Thursday, March 28, 2013

I Plan on Retiring Later but not “Feeding” the Economy

A recent article discussed how workers retiring later is helping to take some of the burden off of Social Security and helping to “feed” the economy.  According to the article and a quote taken from RAND Corp. demographer Peter Morrison, "Older workers with earnings bolster payments into Social Security, have more discretionary income as consumers and offer employers flexibility to staff up with part-time workers bringing a lifetime of work experience,".

Personally, I have no problem with people working longer, and at this point in my life, I’m planning to work part-time well into my retirement years myself.  However, this doesn’t necessarily mean I plan to be “feeding” the economy in the process.

Getting Out of the Way for Others
I doubt that my children want to hear that I’ll be happy to deprive them of jobs by hang out in the workforce into my 70s just because I haven’t saved enough for retirement.  While I plan to continue working at least part time -- if nothing else but to stay busy and because I like to be productive -- I have no desire to take jobs from those youngsters looking for work.  Not only could my presence in the workforce hurt the economy by taking jobs from others who are possibly more willing, able, and needy (as we see in some cases with today’s economy and the baby boomers who are unwilling or unable to retire), but I would at least like the opportunity to enjoy my golden years without the stress and pressure of having to work.

 Saving Now so I Have Options
In an effort to provide myself with options in retirement, and so that I can have the best of both worlds -- working part-time to stay active, yet having time and money to enjoy life as well -- I’m working hard now to save for retirement.  To some, my savings system might sound odd, and in many ways, I’m not saving as the typical person aiming for a secure retirement might. 

While I do have a retirement account, it’s not funded as well as some financial advisors might like to see.  Why?  Because rather than focusing on putting money away, I’ve instead focused on paying down and paying off debt.  By ridding myself of things like student loan debt, a mortgage, owning a vehicle outright, and not taking on credit card debt, I’m working toward setting myself up early in life to (hopefully) save more money later by not having to pay so much toward debt.

Still Earning, but Not Hurting Benefits
During retirement, though I hope to work part-time, I’d like to earn enough to help out with paying bills and add some additional financial cushion to our situation, but not so much that I’m affecting our financial situation negatively.  Earning too much could cut our retirement benefits and add to our tax burden.  Therefore, while I want to continue to earn a paycheck, I want to ensure that this work doesn’t interfere with our enjoyment and quality of life, end up actually reducing our benefits, or steal work from someone who really needs it. 



Nasser, Haya El. “Economy Feeds on Workers Who Delay Retirement”.  January 25, 2013. February 13, 2013.

Friday, March 22, 2013

New Business Ideas Don’t Always Require Substantial Risk

The Internet has been a great new tool in helping explore a variety of business ideas and options.  Sometimes I meet with success in these areas, sometimes I don’t, and sometimes I end up talking myself out of ever trying such ideas well before I ever get to that point.

 This is a good thing, since exploring and trying new business opportunities can get costly.  But lately, I’ve found that sometimes I can get a good feel for what such an opportunity entails without having too put myself out there and risk much in the way of time, effort, or money.

Becoming self-employed took a “leap of faith” so to speak.  This doesn’t mean that I didn’t work to prepare for this transition before it happened though.  I spent several years practicing my trade, learning about the field into which I was preparing to move, and creating a financial reserve and business plan before ever quitting my regular job.  This way I was fairly confident in my abilities to make it with my work and the situation into which I was moving well before I ever left my day job and gave up the stable salary that went along with it.

Business Plans
As I mentioned regarding my self-employment, I laid out my ideas and a business plan in advance.  This was an integral way to ensure that there was some method to my madness so to speak.

By creating a business plan, I was able to consider my potential risk and possibility of success, as well as build any backup plans well in advance to actually trying my hand at my new career.  This plan consisted largely of the following:

  • Estimated startup costs
  • Forecasted expenses over the first year of operation
  • Estimated income
  • Cash reserves
  • Short and long-term goals
  • Backup plans
In this way, I was able to get a good feel for what I wanted from my new work, how I could get there, and what would happen if I didn’t. 

When people hear the word “commodities”, they might envision crowded trading floors of a mercantile exchange with red-faced traders waving papers in their hands while yelling at one another.  They might also think of investments that could take both substantial amounts of both money and knowledge to feel comfortable accumulating and trading, adding considerable risk to entering the commodities realm.

This however, isn’t necessarily the case.  If you think about it, commodities are all around us.  From the food we eat to the coins we exchange for that food, we live in a world commodities that we can accumulate and trade.

But I don’t need to head down to the Chicago Mercantile Exchange to test my hand at commodities.  I can roll over to my local coin shop and purchase some silver or gold if I like.  Otherwise, I could hit the bank and buy rolls of nickels and pennies to attain what else?  Nickel, copper and zinc.  Want to try my hand at agricultural products?  Well, I can head over to the grocery store and load up on food supplies with long shelf lives to stockpile against inflation and rising food prices or just to add to my disaster preparedness kit.

There are all kinds of ways I can test my wit against the commodities market without having to really risk much at all.

Day Trading
But lets say that I want a little bit more than hard assets when it comes to commodities.  Or maybe I want to jump into the stock market and give day trading a shot.  Again, this could seem like a potentially high-risk idea.  But in fact, I’ve been considering it as of late.  However, this doesn’t mean I’m going to dump thousands of dollars into an online trading account right away to test out my market savvy.

 There are less risky ways for me to see whether I have what it takes to make a buck in the stock market (an investment area that has been less than friendly to me in past years).  First off, I’ve picked a list of about 10 stocks to watch.  I don’t have to buy them; I can just gauge them over the next few weeks or months.  If I really want to get a feel for the hot market action after this point, I can sign up for one of those faux trading accounts that gives me the option to trade in real time, but without using actual money.  This way I’m not betting the ranch without having a real idea of what I’m doing.

Tuesday, March 19, 2013

Why I Recently did an Updated Insurance Home Inventory

I recently updated our home insurance inventory. It only took me about ten minutes to do a walk-through video of our home and its contents. This way I have a video recording of our home and the majority of our possessions. I then put this recording in our bank’s safe deposit box where it is safe from fire, flood or theft. While I’ve done this in the past, I felt if was important to update this record for several reasons.

A Relocation
Our recent relocation is the biggest aspect of why I recently updated our home inventory documentation. With our move can a completely new location with different amenities from our first home. Appliances were newer, fixtures were newer, and we have purchased some new possessions for our new home and gotten rid of others. Therefore, I wanted to make sure I not only had an updated inventory of fixtures, furniture, and equipment, but I also wanted a video record of our home so that we could document any changes or upgrades over time for resale or valuation purposes.

An Addition to the Family
Upon the completion of our relocation, we added a new member to the family by way of our second child. As many people know, a new baby can bring with it a lot of stuff. From furniture and clothing to toys and supplies, these items can be worth a pretty penny and be costly to replace if consumed by fire or other loss. This was yet another reason why I thought it would be good to update our insurance inventory.

With the addition of home contents -- either by way of a new baby, an aging parent moving in, children moving back home, new purchases, or whatever -- it can be a good idea to reevaluate the level of insurance carried upon not just a home, but the contents of that home as well.

Increase of Contents Insurance
After considering all the things we would have to replace should a fire consume our belongings, we went ahead and bumped up our contents coverage by another $25,000. And now, since we have this additional coverage, we want to be able to use it should the situation call for it. If something happens, we not only want a record to prove our case (should it be necessary) to the insurance company, but for our own memories’ sake as well. Trying to remember all the stuff we had, after it has been consumed by a fire or lost to theft could prove difficult, and it could have us leaving out certain items and failing to be reimbursed for them. Therefore, our updated inventory can help us ensure that we not only have documentation for but remember all the items we had -- from fixtures to furniture and everything in between -- before they were gone.

Wednesday, March 13, 2013

Why I Pick Silver Over Gold

I’ve been paying a lot of attention to silver as an investment lately. It seems to me that it’s an investment option that often gets overshadowed by its big brother, gold. Gold is obviously the more glamorous option of the two, and it -- or its favored cousin, platinum -- often get more attention when people are discussing investing in metals. However, I tend to like silver over either of these two options.

Long-term Appreciation Moving Forward
Sure, on a per/ounce basis, gold is worth more than silver; however, over the last 10 years, silver has beat out gold in appreciation by nearly 5 percent a year. While gold has silver beat in the longer term (going back over 30 years), I think silver has a better shot at appreciating at a greater rate moving forward because it’s not played out yet compared to gold.

Silver is used and found all around us in our daily lives. From industrial applications in technology, to household items like silverware, mirrors, candlesticks, and more, and of course in personal finance through coins and investments, silver is, has been, and will continue to be used in a vast number of applications. In fact in ancient days, the Greeks and Romans used silver urns and containers to hold water and wine to keep it from going bad. Because of silver’s ability to combat bacteria, it’s also heavily used in medicine and in hospitals.

The more I find out about the hundreds, if not thousands of silver uses, my confidence in it being a good investment (especially for the long term) continues to grow.

Easier Bought, Easier Spent
It’s pretty easy to buy silver, especially in its physical form. Outside of going to garage sales, antique stores, and resale shops, walk in to about any coin shop and there’s bound to be silver of some sort. Whether as bars, ounce coins, collectible coins, or what is referred to as “junk” silver (coins of pre-1964 creation), silver is often abundant and easily purchased due to its lower price compared to gold.

With an ounce of gold currently hovering right around $1,650, and an ounce of silver closer to $31, a regular Joe like me won’t find himself breaking the bank to buy an ounce or two of silver compared to an ounce or two of gold.

And when it comes time to sell silver -- whether at a coin shop or online -- it’s probably a bit easier than selling gold. I don’t know too many people who know what gold coins look like. But if I walk up to someone -- coin dealer or not -- and show him or her a dime or quarter from 1950, they’re likely to recognize it as currency and hopefully know as well that 90 percent of its composition is silver.

Decreased Risk
When I buy silver, I’m not too worried about it being counterfeit. I highly doubt anyone would go to the work to counterfeit an ounce of silver -- or eve a bar of silver for that matter. The profit and risk versus reward just really isn’t there. With gold however, and the substantial price differential from silver, it might be more worth their while.

Therefore, when I buy a roll of junk silver, my concerns are placated as compared to what they might be buying a gold coin with which I’m not familiar and could be a fake.


Tuesday, March 5, 2013

What if I’m Wrong about Silver?

Lately, I’ve been hot on investing in silver. I think it’s a good time for buying physical silver and have purchased some myself. So while I’m backing up my words with action, what if both my words and actions are wrong and silver isn’t the investment vehicle I think it is or will be?

Well, it’s a good question to consider, and a question that really should be asked of just about any type of investment. Here are a few of my answers to just such a question and steps I’ve taken in the process of hedging against the possibility of my being wrong about silver.

Asset Diversification
So what if I’m wrong about silver? Well, then I’ve diversified my investment portfolio just a little bit more and have taken on some risk in another area. Some people stick largely to the stock market and prefer to spread risk among areas of the same sort of investment -- stocks. However, I’m a believer that expanding into areas such as physical assets can help hedge against a stock market collapse. And while few investments are ever guaranteed, even if silver falters, I find it hard to believe that it won’t eventually appreciate beyond its current value over the long-term.

Investing for the Long-term
Speaking of the long-term, so what if silver goes down in the near-term? I often hear investment analysts and advisors talk about being in the stock market for “the long haul” yet it seems like most of the Wall Street money-makers are getting in and out of the market quickly to make their big bucks lately. So how is it that we regular investors are supposed to make a killing in the stock market over the long haul?

I just don’t think that the stock market is the place to be for long-term investments anymore -- too many bubbles popping for my likes. However, I feel that metals such as silver and gold have the ability to appreciate over the long-term due not only to current economic policies but their ability to be used both in financial and industrial applications. And if nothing else, I can always hand silver down to the kids as an investment for them if I can’t make a go of it during my lifetime.

Portfolio Amounts
Currently, physical silver makes up a very minor part of my investment portfolio. Eventually, over time, I’d like to increase the role silver plays among my investments. I feel that by doing so, I can take some of the weight off of other areas. As I mentioned previously, this can help me diversify, and it can help spread risk out over not only different risk levels but different types of assets as well.

While I have money in the stock market, it’s nice to own something physical as well. And if silver goes down in price, it goes down. However, whether my managed stock funds go up or down, their amounts continue to be whittled away by management fees and charges. This can mean that spreading my portfolio amounts out over a variety of types of investments when it comes to risk, type, fee and tax level, and similar characteristics gives my portfolio the ability to bend and give with a variety of economic conditions no matter what they are.

Protecting at Least Some of My Investment
So let’s say that I buy a roll of 1964 US quarters. These Washington quarters were at that time produced with 90 percent silver content. And let’s also say that I’m the worst investment picker of all time and silver becomes absolutely worthless. Even if that happens, that roll of quarter will still be worth its face value of $10. While it might be of slight consolation considering that I would likely have paid much more for those quarters initially, at least it’s a partial protection of my investment. And of course, there is always the numismatic (collector’s) value of such coins, which, while maybe not as high as the silver content value I'd hoped for, may be much higher than the actual face value of the coin.