Traditional wisdom and wall street marketing machine wants us to believe in the mythical 10% of  growth if you buy and hold stocks.
Check out this article which debunks that myth.Here is the punchline from the article
"Taking inflation and dividends into account, an investor who put money into the market any time after the end of 1996, and held on, now has less value than when he or she started."
Read the full article @  http://nytimes.com/2009/02/07/business/07charts.html?_r=1

posted at: 04:10 | category: /personalfinance | permanent link to this entry

For my health coverage I finally took the plunge into the new medical plan called Health Savings Account.Unlike FSA , you don't lose money if you have balance at the end of the year.You carry forward your money just like a 401k.The contributions are tax deductible, the growth in it is not taxed and future withdrawals are also tax-free as long as they are for qualified medical expenses(defined by IRS).
You can also invest the money in mutual funds etc, though not every HSA accounts allow you to do it.
The other advantage is for individual  who are in the high income bracket can continue to contribute tax-free and not use the money during the current year, instead they can use the money from their regular accounts etc so that they can get the benefit of taxes in the current year and at the same time let their money grow tax-free and withdraw it in the future tax-free.
You can read more about HSA accounts @ http://en.wikipedia.org/wiki/Health_savings_account
Updated
I recently found out that for California HSA contributions are not tax deductible for state taxes.Read more @ http://www.aapsonline.org/msas/hsas.pdf

posted at: 15:02 | category: /personalfinance | permanent link to this entry

Have you wondered , that the banks will take money from you and only give an interest rate of 2-5% and at the same time they charge you in the range of 8-20% when you get a loan.The difference is obviously kept by the bank as that is the way they make money. Ever thought about sharing the pie in the lending market with the banks.
Till now there was no way you could do it, but there are p2p lending sites popping up everywhere.The idea is very simple that is you got to these websites and either buy loans or borrow money and you bid on the interest rate just like on ebay. The various sites which facilitate p2p lending are Prosper,Zopa,GlobeFunder,Lending Club,Virgin Money
The idea of P2P lending is game changing and very good but I have chosen to not use it for a while as I feel that the timing is just not right for me at this time.Here are my reasons why
If a person with a nice credit is going to foreclosure and then while his credit is good goes to prosper.com and gets a 25k loan(25k is max at prosper.com) and then goes into foreclosure, he has 25k and obviously someone who is going to foreclosure does not have to care for credit score and considering that prosper.com loans are unsecured(i.e. no collateral) , don't know how much collection agency can get the money back.
This thought has kept me at bay from P2P lending.But in future I definitely going to consider lending or borrowing via P2P.

posted at: 16:36 | category: /personalfinance | permanent link to this entry

Brokerage CD's are nothing but regular CD's which can be bought in the market just like stocks/bonds etc.There are some nuances like callable etc but don't get intimidated by it.Once you understand 3-5 terminologies of Brokerage CD's you will realize how similar they are.
I particulary like Brokerage CD's because , then Im not stuck to one bank and the market competes for my dollars.I can buy CD's from any bank i.e. whoever pays me highest interest wihtout having to open a checking/saving account with them.
There is another advantage of Brokerage CD's.Say if you wanted to have CD's in your 401k , in that case obviously it will not be possible to link your personal bank's CD's with the 401k.
However with Brokerage CD's you can buy CD's in your 401k, if you have setup a brokerage link with your 401k(also called Self Directed 401k).See the other post for advantages of Self-Directed 401k
There is one more advantage over the FDIC limit.With Brokerage CD's you can buy as many CD's as you want , and since you will be dealing with so many banks you don't have to worry about the 100K FDIC limits , unless you buy 100K CD's from one bank only.
I personally believe that Brokerage CD's are going to become more and more popular because of the reasons outlined above.
You can take a look at various Brokerage CD's offered at places like Fidelity.

posted at: 05:25 | category: /personalfinance | permanent link to this entry

There are growing number of banks/credit unions which are offering this feature where in you don't have to got the ATM to deposit checks.This is a very good and a welcome feature especially for people like me whose Credit Union is completely in a different state.
So the basic thing is that you just need to have an internet connection/computer and a scanner and you can deposit a check and the money will be typically available in 24 hours(depends on your bank)
You can lookup on this website to understand the process around this http://www.remotedepositcapture.com/Overview/RDC_Overview.htm
For a list of banks/CU's supporting this look at this page http://www.remotedepositcapture.com/bank_providers.htm

posted at: 17:59 | category: /personalfinance | permanent link to this entry

Have you ever felt that the funds offered in your 401k are very limited?
Have you ever felt that you want invest in Individual stocks or bonds in your 401k ?
Have you ever felt that the stock market is just not for you and you would rather stick to safe haven like CD's in your for 401k?

If you answered yes to any of the questions above then you might want to check with your employer to see if they offer self-directed 401K.
In simple terms a Self Directed 401k is just like a brokerage account where in you can trade stocks/mutual funds/ETF's and even brokerage CD's.
At my work I was lucky enough to have a self-directed 401k with Fidelity and I have traded ETF's/Brokerage CD's/Mutual Funds etc for it and the possibilities are endless.
Now you would ask if I have a self directed 401k then do I loose the traditional 401k with the 10-19 funds offered by my company. The answer is it really depends on your plan.In general you can have a self-directed 401k and a traditional 401k simultaneously.

posted at: 15:07 | category: /personalfinance | permanent link to this entry