Personal Finance and Investing Blog

So you’re interested in value investing?  It’s certainly a great place to start your investing carreer and it isn’t even that difficult to understand the concepts.  You may have heard that Warren Buffett is a value investor or just thought that since stocks are at fairly low levels right now that it’s a great time to find a good value stock, either way I’ll go over some of the basics and some links to places with good information to get you moving further.

First let’s talk about what value investing really is.  The way I like to explain it is by quoting Mr. Buffett, “buy a dollar for 40 cents.”  This statement sums it up pretty well, the trick is figuring out how to say what an investment is worth.  Basically the phrase means that certain circumstances will cause a stock’s price to go down further than it should be priced if the world was thinking clearly.  A great example would be stocks of banks recently falling on fears that all banks were going under, but quickly recovered.  Wells Fargo stock sold in the $8 range on certain days in March, but rebounded into the $20’s by early May.  Did something change during that time that made Wells Fargo’s assets as a whole worth 3 times what they were worth in March?  No.  All that went on is people panicked, as they often do, and sold off shares in Wells Fargo like crazy, giving people who were thinking rationally a chance to buy the stock up at value prices. Read the rest of this entry »

The short answer to that question is not everyone. Credit card rewards programs are getting better every year, sites like www.creditcards.com are a great way to compare rewards programs between cards, which is becoming a very important part of peoples card choices. If it pays you to use a card, then why use a debit card? Debit card rewards programs are rarely ever as good as credit cards either, so it makes sense. Best of all, credit cards are a free loan… if you make a purchase, it can be 50+ days until you have to pay it back. If you’ve ever had an overdraft fee, you can appreciate that!

The rewards for having all your cash in a 4.5% APY savings account and having a good rewards program is small, I’m not going to deny it. But lets do some quick math. If you put everything on your card, earning $30,000 per year… your spending on things other than rent/loans may be around $700 per month. Now a decent rewards program will net you 1%, that’s $7 per month, or $84 per year. The APY on the savings, assuming your average balance in your account is near $1000, you’ll earn around $45 that year. That’s a total of $129 free dollars that you wouldn’t have gotten using your debit card on your no interest checking account.

The big reward here is that you’re not spending your cash, instead you’re taking out mini loans for 20-50 days at a time. Think for a second about how much overdraft fees can add up to. Two overdraft fees will add up to the same amount you earned in interest the entire year with a $1k average in your account. That’s a lot! What happens if you need to pay for something big…. in cash? Well you can keep those items on your credit card and pay a smaller payment that month if you have to.

This isn’t a bad idea for any income bracket, the more you make, the more you spend, the more rewards/interest you’ll earn. This will benefit the person who paid $400 in overdraft fees to their bank last year more, however. Just a note, if that $400 was in your savings earning 4.5% the entire year, you would have made an extra $18! Yes these are small amounts, but no one got and stayed rich by spending money with no regard for saving it.

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With online banking, automated phone systems, and even just ATM’s… there is zero excuse to stay in the dark about what’s coming out of your account. Obviously a nice register would work just fine, but that takes effort and it just isn’t going to happen. Honestly though, overdrafts should be a thing of the past.

So I went out and looked around for some online spending tracking, or personal finance sites, and I was surprised at what I found, having not looked around before. Working for a bank, sometimes you get tunnel vision about what is out there. These are a few personal finance tools for various things, I haven’t tried all of them yet, but I’ve read as many reviews as I can about them, and each seems to have their own little up-side.
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