or investing, I plan to learn a lot on the way. This blog will outline my journey and serve as a discussion point for what I learn in the realm of making, saving, investing, and spending money with this type of goal in mind. If you stick around for 23 years, you'll find out if it's possible.

Wish me luck!