Betting on the Bad Guys

Here is an article I read that was posted earlier this month I figure I would share. To me it makes a good bit of sense and provides a bit of humor as you read. It is really nothing more than food for thought, but it makes a great point of considering the companies you hate the most as good investments.

Always Bet on the Bad Guys.

The creator of Dilbert easily has me convinced and checking on how much I could have made had I invested in a few of the companies I hate back when I began to hate them. The hatred doesn't have to be blind hate, it could be jealousy of the addiction to their products or success with limited ethics or morals. Either way investing in companies you like is apparently riskier statistically according to this article than investing in companies you have no strong emotional tie. Think about it.

Boosting my IRA's Growth with Monthly Dividend Stocks

In my constant drive to educate myself in every way possible, I have come across a plethora of information about investing in dividend paying stocks and why I should. From the information I have learned I started researching the idea of monthly dividend stocks. I own various companies that pay dividends, but I have never considered monthly dividends before. After some research I have decided to give monthly dividends a try in my IRA. Hopefully the monthly dividend payments reinvested into the stock will jump start my IRA's growth through reinvestment. My plan is to choose two monthly dividend stocks/funds that I will make use of for long term investing. The obvious choice mentioned in every book, and various blogs and dividend writings on the web mention The Monthly Dividend Company or Realty Income Corp I am not a financial adviser and this is not investing advice for anyone. This is only what I am doing. I have made the personal choice to invest into this company and another closed ended fund that pays monthly dividends and has a good dividend payment history as well. I will reinvest every single monthly dividend payment back into the stocks of these companies as well as continue to buy into these companies $100 at a time until I have accumulate $1000 into each stock/fund. After I reach this value then I will decide to continue investing or come up with a new investment plan. The stock market and investing is new to me and I feel that with continued practice, research, and discipline to stick to plans will greatly benefit me in the long run and help me build wealth over the long term. On a side note every dividend I receive from any stock or fund I own is reinvested in the stock for free with Sharebuilder.com.

Health Insurance Changes and my Employers Open Enrollment

I have worked at my place of employment for almost a decade and have participated in their health insurance plan since I qualified for open enrollment. Over the years I have noticed the decline in coverage matched by an increase in costs. Years ago my employer switched to a High Deductible Health insurance plan to keep employee and employer costs low and allow the opportunity to use a Health Savings Account (HSA) in order to cover the high deductible. Earlier this year I decided to Maximize my 100% employer price matched HSA contributions to the company allowed maximum of $24 dollars per week. After participating in my companies Open Enrollment and being informed of a change in insurance provider as well as an increase in deductible in order to keep my cost of health insurance the same. In order to compensate for this increase the weekly HSA contribution maximum still 100% price matched has been increased to $29 per week.

Having not much else of a choice for affordable insurance and being that I am a healthy individual I have no problem with a high deductible insurance plan. I think high deductible health insurance plans are a possible fix for future health insurance cost problems. I actually come out ahead because of my health insurance. The increase in deductible of course will change how much money I have in my pocket next year so I referred back to my write up on Payroll Adjustments for a link to a great tool to find out how payroll adjustments will affect my take home pay. Investing in mutual funds in my HSA as well as the immediate doubling of my money from my employers 100% matching of contributions allows my HSA to grow quickly and any funds that do not get used to pay towards my deductible will continue to grow over time.

Investing in Mutual Funds in Health Savings Account

Having a high deductible health insurance plan and a health savings account has proven to be very beneficial to me thus far. I am a healthy individual and the greatest thing is that my health savings account (HSA), which my employer 100% price matches, is growing into a decent nest egg that will stay with me for my lifetime. Recently I have decided to take up the option to invest a portion of my HSA funds into a few mutual funds available to me. Out of about 15 available funds I carefully researched all of them and chose what I felt were 4 winners that were no load, having a great morningstar.com rating, and a prospectus that I found worthy of my money. I chose a minimal amount to maintain in my health savings account that was $1000 higher than the absolute minimum in order to make sure I can meet my high deductible should a medical emergency happen and also in order to help earn enough interest from the savings account to pay the $3 monthly fee. As my HSA savings account grows past my minimum balance the extra money will automatically be transferred into an investment account and then invested into the mutual funds by the percentages I set. Hopefully I will earn a great return in the long run by making the decision to invest the bulk of unused money into mutual funds from my HSA. With a large HSA nest egg in the future I will be able to use the funds to help me as I get older and my health begins to fade. As long as I have a high deductible health insurance plan I can contribute to an HSA. If I build up enough of a nest egg through the use of mutual funds and compound interest even if I can no longer contribute because I switched back to a traditional health insurance plan my HSA should continue to grow. In the future I will still be able to use the HSA funds tax free for medical expenses. It's best compared to an IRA but instead of retirement an HSA is for medical expenses. Although if I really needed to I could pull the money out to use it for non medical expenses or emergencies but I would be subject to taxes and other fees. I will later report how my mutual fund choices are working out and also update in the future my thoughts good or bad on having an HSA.

Failure is Always an Option, That is Why Success is so Good.

2009 is coming to an end and it's time to set some real goals for next year. Here is my list my personal finance accomplishments this year (2009) followed by my list of goals I plan to accomplish next year (2010). I have spent 2009 learning to save, paying off debt, and appreciating wealth. I made a lot of changes including the decision that I don't want to be poor living paycheck to paycheck, I want to own the things I have and not pretend like I do, as so many indebted Americans do. In my quest to attain wealth I did the following in 2009.

1. I increased my pretax 401k contributions from 1% to 5% taking advantage of my employers price matching of up to 4% of my contribution on July 1, 2009 at one of my company's two open enrollment periods.

2. I maximized my Health Savings Account pretax contributions taking full advantage of my company's 100% price match on January 1, 2009.

3. Over the course of the year I began to setup automatic savings plans for my Roth IRA, my Investment Account and multiple Online savings accounts. I started with one account at a time and increased how much I put more into savings and investments little by little.

4. I paid off my highest interest credit card as well as another credit card account, and implemented the practice of paying off any balance in full every billing cycle. I still have one last credit card with a balance that I am working on.

5. I made the decision to go back to school and have almost completed my first semester back in six years (Fall 2009). I am also shooting to get my moneys worth out of school as an adult. I have a few weeks left of school and am looking to finish this semester with great success. I am expecting a 4.0 GPA for this semester and I have high hopes to continue my success until I attain my Bachelors. Sacrificing free time and my personal life in order to study more is helping me to spend less because I can no longer go out and spend money regularly.

6. Although it hasn't been fulfilled, I did converse with my boss about a raise, and even though I did not and will not attain this in 2009, I have had very promising discussions with my employer the possibility of it in the future, sad to say it may not be near future, but through my discussions I received acknowledgment of my constant hard work and excellence at my job which at least was very rewarding even without a raise.

Below are my goals for the year 2010.

1. On January 1 my first Open Enrollment for my retirement plan at work I am going to increase my pretax 401k contribution from 5% to 10% of my pretax income taking more advantage of paying myself fist by saving more money before taxes.

2. Based on my 2009 automatic Roth IRA contributions I set up in the middle of the 2009, in 2010, I will Maximize my Roth IRA automatically with my automatic savings plan at Sharebuilder.com.

3. If possible, with any extra money and extra income I plan to maximize my 2009 Roth IRA contributions before the April 15th deadline.

4. I plan to further pursue a pay increase with my employer, especially if the economy starts to turn around. With our current economy my company is currently in a slump and that has a large effect on the freeze of pay increases.

5. At the second Open Enrollment for my retirement plan at work, July 1 2010, I plan to maximize my pretax 401k contributions to my company's max of 15% finally reaching my goal of truly paying myself first.

6. Finally I plan to come up with new ways to reduce my spending and still maintaining a lifestyle I can enjoy. I will continue to practice and develop good habits for saving, investing, and growing wealth.

Through the above goals I plan to increase my net worth, improve my savings and investments, make the most of my retirement accounts, and eliminate my leftover debt.

My Health Savings Account May Really Pay Off

Every year it seems that health insurance costs have gone up and my employers health insurance gets just a little worse. At least that is what I thought three years ago when my company switched from standard health insurance to a high deductible insurance plan with an Health Savings Account (HSA) option. At first I didn't see the value and only contributed the minimum amount to my HSA which surprisingly my employer matches 100%. I regret not maxing my HSA from the start just like I regret not doing the same with my 401K, however at the beginning of this year I decided to maximize my HSA and I am glad I did.

A high deductible insurance plan is a health insurance plan with pretty much the same coverage of my previous regular health insurance plans except that it is lower in cost for me and a much much higher deductible that I have to be pay before my health insurance begins its copay coverage. I like to think of it as my insurance doesn't assist until I've paid a specific amount out of pocket first. This is where the Health Savings Account comes in, an HSA is a lot like an IRA with the way it works. You invest into the account which lasts forever so you don't have to use it or loose it like other medical related accounts. Similar to an IRA the HSA has tax benefits, the HSA has to be used for qualified medical expenses or you face penalties and taxes.

Since the beginning of this year when I chose to maximize my HSA contributions which are 100% price matched, I couldn't be happier with how fast my account has grown. It has reached over $4000 in value and climbing quickly. As for my health insurance I can't complain because I am still young and healthy and so far my medical costs are very minimal so long as an emergency doesn't happen, however, if it does I have more than enough cash growing in my HSA to cover my deductible for my insurance.

DRIP Investing - My Decision to Start Investing With Less Than $100

A few years ago I opened a brokerage account with Sharebuilder and started stashing what little money I could into my Sharebuilder money market trying to build up enough money to buy anything in the stock market. The very next year I opened a Roth IRA with Sharebuilder with the intentions of doing the exact same thing. I had been reading about DRIP investing and how it could help gain wealth and that anyone could do it, so I decided I was going to do it. My goal was to automatically send money to my Sharebuilder accounts every week after I got my paycheck in order to save up enough capital to start buying stocks.

How I set up my Drips. First and foremost all DRIP investing is is buying stocks that pay a dividend and reinvesting the dividends paid into back into the stock. Sharebuilder is great, although I am sure there are many other online brokers who do the same, because I can automatically buy a stock and pay only $4 however, when dividends are paid out from the stock I can choose to automatically reinvest them into more stock at no cost. This creates a sort of compounding slow money growing strategy.

My simple plan for both my brokerage account and my Roth IRA to set up a plan that automatically takes a specified amount from my checking account every week after I get paid ($15 into my brokerage and $25 into my Roth IRA), and then to automatically purchase a stock of my choice when my Sharebuilder account reaches $104, because I have to pay a $4 commission I add the $4 so I can buy $100 of a stock at a time. Sharebuilder allows the purchase of partial shares so I buy by the dollar amount not the share amount. This is a painfully slow process but over time it is starting to show that it will eventually pay off, in just over 2 years my investments between the two accounts are currently valued at over $6200 (10-8-2009). If I had just put that money into a savings account or CD it would only have amounted to about $5000. Because it is the stock market and stocks rise and fall in value the returns may not be that high in the short term, but increasing my portfolio with long term solid dividend paying stocks I think is really going to pay off. Due not I started investing in a horrible downed economy, however, that has actually really jump started my ability to buy more with less thus far, a solid start. Next year, 2010, I plan to max my IRA (around $96 a week to hit the current $5000 max). I am no financial adviser nor pro stock trader, however, I do research and find what I think is a good stock or fund to invest in one at a time. I keep buying my single chosen stock until I have built a good amount of shares $100 at a time in my portfolio and then move on to the next choice. For anyone who thinks they can't invest in the stock market because it takes money to make money please get that out of your head. I am slowly revolving purchases and building up a small portfolio with great growth potential from nothing. I started my road to investing with less than $100, although I didn't make my first purchase until I reached $100. As I become better at my own money management I will continue to try and increase the amount I send to my Sharebuilder accounts every week in order to increase my investment amounts and recurrences. Don't let your small amount of capital discourage you, anyone can become an investor, and better themselves easily through self guided education, practice, and strictly following a simple plan.