Sunday, September 29, 2013

Why I’m Not Concerned When Gold and Silver Prices Fall

Commodities markets can be volatile at times.  Recently -- as well as historically -- we’ve seen gold and silver take some wild rides both to the upside as well as down.  I’m an owner of physical silver, and while I don’t hold it in vast quantities, over the years I’ve bought some for the kids and a little for myself.  And when metal prices take a dive, there are several reasons why it doesn’t really concern me.

Divergence between paper and physical metals
If you want a really good example of the spread between “paper” silver available through the commodities markets and ETFs, and the actual hard stuff, just pop onto eBay, head to the local coin or pawn shop, or even visit the US Mint’s website and see what you have to pay per ounce as compared to the quoted market price.  I’ve often noted a 20 to 30 percent or more markup between the two prices lately, so the paper market can quote whatever number it likes, to me, it only really matters what price I can actually buy or sell metals for in the physical market.   

Long-term outlook
I have a long-term outlook when it comes to silver and gold.  When I say “long-term”, I’m talking 20 or 30 years.  Commodities can be volatile investments, especially in the near term, but by taking a look at longer-term charts that go back several decades or more, like those at, I can get a better feel for the appreciation metals have had over an extended period of time.

Type of physical holdings
Personally, I prefer silver coins as a form of investment.  As a child, I was given some of these by family members and found them to be an interesting and safe form of investment.  I like them more than say things like silver bars since they can carry a numismatic value as well.  A nice quarter from the 1920s could be worth $4 or $5 in silver content, but it could be worth 10 times as much to a coin collector.  In a way, such an investment is covering me on several fronts, since if silver values go down, the collector value of the coin might still rise, and vice versa.

An insurance policy
I look at investing in metals as a sort of insurance policy.  Such an investment could possibly help protect me against inflation and certain economic uncertainty.  But just as I don’t look to make money on our auto or home insurance policies I don’t expect this with things like silver or gold either.  They are there for peace of mind and should the worst happen to occur.  As with other forms of insurance, I hope not to need them, but I’d be thankful to have them if or when I need them.

The author is not a licensed financial professional or commodities expert.  The information provided in this article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.

Tuesday, September 24, 2013

The NASDAQ Glitch didn’t Rattle Me Because I Follow 3 Simple Rules

Though nothing earth-shattering appears to have come from the NASDAQ outage of August 22, 2013, it was a lesson of what can and could happen in today’s high-tech, fast-paced stock market.  When the NASDAQ shut down trading for three hours, I wasn’t panicking; I was watching with subdued interest, more curious than frightened.  This wasn’t because I don’t have money invested in the stock market, I do.  However, my investments and investing strategies are governed by three simple rules that allow me to breath easy when it comes to a variety of unstable economic and financial situations.

Rule #1: Don’t invest more than you can afford to lose
Most investors will take a chance with their money at some point in their life.  This doesn’t mean however that it has to constantly be at risk or at risk in the amounts that could make or break your financial world.

I have money invested in the stock market through my IRA, and frankly, I don’t want to lose it.  However, I could afford to do so without changing our family’s lifestyle or living situation.   Therefore, my rule is to try to limit our exposure in any single asset area.  To do this, I never try to put more than 25 percent of our assets into any particular investment, and I prefer to limit our holdings to closer to the 10 to 15 percent range.  This means that even if a particular investment fails completely, we’re not left without options and opportunities to recoup it in other areas.

Rule #2: Don’t put all your eggs in one basket
Another way to say “don’t put all your eggs in one basket” is simply to say “diversify”.  I’ve never been a fan of putting all my investments in one place.  I feel that spreading investment options out over cash, stocks, bonds, commodities, real estate, and other investment options is the best way to broaden the ability to weather a variety of financial storms.  Not only this, but I feel that by moving outside the more intangible -- things like stocks, ETFs, bonds, REITs, and paper commodities -- into things like actual physical commodities like silver and gold, real estate like land and rental properties, assets like antiques and collectibles, and other items that can actually be controlled (rather than having an investment firm control them) is another good way not only to diversify the type of investment but the form as well.

In my opinion, diversifying in these ways puts some of the ability to maintain more control over investments back into the hands of the actual investor.

Rule #3: Remain debt-free
Losing a large chunk of money in the stock market could be devastating if you’re counting on that money for other things or had an extremely high cost of living.  However, by keeping debt-free, you may be relieved of some of the stress that comes along with investing. 

In our particular situation, knowing that we have no credit card debt, that student loans are paid off, and that we don’t have a mortgage, the success of our investments aren’t as crucial in the near-term since we aren’t relying on that money for any immediate needs.  By keeping debt down and lifestyle costs low, we have fewer obligations for our money, and we can afford to lose some of it in a market debacle (with hopes of eventually gaining it back of course) should it occur, without it being a huge concern.


The author is not a licensed financial professional.  The information provided in this article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.

Friday, September 13, 2013

Stuck at Home? Save Some Money

People like me might sometimes find themselves stuck at home with too much time and too little work on their hands.  As a self-employed, at-home parent of two, I’m super busy with the kids, but right now, work is lacking.  This doesn’t mean that I’m content to sit on my hands and wait for money to start falling from the sky.  And while decent paying working isn’t exactly knocking on the door, this doesn’t mean that all is lost when it comes to finding ways either to save money or even make some money by doing a few simple things while I’m stuck at home.

Shopping returns
You know those birthday and holiday gifts, the items you bought as gifts for others or even yourself that you never used, or just those things that were well-intentioned purchases for around the house that just never got opened and have been sitting in closets, cupboards or on shelves?

Well, our family had a few such items hanging around.  And with a little extra time to get organized, find old receipts, and get to the store, I recouped a few bucks off of things like an unopened container or baby formula, some unopened baby gas relief medication, and a few baby outfits that our little one had already outgrown by the time we got ready to use them.

Insurance review
Vehicle insurance is one of those financial obligations that we often pay and then forget about for six months or until the next bill arrives.  Sometimes it seems like one of those bills that we just can’t do much about when it comes to cutting costs.  But this isn’t always the case.

Recently, I took the time (since I had it available) to do a little research regarding the Kelly Blue Book value of our vehicle.  Our SUV is over 10 years old now and its estimated value is under $2,000.  After analyzing our insurance bills and considering our driving habits, we’re considering eliminating our comprehensive and collision coverage which could save us an extra $200 a year.  

Organize a garage sale
Being stuck at home with plenty of time on my hands can present a great time for that final push toward preparing for our annual summer garage sale.  While we tend to work on our preparations throughout the year -- setting things aside in bags and boxes until sale time arrives -- we still do a final push in which we make harder decisions regarding possessions that we just weren’t sure whether we wanted to get rid of or not.

Besides this aspect of our preparations, I can also sit down and start narrowing down dates for our sales, ensuring our supply bag (containing things like pens, tape, string, scissors, markers, etc.) is ready to go, contacting friends and family members who might like to partake in our sale, write up our advertisement for the local paper, and complete our sale signs.

Tax documentation
Not everyone has to do their own taxes like I do to take some time at home and get their tax documentation together.  Lately, I’ve been spending time online doing further research regarding deductions for which our family might be eligible.  Learning more about these money-saving possibilities (work-related tax deduction, charitable donation deductions, child deductions and credits, etc.) and organizing the necessary documentation to prove eligibility for such deductions (bills, receipts, and similar documents) means that I’m better prepared to take advantage of these tax savings when tax season rolls around. 

Meal planning
Another way I make use of my extra time at home is through better meal planning.  It might not seem like much, but getting organized when it comes to our family meal plan has allowed us to cut our grocery costs by almost 30 percent over the past year.

I tackle our meal plan in two ways.  First off, I create a running list of anything we need when we make our weekly trip to the store.  This keeps us from forgetting items, and in turn having to return to the store where we could potentially spend more than we mean to or need to on impulse buys.

Second, I create a weekly dinner menu.  This keeps us on track with our food consumption, ensures that we use leftovers or finish up the things that could spoil first, and maximizes our food dollar while minimizing waste.  This also cuts down on last minute decisions -- or worse yet indecision -- regarding dinner that could lead us to pricier fast food options.

Through these methods, I’m able to continue to stay useful and productive around the house, saving and sometimes even making money even if I’m not “working” a regular job.

Thursday, September 12, 2013

Roadblocks We’ve Encountered When Buying Homes

There are a variety of issues that can come up when buying a home.  While many of us are familiar with the usual items that can pop up during home inspections or credit checks, some issues are a bit less common or aren’t advertised as heavily in mainstream media.  However, these potential roadblocks can be just as aggravating and potentially disastrous when attempting to buy a home.  I can attest to the hurdles these issues can present, as I have encountered a variety of them during our various home-buying adventures.

Auctioned Out from Under us
During our first home sale, we stumbled upon what we felt what was a really great deal when looking for our next place.  We found a short-sale condo that was located in one of the suburbs in which we were interested in relocating. 

Knowing that it was a short-sale, we made a full-price offer and then sat back, prepared to wait for an extended period if necessary to hear back from the bank.  In the meantime, we got our finances together, got pre-approved for a second mortgage (since we’d yet to sell our first home), and started downsizing in the event our offer was accepted and we needed to move.  After several weeks spent patiently waiting, we were contacted by our real estate lawyer who informed us that even with our full price offer on the table, while the seller had accepted our offer, the bank had moved forward with foreclosure proceedings and had sold the property at auction.

Initially, we were quite disappointed, but about a year later, the property came back on the market as a foreclosure.  By this point we’d already moved on in our home search.  The property was sold at less than half the price we’d initially offered for it.  Shortly thereafter, another unit in the same six-unit building sold for a comparable price.  So what seemed like a disappointing loss at first could actually be considered a blessing in disguise since we would likely have overpaid significantly for the property.

Money Transfers
Encountering issues when trying to transfer or attain funds for a home purchase can be time consuming, frustrating, stressful, and costly.  In our most recent home purchase, we encountered several issues that we weren’t expecting when trying to wrangle our funds from the bank for our purchase. 

The first issue was obtaining the money from a certificate of deposit in a bank in another state before its maturity date.  Since we couldn’t come into the bank in person, we had to contact a personal banker who emailed us documents that then had to be express mailed back so that we could do a wire transfer of the money to our new bank.  The only issue with this was that we found that our new bank would put a 5-10 business day hold on what is considered “sizeable” transactions, which held up our money until the day before closing.  The final issue in this transaction was that we then found that we couldn’t just write a couple checks to bring to closing.  Since the amount of our down-payment was in excess of $50,000 (we were buying the property outright with equity from our first home), we had to wire transfer the funds from two different banks and pay two different wire transfer fees ($25 and $20). 

While we managed to get the stars to align to make the home purchase, it was a stressful process to say the least and one that might not have been completed on time were we not as on top of things as we were.

Family Gift Payments
When we were looking at that short sale condo I mentioned earlier, since we still owned our primary home, our available liquid cash was at a minimum.  We were planning on taking a temporary loan from a family member to help us with the down-payment; however, there was more to it than just cashing the check.  According to our bank, we had to provide documentation of the transaction and even have the family member sign a statement regarding the “gift” money.  While the deal ended up falling through anyway, it was certainly an additional aspect of the real estate transaction that we weren’t expecting.

As I mentioned, when we bought our current home, we decided to do so without a mortgage since we were downsizing and using some of the money from our previous home to buy our current smaller home outright.  This meant that when it came time to close, we had to bring a sizeable amount of money to the table.  We had planned to bring two cashiers checks from two different banks, but found as closing neared that due to new regulations, the money would have to be wire transferred.  While this didn’t stop the process, it was yet another roadblock that we hadn’t expected and added additional steps and costs (in the form of wire transfer fees) to our purchase process.