Three Questions To Determine If One Will Be Affluent

Free Money Finance had an interesting post sharing an assessment questionnaire from The Millionaire Next Door:

"The affluent tend to answer 'yes' to three questions we include in our surveys:

1. Were your parents very frugal?
2. Are you frugal?
3. Is your spouse more frugal than you are? "

If the answer to all three is "YES," congratulations to being on the way to achieving affluence, if not already there. Free Money Finance also noted that single people still have the opportunity to influence #2 and #3 and therefore, have a chance to answer "YES" to two questions.

My build is that those of us who are parents can also control #1 for our children, giving them a better foundation for becoming affluent:-)

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Carnival Links from July 30, 2007

Here are links to Carnivals from Monday, July 30, 2007:

Carnival of Family Life - Hot Off The Presses @ Island Girl

Festival of Stocks #47 @ Stock Market Prognosticator

111th Carnival of Personal Finance @ Plonkee Money

Please give the hosts some recognition by visiting their Carnivals.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

7/30/07 Stock Purchase Update - After The Carnage

In my 7/23/07 stock purchase update, I wrote about how my stock buy selections of Terex (TEX), Potash (POT), Shaw Communications (SJR) and Avnet (AVT) were performing. At that time, the portfolio was up $2310 for a 13.2% gain. However, the remaining four days of the week were not kind to my portfolio. At the close on 7/27/07, the portfolio down about 9%, but still up with gain of $768 for a return of 4.4% since buying the stocks. Here's the current status on the positions in these four stocks:

	My Wealth Builder Buy List
Stock	Shares	Purchase Price	Current Price 7/27/07
Terex (TEX)	50	$82.36	$83.50
Potash (POT)	50	$71.39	$77.73
Shaw Communications B (SJR)	50	$43.51	$49.35
Avnet (AVT)	200	$38.11	$38.62

Overall, I continue to be happy with the performance of these four stocks, given that the portfolio still has a positive return of 4.4%. Not bad for about 8-14 weeks of owning these stocks :-) Since the last update, TEX and AVT declined significantly, while POT declined slightly and SJR were flat.

I have been impressed with my ability to stay invested in these stocks, in spite of the market volatility. In the past, I would have closed out the entire position with this level volatility. However, while I believe we continue to be in a late stage bull market, I am concerned that the turning point may happen sooner than my estimated timing of next year. If the market turns significantly downward this week, I may close out these positions.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Retirement Saving Challenge - One Month Status

Those who joined the Retirement Saving Challenge on July 1, 2007 have almost completed a month. On Tuesday July 31, 2007, one should have one month of saving, either at a rate to create 12 times income at age 65, or at a rate of 12% of salary. Here's what one's savings should be at this time:

	One Month Amount by Age To Achieve Savings Equal To 12 Times Salary
Salary	20	30	40	50	60*	12% of Salary
$20,000	45.83	105.62	255.30	703	3,316	200
$30,000	68.74	158.43	382.94	1,054	4,974	300
$40,000	91.65	211.32	510.59	1,406	6,632	400
$50,000	114.57	264.04	638.24	1,757	8,290	500
$60,000	137.48	316.85	765.89	2,109	9,948	600
$70,000	160.39	369.66	893.53	2,460	11,606	700
$80,000	183.31	422.47	1021.18	2,812	13,264	800
$90,000	206.22	475.28	1148.83	3,163	14,922	900
$100,000	229.13	528.09	1276.48	3,515	16,580	1000
$110,000	252.05	580.89	1404.13	3,866	18,238	1100
$120,000	274.96	633.70	1531.77	4,217	19,896	1200
$130,000	297.87	686.51	1659.42	4,569	21,554	1300
$140,000	320.79	739.32	1787.07	4,921	23,212	1400

* Mathematically not possible. Shown only for reference

One can choose the lower of the 12 Times Number or the 12% Number. For example, if 20 and make $50,000 per year, one should have saved $114.57 by July 31, 2007. If more aggressive, one can choose to have saved $500.

Since this is an honor system challenge, there is no need to report one's results. I hope everyone is make progress towards their retirement savings target. Next update will be around August 26, 2007. Good luck til then.

Here are the related posts for The Retirement Saving Challenge:

Retirement Saving Challenge

Set A Goal

Create Environments and Behaviors

Daily Savings Targets

Preparation - Timeless Personal Finance Recommendations

Finding Money To Save

The Power of Compounding

Get Started

For more on New Beginnings, check back every Sunday for the next segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

My Wealth Builder Blogiversary - August 13

My Wealth Builder was born on August 13, 2006 at 11:30 AM with a post on Saving Is The Starting Point. I began blogging to learn more about whether blogs should be used extensively at work. (The answer is not at this time). Here's what I've learned about blogging, personal finance, and myself in the year since then.

Blogging

It's all about me. Blogging is about information from a personal context. It's about sharing stories, experiences and knowledge. Blogging isn't about how to buy a stock. It's about how I bought a stock, including my reasons for buying, my results and any past mistakes.

Content is king. Well written content, knowledgeable content, and original content are top priorities in a blog. Linking to or summarizing articles from MSN.com, Yahoo! or the New York Times produces quantity but not necessarily quality content.

Focus on one's passion. My spouse is amazed that I still can create articles 349 days after my first post. In fact, I'm impressed that I have been writing at least one article daily since December 1, 2006. However, I guess I shouldn't be surprised. Personal finance is my passion. After all, I am a personal finance junkie.

Personal Finance

Financial success is personal. What works for me, may not work for someone else. What works for someone else may not work for me. A great example is credit card arbitrage - i.e. using 0% credit card balance transfer to get "free" money which can then be put in riskless investments. I understand the principle, agree that it works, but don't feel it is worth my time or effort to manage it. On the other hand, I invest in individual stocks, which some PF bloggers think is equivalent to "gambling."

I can still learn more. While I think I know a lot, there is still more to learn. In particular, I have found some good blogs on stock and real estate investments, in which I consider myself knowledgeable, but not an expert. I also continue to learn about personal finance, especially in the retirement and tax areas.

Find experts who can help. I've learned that working with professional advisors is extremely useful. My financial advisor has helped me analyze my financial situations with tools and perspectives to which I did not have access. I realize now that I will need to continue expanding my network of experts to a CPA and an attorney.

Myself

I love "working" for myself. While blogging will not likely produce the level of income from my day job, I thoroughly enjoy it, am energized by it, and look forward to doing it every day. So far :-) I also enjoy that there are no organizational politics, downsizing programs or project reviews.

It's fun to fully leverage my strengths. Using my strengths is much more fun than working on my weaknesses. My Wealth Builder allows me to regularly use my strengths and only address those weaknesses that may be limiting.

Bricks and mortar skills are still useful. I've been pleased how My Wealth Builder has developed a readership base, that I've established contacts with numerous credible bloggers, and that My Wealth Builder has received recognition as a Top 100 Blogs to Read in 2007 by Creditcard.org. It shows that skills developed in my day job are still relevant in the new Internet environment:-)

A Request for Presents

No this is not a request for money. It's a request for something even better, visitors to My Wealth Builder. Help My Wealth Builder celebrate it's one year blogiversary by:

1. Subscribing to the feed.
2. E-mailing a link to a friend or colleague.
3. Visiting on August 13, 2007. I will be hosting the Festival of Stocks, Edition #49 in celebration of one year of blogging.

For more on Reflections and Musings, check back every Saturday for a new segment.

Photo Credit: morgueFile.com, Daniel T. Yara

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

How Will I Know I Have Saved Enough?

There is a great discussion in the blogosphere about saving or not saving too much. Basically, it boils down to this. One camp is concerned about over saving and foregoing too much early in life. The other camp is not concerned as much since any excess saving can lead to earlier retirement or a better lifestyle later in life.

Here's how I think about whether I have saved enough:

As background, my plan for retirement is to live on 80% of my current income. Doing so shouldn't be an issue, since we currently save 20% of our income.

Based on an article by Charles J. Farrell, J.D., LL.M., the minimum amount one should save is 12 times one's income just before retirement if one retires at 65. Assuming 5% real return and withdrawing 5% each year will produce 60% of pre-retirement. Social Security payments are expected to provide the other 20%

However, I plan to retire in my 40s. Therefore, the savings ratio will be higher. I will have "enough" at minimum of 16 to 18 times my salary just before retirement. Again assuming a 5% real return, a 5% withdrawal rate will produce 80-90% of pre-retirement income. However, I have increased my target to 20 times my income just before retirement. My financial advisor ran a Monte Carlo simulation that convinced me 20 times was "enough" when retiring in my 40s.

My savings ratio is 15.2 as of June 30, 2007 and I am trying to achieve 16.5 by end of this year. When I reach a savings ratio of 20, I will begin my "retirement phase" of life :-)

For more on Reaping the Rewards , check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Carnival Links for July 24 - 26, 2007

Here are links to Carnivals from July 24-26, 2007:

Carnival of Finance @ The Mad Money Analyst

Carnival of Financial Planning @ The Skilled Investor

Please give these hosts recognition and check out their Carnivals.

The Art of Discreet Surveillance

An important part of living is to learn from one's mistakes. At work we joke that if it doesn't kill us, it will make us stronger. The same is true for our child. One of my jobs as a parent is to keep our daughter away from the dangerous mistakes. This is where I have learned about the art of discreet surveillance. Here are the principles that I follow:

Watch from a distance. In controlled situations (e.g family gatherings, play groups, activities with friends), we will allow our daughter complete freedom, and watch from afar. It's enough distance to let her experiment, be more daring and find out about her limits. Of course, there are numerous eyes watching out for her. Also, we are there should she experience any trouble.

Talk about the topic. Even though our daughter will turn three in the fall, we have conversations about the times she is not with us. We ask her about pre-school and the church nursery. She will tell us about her activities, other classmates, and if something is bothering her. Thus, we can learn a bit about the times when we are not with her.

Encourage new activities when with us. We try to expose our daughter to new things while she is with us. As a result, we get to see and understand how she reacts to new situations when she is not with us.

Discreet surveillance has worked for many elements, e.g. toilet training, pre-school experiences, using the stairs, painting and playing. Hopefully, discreet surveillance will work as well with future challenges, such as driving, dating and even personal finances. :-)

For more on Crossing Generations , check back every Thursday for a new segment.

Photo Credit: morgueFile.com, Mary R. Vogt

This is not financial or parenting advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Five Ways To Lose Money From Investing

There a lots of ways to lose money from investing. More ways than there are to make money :-) Here are five ways of losing money which I have seen happen (either to me or people I know.):

Buy a hot tip. Especially in rapidly rising markets, everyone seems to have a recommendation, based on unique or proprietary knowledge. Friends, colleagues, neighbors, and acquaintances will have stories of making thousands of dollars in a short time (days or weeks) on stock XYZ.

I confess I have purchased hot tips about ten times, with dismal results.

Buy an IPO. Initial public offerings (IPOs) have been occurring at a rate of 200 -400 per year. 37% fail in the first ten years. Also, many do not make money for the post-IPO shareholder, because the price declines or stays flat after the IPO. Although there are great examples of making money with IPOs, (e.g. GOOG, ICE, BIDU), more often than not, people are lucky to recover their investment.

A good strategy is to wait one to six months after the IPO to determine performance. I was able to buy ICE at a lower price at one month. However, I paid 5 times the IPO price for GOOG at one year after the IPO. Both stock gained at least 25% over the purchase price.

Buy when everyone claims to be making BIG money. When your neighbors and colleagues tell you about how they have made lots of in the stock market, there is always an urge to participate. I recall a colleague telling me how he made $60,000 in one day on a tech stock, since it rose 60 points in one day. Luckily, I wasn't tempted and the tech bubble burst within a year.

Currently, there is a lot of skepticism about the market. So I am not too worried about irrational exuberance at this time.

Use only high risk strategies. Buying penny stocks, trading derivatives, and buying/selling futures are examples of high return for high risk. Often these types of investments results in significant losses for the novice investor.

I have not traded in penny stocks or futures. I use a small amount of my portfolio to trade derivatives, primarily call and put options.

Use systems that claim to have big returns. In respected publications, such as the Wall Street Journal, I see advertising about systems that report returns of 20%, 100% or even a 1000%. They often include testimonials from "normal" people who have made those types of returns from the system.

I've never purchased one of these systems. If it is such a good system, why they are selling it to me for $99.95, with a money back guarantee? There's a reason they are selling the system instead of using the system to make their money :-)

Investing can be an expensive education. Avoiding these higher loss probability strategies can make investing more profitable.

For more on The Practice of Personal Finance , check back every day Wednesday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Why I Don't Buy Recommended Stocks From Articles

We've all seen the articles such as Ten Stocks For 2007 and Beyond, Fortune 40: Stocks to Retire On, 50 Stocks To Pump Up Your Portfolio, 10 Top Rated Stocks Under $10 and Ten Great Dividend-Paying Stocks. The lists have excellent stocks, great rationales, and terrific potential. In the past, I have looked forward to such lists with great anticipation of finding one or two outstanding investments.

However, I have been typically disappointed with my results when buying these stocks. Here's typical sequence of events for me:

Excitement. The articles seem to be sharing opportunities to purchase sure wins. The recommendations are often published in respected periodicals (e.g. Money, Kiplinger, Forbes) or on respected sites (e.g. MSN Money, Yahoo! Finance). The analysis and rationales are good, and recent market data is supportive. Often, the stocks are one's I have considered, confirming my ability as a investor :-)

Decision challenge. My biggest challenge is to decide which one to three stocks to purchase. Will it be the turnaround, dividend, top rated or retirement stocks? While stock recommendation articles seem limitless, my funds to invest are not. So many recommendations and so little funds. To buy all the recommendations, I would need to have the wealth of a Bill Gates and Warren Buffet or more :-)

Narrow the choices. After more in depth reading of the articles, I would "judge" two to three stocks to be good buys, based on P/E, business potential or multiple recommendations by different articles. I would buy 50 to 200 shares depending on the price and my perception of the stock quality.

Eventual disappointment. Inevitably, my cherry-picked stock purchases would lose money. Examples of stock picks which have been eventual disappointments are: Globalstar (before bankruptcy), Loral, Southmark, and Richton International. In fact, I can't remember any picks that made money for me.

I have concluded the reasons for my poor results are:

1. Buying a larger portion of the recommended list is needed have a positive return. As with any recommendations, the stocks may go up or down. Purchasing only two to three stocks is not sufficient to reduce individual stock risk.
   
2. I'm a poor cherry picker:-) Seriously, my criteria for choosing stocks to buy was a poor predictor of future price performance.

Thus, a few years ago, I stopped using recommended stock buy lists.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Links To Carnivals From July 22- 23, 2007

Here are links to several Carnivals from July 22-23, 2007:

Towards Better Life - Edition # 11 @ Victor-Fam.com

Carnival of Family Life @ The So Called Me

110th Carnival of Personal Finance @ Fat Pitch Financials

Festival of Stocks #46 @ Nabloid

Carnival of Personal Finance Money Tips @ KCLau's Money Tips

Please give these carnival hosts recognition and check out their carnivals.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Stock Purchase Update - 7/23/07

In my 7/16/07 stock purchase update, I wrote about how my stock buy selections of Terex (TEX), Potash (POT), Shaw Communications (SJR) and Avnet (AVT) were performing. At that time, the portfolio was up $1782 for a 10.2% gain. With the current market volatility, I wanted to keep track of the portfolio more frequently. Here's the current status on the positions in these four stocks:

	My Wealth Builder Buy List
Stock	Shares	Purchase Price	Current Price 7/23/07
Terex (TEX)	50	$82.36	$90.79
Potash (POT	50	$71.39	$82.57
Shaw Communications B (SJR)	50	$43.51	$49.34
Avnet (AVT)	200	$38.11	$43.30

Overall, I continue to be happy with the performance of these four stocks, given the even higher gain of $2310 or 13.2%. Not bad for about 7-13 weeks of owning these stocks :-) In the last update, TEX and POT has risen signficiantly, while SJR and AVT were flat. This update, TEX and POT were flat or slightly down, while SJR and AVT rose significantly. This is one of the benefits of diversification, different stocks will have positive impact at different times.

I have been impressed with my ability to stay invested in these stocks, in spite of the market volatility. In the past, I would have closed out the entire position with this level volatility. However, given the behavior of the market to consistently rebound in the past several months, I believe we continue to be in a bull market, although the late stages.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

We Are Now a Three Computer Family

Three people, three computers. OK, it's not as bad as it sounds, even though our daughter is just about to turn three. We didn't get struck by lifestyle inflation or an urge to justify getting a top of the line laptop.

Here's the story...

Since the 2006 holiday season, I have been considering buying a laptop computer. At the time, I noticed there were several good sales at Best Buy and Circuit City for $400 laptops, prior to Windows Vista. While interested, buying a laptop wasn't urgent at the time. Recently, as our daughter has become older, it has been difficult for my spouse to work for long periods in the den, which has the desktop computer. Since we already have a wireless modem, we decided a laptop would be good for use at home.

Last week, Hustler $$$ Blog shared a great deal at Best Buy for a Compaq laptop (with 1GB RAM, 15.4" wide screen, Intel Dual Core processor, DVD-RW, high speed USB, built-in wireless and Vista Home Premium) for $449.99. My tech savvy colleagues at worked rated it an excellent buy. I returned mid-week and bought the final computer in stock. In addition, we paid the $150 Geek Squad fee for set up, backup disk creation (3-5 hour job), and Norton Internet Security software. I was also able to use a $25 Best Buy gift card which I had received for doing a test drive.

Now back to having three computers...

As I said it is not as bad as it sounds. We are really a two computer family. We currently have a desktop (purchased in 2003), a new laptop, and a Windows 98 desktop purchased in 1999 before going to Japan. Since switching from dial-up to DSL, we have not been using the 1999 desktop computer much any more. It still has a few document files we want to keep, but haven't transferred. In addition, my father-in-law has a program that needs a computer that can still use DOS, which is Windows 98. We are holding it for him as a backup, in case his current Windows computer crashes.

Interestingly, the new laptop cost less than our desktop purchased in 2003 and has 3 times the RAM, upgraded operating system, and faster processor. Also, I have been exclusively using the laptop for work on My Wealth Builder. for If prices keep coming down, we may purchase another laptop for my wife, which was the original intent :-)

For more on New Beginnings, check back every Sunday for the next segment.

Photo Credit: Best Buy

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Am I a Personal Finance Junkie?

Here are five signs that I may be one :-)

Track and update Personal Finance numbers regularly. Regularly, for me, means at least monthly. For some, it could be weekly, daily or (gasp) even hourly. The numbers may include net worth, total debt, stock holdings, earnings, and other financial numbers.

Enjoy talking about financial topics in public. It just seems normal to discuss finances anytime. This includes work, holiday gatherings, dinner with friends and parties. It seems normal to ask, "So which mutual funds are offered in your 401K?" or "Do you think the iPhone will drive Apple earnings next quarter?"

Read financial periodicals or watch business television for entertainment. Periodicals include the business section of the local paper, the Wall Street Journal, Money Magazine (or any number of financial magazines) and, of course, blogs. Business TV includes Nightly Business Report, CNBC, and Bloomberg, and several more.

Often wonder why other people aren't very knowledgeable about personal finance topics. Can't believe people don't know about their company's 401 k matching program, their health benefits, or different mortgage products. Talk ticker symbols (e.g. GOOG) instead of the stock name, Google. Blog, teach, or pontificate about economics or personal finance to impart knowledge to others.

Think about or research personal finance topics during a large part of free time. Interested in how to do 0% credit card balance arbitrage, found the absolute best interest rate or deal, or still trying to find the next Microsoft, Apple or Google. Sometimes do stock analysis and investing as a hobby.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

How Do I Know When I Have Too Much Money?

1. 

There's a lot discussion around the blogosphere about whether people are saving too much retirement. My initial opinion was that one cannot save too much. However, recent articles in the Internet have convinced me there may be an amount above which I would have too much money.

If I could afford any of these three items, I would know I have too much money and could stop saving for retirement. :-)

Luxury Golf Membership

The $750,000-Fee Golf Club describes a new golf club in the Hamptons. For only a $750,000 initiation fee (plus $62,000 tax) and $20,000 dues per year, one can belong to a casual golf club for the wealthy. Early members were able to sign up for a $500,000 initiation fee.

If I play 5 times a week, for 200 days a year, that equals $100 per round based on the yearly dues. I'm sure that there are minimum spending requirements at the facility also. Also, if I am a member at the club for 20 years, the cost of the initiation fee can be amortized to $3750 per year.

What a deal! :-)

My frugal recommendation: Ask if they have a junior membership for applicants under 35.

An Extreme Luxury Car

If I had a lot of spare cash, I could consider buying an expensive car, such as a Bugatti Veyron, for $1,700,000, or a Ferrari Enzo, for $1,000,000. Both are sharp looking cars that will turn a lot of heads. I also wouldn't be too concerned gas mileage or the cost of gasoline if I owned these cars.

Insurance costs might also be a bit high . I am currently checking with my insurance agent and expect it to be a bit higher than the $300/six months that I currently pay for my truck :-

My frugal recommendation: Buy a used one and save the depreciation that happens to new cars.

Ultra Luxury House

If I were ultra wealthy, I could buy this $135 million home in Aspen, Colorado. At 56,000 square feet, it has 15 bedrooms, 16 baths, a private barbershop and beauty salon just off the master suite and enough space for a party of 450 people. For reference, an acre is about 44,000 square feet.

I would hope to negotiate the price to $100 million. With a 20% down payment, a 30 year mortgage at 6.75% for the balance would yield a monthly payment of $518,878.48. And that doesn't include taxes and insurance.

My frugal recommendation: Wait until the house is auctioned and make a low ball bid of $48 million.

At this point, I am not seriously considering purchasing any of these luxuries. Therefore, I guess I will continue to save for my retirement. :-)

For more on Reaping the Rewards , check back every Friday for a new segment.

Photo Credit: morgueFile.com, Kenn Kiser

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Did You Know?

"We can't solve problems by using the same kind of thinking we used when we created them." - Albert Einstein.

I recently saw a video on You Tube titled Did You Know? The video clip shared a number of provocative facts and implications for our children, under the framework of Did You Know? I have summarized a few of the points, which I found most striking:

College Graduates

1. In 2006, the U.S. had 1.3 million college graduates. India had 3.1 million. China had 3.3 million.
2. 100% of India's college graduates speak English.
3. In 10 years, China is predicted to become the largest English speaking country.

Working

1. 1 in 4 workers have been with their current employer less than one year.
2. 1 in 2 workers have been with their current employer less than five years.
3. Today's school age population will likely hold 10-14 jobs by the age 38.

The Internet

1. 1 in 8 couples that were married in 2005 met on-line.
2. 2.7 billion searches were done on Google, this month.
3. 230,000 users signed for My Space, today. If My Space was country, it would be the 8th largest.

Knowledge

1. Today, the amount of technical knowledge is doubling every two years.
2. By 2010, the amount of technical knowledge is predicted to double every 72 hours.

What Does This Mean?

1. We are currently preparing students for jobs and technologies that don't exist .... in order to solve problems that we don't even know are problems yet.
2. How are we preparing our children to be successful and competitive in this future?

For me, the implications are frightening. This is the world in which my daughter will grow up, a much more challenging and changing world. It will be important for me to prepare her for this future.

If you'd like to see the video, a couple of versions can by found on You Tube. Here is an earlier version of Did You Know? and a later version of Did You Know? updated by XPLANE.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, education or parenting advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Links To Carnival Hosts for July 17-18, 2007

Here are links to the Carnival hosts from July 17-18, 2007 that My Wealth Builder would like to recognize.

How to Make a Million Dollars - Festival of Under 30 Finances

Money Walks - Festival of Frugality #83

The Sentinel Effect - Cavalcade of Risk

If you have time, please recognize their hard work by checking out their Carnival.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Home Maintenance Costs AND Planning For Them

Our house had been relatively maintenance free until 2007. In early 2007, we started needing repairs which I could do myself. However, as the year has continued we have needed professionals to do some of the maintenance work. Here are the costs of the major work.

New appliances. We have been making more than needed frequent adjustments to our refrigerator over the last few months. Since it was the refrigerator that came with the house, we decided to purchase an upgraded one versus repairing it. The cost the appliance was 0.3% of our house.

Exterior painting. The paint on our house was beginning to chip. We hired painters to do all the work, plus some carpentry work. Cost was 1.4% of our house. (For reference, I am not a particularly good painter of windows nor on the second story.)

Roofing. This past winter we had a freeze-thaw that caused an ice dam and created several roof leaks. I was able to make temporary repairs with silicone caulk. However, we wanted a more permanent solution since I don't particularly like climbing up on the roof every year:-) Cost of repair was 0.4% of our house.

Masonry. Our home sidewalk and patio is lined with brick that matches the house. Unfortunately, the mortar in the brick is breaking up. Estimated cost of repair is 1.2% of our home price.

Miscellaneous other small maintenance items include the garage door adjustments, yard sprinkler replacements (DIY on the easy ones) and mulching (DIY since I own a truck:-)

Overall, the cost of major maintenance and repairs for the 2007 will come to 3.2% of the price of our house. Fortunately, we have been putting aside 1.5% of our house price each year in the 4 years we have lived here. As a result we have saved 6.0% of our house price for maintenance and will spend half of it this year.

By doing these maintenance activities this year, I expect that we won't need to major repairs for several years. The major ones that will come in the next 5 -10 years are furnace and A/C replacement (estimate at 2% our house price) and roof replacement (about 5-7% of house price). We will continue to save 1.5% our house price in anticipation of these future major costs.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

Photo Credit: morgueFile.com, Nitpix

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

On Being a Landlord

So You Want to Be a Landlord? at Yahoo! Finance confirms my perspective that rental income is not "passive income." Being a landlord can be the equivalent of working at a job. One needs to find tenants, evict bad tenants, maintain the property, and repair things that break. In addition, one needs to find good properties, and sell them, eventually.

To note, I am not saying that real estate is a bad investment. In fact, in Lessons From My Dad - Create Guaranteed Income, I note that real estate has been a terrific investment for my parents. My point is that rental property can be a high maintenance (no pun intended:-) investment. It can also create lost of headaches and lots of stress if one dislikes the type of effort needed.

On the other hand, hiring a good property management company can turn a high effort investment into a low effort investment. My parents' trusts own rental property that is handled by a property management company for about 5% of the rents plus expenses. This investment has been relatively low effort and stress free for them. In addition, the net income is a major part of their retirement income.

If I do get into real estate, I will be looking for similar types of property, which can be handled by a management company. I believe the best place to look is commercial real estate. When I was actively searching, I didn't find any. Perhaps during the current real estate downturn, some deals can be found.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or real estate advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Links To Carnival Hosts for July 15-16, 2007

Here are links to the Carnival hosts from July 15-16, 2007 that My Wealth Builder would like to acknowledge.

The Power of Choice - Carnival of Personal Development - July 15, 2007

Mint - 109th Carnival of Personal Finance - First Post Edition

Be A Good Mom - Carnival of Family Life

5 Percent Stocks - Festival of Stocks #45

Check out these Carnivals to provide some recognition of the host for their hard work.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

CNBC Million Dollar Portfolio Challenge - Final Answer

Waitress is $1 Million Stock Guru by MSN.com reports that a final winner has finally been identified in the CNBC.com Million Dollar Portfolio Challenge. She has never purchased a stock and used a strategy of holding stocks with upcoming earnings announcements that were likely positive.

As reported earlier, several of the contestants had allegedly cheated by using a computer glitch to place orders after the market closed, which was against the rules. To CNBC's credit, they identified the anomaly, investigated rigorously, and disqualified the top five contestants which had broken the rules.

In this case, the cheaters didn't win. Congratulations to CNBC's investigation unit. Unfortunately, in the real world, cheaters aren't always caught.

For more on Strategies and Plans , check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Stock Purchase Update - 7/16/07

On 5/28/07, I wrote about my stock buy selections of Terex (TEX), Potash (POT), Shaw Communications (SJR) and Avnet (AVT). I initiated positions in Avnet on 4/20, Shaw Communications on 6/4, Terex and Potash on 6/7. Here's the current status on the positions in these four stocks:

	My Wealth Builder Buy List
Stock	Shares	Purchase Price	Current Price 7/13/07
Terex (TEX)	50	$82.36	$92.29
Potash (POT	50	$71.39	$83.51
Shaw Communications B (SJR)	50	$43.51	$45.65
Avnet (AVT)	200	$38.11	$40.97

Overall, I am happy with the entry price for and the current overall performance of these four stocks, which have a 10.2% gain of $1782. Not bad for about 6-12 weeks of owning these stocks.

This past week Investment Jungle evaluated these stock recommendations, in answer to a request from My Wealth Builder. Average Joe has graciously provided a detailed analysis of TEX, POT, SJR, and AVT using his Rule#1 system, which uses five metrics. His excellent analyses provided some additional perspective of which I was not aware. These four stocks have had highly variable results for the five metrics, showing that they have had bad times and are recently doing better. It was interesting that all four stocks consistently showed the characteristic of being a turnaround. I will continue to update my modified Unemotional Investor Growth system based on this new information.

Finally, for excellent fundamental analysis of stocks, I highly recommend Investment Jungle as a reference for one's stock investment decisions.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

How Much Money Would It Take to Give Up Using The Internet?

Here's an interesting personal finance/lifestyle question:

How much money would it take for you to give up using the Internet for the rest of your life?

For reference, the Internet would include all current and future applications that use the World Wide Web, including e-mail, IM, telephony or file transfer.

Take the survey below and the check how others voted.




For more on New Beginnings, check back every Sunday for the next segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Sub-Prime Mortgages - Taking Responsbility

Recently, the government proposed to protect people from sub-prime mortgage mistakes they have made. While the intentions are good, it is impossible for the government to keep protecting us from our financial mistakes.

1. The government (and taxpayers) can't afford it.
2. It provides a false sense of security that may cause people to take more risks.
3. It's not the business of the federal government to offset major personal finance mistakes.

That's why I'm impressed that the banking industry decided to take on the sub-prime mortgage issues on their own. Citigroup and Bank of America have set up a fund to help sub-prime mortgagees at risk for foreclosure. While this won't solve everyone's issues, it's a start to have those that made ill-advise mortgage decisions or used ill-advised mortgage products take responsibility for their situation.

For more on Reflections and Musings , check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Recognition of Carnival Hosts For July 10-13, 2007

Here are some acknowledgement links for hosts of Carnivals from July 9, 2007.

Ask Mr. Credit Card - 82nd Festival of Frugality

A Penny Saved - Carnival of Money Stories #17

Reach for Magnificence - Reach For Magnificence Wealth Creation Carnival

The Skilled Investor - Carnival of Financial Planning - July 12, 2007 Edition

For great ideas and stories, stop by and check out their Carnivals.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

The Wisdom of Yogi Berra - A Nickel Ain't Worth A Dime Anymore

Jonathan Clements from the Wall Street Journal writes A Cool Million No Longer Buys You a Luxe Retirement. His point is that a million doesn't get the style of retirement one would expect since:

A million ain't what it used to be. Inflation is the culprit and our money is the victim. A million dollars is only worth 54% of its value from 1987, due to inflation averaging about 3% annually. Similarly, 20 years from now a million dollars will only be worth $550,000 in today's dollars.

Homes are typically a big asset. Many people are millionaires due to rising home prices, which wouldn't be accessible in retirement. For example, the median price of homes in LA, San Francisco or New York is over $500,000. Even if one had a million in investments yielding 5%, that would be about $50,000, a comfortable, but not necessarily luxurious retirement.

The challenge is that a million dollars is still a lot of money, with only 2% of Americans having that much or more. So before saying one is saving too much, check if one's savings is on track to become at least million dollars by retirement:-)

For more on Reaping the Rewards, check back every Friday for a new segment.

Photo Credit: morgueFile.com, Paul Anderson

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Lessons From My Dad - Fair Buyouts

In business deals, sometimes one partner wants to get out while the other partner wants to stay in the business. It is often difficult to arrive at a fair price for half the business. My dad once shared a fair buyout clause for this situation, which I have always remembered.

The strategy is based on a simple fair sharing technique used with children. Basically, when dividing a piece of pie in two, one child cuts and the other child chooses. The child doing the cutting will typically make the two pieces as close to 50% as possible. Controlling only part the activities related to the transaction drives fairness.

In business, the same approach can be used when one partner wants to sell and other partner doesn't The selling partner, A, sets the price and B decides whether to buy from or sell to A. A is obligated to follow B's decision. Thus, if A sets too high a price, he may need to purchase B's shares. It's in the interest of partner A to set price at which A thinks is fair to buy and still be able to sell it to a third party.

This approach has always appealed to me as a good exit strategy from a partnership. It drives a higher level of fairness by both partners and significantly reduces negotiating time. If I ever should form a business partnership, I will make such a exit clause part of the contract.

For more on Crossing Generations , check back every Thursday for a new segment.

Photo Credit: morgueFile.com, Andrea Church

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Why Most People Get Returns Less Than The Market

Seven Money Mistakes to Avoid by Smart Money shares some interesting facts on behavioral economics for investors. The article notes that:

"From 1986 to 2005, the Standard & Poor's 500 returned 12% annually, but thanks to overzealous trading, the average investor in stock mutual funds made just 4%, according to Dalbar, a Boston-based financial-services research firm."

Some key behavioral reasons were:

1. Loss aversion. Quick to sell winning positions but slow to sell losing ones. This often results in low gains and high losses, which reduces one's overall returns. I've done this many times myself. I have ridden several stocks, Southmark, Richton International and Genta (GNTA), to no or almost no value. On the other hand, I have sold a stock, Intercontinental Exchange ((ICE), for a 50% gain only to see it increase to 400% gain a year later.
2. Overconfidence. Frequent trading or investing only in a small basket of "sure winners." Frequent trading increases commission costs and a small basket of stocks increases risk and volatility. In the past, I have been an anxious trader, especially with sharp changes in the market, and selling stocks to capture the gain. Sometimes, I end up buying the stock back at a higher price, missing on some gain and paying a 2X commission.
3. Herding. Buying the latest winner or hot tip from the crowd. By the time one hears the news, the run up is usually over. There have been at least a couple times that I've bought stocks from "can't miss" list only to find out that they do miss :-( Globalstar, a satellite phone company, was one such example. It created a satellite infrastructure, went bankrupted, and was bought up for cents on the dollar. It is now a thriving company. Unfortunately, I bought when it was a hot stock, before bankruptcy was declared.

Since I've been guilty of all three of of these, I have likely reduced my returns over the years. For the other four, read Seven Money Mistakes To Avoid. If one is new to investing and want to avoid these mistakes, a great approach is to buy a diversified mutual fund and use this simple strategy to decide which one to buy and when to sell.

For more on The Practice of Personal Finance , check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Interest Rates Going Up - Find Great CD Rates Now

The threat of rising interest rates is causing significant concerns among stock investors, bond investors, adjustable rate mortgagees, and home buyers. The reasons for concern, respectively, are lower stock prices, lower bond prices, increase in mortgage payments, and higher monthly costs for buying a house.

However, the fixed income investor who holds bonds/CDs to maturity or the money market investor is likely very happy. For them, the return on their new investment purchases will increase. To me, now is the time to make a some CD purchases to lock in higher interest rates for the short term.

On June 22, 2007, I purchased CDs paying 5.25% that mature on September 22, 2008. That's 18 months of 5.25% return, risk free since the CDs are FDIC insured. I purchased my CDs through TD Ameritrade, over the phone. I prefer to purchase CDs through my discount brokerage accounts, TD Ameritrade or Schwab, to keep all my CDs in one place and avoid paperwork and transportation time needed at a local bank.

If preferred, one can find the absolute best CD rates of the week at Bank Deals weekly rate round up every Saturday. For instance, on July 7, 2007, Bank Deals lists four banks that will pay 5.4 to 5.5 % for an 18 month CD, which is better than the 5.25% I got above.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

Photo Credit: morgueFile.com, Michael Connors

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Recognition of Carnival Hosts For July 9, 2007

Here are some acknowledgement links for hosts of Carnivals from July 9, 2007

Forex Reader - Carnival of Long Term Investing #9

Broke-Ass Student - 108th Carnival of Personal Finance

Expatriate's Kitchen - Carnival of Family Life

For great ideas and stories, stop by and check out their Carnivals

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Stock Purchase Update - 7/9/07

Earlier, I wrote about my stock buy selections of Terex (TEX), Potash (POT), Shaw Communications (SJR) and Avnet (AVT). I was able to initiate positions in Avnet on 4/20, Shaw Communications on 6/4, Terex and Potash on 6/7. Here's the current status on the purchase of these four stocks:

	My Wealth Builder Buy List
Stock	Shares	Purchase Price	Current Price 7/06/07
Terex (TEX)	50	$82.36	$84.67
Potash (POT)	50	$71.39	$80.06
Shaw Communications B (SJR)	50	$43.51	$43.18
Avnet (AVT)	200	$38.11	$41.20

Overall, I am happy with the entry price for each of these stock picks and the current overall performance of these four stocks, which have a 6.6% gain of $1151. I will continue to look for opportunities to add to the positions with only 50 shares over the next couple weeks.

For more information on these buy recommendations, see Investment Jungle, which will be doing an analysis of these stocks in the next couple weeks.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Buy American - Frugality Strategy?

With all the news about issues with food and products from China, I've been considering a "buy American" strategy, both to be more frugal and for product safety peace of mind. While I am appreciative of the standard of living improvements that have been created by "made in China" products, I am concerned about two things:

1. Am I unnecessarily "living larger" and experiencing "lifestyle inflation" due to the cost of goods becoming much cheaper. This would be contrary to a buy only what I need strategy to which I subscribe. After all, a generation or two ago, people did quite well without cell phones, 52" plasma TVs, iPods, and SUVs.
2. While I assumed US safety standards were being followed, recent product safety incidents with Chinese products have given me cause for concern. It's not worth saving a few dollars at the risk of personal health, which is irreplaceable.

While I think the rise of the Chinese economy is good, I think I will determine what it would take to buy only made in America. I am doing this partly for safety reasons (should I need to change), frugality reasons (maybe less to buy), and curiosity reasons (can it be done?). I am not doing this to boycott Chinese products or to make a statement. However, recent articles, such as US Family Tries To Live Without China, make me think it will be difficult to buy only American products.

Therefore, for the rest of this month, I will track my purchases, the origin of the product, and potential alternatives. For reference, I will only do this for my personal purchases and not the family purchases (e.g groceries, children's items) my spouse makes.

For more on New Beginnings, check back every Sunday for the next segment.

Photo Credit: morgueFile.com, Michelle Kwajafa

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Eight Random Facts About Super Saver

Lulu at How I Save Money has tagged me in a new blog project. This project calls for sharing 8 personal facts about myself, then tagging 8 other bloggers to do the same. Here are the rules , which were passed to me:

* Each player must post these rules first.

* Each player starts with eight random facts/habits about themselves.

* People who are tagged need to write on their own blog about their eight things and post these rules.

* At the end of your blog, you need to choose eight people to get tagged and list their names.

* Don’t forget to leave them a comment telling them they’re tagged, and to read your blog.

Eight Random Facts About Super Saver

1. I'm ambidextrous. I write, eat, point, play ping pong and shoot (guns, bow and arrow, and pool) with my left hand. I also aim with my left eye. I do almost everything else right handed.
2. In high school, I was a brainy jock. I was one of four valedictorians and a four year starter on the varsity football team that won the state championship our senior year.
3. I once had top security Q clearance due to an application to a government job. Unfortunately, the clearance took several months to get and I had already accepted another job.
4. I've met many people before they were famous, for example, William Ford (former CEO of Ford), and Ken Griffey, Jr. (baseball player). I've met many more people who have never become famous, including me :-)
5. I have been to five continents, and still need to visit Antarctica and Africa. I have traveled to Asia, Latin America, North America, and Europe for work. I traveled to Australia, Europe and Asia for vacations. I have lived in Asia for work.
6. In my twenties, I ran for public office in a major American city. While I was not elected, it was a great experience and I am glad I did it.
7. I occasionally gamble, playing craps, blackjack, roulette, or slots. I also play the PowerBall and Mega Millions when the jackpot is big, even though the odds are not very good. My biggest single winning was $450 on a 25 cent slot machine on a 7 7 7. (Hey, isn't that today's lucky date?) I usually limit my daily losses to about $25.
8. I finally have a stock picking system with which I am satisfied. The system is based on a book titled the Unemotional Investor by Robert Sheard. It is a modified version of the Unemotional Growth system. I have been using the system since December, 2004 with relatively good success.

In the spirit of this project, I have tagged the 8 authors of the following blogs:

Million Dollar Journey by Frugal Trader
RetireRichBlog.com by Colin F
Chief Family Officer by Cathy
One Money Dummy Getting Smarter by Money Dummy
Adventures in Money Making by Adventures in Making
My Journey To Eliminate Debt by Louise
Frugal for Life by Dawn
Armchair Fiduciary by Armchair Fiduciary

For more on Reflections and Musings , check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Estimating How Long One Will Live

One of the critical elements of retiring planning is knowing the day one will die:-) With that information, a financial advisor can develop a plan that allows one to save the right amount while working, live comfortably in retirement and then die broke.

Seriously, since none of us can predict the future, the best one can do is estimate. I recently found this life expectancy estimator. It uses a number of answers to various risk factors to estimate one's current life expectancy. The risk factors are:

Date of birth

Childhood location

Gender

Health Consciousness

Grandparents age of death

Brain use

Exercise

Diet

Smoking

Pets

Stress management

Transportation to work

Various health factors (weight, blood pressure, etc.)

Wear seat belt

Own gun

Average sleep per night

Happiness level

Provide answers to each risk factor and get one's life expectancy.

Based on my answers, my current life expectancy is 73. With a few improvements in exercise, weight and cholesterol, I can increase it to 83.

For more on Reaping the Rewards, check back every Friday for a new segment.
Photo Credit: morgueFile.com, Kenn Kiser

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Recognition of Carnival Hosts For July 3-5, 2007

Here are two additional Carnival hosts I'd like to acknowledge for this week:

Tight Fisted Miser - Festival of Frugality #81

Wisdom From Wenchypoo's Mental Wastebasket - Cavalcade of Risk #29

Please give these hosts some recognition by checking out their carnivals.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

My Daughter's Currency

Money is a very abstract concept. Money has no value intrinsically. Money has value because society "agrees" it has value and treats it as such. While growing up, children learn the concept of money and the benefits/incentives associated with money. Until one understands the concept, money has no meaning.

My daughter knows what money is, but she doesn't know what money can do. She recognizes coins and bills. She knows what a penny, nickel, quarters and various bills are. She knows we spend them. For now, she doesn't understand meaning of money, the benefits of money, or the value of money.

However, my daughter has a different currency. It is just as meaningful and valuable as money. And we trade it all the time. Here is a summary of her currency:

Stickers. The are small ladybug and star stickers which she received when we started toilet training. When getting one, she loves to pick out the specific sticker. She places the stickers on her arms and legs and keeps count.

Stars and smiley faces on a Progress Chart. We evolved from stickers to drawing stars and smiley faces for each successful use of the toilet . We have a chart for every week by day. We cheer every time she earns one and we count the totals every day. Her success rate has increased tremendously since we started using this currency.

While I don't think money is the next currency, I expect we will need to continue to evolve her currency. Perhaps, we'll start letting her trade in stickers, stars and smiley faces for something she would like.

For more on Crossing Generations, check back every Thursday for a new segment.

Photo Credit: morgueFile.com, Darren Hester

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Innovative Companies - Spectacular or Duds

Most Innovative Companies for 2007 by Business Week highlights their 50 top choices for innovative companies. What is interesting to me is that the list contains companies that I consider "spectacular" for innovation and companies I believe are becoming "duds" for innovation. Here's my assessment of a few of these companies and how I am using the information for my stock investments.


Fizzled Out - Future Duds

Microsoft (MSFT) - Microsoft was a great business model innovator 20 years ago. DOS, Windows and Office gave Microsoft dominance in the operating system and business software business. However, what has Microsoft done lately? Hmm..... They're basically still making most of their revenue from Windows and Office. The lack of Internet strength and open source software is chipping away at their dominance.

Wal-Mart (WMT) - Wal-Mart's great innovation is an unmatched supply chain system. The hallmark of a great innovation is one that every understands and still can't copy. Wal-Mart basically put less efficient competitors, from large retailers to small stores, out of business. However, Wal-Mart is a victim of it's own success. Today, it only can win where supply chain advantages make a difference. Unfortunately, there aren't many other areas to which Wal-Mart can apply that expertise. Result, below average growth. I loved Wal-Mart when it first came to my city over 10 years ago. I no longer shop at Wal-Mart.

Dell (DELL) - Dell's made to order computer product process was a terrific innovation. It enabled Dell to make the lowest priced computers, minimize inventory, and give the customer exactly what they wanted. However, today Dell is struggling mightily. What happened? Simply, Dell's business model (made to order computers) is no longer a competitive advantage in today's market because customer now want everything and prices are very low. Dell didn't find the next killer business model.

Spectacular Display - Bright Future

Google (GOOG) - What a great business. Contextual advertising placements. Millions of indviduals partner with Google to create the content sites for the ads. Google's business increases every time a new website is created that wants to advertise. If Google can continue to leverage this partnership with Internet users, they will continue to increase revenues and grow.

Apple (AAPL) - iMac, iPod and iPhone. Need I say more. Well, yes. Steven Jobs. He's the innovator behind Apple. As long as he's there, Apple will be strong. Without Mr. Jobs, Apple will likely flounder as it did in the nineties. Remember, Apple will be a great innovator as long as Mr. Jobs is leading the company.

Amazon (AMZN) - When Jeff Bezos created Amazon.com in 1995, I thought both Jeff and Amazon would a flash in the pan. Twelve years later, both Mr. Bezos and Amazon are still here and running strong. In addition, Amazon's business model is evolving from an Internet sales company to running the backroom supply chain operations for any company. To me, that seems like limitless opportunity, somewhat like the Google business model.

How I am using this assessment

1. I will not buy Wal-Mart, Microsoft, or Dell, no matter how cheap they get. Analysts are touting these three stocks as value stocks, due for higher future returns. Until I see a revised business strategy that is better than their declining current strategy, I will stay away from these stocks. The time to buy these stocks was 20 years ago, not today.
2. I will periodically make purchases in Google and Amazon. I will wait for the market response to the iPhone before making a decision about Apple. I believe these stocks will have the winning strategies to enable 20+ times gains in their stock price.

Disclosure: I currently own LEAP call options in Microsoft and shares of Google.

For more on The Practice of Personal Finance , check back every Wednesday Thursday for a new segment.

Photo Credit: morgueFile.com, Nasir Khan

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

I Won't Follow This Advice #4

Occasionally, I read commercially published articles which provide advice very different to what I have found successful in my own experience. I will be highlighting these articles periodically in a "I Won't Follow This Advice" segment. These segments represent my opinion and one should consult a professional before making any decisions. Here's segment #4.

The article Wal-Mart Moves Into Banking With Debit Card describes a new prepaid debit card service Wal-Mart will be providing to customers.

"Personal finance expert Conrad Ciccotello from Georgia State University said prepaid debit cards can be a boon to low-income consumers who might otherwise be stuck dealing in cash, unable to make such basic transactions as paying for gas at the pump or paying bills online.

'It generally strikes me as positive. In today’s society that is more and more cashless, somebody who doesn’t have access to cashless transaction vehicles is at a disadvantage,' said Ciccotello, who is director of the personal financial planning program at Georgia State’s business college.

The Wal-Mart MoneyCard costs $8.95 to buy and $4.95 for monthly maintenance. Cash can be loaded on the card for free by cashing a payroll or government check at Wal-Mart or direct depositing. Otherwise it costs $4.64 to reload the card."

While I agree with the convenience of paying at the pump or paying online, it surely isn't worth a $8.95 membership fee, $4.95 monthly charge, and $4.64 to reload. That's $4.95 to $9.59 per month for convenience. To me the cost is a big negative. If my checking account charged this much per month, I would be looking for another bank.

In my area, banks can provide equal or better service for lower cost. I recently opened a checking account with a $25 deposit at a regional bank. The account gives me a free debit card, free ATM transactions, free online bill payment and no monthly charge. In addition, the account gave me a $50 bonus when I had payments automatically deposited.

In this case, I can't think of any reason to pay for a service I can get for free.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

Photo Credit: morgueFile.com, Clara Natoli

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Recognition of Carnival Hosts For July 1-2, 2007

Here is acknowledgement of following carnival hosts from July 1-2, 2007.

The Personal Development Carnival - Personal Development Carnival - July 1,2007

BioHealth Investor - Investors Blog Network (IBN) Festival #10

Blogging Away Debt - 107th Carnival of Personal Finance

Littlemummy.com - Carnival of Family Life - School Edition

My New Choice - Carnival of Money Stories: 16th Edition

Don't Mess With Taxes - Carnival of Taxes #20: Stars and Taxes Forever

Made To Be Great - Made To Be Great - July 2, 2007 Edition

Please give these hosts some recognition by checking out their carnivals.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Wealth Builder Ratios - Q2 2007 Update

Here is my Q2 2007 Wealth Builder Ratio update. This update also represents results for the 2007 year to date. Overall, I am disappointed with this year's results so far versus 2006 results. For more details on the relevance of these ratios, please see this How Much Is Needed To Be Wealthy - The NUMBER.

Ratio and Target	Q1 2007	Q2 2007	Comments
Investment Income to Salary Target=0.8	0.04	0.09	While our stock market and fixed income investments have done well, my company retirement plan has declined this quarter due to a 3.1% decline in our company stock this quarter. Thus, the return for this quarter was only 5% of salary. Tracking this number is giving me an indication of what our income might be like during retirement. Obviously, with income at 9% of my salary, we would have been spending our retirement principal during Q1 and Q2 2007. I am still not comfortable with that kind of situation.
Savings to Salary Target>20	15.1	15.2	The small investment gain and three months of savings has increases this ratio by 0.1. I had been targeting for a 0.75 increase by mid-year.
Debt to Salary Target=0	1.63	1.55	Currently, our only debt is our home mortgage. In January, we made a payment equal to 4% of our principal.

My financial goals for 2007 are:

1. Continue to maintain an Investment Income to Salary ratio > 0.8. (off track)

2. Add 1.5 to my Savings to Salary Ratio for a year-end value of 16.5. (off track)

3. Reduce my Debt to Salary Ratio by 0.1 to 1.53. (on track)

(For reference, Salary refers to gross salary.)

Both #1 and #2 are directly correlated with how well our stock, bond, and CD investments do. If our stock investments return about 10% in 2007, I should be able to comfortably achieve these goals. The S&P returns through June 29, 2007, are 5.5% and the Dow is up 7.6%. The market gains have been offset by decline of company stock in our retirement plan which is down 5.1%, and is causing me some concern for this year. Number 3 is on track since we made an additional payment equal to about 4% of our mortgage principal.

When I was bullish on the market, I expected to achieve these financial goals for 2007. While I still believe 2007 will be a strong finish for the market (and my company's stock), I may need to revise my investment strategies in second half to get closer to the 2007 goals.

For more on Strategies and Plans , check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC